Cannabis Penny Stocks in Cannabis to Watch in 2024
Marijuana penny stocks are emerging as a notable segment in 2024’s stock market. With the growing legalization and acceptance of cannabis, the industry is experiencing rapid expansion. Forecasts suggest the global cannabis market could reach $73.6 billion by 2027. This growth is fueled by increasing medical and recreational use worldwide.
Investors are increasingly using technical analysis for these volatile stocks. This approach examines price movements and trading volumes to predict future trends. Proper risk management is essential in this sector. It involves setting stop-loss orders, diversifying portfolios, and investing only what one can afford to lose. These strategies help mitigate risks inherent in penny stock trading.
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Marijuana Penny Stocks to Consider in 2024
- Glass House Brands Inc. (OTC: GLASF)
- Lowell Farms Inc. (OTC: LOWLF)
Glass House Brands Inc.
Glass House Brands Inc. stands out in the U.S. cannabis market. It specializes in producing, distributing, and cultivating high-quality cannabis. Headquartered in California, it’s a vertically integrated company with a strong retail presence. The state’s significant market size and expansion potential bolster its position.
Third Quarter 2023 Highlights
In their recent press release, Glass House Brands reported notable achievements for the third quarter of 2023. A major highlight is the $12.8 million raised from a Series D Preferred Equity Fund. This funding increased their cash reserves to $37.9 million. Their operating cash flow also saw an increase, reaching a record $9.1 million from $8.3 million in the previous quarter. Adjusted EBITDA grew to $10.7 million, up from $9.5 million. Remarkably, revenue hit a record $48.2 million.
This is a 71% year-over-year increase and an 8% sequential rise. Despite these gains, the gross margin slightly decreased to 54%. However, it’s still a significant improvement from the previous year’s 31%. Biomass sales also increased impressively by 142% year-over-year, with a 36% growth in production. For Q4 2023, the company estimates revenues between $38 million and $40 million. This is a 21% increase over Q3 2022. But, it also predicts a 19% sequential decrease due to unfavorable weather.
These developments could positively impact Glass House Brands’ stock prices. The record revenue and strong financials may boost investor confidence. The company’s robust financial health, indicated by its successful equity fundraising and increased cash flow, could attract more investors. However, the slight margin decrease and forecasted revenue drop in Q4 could raise concerns. Despite this, the year-over-year growth in biomass sales and production underpins a strong operational foundation.
In summary, there are several investment perspectives. The bullish case focuses on Glass House Brands’ impressive revenue growth, strong cash position, and operational achievements. The bearish case considers the slight margin decline and potential revenue decrease in Q4. The balanced case suggests weighing the company’s growth potential against possible market volatility and operational challenges.
GLASF Stock Performance
GLASF stock ended at $4.51 on December 20th, down 1.96% in the last month of trading. Currently, the stock has been trading in a 52-week range of $1.85-$5.11. GLASF stock is up 136.13% year to date.
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Lowell Farms Inc.
Lowell Farms Inc., a leading cannabis manufacturer in California, is rapidly growing its market share. The company focuses on developing premium cannabis brands and artisanal farming methods. It utilizes advanced production technology. Lowell Farms has a licensing agreement with Ascend Wellness Holdings. They are collaborating to distribute Lowell Smokes in Massachusetts, Illinois, and Michigan.
Third Quarter Financial Highlights
Lowell Farms reported its financial results for Q3 2023. The net revenue was $6.2 million, a 28% decrease from Q3 2022 and a 12% decrease from Q2 2023. Consumer Packaged Goods (CPG) revenue dropped by 29% from Q3 2022 and 2% from Q2 2023. Revenue from self-grown wholesale products fell by 39% from Q3 2022 and 47% from Q2 2023. This included a 49% decrease in volume, but a 3% increase in price per pound from Q2 2023. However, Lowell Farm Services (LFS) revenue saw a significant increase, rising by 384% from Q3 2022 and 79% from Q2 2023. Out-of-state licensing revenue decreased by 38% from Q3 2022 and 19% from Q2 2023.
The gross margin for Q3 2023 was negative at 7.1%, a gross loss of $0.4 million, compared to a negative gross margin of 4.8% in Q2 2023. The operating loss improved, reducing from $5.2 million in Q3 2022 to $2.8 million in Q3 2023. However, the net loss significantly increased to $20.2 million from $4.8 million in Q3 2022 and $0.1 million in Q2 2023. Adjusted EBITDA was negative at $1.3 million, slightly worse than the negative $3.5 million in Q3 2022 and the negative $1.2 million in Q2 2023.
Potential Stock Price Impact
Lowell Farms’ financial results for Q3 2023 show mixed signals for potential investors. The substantial decrease in net revenue and a negative gross margin could negatively impact investor confidence, potentially affecting the stock prices. However, the improved operating loss might be seen as a positive sign of better cost management. The significant increase in net loss, though, raises concerns about the company’s long-term financial sustainability. Overall, these results could lead to cautious investor sentiment regarding Lowell Farms’ stock.
Investment Cases
- Bullish Case: The significant improvement in operating loss and the increase in LFS revenue could indicate the potential for recovery and growth.
- Bearish Case: The steep decline in net revenue, negative gross margin, and substantial increase in net loss highlight ongoing financial challenges, posing risks for investors.
- Balanced Case: Investors should weigh the improved operating loss and LFS revenue growth against the broader context of declining revenues, negative margins, and increased net loss, carefully considering the company’s long-term financial health
LOWLF Stock Performance
The shares of LOWLF closed at $0.15 on December 21st, down 35.76% in the last month of trading.
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Weighing These Marijuana Penny Stocks For 2024
In conclusion, both Glass House Brands Inc. and Lowell Farms Inc. present contrasting pictures in the dynamic cannabis industry. Glass House Brands, with its significant revenue growth and strong financial performance in Q3 2023, demonstrates a robust market presence and operational efficiency. Their successful equity raise and increased cash flow signify a strong financial foundation. However, the anticipated decrease in Q4 revenues due to environmental factors suggests potential challenges ahead.
Lowell Farms Inc., on the other hand, faces more pronounced financial difficulties. Overall, their Q3 2023 results show a substantial decline in net revenue and a negative gross margin, indicating struggles in maintaining profitability. While their operating losses have improved, the substantial increase in net loss raises concerns about long-term sustainability. Investors in the cannabis market might see Glass House Brands as a potentially stronger candidate for growth, whereas Lowell Farms appears to be navigating through more challenging financial waters.
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