The marijuana sector has taken off in a big way over the past two years or so, and there is a lot of interest in pot penny stocks among investors. It is a sector that has the potential to grow exponentially in the coming years, so a bet on penny stocks could eventually pay off handsomely.
However, it should also be noted that the markets have not been performing particularly well in recent times, and many marijuana stocks have performed quite poorly due to that.
That being said, there are still some penny stocks in the marijuana space that could be tracked by investors. Here is a closer look at three such stocks.
3 Pot Penny Stocks to Watch: Organigram Holdings (TSX:OGI) (NASDAQ:OGI)
In recent times, Organigram Holdings has emerged as one of the most promising companies in the Canadian marijuana industry. It goes without saying that the Canadian cannabis sector is suffering from a range of issues, including oversupply and the slow rollout of stores.
These issues have affected many stocks, and Organigram is no exception in that regard. However, the company enjoys certain competitive advantages over many of its peers that make Organigram stock an attractive marijuana penny stock.
It is the only major cannabis producer that operates in the Eastern Atlantic region, and that gives the company easy access to the market in eastern Canada. On top of that, Organigram has tied up wholesale supply deals with all the provinces in Canada.
Another important thing to remember is that the company has only one cultivation and processing facility. This allows Organigram to keep a tight hold on costs; the company has recorded one of the best yields in the industry at 230 grams per square foot.
Organigram has also made investments in cannabis 2.0 products, which are known for generating higher margins. Analysts believe that this is a pot penny stock that could be one of the bigger winners in the coming years.
3 Pot Penny Stocks to Watch: MediPharm Labs (TSX:LABS) (OTCQX:MEDIF)
Another marijuana penny stock that could be on the investor radar at this point in time is that of cannabis extraction company MediPharm Labs. At this point, the company might be experiencing some difficulties if other cannabis companies decide to to downsize their output, but in the long-term, that is unlikely to be the case.
Despite the cannabis industry's struggles last year, MediPharm still managed to become a profitable company. The company generated an operating profit within five months of opening its doors.
There are two main reasons why MediPharm Labs is such a promising company. First, the company works on the basis of contracts. It has signed up long-term extraction services contracts with some of the biggest cannabis companies, which helps to ensure that MediPharm has a steady cash flow, irrespective of the state of the industry.
Second, the legalization of cannabis derivatives has thrown open a massive opportunity for MediPharm. Cannabis companies will need huge amounts of cannabis extract to produce these items, and MediPharm could see a major uptick in the number of contracts that it signs.
3 Pot Penny Stocks to Watch: Planet 13 Holdings (CSE:PLTH) (OTCQB:PLNHF)
Planet 13 Holdings has taken a unique approach to growth. Instead of opening up stores in as many states as possible where cannabis is legal, Planet 13 created the biggest cannabis shopping mall in Las Vegas.
The SuperStore spreads across an area of 112,000 square feet and is located on the iconic Las Vegas strip. It provides customers with the ultimate cannabis buying experience considering, offering an events stage, restaurant, and even a processing center for customers. The company also brought in advanced technology to make the experience even more enjoyable for customers.
Planet 13 has also been incredibly transparent with regards to performance. The company releases detailed information about traffic and average ticket size at the store. In January and February 2020, the average ticket size was $100. In November 2018, it was only $79.
The company is all set to open another SuperStore in Santa Ana, California, later this year, and that could prove to be another massive boost to Planet 13’s eventual growth. Investors may want to track this pot penny stock in the coming days and then decide on a course of action.
Featured image: PixaBay