Marijuana stocks, as represented by the ETFMG Alternative Harvest ETF (MJ), have dramatically underperformed the broader market. MJ has provided a total return of -28.6% over the past 12 months, well below the Russell 1000’s total return of 25.2%. These market performance numbers and all statistics in the tables below are as of Jan. 6, 2022.
GRWG is top for value and growth, and IIPR is top for momentum
The marijuana industry is made up of companies that either support or are engaged in the research, development, distribution, and sale of medical and recreational marijuana. Cannabis has begun to gain wider acceptance and has been legalized in a growing number of nations, states, and other jurisdictions for recreational, medicinal, and other uses. Some of the biggest companies in the marijuana industry include Canopy Growth Corp. (CGC), Cronos Group Inc. (CRON), and Tilray Inc. (TLRY). Many big marijuana companies have continued to post sizable net losses as they focus on investing in equipment to speed up revenue growth.
Best Value Marijuana Stocks
These are the marijuana stocks with the lowest 12-month trailing price-to-sales (P/S) ratio. For companies in the early stages of development or industries suffering from major shocks, this can be substituted as a rough measure of a business’s value. A business with higher sales could eventually produce more profit when it achieves (or returns to) profitability. The P/S ratio shows how much you’re paying for the stock for each dollar of sales generated.
Since then, the company has shown it plans to expand. In July, it invested up to $20.5 million to buy land and build a 130,757-square-foot growing and processing facility in Phoenix to be leased by Tempe, Ariz.-based based cannabis company Mint. This month, Massachusetts’ Worchester Business Journal said the company spent $8.8 million on four properties in Fitchburg, Mass., that were co-owned by medical cannabis company Revolutionary Growers and Anwelt Heritage Condominiums.
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NewLake Capital Partners is well named
NewLake is a real estate investment trust that leases out growing facilities, processing facilities, and dispensaries to cannabis companies. Village Farms International is one of the largest greenhouse growers in North America and its subsidiary, Pure Sunfarms, is one of the largest cannabis-related operations in the world. Hydrofarm Holdings sells an array of controlled-growing products that can be used for many crops, including marijuana.
Because of federal regulations, cannabis companies have difficulties obtaining bank financing, so NewLake buys their properties and leases them back with triple-net leases that put expenses such as real estate taxes, insurance, maintenance, and utilities on the tenants and include annual rent escalation clauses based on an inflation index. The setup frees up capital to cannabis companies and supplies a steady income stream for NewLake.
You may not know much about these three stocks, but they could make for great long-term plays because of their connections to cannabis.
All three of these marijuana companies have huge potential, in part because they aren’t that well known yet and their shares haven’t yet skyrocketed.
Most smaller pure play stocks in the UK are listing on the Aquis Stock Exchange (formerly NEX Exchange), which is known as AIM’s younger brother and designed for small businesses looking to raise smaller amounts of money from the public.
Steps to investing in cannabis
According to a 2020 report by the Crime Survey for England and Wales (CSEW), around 3.2 million people had taken the drug over a one-year period – that is around 5% of the UK’s population – valuing the country’s black market at well over £5 billion.
Chill Brands Group
After a gas discovery in Kansas, US, the company found that the gas had high purity levels of nitrogen and a high concentration of hydrogen. Together, the latter are used to make a potent fertiliser used in a pilot project to improve yields at a cannabis growing facility.