These Alternative Marijuana Stocks May be Winners This October
When it comes to marijuana stocks, investors often only consider the top two or three companies by market cap. This includes pot stocks like Cronos Group Inc. (CRON Stock Report) and GW Pharmaceuticals Inc. (GWPH Stock Report). While this can be a solid strategy, it denies a lot of the potential of any alternative marijuana stocks to watch. Within the cannabis industry, there are several markets to choose from.
Starting at the top, we have the pure-play pot stocks. These are companies that engage in the production and sale of marijuana in its raw form. Next, we have product producing marijuana stocks. These are companies that produce products that utilize cannabis. This includes derivative companies such as ESPs as well as retailers of marijuana such as MSOs. The last category of marijuana stocks are the ancillary companies. These businesses offer services to help the cannabis industry run. This could be anything from REITs to packaging companies and more.
With such a broad range of pot stocks to watch, investors have to do their own research to find out what companies are right for them. While the cannabis industry does have a lot of forward momentum, investors should narrow down what industry fits their portfolio strategy best.
A Leading Ancillary Marijuana Stock
Altria Group Inc. (MO Stock Report) is not a marijuana stock in any traditional sense of the term. Rather, MO stock has made its gains based on the tobacco industry. Based out of Virginia, Altria has long been considered to be the leader in the tobacco production and sale industry. But, a few years ago, the company purchased a very sizable stake in Canadian cannabis grower, Cronos Group Inc. (CRON Stock Report). This investment is what gives Altria Group any standing in the cannabis industry whatsoever.
While the more traditional cannabis investors may stray away from companies like Altria Group, others may like its stability. Because it is not traditionally a pot stock, MO stock only has a small amount of exposure to the cannabis industry. This means that it is not as volatile as most other pot stocks to watch. And with a market cap of roughly $75 billion, many believe that Altria Group has a solid long term future. In addition, Altria Group is currently paying out a dividend of roughly 8.4% which is more than most. For that reason, Altria Group continues to bring in a large amount of outside investors.
A Pharmaceutical Marijuana Stock
AbbVie Inc. (ABBV Stock Report) is one of the leading pharmaceutical pot stocks to watch. In the past few years, the company has divested slightly in its role in the cannabis industry. But, it has worked on reducing its debt to help meet investor expectations. The company stated that it has around $5.4 billion in debt as of late 2020. The majority of this debt comes from the companies acquisition of cosmetics giant Allergan for around $63 billion. While investors may think this was not the smartest move, the company has been able to show massive revenue increases since the acquisition. In its most recent quarter, ABBV stock showed a 26% year-over-year revenue gain to around $10 billion.
With this, AbbVie should have the cash flow to continue growing in its respective market. In the cannabis industry, AbbVie is still in production of the drug Marinol which is used to treat nausea in patients. Marinol has proven to be a fervent enemy to symptoms of cancer and cancer treatments. This includes nausea and weight loss in those suffering from cancer and related symptoms. With this, many believe that AbbVie could remain a leader in the pharmaceutical side of the cannabis industry moving forward.
Another Ancillary Marijuana Stock to Watch
KushCo Holdings Inc. (KSHB Stock Report) is an ancillary marijuana stock with more exposure to the cannabis industry than AbbVie Inc. The company began as a packaging supply business to those who were in the cannabis industry. With so many stringent regulations on how cannabis could be packaged, KSHB stock quickly found a niche in the industry. Since then, the company has divested into producing a wide range of products for the cannabis industry. This includes vaporizers as well as marketing and advertising supplies. Because the company is so diverse, many believe that it could have a very solid long term future in the cannabis industry. On September 24th, KSHB stock ended the day up by almost 30%.
This is due to its fourth-quarter fiscal results being announced. The company stated that “Fiscal Q4 2020 was arguably the most pivotal quarter in KushCo’s entire 10-year history, as we returned to growth, executed on our strategic plan and achieved our first quarter of positive adjusted EBITDA in more than three years.” Not many cannabis stocks have performed to the expectations of investors. But, KushCo is one of many who have in recent months, reported better than expected earnings. While we don’t know how long this bull run will last, it looks like KushCo Holdings is in a good position in the current state of the cannabis industry.
What This Means for the Cannabis Industry Moving Forward
These two marijuana stocks are only a few of a much larger industry. While they are both prominent players in the cannabis industry, there are still a lot of options when it comes to pot stocks to watch. For this reason, investors should keep their eyes open to see where the most value is amongst marijuana stocks. With the right research at hand, investors can open their eyes to new potential in the cannabis industry. As always, marijuana stocks remain quite volatile. For this reason, investors should continue to watch their portfolios to see what type of price action is occurring on any given day.
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