By James Kelly
Here are some of the best pot penny stocks to follow during 2018 because of the growing acceptance towards marijuana. As of right now, nine states voted to legalize the recreational use of the drug. These states include California, Alaska, Colorado, Massachusetts Maine, Nevada, Oregon, Washington, D.C. and Washington state. Other nations such as Canada also legalized the medicinal use of the plant which opens up more investment opportunities. (Check out my other blog post on the best penny stocks to buy this year). Most MJ companies don’t deserve such crazy valuations and are financial train wrecks destined to fail in the long term. People new to the stock market are investing $500 expecting to make a fortune when in reality these stocks are terrible investments. They are struggling to survive, crippled with debt and have very little revenue to support operations. I’ve seen old defunct mining companies just add the word “Cannabis” to their name to cash in on the craze. If you’re going to trade these stocks don’t get caught holding the bag.
1. Cara Therapeutics Inc (NASDAQ:CARA)
Founded in 2004 and headquartered in Shelton, Connecticut, this clinical-stage biopharmaceutical company develops product candidates targeting the body’s peripheral nervous system. I.V. CR845, Cara’s lead product candidate, is in Phase III clinical trials, designed to treat acute postoperative pain in adult patients. Cara Therapeutics is also engaged in developing lead molecules that are supposed to selectively modulate peripheral CB receptors without targeting CNS cannabinoid receptors. It’s most advanced CB compound is CR701, which is currently in a stage of preclinical development for treating neuropathic and inflammatory pain. The company will benefit because the development of marijuana-based analgesics is anticipated to shift toward CB2 receptors. Since recommending CARA as a buy at $5.97 it has gone on a wild ride, peaking at $26.95 in July and plunging back down to the $12 range. While they are still in the early stages of growth I think it has the potential for explosive gains providing you can handle the wild swings.
2. AURORA CANNABIS INC (OTCMKTS:ACBFF & TSE: ACB)
The Vancouver based company is engaged in cultivating, harvesting, and selling medical marijuana in Canada. It uses water from Canadian Rocky Mountains to bring the cannabis plants to harvest in their 55,200 square feet facility. Aurora Cannabis provides high-quality medical cannabis, offering the following prices to its patients: (1) $8/gram strain pricing, (2) $5/gram composite pricing. It also offers free shipping in Canada. The company’s stock price has grown more than 300 percent since I first posted about the business and looks like it will continue. With Canada planning to legalize marijuana on July 1st, 2018, the company is attempting to gain top spot with strategic acquisitions. Aurora are buying up competitors as they want to dominate production and retail. Aurora are now trying to takeover their biggest rivals, CanniMed. If the acquisition goes through it would increase Aurora’s production capacity to nearly 135,000 kg every year. Even if the CanniMed acquisition fails Aurora will continue buying up smaller players and consolidate their position in the industry. Expect shares to be volatile in the near future!
3. Canopy Growth Corporation (OTCMKTS:TWMJF & TSE:WEED)
Canopy Growth, formerly known as Tweed Marijuana Inc., is the largest producer of medical marijuana in Canada. It is engaged in production and sales of medicinal marijuana under its Tweed and Bedrocan brands. Over the last 12 month, they have been aggressively acquiring smaller Canadian licensed producers. Since the start of the year, their stock price has soared from $7 to $14.20! Canopy Growth boasts 665,000 square feet of indoor greenhouse production capacity. After numerous acquisitions, their production capacity now stands at an impressive 40,000 kilograms per year. Increasing production capabilities is crucial as demand will soon overtake supply once recreational use of the plant is allowed in 2018. Despite the companies phenomenal growth I think they are overvalued and shares will pull back. Although they face challenges in the future they are well positioned to capitalize on huge demand for various marijuana products within Canada.
4. Aphria Inc (OTCQB:APHQF & TSE:APH)
Aphria Inc is another big player in the medical cannabis sector set to profit from the developing Canadian market. They sell and transport medical cannabis oil to customers globally. Aphria recently spiked 20% on the news of receiving a dealer’s license from Health Canada. This license allows them to expand rapidly into the international market and decrease their dependence on their home nation. Since 2015 revenue has grown significantly from $550,000 to over $20 million (CAD) so far. Net income was $15 million which is rare for a cannabis company to be profitable. Similarly to other businesses in the sector they are ramping up production. Aphria purchased a position in a Florida OTC marijuana stock, Liberty Health Sciences, to gain more exposure to the green rush! Their low productions costs, strong earnings, and solid growth make them an exciting investment.
