Diving into big-name marijuana stocks. These companies have all but taken over the focus of the cannabis industry in the past year or so. With so much attention surrounding only a few of these businesses, it seems as though there are some key factors to consider before looking for marijuana stocks to buy
One of the most important things to note is that the largest companies in the industry tend to have the highest rates of volatility. This is simply due to them taking the brunt of the fluctuations from the pot stock market still being in its relative infancy. The cure for this you might ask? Time.
It seems as though the only way to beat out this high level of volatility is to wait and let time take its course. With any infant market, much of the investments are based on speculation.
This is due to the fact that there is not much of a past to base future investments on. Nowhere is this truer than dealing with marijuana stocks. But, just because a pot stock is large in market cap, does not guarantee any sort of success in the future of that company. It simply means that it will be the first to be hit by any sort of news coming in and out of the industry.
But, this should not dissuade many investors from taking a closer look at these companies. The big guys in the pot stock market tend to be able to put in a greater amount of innovation due to the sheer volume of free cash that they may have.
Now, also worth considering is the amount of debt that a company has racked up. In terms of growing cannabis, it is an extremely capital intensive process. This means that many of the leading pot stocks to watch have been bogged down by heavy commitments to capital intensive build-outs of cannabis growing and processing facilities.
A Big Name Marijuana Stock to Watch
Aphria (APHA Stock Report) is widely regarded to be one of the largest pot stocks in the market. The company has stated that it is holding as much and $350 million in free cash at the current point in time. Much of this money is scheduled to go toward the grow-out of over 140,000 kilograms of cannabis. Of course, the company has not been without its troubles.
The majority of this large amount of capital was generated by a convertible debt offering that the company had in April of last year. This could lead to quite a dicey situation moving forward but only time will tell. For now, it remains an interesting pot stock to watch.
As we move into the future of the industry, there is nothing that is certain. The only thing that we have to aim our goals at is the massive growth that is supposed to take place in the industry. With the new year showing greater promise than ever before for pot stocks, the only thing we can do as investors is to wait and see what happens. With this in mind, investing in pot stocks can be much more fun.
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