Marijuana stocks have experienced a substantial boost in attention and value since more states have started to legalize cannabis for medical and recreational purposes. Today, the fast-growing legal cannabis industry also boasts exciting investment opportunities on the stock market. In this article, you will learn how to invest in marijuana stocks and discover a list of the most promising publicly-traded cannabis companies you can invest in today.
Marijuana Stocks Explained
Marijuana stocks, also known as cannabis stocks, are stocks in companies that operate in the legal cannabis industry. Recent changes in state laws covering the medical as well as recreational use of cannabis have birthed a largely new industry that has made it all the way to Wall Street. As a result, you can now invest in cannabis stocks.
Most “cannabusinesses” are small and medium-sized enterprises. Therefore, most public marijuana companies trade as small or mid-cap stocks.
To date, very few large corporations have dared to enter the legal cannabis industry because at federal level, the consumption of cannabis is still illegal in the United States. Moreover, there are only a handful of countries where the consumption and distribution of cannabis are legal. The legal cannabis market is, therefore, still quite concentrated in a few US states.
However, there has been a clear trend towards cannabis legalization globally with Canada following in the footsteps of many states in the U.S. in 2018. Should this trend continue in the coming year, cannabis stocks could prove to become very lucrative investments.
How to Invest in Marijuana Stocks
Investing in marijuana stocks works in the same way as investing in any other type of stocks. The steps are as follows:
- Sign up for an online brokerage account or an investment app that provides you with a wide range of stocks you can invest in.
- Deposit funds into your investment account.
- Pick the marijuana stocks you want to add to your portfolio.
- Click the buy button.
And that’s it! As you can see, while cannabis stocks may sound exotic, they are really no different than other stocks.
Top Marijuana Stocks
To compile our list of best marijuana stocks, we have ranked the largest publicly-traded cannabis companies by market capitalization. While market capitalizations should by all means not be the only metric you look at when picking stocks, it provides some insight into how successful a public company currently is – especially in relation to other companies in the same sector.
Below, we have listed seven of the largest mairjuana stocks by market capitalization.
Aurora Cannabis Inc. (NYSE: ACB)
Aurora Cannabis is arguably the most well-known, publicly-traded cannabis company. Aurora Cannabis is a “pure-play” marijuana stock as the Canadian company engages in the production, distribution, and sale of cannabis and cannabis-related products.
- Price: $12.83
- Market Capitalization: $1,390,000,000
- Earnings Per Share: -$11.64
- Dividend Yield: n.a.
- P/E Ratio: n.a.
The Scotts Miracle-Gro Company (NYSE: SMG)
When you hear the name Scotts Miracle-Gro you will be forgiven for thinking that the company only deals in gardening products. However, the Ohio-based enterprise is also classified as a cannabis stock because as “the leading provider of nutrients, plant supplements, growing media, air filtration and lighting used for hydroponic and indoor growing,” it has also started to supply the legal cannabis industry.
- Price: $135,49
- Market Capitalization: $7,500,000,000
- Earnings Per Share: $5.72
- Dividend Yield: 1.71%
- P/E Ratio: 23.06
Canopy Growth Corporation (NYSE: CGC)
The Canopy Growth Corporation is another flagship marijuana stock. The Canada-based company engages in the production and sale of medical cannabis and cannabis-based products.
- Price: $16.56
- Market Capitalization: $5,790,000,000
- Earnings Per Share: -$6.61
- Dividend Yield: n.a.
- P/E Ratio: n.a.
GW Pharmaceuticals plc (NASDAQ: GWPH)
GW Pharmaceuticals is a biopharmaceutical enterprise that develops cannabinoid-based medicines for the treatment of multiple sclerosis as well as a range of other illnesses. The British company made a name for itself for developing the world’s first prescription medicine derived from the cannabis plant.
- Price: $127.00
- Market Capitalization: $3,810,000,000
- Earnings Per Share: $1.01
- Dividend Yield: n.a.
- P/E Ratio: 124.75
Arena Pharmaceuticals (NASDAQ: ARNA)
Arena Pharmaceuticals is a biopharmaceutical enterprise that engages in the research, development and commercialization of new medicines. The California-based company also has a cannabidiol-derived drug, called Olorinab (APD371), which is currently in a trial phase.
- Price: $62.05
- Market Capitalization: $3,570,000,000
- Earnings Per Share: -$6.46
- Dividend Yield: n.a.
- P/E Ratio: n.a.
Curaleaf Holdings Inc. (OTC: CURLF)
Curaleaf Holdings is an integrated Cannabis company that produces, distributes, and sells medical and wellness cannabis products in the United States. The Massachusetts-headquartered company also engages in cannabis research, education, and advocacy.
- Price: $6.18
- Market Capitalization: $3,210,000,000
- Earnings Per Share: -$0.15
- Dividend Yield: n.a.
- P/E Ratio: n.a.
Cronos Group Inc. (NASDAQ: CRON)
Cronos Group is a global cannabinoid enterprise that produces and distributes cannabis-based products. The Canadian company boasts several popular brands and aims to build “disruptive intellectual property by advancing cannabis research, technology, and product development.”
