3 Considerations For How To Invest In Weed Stocks
Marijuana Stocks: Significant Potential
Unless you have been living under a rock, you are probably well aware that the industry involving marijuana is currently booming. With so many of the U.S. states that have legalized medical marijuana along with a number of them who have also legalized recreational marijuana along with Canada that has considered legalizing recreational marijuana across the nation, the demand has increased exponentially. Promising drugs that are marijuana-based is set to hit the markets in the very near future.
Today there are a variety of reasons to believe that the marijuana stocks will still offer a significant upward potential. But what types of marijuana stocks should be considered for the investors who have not yet jumped on this fantastic opportunity? Here are reasons why NASDAQ:GWPH, GW Pharmaceuticals, NYSE:SMG, Scotts Miracle Gro Company and NASDAQOTH:TWMJF, Canopy Growth Corporation are the 3 top marijuana stocks that are a great choice to invest in if you have never purchased these types of stocks before, and are looking to learn how to invest in weed stocks.
The company known as Scotts Miracle-Gro does not cultivate marijuana or develop any drugs that are marijuana based. In actual fact, Scotts Miracle-Gro is not even classified as marijuana stocks. However, it should be. The majority of the fortune and focus of Scotts' is directly linked to the "marijuana industry." This company offers the main supplies for the marijuana growers that include lighting, hydroponics and fertilizers.
The business of this company is currently driven towards the smaller recreational growers, however, Scotts also have a firm presence when it comes to the professional growers along with strategies to build up lucrative relationships with the larger players. Not all the business of Scotts Miracle-Gro is linked to marijuana, which is what makes this one of the attractive choices for investors that are new to investments in the marijuana stocks. Investing in the Scotts Miracle-Gro shares provides a way for your participation in the growing marijuana industry with a lot more stability compared to purchasing micro-cap marijuana stocks.
The company known as GW Pharmaceuticals is currently the biggest biotech that specializes in developments of the drugs that are marijuana based. This company already has 1 cannabinoid products available on the markets in 16 countries over and above the U.S., known as Sativex which is a muscular-sclerosis medication. However, the biggest opportunity currently in the pipeline for this company is something to do with one of their cannabinoids drugs which are yet to be approved. GW Pharmaceuticals reported very positive results from the year before in regards to late-stage clinical-based studies for evaluations for Epidiolex, a cannabidiol drug for the treatment of LGS (Lennox-Gastaut syndrome) and Dravet syndrome. The company is already on track in regards to submitting Epidiolex for the U.S. regulatory approvals as well as European approval planned for the later part of this year.
There are a few analysts that project that the drug Epidiolex has the potential to reach its peak sales annually of around $3 billion when approved. The market cap for GW Pharmaceuticals is currently around $2.5 billion. If Epidiolex is able to achieve these success levels as expected, this type of marijuana stock will have sufficient room in order to progress higher.
Canopy Growth Corporation
Canada seems to be on course in regards to the legalization of recreational marijuana use for the following summer. Canopy Growth Corporation may be a lucrative method for the investors to make profits from anticipated growths within the marijuana markets in Canada. To date, Canopy Growth already ranks with the larger providers and associations for medical marijuana for Canada. How large could the Canadian marijuana markets become? Deloitte, a professional services agency released reports which projected that retail markets for marijuana could increase to $8.7 billion on an annual basis. To place this into a better perspective, the revenue for the last year for Canopy Growth was at around $30 million.
The company is believed to be in one of the best positions in becoming the authorized dealer when it comes to recreational marijuana when Canada implements the legislation that is currently under consideration. Canopy Growth has gone onto make a number of acquisitions. It will not come as a surprise if Canopy Growth purchases the smaller operations in order to expand their presence in their own country as well as the other countries across the globe.
If you have not yet made the decision to buy marijuana stocks, it is probably due to the fact that you are relatively cautious. It is not advisable that you just throw "caution to the wind." Even the above mentioned stocks which may be more stable and steady when compared to many other marijuana stocks, they still come with a host of risks. The valuation happens to be a significant consideration due to the fact that the significant expectations in growth are rooted into share prices for Canopy Growth and GW Pharmaceuticals. The company Scotts Miracle-Gro trades at around 20 times their expected earnings, which means they are not cheap, but at the same time, not too pricey.
There are also possibilities that the drug Epidiolex does not turn out as hoped for in regards to GW. In addition, the legalization of recreational marijuana may not come about in Canada. The federal government in the U.S. may also come down on the marijuana growers which will affect sales for the company, Scotts Miracle-Gro. In conclusion, investigations for marijuana stocks are not different to any of the other stocks. When it comes to how to invest in weed stocks, make sure you conduct your own research and only make your choice once you have evaluated the potential rewards and risks.