The cannabis market has seen quite a lot of bad news in the past few weeks. With the coronavirus, the entirety of the marijuana market has been incredibly volatile during this time period. But, if we look back further than two weeks ago, we see that there are some major underlying issues within the cannabis industry that need to be solved. In Canada, these issues relate to supply worries and the increasing size of the black market. Many top Canadian cannabis producers have worked to up their production to incredible amounts. Others, however, have had to fight to keep their businesses alive by cutting production and laying off staff.
If you watch the marijuana market, you know that it is very difficult to keep up with all aspects of it. But, the coronavirus has helped to bring all of these issues to the front-line. While we as traders continue to trade marijuana stocks, it’s worth noting which companies are profitable, and which can stay profitable moving forward. With this information, we can begin to build out a strategy of how to invest in the cannabis market moving forward. For investors who are less risk inclined, this may be a good time to sit out and rethink your strategy for when trading begins to stabilize. For others, now may be a good time to dive in head first and find value where it can be found.
A Cannabis Grower Pot Stock
OrganiGram Holdings (OGI Stock Report) is a leading cannabis grower that is reportedly down as much as 74% from its high point. The pot stock is currently trading at just south of $2 and has sene quite a lot of losses from the coronavirus pandemic. Despite these losses, the company still has quite a lot to offer from its business model. Unlike other major pot stocks, OrganiGram has actually managed to generate an operating profit, as shown in its first-quarter 2020 results. One of the major reasons for its growth has been its large presence on the East Coast of Canada.
The company has unparalleled access to this area of the Canadian cannabis market which makes it one of the largest domestic suppliers of marijuana. In addition to this, the company has one of the most efficient growing operations in the business. OrganiGram utilizes a tier system that allows it to grow cannabis plants on top of one another. This means that it is pushing out more production per square foot than most other competitors. Because of these reasons, the company continues to show why it is such an interesting pot stock to watch.
Another Major Grower Cannabis Stock
Aphria (APHA Stock Report) is another beaten-down pot stock with a solid business model. From its high price, the company is down by around 80%. While this could represent a good time to take a look at the company, it does look like it could see some more volatility in the near future. Interestingly enough, the company is also one of only a handful of pot stocks to be producing an operating profit.
In the past two quarters, the company has reported such profits, which has attracted the attention of many investors. Year over year, Aphria has seen its revenue grow by around 550% which is quite impressive. In addition, the company has been working tirelessly to move further into the European cannabis market. Although we are far from seeing the end of coronavirus related volatility, Aphria continues to be a major contender for investors looking for a pot stock to watch.