What This Year Can Tell us About the Cannabis Industry
As we turned from 2019 to 2020, investors began to learn a lot about marijuana stocks. The end of last year seemed extremely promising for the cannabis industry as many companies were posting solid gains. And as we had just reached a stability point, COVID hit. The coronavirus pandemic was and is the single largest impediment to growth in the cannabis industry. And, it doesn’t seem like COVID is close to being over anytime soon. But, that does not mean that there is no room for growth with marijuana stocks to watch. Certain pot stocks have continued to show solid potential in the face of adversity.
After mid-March, we watched a large number of leading marijuana stocks climb by substantial amounts. Looking back, those gains have amassed anywhere from 40-150% in growth for varying cannabis stocks. As we are only in the first half of 2020, we still have several months to go before we call this year an end. With that in mind, many investors believe that marijuana stocks could continue to climb into the near future. It’s worth examining just what the industry looks like now and what it could look like in the next few months to years.
Has The Marijuana Stock Bubble Popped?
The short answer is yes. A few years ago when marijuana stocks were the talk of the town, we saw values shoot up by a lot. This was swiftly followed by a massive market correction that led into the 2019 fiscal year. Now, however, it seems as though gains and losses are occurring on a smaller basis. This is definitely a major positive for the industry. Investors have often believed that cannabis stocks like Canopy Growth Corp. (NYSE:CGC) can be too volatile to take seriously.
But, these smaller jumps and losses have made that sentiment less true. This is not to say that pot stocks are not volatile because that would simply be untrue. But, we have seen a large amount of stability creep its way back into the cannabis industry. By the year 2030, analysts have stated that the cannabis industry could be worth as much as $75 billion. Even if this is an overstatement, we are still due for a lot of growth in the next few years. This growth seems to be spread out across many different sectors of the cannabis industry.
Which Marijuana Stock Sectors Can We Look Forward to This Year?
Within the cannabis industry, there are several key areas that investors are watching for growth. This includes the edibles and derivatives markets, ancillary pot stocks, and pharmaceutical pot stocks. All of these have their different pros and cons, but all have a lot to offer investors. Derivatives have taken over investor interest in the past few months as Canada only legalized them at the beginning of this year. Since then, many cannabis companies have moved quickly to get new products onto the market.
Ancillary pot stocks have also shown themselves to be more stable than the pure play pot stocks at times. This has made them a popular choice amongst investors that want less exposure. Lastly, big pharmaceutical pot stocks have been able to show solid growth. This growth is predicated on approvals and legislation being put in place. With this information, investors can begin to make an educated decision as to which area of the cannabis industry may be right for them. That being said, the hopes are that we can continue to see growth in the next few years.