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• AdvisorShares Pure US Cannabis ETF (MSOS). Actively managed ETFs are hard to come by, but here’s one for the cannabis sector. If you’re looking to dip a toe into cannabis, this ETF can help you get all the benefits of an actively managed mutual fund with the real-time liquidity of an ETF. A relatively new fund, it’s showing returns in excess of 17% YTD as of early May 2021. The expense ratio is high for ETFs, however, clocking in at 0.74%.
• GrowGeneration Corp (GRWG). Back in the day, hearing “hydroponics” made you instantly think of someone growing weed in their basement. Today, hydroponics is one of the top cultivation methods for the legal cannabis industry, and GrowGeneration stands as the leading supplier of hydroponic equipment in the U.S. Offering over 50 retail centers throughout the U.S., this young company (founded in 2014) is growing by leaps and bounds. No dividends as of yet, but a P/E ratio of 90.27 says that growth-oriented investors might find what they’re looking for.
The Best Pure Play Cannabis ETFs
• Altria Group Inc. (MO). You’ll know this stock best as the maker of Marlboro and one of the behemoths in the tobacco sector (along with its dabblings in the adult beverage industry). Because of that, for ESG investors, Altria’s likely not an option. For those who don’t mind the vice, the company’s making a play for cannabis, holding a substantial stake in Cronos Group, detailed above. While the stock took a substantial hit from its investment in JUUL, share prices have been on rise since top of 2021. Analysts have noticed and the stock comes complete with several Buy and Strong Buy ratings and a dividend yield that only stocks in this sector can bear: 7.1%.
• Amyris Inc. (AMRS). Buckle up because this stock has gained about 600% since this time last year. Amyris has been working to create synthetic cannabinoids that could revolutionize the industry and make it less reliant on large, expensive growing facilities. With a $3.5 billion market cap, Amyris most recent quarterly results posted quarter-over-quarter sales figures up 96%. No dividends to report yet, but investors willing to take on the risk of this up-and-coming stock when it hit a low of $1.88 per share in November 2020 would now hold shares worth over $12 each.
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• Amplify Seymour Cannabis ETF (CNBS). At the end of Q1 2021, this strictly cannabis ETF posted year-over-year returns of (gasp) 233%, but like most of this sector’s ETFs, it’s short on history—inception date: 2019—which gives investors little to go on for historical performance. However, with a low NAV in the $20 per share range, inventors can get a taste for the industry without risking a positive drug test at the workplace. Like other ETFs in the cannabis sector, the expense ratio is high (0.75%), but it does offer a rare dividend, currently • ETFMG Alternative Harvest ETF (MJ). Providing a YTD return of 45% as of early May 2020, this ETF that tracks the Alternative Harvest Index is no slouch. With an at-present highly accessible cost-per-share under $30, investors wanting to try the cannabis industry on for size can do so at a low price of entry. Shares come with a steep expense ratio for a passively managed ETF, though: 0.75%..101 per share.
Marijuana stocks, as represented by the ETFMG Alternative Harvest ETF (MJ), have slightly outperformed the broader market. MJ has provided a total return of 36.9% over the past 12 months, above the Russell 1000 index’s total return of 35.0%. These market performance numbers and all statistics in the tables below are as of Aug. 23, 2021.
Momentum investing is a factor-based investing strategy in which you invest in a stock whose price has risen faster than the market as a whole. Momentum investors believe that stocks which have outperformed the market will often continue to do so, because the factors that caused them to outperform will not suddenly disappear. In addition, other investors, seeking to benefit from the stock’s outperformance, will often purchase the stock, further bidding its price higher and pushing the stock higher still. These are the stocks that had the highest total return over the last 12 months.
HITI.V is top for value and JUSH.CX is top for growth and momentum
Here are the top 5 marijuana stocks with the best value, the fastest growth, and the most 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.
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.
Many U.S. cannabis companies appear to be performing well in the wake of the COVID-19 pandemic. However, several Canadian marijuana companies continue to face headwinds, with restrictions on retail cannabis stores still in place.
Green Thumb Industries (OTC:GTBIF)owns retail cannabis stores in 12 states across the U.S. and operates 13 manufacturing facilities. Green Thumb holds licenses for 96 retail cannabis locations but has opened only a little over half that many stores.
Source: Business Wire
Impact of COVID-19 on marijuana stocks
Scientific advances are opening up new possibilities for the treatment and prevention of diseases.
Healthcare is a growing industry, and cannabis investors may benefit from getting acquainted with it.
U.S. cannabis companies can’t easily secure capital from banks or financial institutions since marijuana remains illegal at the federal level. Innovative Industrial Properties (NYSE:IIPR) helps to solve that cash shortage for growing marijuana companies by buying properties owned by U.S. medical cannabis operators and leasing those same properties back to them. The property sale to IIP provides the cannabis operator with much-needed cash, and the lease agreements create a steady revenue stream for IIP.
With the legal recreational marijuana market in Illinois opening for business at the beginning of 2020, this company is benefiting from tremendous growth in its home state. Along with the opportunity to expand into additional states such as New York and New Jersey, the company has significant growth potential.