Marijuana stocks, represented by the ETFMG Alternative Harvest ETF (MJ), have dramatically underperformed the broader market. MJ has provided a total return of -22.4% over the past 12 months, well behind the Russell 1000’s total return of 27.1%. Note that MJ targets a broad assortment of cannabis industry stocks, including penny stocks. These market performance numbers and all statistics in the tables below are as of Dec. 13, 2021.
To begin with, cannabis stocks face higher-than-normal risk and volatility due to a long list of factors. Many publicly traded cannabis companies are young, unproven enterprises that face a complicated, fast-changing market that includes different laws across many local, state and regional jurisdictions. Also, cannabis use is still illegal at the U.S. federal level. The challenges are particularly great for marijuana penny stocks, and investors should be especially cautious and perform more than their usual due diligence when investing in these companies. Some up-and-coming names in the marijuana penny stock category include Cansortium Inc. (TIUM.U.CX) and Vireo Health International Inc. (VREOF).
Best Value Marijuana Penny Stocks
Here are the top three marijuana penny stocks with the best value, the fastest growth, and the most momentum.
These are the marijuana penny stocks with the highest year-over-year (YOY) sales growth for the most recent quarter. Rising sales can help investors identify companies that are able to grow revenue through organic or new ways, as well as find growing companies that have not yet reached profitability. In addition, earnings per share can be significantly influenced by accounting factors that may not reflect the overall strength of the business. However, sales growth can also be potentially misleading about the strength of a business, because growing sales on money-losing businesses can be harmful if the company has no plan to reach profitability.
GNLN, TGOD.CX, and TIUM.U.CX are top for value, growth, momentum, respectively
Medical and recreational cannabis use has been legalized in a growing number of U.S. states and on a national level in Canada, fueling a burgeoning legal cannabis industry in recent years. Cannabis stocks are now a prime focus for investors seeking potentially explosive sales and stock growth. But there are certain considerations associated with marijuana stocks that investors should keep in mind.
Another small-cap pot stock with serious potential in 2022 is MSO Jushi Holdings (OTC:JUSHF) .
The fifth and final best marijuana stock to buy in 2022 is MSO Cresco Labs (OTC:CRLBF) .
Having visited the Las Vegas SuperStore, I was impressed by the incorporation of technology (self-pay kiosks), a store layout that funnels customers to higher-margin derivative products, and the provision of individual budtenders to meet customer needs.
Planet 13 Holdings
Trulieve, like many of the stocks on this list, is a vertically integrated multi-state operator (MSO) that controls most aspects of the seed-to-sale process. But its path to profitability was a lot different than that of most pot stocks.
With the company on the verge of recurring profitability and gobbling up a significant portion of Nevada’s weed sales with just a single location, it has the look of a no-brainer buy.
According to estimates from cannabis analytics company BDSA, worldwide weed sales are expected to double from $31 billion in 2021 to $62.1 billion by 2026. The bulk of this nominal growth will originate in the United States.
In addition to acquisitions, management is focused on building up the company’s online presence, as well as promoting a number of proprietary and private-label brands that should provide a margin lift. The third quarter saw private-label and proprietary merchandise account for nearly 9% of total sales, which compares to more like 2% in the year-ago quarter.
The best marijuana stocks to buy in 2022 are those that provide a competitive advantage and differentiation. Small-cap MSO Planet 13 Holdings (OTC:PLNH.F) fits that description well.