The cannabis industry has been off to a rocky start since its launch. The last couple of months have been interesting, not in a very good way. It’s not a time when the novice investor is looking to profit from marijuana stocks; most have plummeted with some losing up to 50% of their value. Some prefer to call these growing pains, but admittedly it’s been such a bummer for an industry that had sparked such high hopes for investors.
Forecasts made by Arcview Market Research project that the legal marijuana market will hit $66 billion by 2025. As much as this heralds great tidings for investors, it may take some time before the market becomes profitable for investors.
Several factors have crippled the positive performance of cannabis stocks; lack of investor trust, lack of regulation, and high tax rates. Canadian pot stocks have not been exempted from this, big brands such as Cronos and Canopy Growth are better of left for a future buy. However, three pot-stocks listed on the Nasdaq have taken the market by surprise and posted positive growth amidst current challenges in the industry. We shall review them below.
Nasdaq is an American stock exchange, second only to the New York Stock Exchange (NYSE) in terms of market capitalization by shares traded.
Listing on Nasdaq is no mean feat, so far only a handful of marijuana companies are listed there. Trading over-the-counter (OTC) is much easier because rules are less stringent. However, trading on Nasdaq has a few advantages such as:
- First electronic exchange
- Offers greater liquidity
- Offers tighter spreads meaning greater profits
Cannabis companies that have uplisted from OTC markets are generally considered to be doing well and have greater stability.
At a glance, marijuana stocks listed on Nasdaq may appear depressing for an investor. Industry stalwarts like Cronos Group, Tilray, and Corbus have posted dismal returns. Only five companies have posted positive returns in the last twelve months. Even OrganiGram Holdings which had shown a lot of promise earlier this year seems to be experiencing some challenges.
Image credits Investopedia
Here are the top three companies:
- Arena therapeutics: 29.2% return in the last 12 months
- Zynerba Pharmaceuticals: 36% return in the last 12 months
- Village Farms International: 96.6% return in the last 12 months
Here is a breakdown of these top three pot stocks
1. Arena Pharmaceuticals, Inc.
Arena Pharmaceuticals is involved in the development of transformational medicines. Arena is behind the FDA-approved weight-loss drug Belviq which was later resold to Eisai. Admittedly, Arena has had a lot of struggles in the past. But in 2019 things are looking up for this company as it now proudly joins the ranks of top-performing marijuana stocks on Nasdaq.
2. Zynerba Pharmaceuticals Inc.
Zynerba Pharmaceuticals is a pharmaceutical company that’s involved in the development of cannabinoid-based drugs. Their focus is on near-rare neurological and psychiatric conditions that have no known cure. So far, they have a THC patch for fibromyalgia and a CBD based gel for seizures.
Zynerba stocks seem to be doing well, at least as of October this year. There could be a couple of reasons for this. One good one is that Zynerba has something exciting in the pipeline; a cannabinoid-based gel for rare epilepsies that’s awaiting FDA approval.
Note that Epidiolex (a CBD based drug) is what propelled GW pharmaceuticals to the limelight. The same could be happening for Zynerba?
3. Village Farms International (VFI)
Village Farms International is the newest kid on the block but appears to be doing well. The shares began trading on the NASDAQ in February 2019.
In the last month, there’s been a lot of speculation about how the share prices for VFI will fare, but a rearview demonstrates greater stability compared to its industry peers.
Things are looking up, but the legal cannabis industry is not yet out of the woods. The sector is warped in a lot of red-tape that creates unnecessary barriers to entry for would-be cannabis investors. The recent vaping crisis has marred the industry’s image further; stigma is at its peak.
From my perspective, these are just headwinds and growing pains that cannot curtail the growth potential of this billion-dollar industry. Stay put, explosive growth is on the way.