Trading Marijuana Penny Stocks in August 2023: Strategies for Success and Risk Management
As August 2023 approaches, investors and traders keep a close eye on the top marijuana stocks, ready to cash in on potential gains in this developing market. These penny stocks, typically low-priced and considered speculative, provide considerable prospects for investors wanting increased volatility and the possibility for rapid growth. However, approaching this market with prudence and good risk management measures is critical.
When trading penny stocks, it is critical to undertake extensive research and due diligence on the companies you are interested in. Understanding marijuana industry basics such as legislative changes, market trends, and corporate financials will help you make informed judgments. In addition, incorporating technical indicators into your study can provide valuable insights into stock price fluctuations. Moving averages, the relative strength index (RSI), and Bollinger Bands can help you identify probable entry and exit positions, increasing your chances of success.
Regardless of the promise of quick riches, penny stocks are inherently riskier due to their low market capitalization and liquidity. As a result, adequate risk management is critical. In general, diversifying your portfolio, establishing stop-loss orders, and avoiding excessive investments in a single stock are all critical tactics for avoiding substantial losses. Remember, the goal in August 2023 is to strike a balance between prospective rewards and reasonable risks, resulting in a more sustainable and lucrative trading experience in marijuana penny stocks.
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Top Marijuana Penny Stocks for August 2023
- Ascend Wellness Holdings, Inc. (OTC: AAWH)
- TerrAscend Corp. (OTC: TSNDF)
- SLANG Worldwide Inc. (OTC: SLGWF)
Ascend Wellness Holdings, Inc.
AWH facilities exist in Massachusetts, New Jersey, Ohio, Illinois, Michigan, and Michigan. AWH’s key commercial activities include owning and operating facilities that produce well-known strains and having an extensive product portfolio. The company usually makes and distributes its items under the brand name Ozone. Among the cannabis-related items sold at the shop are candy, concentrates, pre-rolls, flowers, and vape pens. AWH operates 17 retail outlets and provides products to licensed marijuana businesses. As agreed upon by Ascend Wellness and MedMen Enterprises Inc., the purchase price of MedMen NY Inc. will rise. After the market closes, the company will release its second quarter 2023 results on August 8th.
Ascend Latest Financial Results
Ascend released financial highlights for the first quarter of 2023, with total revenues increasing 39.5% year on year and 4.9% quarter on quarter to $141.2 million. Furthermore, excluding intercompany wholesale product sales, net revenue increased 34.2% year over year and 1.9% quarter over quarter to $114.2 million. Furthermore, retail revenue increased 30.7% year on year but decreased 1.8% quarter on quarter to $82.7 million. To $58.4 million, gross wholesale revenue increased 54.0% year on year and 16.3% quarter on quarter.
To $31.4 million, wholesale sales increased 44.2% year on year and 13.0% quarter on quarter. Ascend’s net loss was $18.5 million for the quarter, down from $27.8 million in Q1 2022 and $15.1 million in Q4 2022. Adjusted EBITDA1 was $23.3 million, representing a 20.4% margin. Year on year, adjusted EBITDA increased by 42%, while margins increased by 118 basis points. From quarter to quarter, margins decreased 473 basis points. As of March 31, 2023, cash and cash equivalents totaled $73.3 million, with net debt2 totaling $250.8 million.
AAWH Stock Performance
AAWH stock closed on July 27th at $0.60, down 6.25% in the past month of trading. The stock has a price range of $0.5910-$2.78, down 47.83% year to date. According to analysts at CNN Business, AAWH stock has a 12-month median price forecast of $3.93 per share. In this case, it would represent an increase of 554.17% from its last trading price of $0.60.
TerrAscend grows and distributes marijuana in the United States and Canada for medical and recreational use. The company is a large cannabis grower in the United States, operating in Pennsylvania, New Jersey, and California. The company’s principal goals are to create and market artisan cannabis goods and hemp and cannabis-infused products. TerrAscend has developed several items under the Kind Tree brand in Maryland. Vapes and half-gram pre-rolls will be added to the Kind Tree brand’s current product line, manufactured in Maryland from 15 different flower varietals.
First Quarter 2023 Financial Highlights
- Net Revenue was $69.4 million, an increase of 0.6% sequentially and 42.8% year-over-year.
- Gross Profit Margin was 48.8%, compared to 44.6% in Q4 2022 and 32.1% in Q1 2022.
- Adjusted Gross Profit Margin1 was 49.0%, compared to 45.3% in Q4 2022 and 40.3% in Q1 2022.
