Last week, the stream of sell-offs on Wall Street created trouble in the stock market. On Friday, the benchmark index S&P 500 closed lowest since January. Investors are concerned about the market conditions, and there is a state of confusion about the same. It is not clear that the rally is heading towards the end or it’s just taking a break.
Whatever be the scenario, it is necessary to remain cautious. Investors must be aware of the current happenings and the ways of creating wealth in the midst of such situations. They must look for the sector that is fueling the growth and invest money in that so as to reap positive returns while the index is on the downturn.
One such sector is cannabis. It is having a potential of showing upside trend thereby posing an opportunity for investors to generate far-fetched returns. During the previous year, many regulatory changes took place across the world, which opened the gates for novice investors.
With cannabis/marijuana getting a nod on legalization, though just for medical purposes in some places, the outlook remains positive for these stocks. An investor getting into this after due analysis is likely to remain distant from the losses arising out of the falling market.
As a result of a series of legalization, one can hear innumerable announcements from many public companies that they are stepping towards this direction, on the side of cannabis or CBD. After this, stocks of many of these companies moved strongly in a positive direction. Though there are several options for investment in this area as well, not all are prospering.
Though some companies announced their entry into the cannabis or CBD sector, with just the announcements and no real product in the hand, they are lagging on the curve. What is needed is to find those stocks which could show monumental growth.
Also, last week was great for cannabis stocks from the policies point of view as well. The Secure and Fair Enforcement (SAFE) Banking Act of 2019 was introduced by Congress on March 7, 2019. This was much-needed reform for cannabis companies to provide them access to banking.
Keeping in mind all these, here are some suggestions from cannabis and CBD sector, which are having real products in the basket and thus the real growth opportunities.
Canopy Growth Corporation (WEED)
The stock of the company last closed at $45.40/share, up 0.60%. This is one of the most discussed stocks in the industry because of multiple good reasons. Firstly, it is among the early adopters of cannabis for medicinal purposes in Canada. As a result of this, the company became able to build a strong foundation, since years. Now, it has become an adult cannabis user in Canada.
The stock not just allured retail or small investors, but some of the biggest investors as well. In 2018, Constellation Brands announced about its investment worth US$ 4 billion in the Canopy Growth Corporation. Constellation Brands believed that the Canopy Growth is a beneficial stock to take a position in after deep research and analysis.
The factors contributed to the decisions of Constellation Brands are – the increasing trend of the legalization of recreational cannabis across the globe and multiple companies are looking for changes in regulations for the acceptance of medical cannabis.
Though the company is currently getting fame due to being an old player of the cannabis sector, it is promptly moving towards the emerging markets of CBD in the US. Recently, the company revealed the partnership with Martha Stewart that will result in CBD related lifestyle brands. Being an old and eminent industry player, it poses long term growth potential.
Veritas Farms (VFRM)
It came into existence in 2015 and managed to become a contender in the CBD space. Though lesser-known players of CBD industry, it has strong potential to generate returns. The stock of the company last closed at US$0.54/share, down 6.90%. It is more of a penny stock. The excellent work record of the company provides it a strong foundation and enables it to take advantage of the CBD market in the US, which is developing with the Farm Bill of 2018.
One of the reasons for it being well positioned it its location. The headquarters of the company is located in Colorado. So, it becomes easy for Veritas Farms to reap benefits from US markets, unlike other cannabis or CBD companies that are mostly based in Canada. With this, Veritas Farms need not take a shop in the US or enter into the partnership with other US companies for conducting business, including export-import.
The company has experience in dealing with regulatory requirements. Another benefit is that it is a seed to sale player, a less common phenomenon.
The company owns a 140-acre production facility and operates on it. It has clones of its own. Veritas grows its own hemp and processes the same into high-quality CB. Then those CBDs are used to produce products that are depicted by over 20skus on the market, presently.
Having all these, Veritas has its control over the product and its quality. This also helps in shedding the cost of middle-man that otherwise are required for some of the other purposes.
Though the company is a smaller player, however, poses bigger opportunities. The company could pose strong growths in the organic sector or it could be acquired by some large player, owing to its strong base.
Pyramidion Technology Group Inc. (PYTG)
Pyramidion technology was established in 1997. It is another CBD stock that is quite smaller in size but has quite a big story. In the last trading session, the stock of the company closed at US$0.72/share, up 38.46%. With such a low price, it is a penny stock.
It focused on general defense sector and had clients like US Customs Service, Federal Aviation Administration, and many others. It remained successful in its work.
The company, on August 2, 2018, announced its intention of getting into CBD area as the developing markets provided prospects of strong growth. It has issued around 17 press releases about its progress in CBD industry, since then. It announced about partnerships, acquisitions, marketing activities, and others. Now, Pyramidion Technology Group is an active member of the CBD area. The company, through its subsidiary LeafyWell, sells a wide range of branded products that are CBD-infused; developed with a view of promoting health and relation in human beings as well as pets.
With a good history in the defense segment, active participation in CBD markets from August 2018 and some CBD products already in the markets, it is a stock worth watching.