Understand cannibis stocksHow does one make an investment decision in the Cannabis Stocks?
This is a discussion topic or guest posting submitted by a Stock Gumshoe reader. The content has not been edited or reviewed by Stock Gumshoe, and any opinions expressed are those of the author alone.
There aren’t many of them that can be called “investment decisions” at this point — the vast majority are wild speculations with no attachment to financial fundamentals. There are some real and large companies in the space, mostly in Canada, but they are so richly valued that a lot of hope for the industry is already written in their prices. I’ve been too cautious on the sector in general, but the stocks I’ve been most attracted to have mostly been the giants — Aurora, Canopy Growth, etc.
There are fortunes being made in this industry, but there’s also a huge amount of junk — not as much as there is in the bitcoin space, but the ratio of speculative junk to real companies is probably similarly large. I’d look for actual financial performance to narrow your list for consideration… revenue, and revenue growth for the companies that are active in medical marijuana (which has been legal long enough to generate real financial performance, unlike recreational marijuana), spending on meaningful assets (building facilities, etc.), and brands that might become important… but I’ve been cautious to such an extent that I’ve missed all of the excitement of the pot stock bubbles to this point, so your interest in the adrenaline stocks might be stronger than mine.
Travis,
Have you looked into Cannabis Wheaton (CBWTF). They are set up like the very successful Silver Wheaton – – funding growers then taking part of their production as payment.
Yes. Last time I looked the valuation was absurd — priced as if they had funded those streaming agreements, instead of just agreeing to them. It also concerns me that I t’s a bet on dramatically higher marijuana prices — which Canadian regulators presumably don’t want, if the goal is to shut down the black market.
I like the business plan, but not the valuation.
stay with the Canadian companies for now.