Marijuana stocks have definitely had some bad days in the past few months. We can blame the coronavirus for some of these issues, but the cannabis industry has its own problems to contend with. In the past year or so, cannabis stocks have collectively lost around 70% of their value. While this is partly a natural correction from the ballooning that occurred last year, it does highlight some of the inherent issues in the marijuana industry. But, for investors who are less risk inclined, there are still some options for finding marijuana stocks to watch. These companies play a smaller role in the cannabis industry at large and therefore can offer a different value point to investors.
In addition, because they are not usually touching the physical marijuana plant, they can often have lessened volatility when compared to the more pure-play pot stocks. Of course, we should always remember to do the proper research into a given company. With the right information at hand, making an educated decision about a pot stock can be much easier. This information includes financial filings as well as a companies free cash and forward-thinking plan. With cannabis stocks continuing to see massive growth in the next few months, it seems as though these marijuana stocks may be a solid place to start looking.
A Solid Alternate Marijuana Stock
Scotts Miracle-Gro Inc. (SMG Stock Report) is one of the most popular ancillary marijuana stocks for several reasons. The company is widely known for being a provider of lawn and garden care supplies. But, in the past few years, it has worked to create a subsidiary known as Hawthorne Gardening, which specifically supplies products for those growing plants with hydroponic methods. Since its creation, Hawthorne has seen massive success, posting profits that outweigh the company as a whole.
Year over year, Hawthorne has grown in sales by as much as 60%. It’s traditional business comparatively only grew by around 10% during that same time. With summer on the way, it seems as though people may begin to start buying products to grow and sustain their plants. With the company currently trading at 26 times its earnings, it looks like Scotts could be a real solid marijuana stock to watch. But, investors should continue to keep an eye on the overall business strategy to see how the company grows in the near future.
A Company With a Small Role in the Cannabis Industry
Shopify Inc. (SHOP Stock Report) is not a traditional marijuana stock in any sense of the word. But, the company has been working to play a larger and larger role in the cannabis market. With the coronavirus, the cannabis industry has become very digital in only a short period of time. Dispensaries and marijuana stocks alike are using the online platform as a way to offer store pre-ordering and pick up details.
During its second quarter, Shopify posted sales up around 50% for its year-over-year numbers. It’s clear that Shopify has its core business under control as it is the best-known platform for making simple websites. But, the company has a real opportunity to become a major player in the cannabis market moving forward. Given that things are only going to become more and more digital, there could be some solid opportunity for investors looking for an alternative pot stock to watch.
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