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. 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, and it's still illegal at the U.S. federal level. This is even more true of marijuana penny stocks, and investors should be especially cautious and perform more than usual due diligence when investing in these companies. Some up-and-coming names in the marijuana penny stock category include High Tide Inc. (HITI.V) and Vireo Health International Inc. (VREOF).
Marijuana stocks, represented by the ETFMG Alternative Harvest ETF (MJ), have significantly outperformed the broader market. MJ has provided a total return of 107.6% over the past 12 months, close to double the Russell 1000's total return of 60.5%. 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 April 7, 2021.
Here are the top 3 marijuana penny stocks with the best value, the fastest growth, and the most momentum.
These are the marijuana penny stocks with the lowest 12-month trailing price-to-sales (P/S) ratio. For companies in early stages of development or industries suffering from major shocks, this can be substituted as a rough measure of a business's value. A business with higher sales could eventually produce more profit when it achieves, or returns to, profitability. The price-to-sales ratio shows how much you're paying for the stock for each dollar of sales generated.
|Best Value Marijuana Penny Stocks|
|Price ($)||Market Cap ($M)||12-Month Trailing P/S Ratio|
|Zenabis Global Inc. ( ZENA.TO)||CA$0.11||CA$99.1||0.5|
|MedMen Enterprises Inc. ( MMNFF)||0.34||174.7||0.9|
|MediPharm Labs Corp. ( LABS.TO)||CA$0.48||CA$122.5||1.2|
- Zenabis Global Inc.: Canada-based Zenabis Global cultivates and sells cannabis products for both recreational and medical use. The company sells under the brand name Zenabis for medical cannabis products, and under the brand names Namaste, Re-Up, and Blazery, for recreational-use products. Zenabis announced in April that the British Columbia Supreme Court had granted an interim order providing for cannabis company HEXO Corp. (HEXO.TO) to acquire all issued and outstanding common shares of Zenabis in exchange for HEXO shares. Zenabis shareholders will vote on whether to approve the deal in May at a special meeting.
- MedMen Enterprises Inc.: MedMen Enterprises is a Canada-based cannabis company. MedMen cultivates, manufactures, and sells cannabis products through retail stores in the U.S. and Canada. The company serves customers in the biotechnology and pharmaceutical industries.
- MediPharm Labs Corp.: MediPharm Labs is a Canada-based company involved in the pharmaceutical-grade production of cannabis oil, concentrates, and similar products. For Q4 2020, MediPharm Labs announced that revenue increased by approximately 22% on a sequential basis, while revenue from formulated finished products increased approximately 64% sequentially. Despite that, the company posted a $30.9 million loss for Q4 due to a series of major writedowns, including for inventory.
These are the marijuana penny stocks with the highest year-over-year (YOY) sales growth for the most recent quarter. Rising sales can help investors identify companies that are able to grow revenue through organic or new ways, and find growing companies that have not yet reached profitability. In addition, earnings per share can be significantly influenced by accounting factors that may not reflect the overall strength of the business. However, sales growth can also be potentially misleading about the strength of a business, because growing sales on money-losing businesses can be harmful if the company has no plan to reach profitability.
|Fastest Growing Marijuana Penny Stocks|
|Price ($)||Market Cap ($M)||Revenue Growth (%)|
|MariMed Inc. ( MRMD)||0.73||233.0||292.1|
|The Green Organic Dutchman Holdings Ltd. ( TGOD.TO)||CA$0.31||CA$160.8||195.9|
|High Tide Inc. (HITI.V)||CA$0.73||CA$467.2||179.4|
- MariMed Inc.: MariMed is a pharmaceutical company that develops and operates medical cannabis cultivation facilities, production centers, and dispensaries. For FY 2020, MariMed reported net income of $2.4 million compared to a net loss of $81.9 million for FY 2019. The company said that the profit improvement was driven by the consolidation of its operations in Illinois and Massachusetts.
- The Green Organic Dutchman Holdings Ltd.: The Green Organic Dutchman Holdings is a Canadian holding company that, through subsidiaries, produces organic and farm grown cannabis for medical use. Its customer base is global.
- High Tide Inc.: Canada-based High Tide is a cannabis company that manufactures and distributes smoking accessories to wholesale and retail clients, and sells cannabis products to retail customers. For Q1 FY 2021, ended January 31, High Tide's revenue rose 179%, but operating expenses more than doubled and its net loss rose more than four-fold from the same quarter a year earlier.
These are the marijuana penny stocks that had the highest total return over the last 12 months.
|Marijuana Penny Stocks With the Most Momentum|
|Price ($)||Market Cap ($M)||12-Month Trailing Total Return (%)|
|High Tide Inc. (HITI.V)||CA$0.73||CA$467.2||595.2|
|Vireo Health International Inc. (VREOF)||2.27||55.2||567.8|
|Cansortium Inc. ( TIUM.U.CX)||0.81||93.2||548.0|
|ETFMG Alternative Harvest ETF (MJ)||N/A||N/A||107.6|
- High Tide Inc.: See company description above.
- Vireo Health International Inc.: Vireo Health International is a Canada-based medical cannabis company. Vireo Health produces pharmaceutical-grade cannabis extracts for sale at company-owned and independent dispensaries.
- Cansortium Inc.: Cansortium produces and sells medical cannabis products to customers in the U.S. and Canada. Its biggest U.S. market is Florida, but it is expanding into Texas, Michigan and Pennsylvania, where it has secured licenses and started operations. On April 9, Cansortium announced the second of its final private placement to complete $17.1 million in equity financing. The second closing was $5.2 million. the proceeds will be used to speed up Cansortium's expansion in the Florida and Michigan markets.
YCharts. "Financial Data." Accessed April 10, 2021.
Zenabis Global Inc. "ZENABIS ANNOUNCES RECEIPT OF INTERIM ORDER FOR PROPOSED ARRANGEMENT WITH HEXO CORP." Accessed April 10, 2021.
MediPharm Labs Corp. "MediPharm Labs Reports Fourth Quarter and Full Year 2020 Results." Accessed April 10, 2021.
MariMed Inc. "MariMed Reports Record Fourth Quarter and Full Year 2020 Financial Results and Provides Full Year 2021 Guidance." Accessed April 10, 2021.
High Tide Inc. "High Tide Reports First Quarter 2021 Financial Results Featuring a 179% Increase in Revenue and Record Adjusted EBITDA of $4.6 Million." Accessed April 10, 2021.
Cansortium Inc. "Cansortium Announces Second Closing of Private Placement to Complete $17.1 Million Equity Financing." Accessed April 10, 2021.