Best Marijuana Stocks to Invest in 2021
Marijuana stocks to invest in 2021: In recent years, marijuana has gone from being a controversial word to a multi-billion dollar industry because of its bright prospect in the weed bags business, dispensary business, and especially its medical benefits.
Since 2014, a multitude of cannabis companies has been listed on the Canadian stock exchanges and the New York Stock Exchange and the NASDAQ. This attracted billions in investment and opened the doors to an era of immense growth. This movie captured the media’s attention and the enthusiasm of investors in what is often called “the green fever.”
In late 2019 and early 2020, there was a general loss of confidence in investors, driven by the unfulfilled promise of profitability of many cannabis traders. The valuation of most public cannabis companies declined, growth capital became more difficult to obtain, and many companies were forced to downsize and consolidate with others to navigate the bubble’s bursting. The COVID-19 pandemic showed that while the initial flame of infatuation had died down, the cannabis industry was here to stay. Faced with measures of social isolation, most jurisdictions with legal or medicinal programs declared cannabis as an essential product. This motivated several analysts to give the industry the title of “recession-proof.”
Why Use Marijuana Stocks to Invest in 2021?
By then, the capital markets darling had his baby shoes too small.
What’s more, cannabis is becoming so popular that many celebrities are entering the space. Added to this is the wave of legalization in the United States, with several states legalizing cannabis (medicinal or recreational) in the November elections and the first months of 2021. This trend, of course, has generated a significant boost to the industry.
Today, marijuana is presented as a more established industry, where expectations have become realistic. As unbridled growth becomes secondary to profitability and cheerful balance sheets, many companies continue to offer enormous opportunities for investors of all stripes.
With more states joining the list of legal jurisdictions, US multi-state operators such as Green Thumb Industries (CSE: GTII), Cresco Labs (CSE: CL), Curaleaf (CSE: CURA) and Trulieve (CSE: TRUL) continue to expand. His footprints are all over the country.
Several large cannabis ETFs trade on major stock exchanges. Among them, the following business on the New York Stock Exchange: ETFMG Alternative Harvest ETF (NYSE: MJ), AdvisorShares Pure Cannabis ETF (NYSE: YOLO), Cannabis ETF (NYSE: THCX), and Amplify Seymour Cannabis ETF (NYSE: CNBS ).
While the smaller companies have delivered astronomical returns (and losses) in recent years, the more established ones have been running steadily, despite the industry’s inherent volatility.
Still, the industry’s inherent volatilitypanies. So how can we tell the difference between a legitimate company and a disappointment?
How to invest in public companies?
Before continuing, readers need to understand that cannabis investments do not end with growing or selling businesses.
Many companies provide complementary services to the industry, as well as derivative activities. They used the cannabis industry but have joined the dance since the legalization of marijuana in the US and Canada.
Marijuana stocks to invest in 2021 Some of the main subsectors of the cannabis industry are:
Agricultural technology. Biotechnology and pharmacy. Consulting services.
Consumer paraphernalia. Growing and retail. Hemp.
Infusions, extractions, and concentrates. Investments and banking services. Safety.
Real estate. Software and media.
The over-the-counter affair while several states in the US have already legalized cannabis for recreational and medicinal use, allowing many companies to flourish, the plant remains illegal at the federal level.
It means that most companies have faced great difficulties in listing their shares on exchanges such as the Nasdaq or the NYSE. Looking for alternative methods of raising capital, many companies have flipped Canadian stock exchanges. On the other hand, others have opted for smaller businesses in the US, such as OTC Markets.
It means that many cannabis companies that are publicly listed are not subject to the same level of scrutiny as imposed by the United States. Although those on the Canadian TSX exchanges and CSE are entirely under scrutiny, securities and Exchange Commission (SEC) and significant markets like the NYSE or Nasdaq.
