The phrase “I wish I knew I would have ….” dominates the investment market with the introduction of a new product. Do not let this be your statement come 2020 regarding the cannabis industry and possible marijuana investment stocks. Don’t kick yourself for missing out, but a pat on the back for taking the risk.
As countries around the world continue to eliminate limitations associated with marijuana use, the opportunities that arise are phenomenal. However, the risks are still high, and bad actors are on the loose. With that being the case, it does not mean you forfeit the opportunity. All it asks for is to exercise caution by doing in-depth research and understanding the various parts of the industry and what propels it to greater heights.
If looking to invest in marijuana stocks come 2020, here is how to do it:
Understand what the marijuana industry has to offer
There are indeed only two products that are currently available in the marijuana industry. These are medical marijuana and recreational marijuana. From these two classifications, further breakdown continues, and the products arising from each are numerous.
For instance, Canada opened and handed over an investment opportunity with branded products infused with cannabis. It gave way for companies to start producing cannabis-infused edibles, vape, and other infused beverages. The buzz that came with this is something that continues to drive the market.
As an investor, it is fundamental to understand that the new products will appeal to the population. Not having to take the green murky and earthy marijuana buds and instead of having a sweet looking cannabis-infused cookie is quite appealing! Don’t you think so! Take the chance and invest in new commodities that show potential for long term or short term returns.Eg. one of the top brands, Get Kush continuously innovates by introducing new CBD products at pocket-friendly rates.
Identify different cannabis-based stocks
Companies continue to list their shares and commodities in the market for trading. The company’s functions and important business deals are never available on the stock market. You have to research what the companies engage in before purchasing their stocks. You need to evaluate marijuana stocks according to best value stocks, high momentum stocks, and revenue growth. For detailed review and analysis regarding cannabis stocks, one can refer to industry leader high-supplies online site.
With best value stocks, evaluate the trailing P/S ratio (profit to sales). The ratio indicates stocks that are yet to offer their investors profits but are continuously on the growth streak. The low P/S ratio shows that you pay in comparison to the revenue the company generates. Village Farms International a company specializing in agricultural greenhouses for marijuana farming, has the lowest P/S ratio of 2.0, according to Investopedia YCharts.
High momentum shows stocks that got the highest returns over the 12 months. Village Farms International and Innovative Industrial Properties come first with a tie in their trailing percentage for the 12 months in 2019.
Revenue growth indicates companies with high revenue growth year over year. It shows that the company s generating more income that it is using to cover associated costs. The Valens GroWorks Corporation specializing in biotechnology i.e., analytical testing of cannabis, processing, and formulations, had the highest revenue growth in 2019.
Evaluating these numbers and having an idea of what their representatives will help you invest in marijuana stocks much more wisely in 2020.
Know the risks and incorporate them into your strategy
Stability is just another word that does not offer security in this industry. There are many legal fronts for individuals and the government to come to terms with regarding cannabis use. The delay in regulatory progress is discouraging to investors come 2020, but the possibility of further growth, the investment options increase.
The risk of over the counter marijuana stocks is quite high. The quality has no specific determinant, and no one takes these seriously. However, companies continue to trade with them due to the high demand and returns. Advice is at having a lower number of shares and pricing them higher if there is a future for the company. They are easier and much more effective to control.
Look at the major listings and identify the company’s ETF stocks. These undergo strict testing and evaluations before the companies responsible list them for purchase. Analysts spend time assessing these companies assuring you of the stocks you invest in for the long or short term.
Understand the fundamentals of each marijuana stock
Sometimes, we purchase blindly, and this can either be beneficial in case lady luck is within reach or cause major loses. Before you commit to any marijuana stock in 2020, be sure to assess the company’s management team responsible for ensuring the growth of the stock. Get down to the growth strategy and their overall position in this competitive world. Set aside their financials for a better look into their profitability scheme. If unavailable, ensure that the balance sheet meets your set targets.
Evaluate the convertible securities and warrants the company has for unexpected scenarios such as the dilution of risks. You need assurance of a profit and returns on investment. If not, you will require means to safeguard your investment in case the business fails, and nothing of it is salvageable.
Investing in marijuana stocks is no easy fit. You need to put into consideration new products that continue to emerge each day. You should understand that volatility can either be profitable or cause a massive loss you may not bear. Finally, conducting research and verifying legitimate business ventures is fundamental to compliance and security of investments. Therefore, as you peruse the industry for possible investment opportunities, be sure to have this information at hand.