These Cannabis Industry Trends Are Important to Know
When it comes to investing in marijuana stocks, those with less information are inherently disadvantaged. But, in the days of the internet, anyone can be the most informed investor out there. In the past six months, investors have focused on smaller pot stocks like TerraAscend Corp. (TRSSF Stock Report), OrganiGram Holdings Inc. (OGI Stock Report), and Sundial Growers Inc. (SNDL Stock Report). In addition, ancillary pot stocks like Scotts Miracle-Gro Inc. (SMG Stock Report) and Brinks Co. (BCO Stock Report), have also made big waves. As you can see, there are quite a lot of marijuana stocks to choose from. It truly comes down to two factors.
For one, what type of investor are you? Are you looking for a long term, stable investment to put money into and then forget about? Or, are you an avid day trader that is looking for volatile positions in the cannabis industry. Both of these strategies can be valuable, but both involve different marijuana stocks to watch. In addition, investors need to know the current trends in the cannabis industry. These trends can help investors to discover where the next valuable pot stock may be. With this in mind, let’s take a look at three things that marijuana stock investors should consider.
U.S. Marijuana Stocks Are Leading The Charge
While Canada has been the focus of the cannabis industry for some time, in the past year, that focus has turned to the U.S. During Covid, we have seen a dramatic increase in demand for cannabis in the U.S. This demand increase means that many leading U.S. pot stocks have posted better than expected gains. While the U.S. is lagging in legislation, the states that have legalized marijuana, have managed to pull in big gains in tax revenue. This means that the focus of investors has turned toward the U.S. for the better.
But, with the upcoming presidential election, things could once again shift very quickly for U.S. based pot stocks. Many investors believe that the election will be a major positive for the U.S. cannabis industry. With five states voting on whether or not to legalize cannabis, this election season could be a big deal. The pot stocks that stand to gain the most from this are MSOs. These companies are the most forward-facing part of the cannabis industry. With this in mind, the U.S. remains the backbone of the North American cannabis industry.
Alternative Marijuana Stocks Are Showing True Potential
While many investors focus on big-name pot stocks, some have turned their attention to smaller marijuana stocks. A select few companies have been showing a great deal of potential in the face of a much larger market. Because the cannabis industry has grown so much in the past few years, it has become more difficult for smaller marijuana stocks to stake a claim. But, some leading pot stocks have done just that. Although these companies are considered to be more volatile plays, the future potential is truly quite large.
While investors may want to avoid smaller pure play pot stocks for the competitive factor, alternative businesses are definitely very interesting. This includes companies that help the cannabis industry function as well as those producing alternate products. If investors choose to go down this path, they should make sure that they research the company to the fullest extent. In addition, investors should make sure that the marijuana stock has enough liquidity to enter and exit positions swiftly.
Pot Stock Earnings Are Still Extremely Important
As stated before, many U.S. pot stocks have posted better than expected earnings in the past few months. But, beyond the anomaly of Covid, investors should see what long term trends pot stocks are showing. In addition, market demand is an extremely important factor to consider. Many big name and small pot stocks have touted large deals and promises for the future. And while some have come through on these, others have let them fall by the side. With this, investors should always make sure that they know what a company has planned for the long term. This information can help to decide whether or not a cannabis stock can be a good play for the longer term.
In addition, investors should know what type of macro trends are occurring in the global cannabis industry. These trends can help investors to decide which area of the cannabis industry may be the most profitable. Of course, investors can use the information at hand to make this decision. But, there is a lot of unknowns about the future. With this in mind, the hopes are that we can continue to see growth in the future of the cannabis industry.
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