Cannabis stocks are actually cheap as a group at this point. And some form of long-term regulatory tailwind is ahead. Neither of those statements is really debatable right now. Which leads to the question: how can one ever come across such an obviously beneficial investment premise on a large timeframe basis?
No matter how you answer that question, the implication is the same: it’s time to get active in the space. But the devil is in the details, and constructing a pot stock portfolio capable of maximizing long-term returns takes serious due diligence.
With that in mind, we take a look here at a few of the most compelling opportunities in the space, along with their recent catalysts.
GrowGeneration Corp. (Nasdaq:GRWG) engages in the retail of hydroponic and organic specialty gardening products.
The company offers lighting fixtures, nutrients, seeds and growing media systems, trays, fans, filters, humidifiers and dehumidifiers, timers, instruments, water pumps, irrigation supplies, and hand tools.
GrowGeneration Corp. (Nasdaq:GRWG) recently announced that the Company and Harvest 360 Technologies, LLC (H360) will work together to develop a National Program to support individuals with the education and training to acquire the skills necessary to gain access to the state licensing process and types of support that are required to be successful in this emerging industry.
“This industry is expanding exponentially. Markets like Oklahoma and Michigan are proving that servicing smaller grows and home grows, is not only good business it is good practice” said Michael Salaman President and co-founder of GrowGen, “this program with H360, gives us a direct method to impact the ability of new companies to grow their businesses”
And the stock has been acting well over recent days, up something like 4% in that time.
GrowGeneration Corp. (Nasdaq:GRWG) pulled in revenues totaling $125.9M during the company’s most recently reported quarterly financial data, driving y/y top line growth of 189.7%. In addition, the company has a strong balance sheet, with cash levels exceeding current liabilities ($124.5M against $59.8M).
Sugarmade Inc. (OTC US:SGMD) is an OTC name, but an interesting one. The company bills itself as “a product and branding marketing company investing in operations and technologies with disruptive potential” that has a Brand portfolio that “includes CarryOutsupplies.com, SugarRush, NUG Avenue, Lemon Glow and Budcars.”
SGMD shares have been pulling back along with the rest of the cannabis space. But the name has a number of major catalysts working to its advantage that may not be priced in, suggesting cause for further investigation by market participants interested in the space.
Sugarmade Inc. (OTC US:SGMD) announced this morning that its wholly owned subsidiary, Lemon Glow Company, recently obtained a conditional Use Permit (UP) number from the Community Development Department of the County of Lake, California.
As noted in the release, if the necessary approvals and permits are obtained, up to thirty-two (32) of the six hundred forty (640) acres at the Lemon Glow Property would be designated for outdoor cannabis cultivation.
It should also be noted that parties involved in the acquisition transaction estimate that the annual potential cultivation yield at the Property could possibly achieve four thousand (4,000) pounds of dry trimmed cannabis flower per acre annually, which represents approximately 128,000 pounds, or 64 tons, of dry trimmed cannabis flower annually in total.
That would instantly make SGMD one of the most significant vertical names in the California cannabis marketplace.
Sugarmade Inc. (OTC US:SGMD) CEO Jimmy Chan noted, “We are excited to see the process moving forward for our Lemon Glow property, which represents an important strategic asset as we further verticalize our overall model. Our vision is ‘seed to door’, which would separate us from other players in the California cannabis marketplace, given that we have already established a leading and growing presence in the cannabis delivery market and have set in motion a process to control our own supply chain. Ramping up our cultivation resources is a significant step in fully leveraging a vertical model to drive shareholder value through margin gains.”
Innovative Industrial Properties Inc. (NYSE:IIPR) is a real estate investment trust that engages in the acquisition, ownership, and management of industrial properties. It operates through the following geographical segments: Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New York, North Dakota, Ohio, and Pennsylvania.
The firm’s property portfolio includes PharmaCann; Ascend Wellness Holdings, LLC; Vireo Health, Inc.; and Green Peak Industries, LLC.
Innovative Industrial Properties Inc. (NYSE:IIPR) recently announced results for the quarter ended September 30, 2021, including news that the company generated total revenues of approximately $53.9 million in the quarter, representing a 57% increase from the prior year’s third quarter.
According to the release, the company recorded net income attributable to common stockholders of approximately $29.8 million for the quarter, or $1.20 per diluted share, and adjusted funds from operations (AFFO) of approximately $45.0 million, or $1.71 per diluted share.
IIPR has been the leader in the cannabis space over the past year, with shares ripping higher by over 150%. It continues to bang away at new 52-week highs in recent action.
Innovative Industrial Properties Inc. (NYSE:IIPR) managed to rope in revenues totaling $48.9M in overall sales during the company’s most recently reported quarterly financial data – a figure that represents a rate of top line growth of 0.4%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels exceeding current liabilities ($805.7M against $0).
Other key names in the cannabis space include Cronos Group Inc. (Nasdaq:CRON), Canopy Growth Corp. (Nasdaq:CGC), HEXO Corp. (Nasdaq:HEXO), and AdvisorShares Pure US Cannabis ETF (NYSEArca:MSOS).
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