Everyone loves a good bargain. And in a newly industrialized sector such as cannabis, those bargains are ripe for the picking. It’s not hard to understand why investors flock to cannabis penny stocks. Legal marijuana opens doors to a whole new sector, and getting in now could mean a retirement fund in waiting.
Of course, when it comes to investing, the common idea is that the lower the share price, the more speculative the play. And where cannabis is concerned, that is certainly true. But cannabis penny stocks, arguably, pose an even greater risk because investors must consider the current sector climate. As recreational legality is new in Canada and certain US states, businesses are young. Lacking experience, these shares must also contend with regulatory issues, supply chain problems, high taxes, and overzealous spending.
Nobody can predict exactly where this industry is going to go, and we still don’t know the true extent of the demand (we will need to wait for derivatives legalization in Canada to assess that), but that doesn’t mean investors should shy away.
Rather, the time is now to find the perfect cannabis penny stock for you. In a newly industrialized industry, here are some low-priced plays to watch in the latter half of 2019.
Cannabis Penny Stocks: Auxly Cannabis Group
This cannabis play isn’t for everyone, but there are plenty of reasons to like Auxly Cannabis Group (TSXV:XLY) (OTCQX:CBWTF). 2019 has not been easy, and year-to-date, despite lots of movement, Auxly stock hasn’t gained much for investors who’ve been holding. At its highest, XLY stock hit $1.05 CAD; at its lowest, it hit $0.70.
But the cannabis royalty and operator company has a unique business model that could pay out dividends down the line, and this keeps us on our toes.
Because along with a dozen licensed partners, Auxly has its own joint venture and wholly-owned grow projects in its portfolio. A result of all its efforts means that, all-in-all, Auxly is expected to bring about 170,000 kilos of cannabis to market annually.
To give that perspective, there are only five or six individual cannabis growers that will top that—all backed with much larger market caps. Auxly has a tiny market cap of just $557.09 million, and shares sell for less than $1 at present.
The company has the derivatives market in its sights and most recently secured a lucrative and exciting deal with tobacco giant Imperial Brands (OTCQX:IMBBF). The deal has injected life into the company and offers Auxly Cannabis Group much to be thankful for moving towards 2020.
For this reason, Auxly is a potential play if you want long-term potential. Don’t look at 2019, but instead consider 2020 and beyond with this cannabis company.
Cannabis Penny Stocks: Supreme Cannabis Company
Shares of The Supreme Cannabis Company (TSX:FIRE) (OTCQX:SPRWF) are currently on the rise over 15%. On Tuesday, the company released its expected revenue for fiscal Q4 2019 and provided guidance for fiscal 2020. With Q4 revenue pegged at $19 million and FY20 revenue in excess of $150 million, it’s easy to understand the excitement hitting these shares right now.
Selling for $1.43 CAD, Supreme is a cannabis penny stock that focuses on a business-to-business (B2B) strategy. What this means, in essence, is that its 7ACRES brand of medical-grade cannabis offers distinct high-quality strains directly to other cannabis brands for repurposing.
One positive of this is that it culls the cost of expensive supply-chain segments such as its own dispensaries. It also niches the company, allowing it to focus and perfect its craft.
This focus on the ‘higher-end’ helps to distinguish FIRE stock from the competition, offering investors a high-risk-high-reward scenario down-the-line.
As it’s early days in this industry, differentiation between products may not be so important—yet. But in all likelihood, it will be. As customers become accustomed to cannabis and its varying strains, and when brands truly define themselves, variety and high-quality will demand a lucrative following.
Supreme Cannabis Company offers both of those, and for that reason, FIRE stock remains on our radar.
Cannabis Penny Stocks: MPX International
Shares of MPX International (CSE:MPXI) (OTCPK:MPXOF) have practically split in two since the beginning of 2019. But for $0.47 CAD at present, there is potential on the horizon.
Operating three brands, MPX focuses on healthcare and wellbeing through cannabis. Its brands include Salus BioPharma, Health for Life, and its namesake MPX. The former two divisions specialize in medical-grade cannabis, while the latter caters to the green lifestyle.
MPX International has intriguing operations outside of Canada. Its Salus brand represents a joint venture with Israeli pharmaceutical company Panaxia to develop proprietary, smokeless cannabis products. Further, the company has another partnership with South Africa’s First Growth Holdings.
The company is growing very fast, and with a tiny market cap of $21.29 million and shares for under $0.50, this cannabis penny stock offers a potential that outweighs the risk.
Do you have any favorite cannabis penny stocks to watch in 2019?
Let us know your thoughts!
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