Investors across the spectrum are always looking for a way to diversify their portfolios or get involved with an investment at the ground level and see it grow. In the past few years, mainstream investments like Bitcoin and real estate have been the hottest trends, but now marijuana stocks have the possibility of outpacing the marketing and bringing big gains to everyday and institutional investors alike.
The legal pot market just recently got into the public eye but is promising immense growth. The primary catalyst to the explosive forecast is the continuing legalization of marijuana in US states and countries around the world. Beyond being legalized for recreational use in many US states, it as also been approved for additional medical purposes. The approved uses have led experts to forecast an annual growth rate of nearly 20% over the next thirteen years; which is a rate that far outpaces the market as a whole.
Marijuana investors should know that investing in the newly released marijuana stocks does not guarantee that forecasted return. Only investors who are willing to accept a high level of risk should consider investing in marijuana stocks. If you are willing to take the risk, then there are two small-cap cannabis stocks that may be right for you.
MariMed (MRMD) is the first of the two small-cap cannabis stocks. MariMed is a twelve-person company based out of Delaware. They have successful develop cannabis facilities in five different states and managed to manufacture many different strains of products as well as a growing vape business under the Lucid Mood brand. Their growth stock has been on the market since August of 2012 and started out at a price close to zero. At this point last year, a share of the stock was valued at around $.50 per share, but now prices are at $2.69 per share. In total, the return is greater than 400%. The beta of the stock is at 3.04, showing there are three times as much risk as the market in this stock.
On the other hand, there is The Hydropothecary Corporation (HYYDF). The Hydropothecary Corporation is based out of Canada and employees 89 people full-time. The company has established a solid base in Quebec and is now the preferred supplier of cannabis products for the Quebec market. The stock has been on the market for less than four months but has not seen the same growth as MRMD did in that time. The stock opened at a price around $3.73 when it first hit the market and is now at a price of $4.21 per share. Due to its recent beginnings, the stock does not have a beta value at this point.
Both stocks have a possibility to grow immensely in the coming years. Looking at the numbers, it’s not entirely sure which stock is better, but Hydropothecary seems to have the clearer path to success in terms of legality. As HYYDF is Canada based and recreational use is federally legal in Canada, it has a much easier path towards the sustainable growth.