I first thought about investing in legal marijuana during an animated discussion with my friend when we were at a 'coffee' shop in Amsterdam in late 2013. As we all know this used to be an unorganized sector which used to grow the weed based on need basis for recreation purposes. In order to get rid of the opioid menace, few of the countries made it legal both for recreational aswell as medical use.
Marijuana stocks caught my attention during 2014 as it was one of the much talked about sector considering that many states and countries were planning to legalize.
The stocks in the sector are considered as high risk but also high growth.I started researching on them as an investment during 2014-15 and saw that there were too may penny or small cap stocks that had weeded the sector and hence the volatility associated with them. Majority of the stocks were listed in Canada and were more suitable to make a quick buck trading and not by investing in them longterm.
The companies in marijuana sector can you spread across three categories
-Growers
-Service providers to the marijuana industry
-Biotech
As these are high growth stocks I had to keep my value investment criteria aside as it doesn't make sense for value investing in marijuana stocks as valuation are done mostly on sales growth rather than on earnings.
My first marijuana investment play was in 2016 in a Swedish service provider to the industry called Heliospectra (HELIO) who were into Vertical Farming Solutions with LED grow lights and solutions for commercial greenhouse growers & horticulture producers which didn't go too well and I did an timely exit with a 7% annual return early this year.
By 2018 I had learnt some more on the industry and decided to go global and decided to make my first global investment in large cap in a company called Canopy Growth (WEED) which is the biggest marijuana grower in terms of market cap .Their quarterly revenues were growing good at an YoY rate of 214%.
Canopy Growth is the first marijuana company to be included in Canadian large-cap index . Constellation Brand's invested in the company for diversification has supported the stock very well since their investment. Constellation Brands (STZ) the makers of Corona Beer is also one of my holding and will talk of about it in later posts.
My investment in Canopy have given me good return of 122%
Current estimates says they will for the first time make an operating profit in 2021 which will give them an PE of 200+.
Canopy growth might be one of the safer and stable bet in the sector.
I did my second investment in second biggest but half by market capitalization called Aurora Cannabis (ACB). It is expected to make a operating profit next year with a PE of 300+ and will reduce to 60+ by 2021. Year to date it has gone up by 75% as compared to 57% of Canopy.
Both companies are sold off during a broader market sell-off and I could consider putting some more into them.
The investment in Aurora has gone good at 45% but not as good as the Canopy
Heliospectra (HELIO)
Canopy Growth (WEED)
Constellation Brands (STZ)
Aurora Cannabis (ACB).
Marijuana stocks caught my attention during 2014 as it was one of the much talked about sector considering that many states and countries were planning to legalize.
The stocks in the sector are considered as high risk but also high growth.I started researching on them as an investment during 2014-15 and saw that there were too may penny or small cap stocks that had weeded the sector and hence the volatility associated with them. Majority of the stocks were listed in Canada and were more suitable to make a quick buck trading and not by investing in them longterm.
-Growers
-Service providers to the marijuana industry
-Biotech
As these are high growth stocks I had to keep my value investment criteria aside as it doesn't make sense for value investing in marijuana stocks as valuation are done mostly on sales growth rather than on earnings.
My first marijuana investment play was in 2016 in a Swedish service provider to the industry called Heliospectra (HELIO) who were into Vertical Farming Solutions with LED grow lights and solutions for commercial greenhouse growers & horticulture producers which didn't go too well and I did an timely exit with a 7% annual return early this year.
By 2018 I had learnt some more on the industry and decided to go global and decided to make my first global investment in large cap in a company called Canopy Growth (WEED) which is the biggest marijuana grower in terms of market cap .Their quarterly revenues were growing good at an YoY rate of 214%.
Canopy Growth is the first marijuana company to be included in Canadian large-cap index . Constellation Brand's invested in the company for diversification has supported the stock very well since their investment. Constellation Brands (STZ) the makers of Corona Beer is also one of my holding and will talk of about it in later posts.
My investment in Canopy have given me good return of 122%
Canopy growth might be one of the safer and stable bet in the sector.
I did my second investment in second biggest but half by market capitalization called Aurora Cannabis (ACB). It is expected to make a operating profit next year with a PE of 300+ and will reduce to 60+ by 2021. Year to date it has gone up by 75% as compared to 57% of Canopy.
Both companies are sold off during a broader market sell-off and I could consider putting some more into them.
The investment in Aurora has gone good at 45% but not as good as the Canopy
Heliospectra (HELIO)
Canopy Growth (WEED)
Constellation Brands (STZ)
Aurora Cannabis (ACB).
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