The summer of 2019 has not been very kind to the cannabis sector. In fact, if ever there was a time that the allure of cannabis investing was tested, the last three months were it. But now there are certain marijuana stocks to watch moving forward.
Because a sector-wide downturn isn't always all bad. Rather, in the midst of trouble, some of the hardiest brands will shine; a proverbial "sorting the men from the boys" of sorts. Also, the knock-on damage of an industry in crisis means several brands price so low, that buy-in opportunities arise.
These are the marijuana stocks we are interested in right now. The entire sector has lost value trying to navigate the next stages of growth, regulatory concerns, and supply chain issues. But there are several stocks that remain a clever investment if you are willing to wait out the storm. The growth prospects ahead are intriguing, especially should some business plans come to fruition.
With that in mind, here are three low priced marijuana plays that investors should watch in the Autumn.
Marijuana Stocks to Watch: Auxly Cannabis Group
Last week, Auxly stock shot to the sky after the company announced that it received a $94 million investment from global tobacco giant Imperial Brands (OTCQX:IMBBF). The news caused shares to gain 21% in the last week alone, but the upward trajectory looks set to continue.
The deal gives a new lease of life to Auxly (TSXV:XLY) (OTCQX:CBWTF), which has faltered through much of 2019. For one, it will be privy to Imperial's intellectual property along with its vaping technology. This puts it in an advantageous position to benefit, as vapes are projected to be one of the top-selling cannabis derivatives in 2020.
Auxly has already placed importance on this arm of the cannabis industry, but now, it will work closely with Imperial's Nerudia to create a portfolio of new and enhanced vapor products and brands.
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For one thing, derivatives command higher margins than flower, and this means greater chances for profits. But another important element to this deal is the global distribution network that Auxly Cannabis Group is now provided. Imperial offers Auxly ‘fast-track’ access to any market that Imperial currently operates in. This means Auxly could leverage that opportunity to accelerate its growth.
There’s no doubt that this deal could rescue Auxly. Operational enhancement and cash injection aside, simply associating with a brand as global as Imperial Brands puts Auxly into a whole new category of regard.
For only $1.04 at present, there is a lot of potential here worth watching.
Marijuana Stocks to Watch: Aleafia Health
Aleafia Health (TSX:ALEF) (OTCQX:ALEAF) climbed significantly in the last five days when it announced a potential hostile takeover bid for cannabis rival CannTrust Holdings (TSX:TRST) (NYSE:CTST). Investors got behind the news, and ALEF stock jumped roughly 25% in a few days. At the height, shares hit $1.25 CAD. They have since corrected but still remain on the positive side, selling for $1.12 at present.
All-in-all, Aleafia has been an overlooked small-priced cannabis play in 2019. Yes, shares have dropped roughly 53% since March, though most of this is due to the broader market sell-off.
But there is a lot of potential in the tank here, and if Aleafia Health does aim for CannTrust, it would be a triumph for the small-cap company. Because, despite the current controversy, CannTrust remains at its core a credible and operational success. Its addition would be a huge boost for the smaller Aleafia.
For this reason, investors should keep an eye on Aleafia in the coming months. This is a company that is growing fast; already it is showing increasing revenue on a monthly basis, and further expects its production capacity to hit 138,000 kgs by 2020.
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Marijuana Stocks to Watch: 22nd Century Group
Another cheap cannabis stock to watch in August is an unlikely one: 22nd Century Group (NYSE:XXII). A new player in the field of cannabis, XXII stock announced its entry into the cannabis industry last week and shares went through the roof.
The plant biotechnology company is, in its usual line of work, a leader in "tobacco harm reduction" and "Very Low Nicotine Content (VLNC) tobacco." But now, it is going to shift focus to cannabis oil.
According to reports, 22nd Century uses proprietary technology to reduce the level of nicotine in tobacco plants and to modify the level of cannabinoids in hemp and cannabis plants. It does this through genetic engineering and modern plant breeding. Furthering on from this then, it hopes to ease the process of CBD oil extraction for companies that are involved in the business. Bear in mind, however, that its technology is still awaiting FDA approval.
Shares are currently selling for $1.50 USD. Companies in the area of extraction are proving popular plays in the cannabis space at present. The reason is the vital need for their services to create derivatives. Will 22nd Century measure up?
Time will tell, but it's a good sign that investors already are backing it on the mere mention of its new venture.
There you have three marijuana stocks to watch in the Autumn. There is a lot of potential in their stories, and the recent headlines coming from each are not to be scoffed at. We could be looking at the next big names in cannabis here.
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Featured Image: DepositPhotos © leungchopan