- GAAP Net loss from continuing operations was $19.2 million, compared to $2.0 million in Q4 2022 and $13.8 million in Q1 2022.
- EBITDA from continuing operations1 was $6.1 million, compared to $30.0 million in Q4 2022 and $1.1 million in Q1 2022.
- Adjusted EBITDA from continuing operations1 was $12.2 million, compared to $12.2 million in Q4 2022 and $4.9 million in Q1 2022.
- Adjusted EBITDA Margin from continuing operations1 was 17.6%, compared to 17.7% in Q4 2022 and 10.1% in Q1 2022.
- Cashflow provided by (used in) continuing operations was $8.4 million compared to $7.3 million in Q4 2022 and ($18.8) million in Q1 2022.
- Free cash flow was a positive $5.9 million compared to ($6.9) million in Q4 2022 and ($23.0) million in Q1 2022.
- Cash and Cash Equivalents totaled $32.9 million as of March 31, 2023, as compared to $26.2 million as of December 31, 2022.
TSNDF Stock Performance
TSNDF stock closed at $1.36 on July 27th, down 19.27% in the past month of trading. The stock has a 52-week price range of $1.00-$2.57 and is up 20.37% year to date. According to analysts at CNN Business, TSNDF stock has a 12-month average price target of $2.46 per share. In this case, this would represent an upside of 80.92% from its last trading price of $1.36.
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SLANG Worldwide Inc.
SLANG Worldwide Inc. is the market leader in branded cannabis consumer packaged goods, with a varied portfolio of five distinct brands and products distributed throughout the United States. In 13 legal cannabis markets around the country, SLANG focuses on acquiring and extending market-proven regional brands and building innovative new brands to capitalize on global market opportunities and meet shifting consumer demands. The Company has over a decade of experience operating in the new and heavily regulated cannabis sector, and its partners benefit from that experience by having access to the SLANG playbook for effective operations, sales, and marketing.
First Quarter 2023 Results
- Revenue from continuing operations for the three months ended March 31, 2023, was $10.82 million, compared with $8.37 million in the three months ended March 31, 2022, representing a 29% increase year-over-year.
- Gross profit of $5.72 million (53% gross margin) in Q1 2023, compared with $3.66 million (44% gross margin) in Q1 2022, representing a 56% increase year-over-year. Adjusted gross profit1 was $5.68 million (52% adjusted gross margin) in Q1 2023, compared with $3.64 million (43% adjusted gross margin) in Q1 2022, representing a 56% increase year-over-year.
- EBITDA1 of $0.68 million in Q1 2023, compared with ($2.36 million) in Q1 2022. The improvement in EBITDA is primarily attributable to a $2.06 million increase in gross profit and a $0.55 million decrease in share-based payments. Further reductions in operating expenditures, such as consulting and subcontractors, also improved EBITDA.
- Adjusted EBITDA1 of $0.74 million in Q1 2023, compared with ($1.64 million) in Q1 2022. The improvement in Adjusted EBITDA is primarily attributable to a $2.04 million increase in gross profit before fair value adjustments of biological assets. Further reductions in operating expenditures, such as consulting and subcontractors, also contributed to the improvement in Adjusted EBITDA.
- $11.67 million in cash and restricted cash on March 31, 2023, compared to $11.92 million on December 31, 2022. Excluding deferred cash consideration of $0.33 million paid in connection with the Company’s acquisition of High Fidelity Inc. (“HiFi”), the Company was operational cash flow positive in the three months ending March 31, 20231.
SLGWF Stock Performance
SLGWF stock closed at $0.026 on July 27th, down 3.70% in the last month of trading. In this case, the stock has a 52-week price range of $0.014-$0.094 and is up 0.39% year to date.
Unlocking Opportunities: Investing in Marijuana Penny Stocks in August 2023
August 2023 holds much promise for those interested in marijuana penny stocks. However, it is critical to approach this market with a balanced approach that includes careful research, technical analysis, and smart risk management. While the temptation of quick profits is appealing, it is critical to avoid becoming engulfed in speculative excitement and instead focus on discovering fundamentally strong companies with great development potential in the booming marijuana market.
Remember that success in penny stock trading takes patience, discipline, and a willingness to adjust to changing market conditions. Overall, you can navigate the volatility of the penny stock market and position yourself for potential long-term gains by diversifying your portfolio, setting realistic goals, and employing appropriate risk management measures. Also, seek assistance from financial specialists, educate yourself about the business regularly, and maintain a well-informed, systematic approach to take advantage of the prospects given by the top marijuana penny stocks in August 2023.
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