5. Zynerba Pharmaceuticals Inc (NASDAQ:ZYNE)
Founded in 2007, this pharmaceutical company is focused on developing and commercializing synthetic cannabinoid therapeutics developed for transdermal delivery. Its two product candidates are ZYN002 and ZYN001. ZYN002 represents a synthetic cannabidiol (CBD), a permeation-enhanced gel for transdermal delivery, made to provide controlled drug delivery with once- or twice-daily dosing ZYN001, which enables transdermal delivery through a patch, is intended to be tested for application to the arm, back and thigh. The company will study ZYN001 for the treatment of fibromyalgia and peripheral neuropathy. The stock price is very volatile as Zynerba race to become the first FDA approved marijuana-based treatment ahead of GW Pharmaceuticals. It’s worth noting, Zynerba’s pipeline is still in the early stages of development. Investors can only hope studies on treating autism and epilepsy continue to release positive results. At some point, they will have to raise more money but for now, have enough capital to sustain operations for another two years. I would wait until more studies are available before adding this company to your portfolio.
6. American Cannabis Company Inc (OTCMKTS:AMMJ)
The company, incorporated in 2001, provides solutions for pot industry businesses in the U.S. and Canada. The company’s operations can be divided into two main components: (1) advisory and consulting services, and (2) sale of products and equipment for customers in the cannabis industry. The offered consulting services include commercial business planning, business license applications, cultivation build-out consulting, regulatory compliance, compliance audit services, business growth strategies, and business monitoring services. In addition to its consulting business, the company provides products and equipment such as Satchel, SoHum Living Soil, High Density Racking System and The Cultivation Cube. American Cannabis Co was one of the biggest runners in 2016, the penny pot stock went from $0.11 to $1.50 and now trades at $0.79. Now AMMJ only has a market cap of $40 million with last quarters earnings set at $0.99 million. Risky investment due to how small the business but definitely an opportunity worth following.
7. Cannabis Sativa Inc (OTCMKTS:CBDS)
The company is based in Nevada and has been in operation since 2005, though it only went public three years ago. Cannabis Sativa develops and promotes natural cannabis products through their online website and Amazon. A number of their products contain CBD, a chemical compound found in hemp plants that potentially have medicinal uses. This tiny penny weed stock has the license for a medicinal cannabis strain, namely NZT, a cannabis lozenge delivery technique and a cannabis trauma cream formula. No longer recommend investing as revenue is disappointing and insiders are slowly selling shares. A classic example of a company with very little assets that only exists so shareholders can enrich themselves from all the hype.
8. Medical Marijuana Inc (OTCMKTS:MJNA)
Incorporated in 2005, and still being in its development stage, the company provides a wide range of products, services and technologies for the medical marijuana and industrial hemp sectors. These include cannabinoid-based products, such as cannabinoid chewing gum, new extraction technologies, and isolated high value extracts developed for the pharmaceutical, cosmetic and nutrition industries. Despite enjoying strong gains over the years the penny stock has lost 90% of its value since its IPO back in 2009.
9. Terra Tech Corp (OTCMKTS: TRTC)
Terra Tech Corp is a medical marijuana penny stock that focuses on cannabis agriculture and is located in Irvine, California. They design and sell hydroponic equipment along with their proprietary technology for the cultivation of indoor agriculture. TRTC operates through various subsidiaries including MediFarm, IVXX, Blüm and Edible Garden. While Terra Tech’s revenue is growing nicely they aren’t profitable yet. In Q3, total revenue was $10.1 million, up $3 million in the same period from the previous year. The net loss was $7.8 million with future financial updates expected to improve after investing heavily in expansion throughout California.
10. Kush Bottles (OTCMKTS:KSHB)
Kush Bottles is a start-up based in California that help entrepreneurs enter the cannabis business. They provide an all-in-one solution to help reduce the barriers to entry in an industry that is heavily regulated. Kush is one of biggest distributors of marijuana packaging and supplies. The company provides an indirect opportunity to profit from a booming sector potentially worth $20 billion by 2020. Remember the people who really made money during the gold rush were those who sold supplies. Kush is currently profitable with no debt and steady earnings. The only downside is their margins are quite low.