With the end of the first full year of legal cannabis fast approaching, and with it, a new decade, we look to some cannabis penny stocks that are finishing the year strongly and could be set for big gains when the 2.0 market comes into effect in 2020—namely, Auxly Cannabis Group and Aleafia Health.
While 2019 has been somewhat of an up and down year for pot stocks, the arrival of 2.0 products such as vapes and edibles could be a huge catalyst for growth and the penny stock sector of the market looks to be the prime source for turning a small investment into a big return. Let's take a look at the stocks catching our eye.
Auxly Cannabis Group Inc (TSXV:XLY) (OTCQX:CBWTF)
This penny stock may have had a bit of a bumpy ride this year in terms of share value, but on paper, 2019 has actually been very kind to Auxly. The company has taken on a series of partnerships that will only begin to bear fruit in the New Year, such as a joint venture with Sunens to build a 1.4 million square foot greenhouse, which will be fully functional by Q2, and a deal with hemp farmers on Prince Edward Island to purchase all the hemp biomass grown on a 300-acre farm.
Most impressive is Auxly Cannabis Group's $123 million USD investment from British tobacco giant Imperial Brands (OTCQX:IMBBF), which will see the cigarette maker share its expertise in vaping technology, one of the key products in the 2.0 market. Some analysts see Auxly as being the biggest pot stock gainer of 2020, with revenue possibly climbing 3,000%. With a current share value of just $0.61, Auxly might not be in penny stock territory for much longer.
Aleafia Health (TSX:ALEF) (OTCQX:ALEAF)
Aleafia stock has had a dismal 2019, sinking over 50% from its January 1 opening price. However, Aleafia has one thing going for it that almost no other company on the market does, least of all a penny stock, and that's profitability. Back in November, the Toronto-based firm reported revenue of $5.29 million CAD, a 34% increase from the previous quarter, while net income came in at $1.86 million CAD versus a loss of $11.48 million CAD previously.
Like Auxly, Aleafia Health has also signed a number of impressive deals that will stand it in good stead going forward. These include a 2,840-kilo order from a Canadian producer worth around $7 million CAD, as well as a white label order from Australia. Aleafia stock is currently trading for $0.64, but it certainly looks like a penny stock with huge potential.
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