Parallel or over-the-counter (OTC) markets pose challenges. They are not taken as seriously as the more significant exchanges, and they also leave room for greater latitude in terms of the quality of the company that would trade with them. Consequently, many of the companies that have something to do with cannabis probably shouldn’t be there.
They got where they are because the entrepreneurs thought it was the only way to access capital:
someone had traded a financial instrument that seemed to be a good fit,” says Leslie Bocksor, investment banker and president of the cannabis advisory firm Electrum Partners.
He adds that there is no reason to avoid all cannabis stocks that are traded on the OTC exchange: “There is a bias against the low-value stocks, the famous penny stocks, that I think we have to eradicate from the industry, starting to keep an eye on having fewer shares and higher prices because it is better seen, “said Bocksor.
Cannabis stock expert Alan Brochstein of 420 Investor seems not to think the same: “It is imperative not to rely solely on companies’ press statements, as they tend to show their more positive side.”
“It’s a much bigger effort to read and understand the SEC filings, but it’s worth it as they give us a complete perspective on the bottom line. Also, if the company doesn’t file with the SEC, you probably shouldn’t even pay attention to it,” suggests Brochstein.
How to separate the chaff from the wheat
We then continue with the same question from a couple of paragraphs ago: how do you go about choosing good cannabis stocks? How do you avoid marijuana misdeeds?
For now, it is always recommended that investors do their rigorous research. However, analyzing thousands of corporate files and documents can be difficult and time-consuming.
In turn, most people do not have access to the resources necessary to make an informed judgment about a company.
But there are options. One of them is to invest in ETFs, like the ones mentioned above. These instruments make it easy to invest in cannabis stocks that teams of analysts have already preselected. They have already conducted the relevant investigations and decided to include certain companies in these ETFs. Another option for those looking to build their stock portfolios is to turn to investment advisers and cannabis stock constituents like Alan Brochstein or Jeff Siegel of Green Chip Stocks.
The six steps to investing well
Here is a list of seven steps you should take when investing in cannabis stocks or any other type of stock in the United States and Canada to keep things simple.
Step 1: Research the company
You always have to start by researching the company or companies in which you are going to invest. Check SEC files and other documents required by regulatory agencies.
It is also convenient to read the latest news about these companies on portals such as Yahoo Finance, Benzinga and El Planter and get an idea of the market climate with Twitter or Stocktwits.
Step 2: Determine the amount to invest
As a general rule, never invest more than the loss you can afford. It’s a famous investment mantra: only invest what you can afford to lose. While good research usually pays off, this may not necessarily be the case. Stocks are volatile, and contingencies are sometimes unpredictable.
On this point, Alan Brochstein says: “I see that a lot of people place too much trust in just one or two ideas. In an industry that is taking off, which in many ways is the case with legal cannabis, it is not easy to choose the winners. In the late ’90s, many companies that seemed to have the upper hand did not survive three years. My long-term focused model portfolios typically include a dozen names. “
Step 3: Decide your deadlines
Determining when to buy and when to sell is vital.
Try to define what your limits are beforehand. You can, for example, establish a rule: “if the stock falls below X or rises above Y, I sell.”
Step 4: Choose a broker
When you have completed the first steps, you will be ready to start buying your shares.
You can do it the old-fashioned way, with an honest live broker like Scottrade or subscribe to a virtual broker like eToro. These options will allow you to buy and sell shares once you have registered and funded your account.
Step 5: Buy the stock
This step may sound redundant, but it is a bit more complex than it sounds. There are generally two types of buy orders: market order and a limit order. “A market order will buy at the current market price, while a limit order will only buy if the price falls at or below the limit price. Although a limit price can give an investor a lower entry price, there are no guarantees as to the execution of the limit order,” explains Thomas Rudy of Benzinga.
Step 6: Sell the stock
When you feel like you’ve already made enough profit on a stock, it’s time to sell. Again, you can sell the stock with a market order or a limit order. Use your income to reinvest. Or else, spend them. Life is to be lived.