- Price: $6.15
- Market Capitalization: $2,090,000,000
- Earnings Per Share: $0.93
- Dividend Yield: n.a.
- P/E Ratio: 6.56
Top Marijuana Stocks That Pay Dividends
Most cannabis stocks are nanostocks or small-caps. Therefore, the number of dividend-paying marijuana stocks is limited. However, there are a handful of cannabis-related stocks that pay surprisingly high dividends, including Altria Group and AbbVie.
Altria Group (NYSE: MO)
Altria Group is one of the largest producers of tobacco and tobacco-based products in the world. Interestingly, the Virginia-based company owns a substantial stake in Canadian cannabis producer Cronos Group, which makes Altria a de-facto cannabis stock. With a dividend yield of 8.43%, Altria Group’s stick is an interesting pick for yield-hungry dividend stock investors.
- Price: $39.94
- Market Capitalization: $72,940,000,000
- Earnings Per Share: -$0.47
- Dividend Yield: 8.43%
- P/E Ratio: n.a.
AbbVie Inc. (NYSE: ABBV)
AbbVie is a biopharmaceutical company that engages in the development and sale of pharmaceutical products. That also includes cannabis-based pharmaceuticals, which makes AbbVie a cannabis stock despite being first and foremost a health sciences enterprise. With a quarterly dividend of 4.8%, it is an interesting pick for dividend stock investors who want exposure to the legal cannabis industry.
- Price: $98.45
- Market Capitalization: $173,030,000,000
- Earnings Per Share: $5.65
- Dividend Yield: 4.8%
- P/E Ratio: n.a.
The Scotts Miracle-Gro Company (NYSE: SMG)
The Scotts Miracle-Gro Company is not only one of the largest cannabis stocks by market capitalization; it is also a dividend-paying company. While its current dividend yield of 1.71% may not be that high, you would still be buying one of the largest and most established marijuana stocks in the market.
- Price: $135,49
- Market Capitalization: $7,500,000,000
- Earnings Per Share: $5.72
- Dividend Yield: 1.71%
- P/E Ratio: 23.06
Top Marijuana Penny Stocks
Traditionally, penny stocks are defined as stocks that you can buy for a few dollars or less.
Today, we tend to mean nanostocks, small-caps, and over-the-counter (OTC) traded stocks when we talk about penny stocks. In other words, small companies that have a low market capitalization and stock price.
In the world of legal cannabis, penny stocks are abundant. In fact, the majority of marjiuana stocks are penny stocks. As the industry is still in its nascence and most companies are still small, this is reflected in its presence on the stock market. However, that does not mean that marijuana penny stocks don’t have a substantial potential on the upside.
For investors, it’s important to note that these stocks tend to also be more volatile because of their lack of liquidity. Therefore, they are considered riskier than their mid and large-cap counterparts.
Below, we have listed five marijuana penny stocks that you could look into if you are a fan of penny stock picking.
General Cannabis Corp. (OTCQX: CANN)
General Cannabis is a holding company that invests in business in the legal cannabis industry. The Colorado-based company aims to bring more transparency and legitimacy to the regulated cannabis sector.
- Price: $0.425
- Market Capitalization: $17,220,000
- Earnings Per Share: -$0.42
- Dividend Yield: n.a.
- P/E Ratio: n.a.
Aphria Inc. (NYSE: APHA)
Aphria is a diversified cannabis company that engages in the production and distribution of cannabis. The Canadian company has a presence in ten countries across five continents.
- Price: $4.37
- Market Capitalization: $1,140,000,000
- Earnings Per Share: $0.09
- Dividend Yield: n.a.
- P/E Ratio: 46.82
GreenGro Technologies Inc. (OTC: GRNH)
GreenGro Technologies is a provider of indoor and outdoor agricultural science systems for the legal cannabis industry. The California-based company also offers genetic fingerprinting of cannabis strains.
- Price: $0.0037
- Market Capitalization: $1,380,000
- Earnings Per Share: -$0.01
- Dividend Yield: n.a.
- P/E Ratio: n.a.
Should You Invest in Cannabis Stocks?
The legal cannabis industry is a fast-growing market. According to investment firm Cowen & Co., the legal cannabis market in the U.S. has the potential to reach $50 billion in sales by 2026.
The investment case for cannabis stocks is thus very clear. Invest now to get in early on what is poised to turn into a massive new multi-billion dollar industry.
However, not all cannabis stocks are created equal. There are small companies with a market capitalization of only a few million dollars. Conversely, there are large pharmaceutical corporations that are jumping on the cannabis bandwagon to develop cannabis-based drugs. There are many investment opportunities in legal cannabis, but not every cannabis stock you pick will be a winner.
Therefore, it is essential to research each company you would like to invest in thoroughly. And if you don’t possess the financial know-how to perform stock analysis, you should contact a financial advisor to help you with your investment decisions.
* All stock data is from July 1, 2020.
