Medical and recreational cannabis usage has been legalized in an increasing number of U.S. states and on a national basis in Canada in recent years, supporting a flourishing legal cannabis economy. Cannabis companies have become a top priority for investors looking for potentially rapid sales and stock growth. However, there are several factors for marijuana stocks that investors should be aware of.
To begin with, cannabis stocks face elevated risk and volatility owing to a variety of causes. Many publicly listed cannabis firms are new, untested businesses operating in a difficult, fast-changing industry with varying rules across several municipal, state, and regional governments. Furthermore, cannabis usage remains illegal at the federal level in the United States, despite the fact that 37 states have legalized cannabis in some manner as of February 3, 2022.
When it comes to marijuana penny stocks, the obstacles are especially daunting for investors. When investing in these firms, which include up-and-coming names like Cansortium Inc. and Goodness Growth Holdings Inc., investors should be more careful and undertake more due research than normal.
Marijuana equities, as represented by the ETFMG Alternative Harvest ETF (MJ), have significantly underperformed the wider market. Over the last 12 months, MJ has produced a total return of -70.9%, below the Russell 1000’s total return of -12.5%. Small-cap equities in general, as represented by the Russell 2000 Index, have lagged the market as well, with a 1-year trailing total return of -24.9%. MJ invests in a wide range of cannabis sector businesses, including penny stocks.
Here are the top three marijuana penny stocks in terms of valuation, growth rate, and performance. The market performance figures above, as well as other information in the tables below, are current as of July 1, 2022.
The marijuana penny stocks with the lowest 12-month trailing price-to-sales (P/S) ratio are listed below. This may be used as a rough assessment of a company’s worth for enterprises in the early phases of development or sectors experiencing big shocks. When a company reaches or returns to profitability, it may be able to earn additional profit. The P/S ratio indicates how much you pay for a stock for every dollar of sales produced.
|Best Value Marijuana Penny Stocks|
|Price ($)||Market Capitalization (Market Cap) ($M)||12-Month Trailing P/S Ratio|
|Hydrofarm Holdings Group Inc. (HYFM)||3.48||156.1||0.3|
|HEXO Corp. (HEXO)||0.21||105.9||0.4|
|GrowGeneration Corp. (GRWG)||3.79||230.2||0.6|
- Hydrofarm Holdings Group Inc. is a distributor and manufacturer of controlled environment agriculture equipment. In addition to cannabis, its products are utilized to cultivate a range of food, cereals, and herbs. Lighting, nutrition, and supplies are among the services provided by the organization. Terence Fitch, president of Hydrofarm, stated on June 23 that he will step down on June 24 to seek other possibilities. In the statement, the corporation made no mention of Fitch’s replacement.
- HEXO Corp.: HEXO is a consumer packaged products cannabis firm established in Canada that serves both the adult-use and medicinal cannabis industries. It is also traded under the ticker HEXO.TO in Canada.
- GrowGeneration Corp. offers hydroponic garden centers across North America. Growing medium, fertilizers, lighting, ventilation equipment, and other hydroponic gardening items are marketed and distributed by the firm. On June 27, the company’s most recent hydroponic garden facility debuted in Jackson, Mississippi. It is GrowGeneration’s 64th shop nationally, expanding the company’s market to 14 states.
These are the cannabis penny stocks with the strongest year-over-year revenue increase in the most recent quarter. Rising sales may assist investors in identifying firms that can generate revenue organically or in novel ways, as well as finding rising companies that have not yet attained profitability. Furthermore, profits per share may be heavily impacted by accounting considerations that may not accurately represent the overall health of the organization. However, sales growth may be deceiving about a firm’s soundness since increasing sales on a losing business might be bad if the organization has no strategy to regain profitability.
|Fastest-Growing Marijuana Penny Stocks|
|Price ($)||Market Cap ($M)||Revenue Growth (%)|
|OrganiGram Holdings Inc. (OGI)||0.94||294.9||118.0|
|HEXO Corp. (HEXO)||0.21||105.9||99.9|
|Cronos Group Inc. (CRON)||2.86||1,074||98.5|
- OrganiGram Holdings Inc. is a licensed manufacturer of cannabis-related products for both medicinal and recreational use situated in Canada. The firm sells its goods to customers as well as via wholesale channels. It is also traded under the ticker OGI.TO in Canada. Organigram said on June 24 that it has reached a proposed settlement in a class action lawsuit involving medicinal cannabis that was voluntarily recalled in 2016 and 2017. Organigram will pay a total of $2,310,000, according to the plan. On August 31, 2022, the Supreme Court of Nova Scotia will conduct a hearing to decide whether to accept the plan.
- HEXO Corp.: See above for corporate description.
- Cronos Group Inc. is a vertically integrated cannabis corporation that has distribution on five continents. It sells medicinal marijuana and grows cannabis oil. Cronos Group has a worldwide wellness platform, adult-use products, and hemp-derived CBD brands in its portfolio. Cronos released their first-quarter 2022 results on May 10. Year on year (YOY), net losses shrank considerably while consolidated net revenue almost quadrupled. Revenue increase was driven by strong performance in Canada and Israel.
These are the marijuana penny stocks with the least total return decreases over the last 12 months among the firms we looked at.
|Marijuana Penny Stocks with the Best Performance|
|Price ($)||Market Cap ($M)||12-Month Trailing Total Return (%)|
|Sundial Growers Inc. (SNDL)||0.33||793.6||-63.8|
|Cronos Group Inc. (CRON)||2.86||1,074||-66.7|
|OrganiGram Holdings Inc. (OGI)||0.94||294.9||-66.8|
|ETFMG Alternative Harvest ETF (MJ)||N/A||N/A||-70.9|
- Sundial Growers Inc.: Sundial Growers is a cannabis grower situated in Canada. The firm cultivates and sells cannabis for both the adult and medicinal markets. It sells dried flower cannabis in a variety of forms, including pre-rolls, oils, pills, and more. Sundial released profits for the first quarter of 2022 on May 16. On the back of excellent sales growth, net losses shrank dramatically year on year. Sundial Growers’ achievement, according to the firm, was driven by cost-cutting measures and greater distribution of branded goods.
- Cronos Group Inc.: See above for a corporate description.
- OrganiGram Holdings Inc.: See above for firm information.
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