The use of medical and recreational cannabis has been legalized in more and more states in the United States and Canada across the country, which has promoted the booming legal cannabis industry in recent years. Cannabis stocks are now the main focus of investors looking for potentially explosive sales and stock growth. But investors should keep in mind certain considerations related to marijuana stocks.
First, due to a long list of factors, cannabis stocks face higher-than-normal risks and volatility. Many publicly traded cannabis companies are young, unproven companies, and they face a complex, rapidly changing market that includes different laws in many local, state, and regional jurisdictions. In addition, at the federal level in the United States, the use of marijuana is still illegal. Cannabis penny stocks are particularly challenging. Investors should be particularly cautious when investing in these companies and conduct more due diligence than usual. Some up-and-coming names in the cannabis penny stock category include Cansortium Inc. (TIUM.U.CX) and Vireo Health International Inc. (VREOF).
The performance of cannabis stocks represented by ETFMG Alternative Harvest ETF (MJ) significantly lags behind the broader market. In the past 12 months, MJ’s total return was -22.4%, which is much lower than the 27.1% total return of the Russell 1000 Index. Note that MJ targets a wide variety of cannabis industry stocks, including penny stocks. These market performance data and all statistics in the table below are as of December 13, 2021.
Here are the top three cannabis penny stocks with the best value, fastest growth, and strongest momentum.
These are the marijuana penny stocks with the lowest tracked market-to-sales ratio (P/S) in 12 months. For companies in the early stages of development or industries that have suffered major shocks, this can be used as a rough measure of corporate value. Companies with higher sales may eventually generate more profits when they achieve or return to profitability. The market-to-sales ratio shows how much you pay for stocks for each dollar of sales generated.
|The most valuable cannabis penny stocks|
|Price ($)||Market value (millions of dollars)||12-month tracking P/E ratio|
|Greenland Holdings Corporation (GNLN)||1.12||90.1||0.2|
|TILT Holdings Inc. (TILT.NO)||0.32 Canadian dollars||105.1 Canadian dollars||0.6|
|Acreage Holdings Inc. (ACRG.AUCX)||1.70||179.5||1.1|
- Greenlane Holdings Inc.: Greenlane Holdings is a holding company that distributes vaporized products and accessories to cigarette shops and other distribution vehicles through its subsidiaries. On November 30, Greenlane announced the completion of its previously announced acquisition of DaVinci, a leading developer and manufacturer of high-end portable evaporators. Da Vinci expects sales in 2021 to reach 12 million U.S. dollars. The total consideration for this acquisition is as high as US$20 million.
- TILT Holdings Inc.: TILT Holdings is a cannabis industry technology and infrastructure company. The company provides same-day delivery services to retailers, wholesalers and consumers in the United States, Canada, Puerto Rico, and Jamaica.
- Acreage Holdings Inc.: Acreage Holdings is a multi-state operator of cannabis licenses and assets. The company grows hemp plants, manufactures branded products, distributes hemp flowers and related products, and establishes contractual relationships with planting facilities. Acreage reports the results for the third quarter of 2021 between September 30 and November 10, 2021. As consolidated income increased by 51.7%, net operating loss year-on-year (YOY) narrowed. The company attributed its performance to its efforts to refocus on achieving profitability, strengthening its balance sheet, and accelerating core market growth.
These are the cannabis penny stocks with the highest year-over-year sales growth in the most recent quarter. Increasing sales can help investors identify companies that can increase revenue organically or in new ways, and look for growth companies that have not yet achieved profitability. In addition, earnings per share may be significantly affected by accounting factors that may not reflect the overall strength of the company. However, sales growth may also mislead the strength of the company, because if the company does not realize a profitable plan, the sales growth of a loss-making company may be harmful.
|Fastest-growing cannabis penny stocks|
|Price ($)||Market value (millions of dollars)||Revenue growth (%)|
|Green Organic Dutchman Holdings Limited (TGOD.CX)||0.11 Canadian Dollar||CAD 59.0||142.4|
|Jushi Holdings (JUSH.CX)||4.65 Canadian dollars||847.3 Canadian dollars||104.9|
|Red White & Bloom Brands Inc. (RWB.CX)||0.45 Canadian Dollar||98.7 Canadian dollars||93.5|
- The Green Organic Dutchman Holdings Ltd.: Green Organic Dutchman Holdings is a Canadian holding company that produces organic and farm-grown cannabis for medical purposes through its subsidiaries. Its customer base is global. The company reported on November 18 that it had completed the previously announced acquisition of Galaxie Brands Corp., a Canadian-based manufacturer of cannabis pre-rolls, e-cigarettes, solvent-free products and similar products. The value of the acquisition is approximately 21 million Canadian dollars (16.3 million US dollars).
- Jushi Holdings Inc.: Jushi Holdings is a Canadian-based holding company that focuses on branded cannabis and cannabis assets. The company is engaged in retail, distribution, planting and processing businesses. In the third quarter of 2021 ending September 30, Jushi reported net income of 38.2 million U.S. dollars, compared with a net loss of 38.2 million U.S. dollars in the same period last year. Net income more than doubled year-on-year. The company attributed its performance to the growth of its retail network through strategic acquisitions in Massachusetts, the opening of two new stores in Pennsylvania, and other factors.
- Red White & Bloom Brands Inc.: Red White & Bloom Brands is a manufacturer of hemp products. This Canada-based company provides services to customers in the United States and Canada.
These are the cannabis penny stocks with the highest total returns in the past 12 months.
|The most dynamic cannabis penny stocks|
|Price ($)||Market value (millions of dollars)||12-month tracking total return (%)|
|Cansortium Inc. (TIUM.U.CX)||0.67||166.4||54.0|
|RIV Capital Inc. (RIV.CX)||1.43 Canadian dollars||203.7 Canadian dollars||45.9|
|OrganiGram Holdings Inc. (OGI.TO)||2.41 Canadian dollars||722.6 Canadian dollars||40.9|
|Russell 1000||Not applicable||Not applicable||27.1|
|ETFMG Alternative Harvest ETF (MJ)||Not applicable||Not applicable||-22.4|
- Cansortium Inc.: Cansortium manufactures and sells medical cannabis products for customers in the United States and Canada. Its largest U.S. market is Florida, and it is expanding to Texas, Michigan, and Pennsylvania, where it has obtained a license and started operations.
- RIV Capital Inc.: RIV Capital, formerly Canopy Rivers Inc., is an investment and acquisition company headquartered in Canada. The company has invested in a series of cannabis companies that operate in the fields of health, cannabis production, software, retail and distribution, pharmaceuticals and biotechnology, and consumer products.
- OrganiGram Holdings Inc.: OrganiGram Holdings is a licensed manufacturer in Canada that produces cannabis-related extract products for medical and recreational purposes. The company distributes its products to consumers through wholesale transportation channels. In November, the company announced the launch of Monjour, a new health brand featuring cannabidiol (CBD) products for consumers who want to incorporate CBD into their daily health plans. The brand offers vegan and sugar-free products.
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