Top Marijuana Penny Stocks For Q3 2022

HYFM, OGI, and SNDL are top for value, growth and performance, respectively

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. Also, cannabis use is still illegal at the U.S. federal level, although 37 states have legalized cannabis in at least one form as of February 3 2022.

The challenges are particularly great for investors when it comes to marijuana penny stocks. Investors should be especially cautious and perform more than their usual due diligence when investing in these companies, which include up-and-coming names such as Cansortium Inc. and Goodness Growth Holdings Inc.

Marijuana stocks, represented by the ETFMG Alternative Harvest ETF (MJ), an exchange-traded fund, have dramatically underperformed the broader market. MJ has provided a total return of -70.9% over the past 12 months, well behind the Russell 1000’s total return of -12.5%. Small-cap stocks more broadly, as represented by the Russell 2000 Index, have also underperformed the broader market, with a 1-year trailing total return of -24.9%. MJ targets a broad assortment of cannabis industry stocks, including penny stocks.

Here are the top three marijuana penny stocks with the best value, the fastest growth, and the best performance. The market performance numbers above and all statistics in the tables below are as of July 1, 2022.

Best Value Marijuana Penny Stocks

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 P/S ratio shows how much you’re paying for the stock for each dollar of sales generated.

Best Value Marijuana Penny Stocks
  Price ($) Market Capitalization (Market Cap) ($M) 12-Month Trailing P/S Ratio
Hydrofarm Holdings Group Inc. (HYFM) 3.48 156.1 0.3
HEXO Corp. (HEXO) 0.21 105.9 0.4
GrowGeneration Corp. (GRWG) 3.79 230.2 0.6

Source: YCharts

  • Hydrofarm Holdings Group Inc.: Hydrofarm Holdings Group distributes and manufactures controlled environment agricultural equipment. Its products are used to grow a variety of produce, grains, and herbs, in addition to cannabis. The company's offerings include lighting, nutrients, and supplies. Hydrofarm announced on June 23 that president Terence Fitch would step down on June 24 to pursue other opportunities. The company did not provide any information about Fitch's successor in the announcement.
  • HEXO Corp.: HEXO is a Canada-based consumer packaged goods cannabis company serving both the adult-use and medical cannabis markets. It also trades in Canada under the ticker HEXO.TO.
  • GrowGeneration Corp.: GrowGeneration operates hydroponic garden centers across North America. The company markets and distributes a variety of hydroponic gardening products, including growing media, nutrients, lighting, ventilation equipment, and more. The company's most recent hydroponic garden center opened in Jackson, Mississippi on June 27. It is the company's 64th store nationwide and expands GrowGeneration's market to 14 states.

Fastest-Growing Marijuana Penny Stocks

These are the marijuana penny stocks with the highest 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, as well as 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 (%)
OrganiGram Holdings Inc. (OGI) 0.94 294.9 118.0
HEXO Corp. (HEXO) 0.21 105.9 99.9
Cronos Group Inc. (CRON) 2.86 1,074 98.5

Source: YCharts

  • OrganiGram Holdings Inc.: OrganiGram Holdings is a Canada-based licensed producer of cannabis-related products for both medical and recreational use. The company distributes its products to consumers and through wholesale channels. It also trades in Canada under the ticker OGI.TO. On June 24, Organigram said it reached a proposed settlement related to a class action lawsuit related to medical cannabis that was voluntarily recalled in 2016 and 2017. Per the proposal, Organigram will pay an aggregate of $2,310,000. The Supreme Court of Nova Scotia will hold a hearing to determine whether to approve the proposal on Aug. 31, 2022.
  • HEXO Corp.: See company description above.
  • Cronos Group Inc.: Cronos Group Inc. is a vertically integrated cannabis company with distribution across five continents. It distributes medical marijuana and cultivates cannabis oil. Cronos Group’s portfolio includes a global wellness platform, adult-use brands, and hemp-derived CBD brands. Cronos announced results for Q1 2022 on May 10. Net losses narrowed dramatically year-over-year (YOY) as consolidated net revenue nearly doubled. Strong performance in Canada and Israel in drove revenue growth.

Marijuana Penny Stocks with the Best Performance

These are the marijuana penny stocks that had the smallest declines in total return over the past 12 months out of the companies we looked at.

Marijuana Penny Stocks with the Best Performance
  Price ($) Market Cap ($M) 12-Month Trailing Total Return (%)
Sundial Growers Inc. (SNDL) 0.33 793.6 -63.8
Cronos Group Inc. (CRON) 2.86 1,074 -66.7
OrganiGram Holdings Inc. (OGI) 0.94 294.9 -66.8
Russell 1000 N/A N/A -12.5
ETFMG Alternative Harvest ETF (MJ) N/A N/A -70.9

Source: YCharts

  • Sundial Growers Inc.: Sundial Growers is a Canada-based cannabis producer. The company produces and distributes cannabis for the adult-use and medical market. It offers dried flower cannabis products in various formats, including pre-rolls, oils, capsules, and more. Sundial reported Q1 2022 earnings on May 16. Net losses significantly narrowed YOY on strong revenue growth. The company said that performance was driven by improvements in Sundial Growers' cost structure and by increased distribution of branded products.
  • Cronos Group Inc.: See company description above.
  • OrganiGram Holdings Inc.: See company description above.

The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described in our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.

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  1. National Conference of State Legislatures. “State Medical Cannabis Laws.”

  2. YCharts. “Financial Data.”

  3. Hydrofarm Holdings Group Inc. "Hydrofarm Holdings Group, Inc. Announces the Departure of President Terence Fitch."

  4. GrowGeneration Corp. "GrowGeneration Announces Jackson, Mississippi Store Opening June 27, 2022."

  5. Organigram Holdings Inc. "Proposed Settlement Reached in 2016 Class Action."

  6. Cronos Group Inc. "Cronos Group Reports 2022 First Quarter Results."

  7. Sundial Growers Inc. "Sundial Reports First Quarter 2022 Financial and Operational Results."

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