Not only could these marijuana penny stocks double in a week, they could triple, quadruple, or even more! And it make not even take a week. It could just be a matter of days or even hours. But guess what? If it sounds too good to be true, it probably is. You could own each of these stocks and not make a single cent!
If you’re a stock market junkie who reads Wall Street analysis online, you’ve no doubt seen numerous advertisements for “superhuman” products. Writers and analysts brag about their alleged profits incessantly. Advertisements with claims such as “the last stock I recommend increased 80% in a month!” or “our last recommendation tripled in a week!” are everywhere.
I spent a long time trading at different hedge funds, so I know a lot about the markets. The reason why I am writing this is because I get angry when I see these types of advertisements. I believe they are dishonest and are an attempt to deceive unsophisticated investors.
It is important to understand that some of these ads may be factually correct, but are still very misleading. What do I mean by this?
Every stock has a bid and an offer. The bid is the highest price that anyone is willing to pay for it, and the offer is the lowest price that anyone will sell it at. So if you sold the stock you would receive the bid price, and if you bought it you would have to pay the offer price.
Now suppose we have a penny stock. Let’s say the best bid is 1 cent, and the best offer is 2 cents. Now let’s say that someone sells 100 shares at the bid price. The last trade is 1 cent. Now let’s suppose that 10 minutes later someone else buys 100 shares and pays the offer price of 2 cents. The last trade is now 2 cents. See what has happened? The stock has gone from 1 cent to 2 cents in ten minutes. The price has doubled, but the stock actually hasn’t moved!
Hopefully an understanding of these dynamics will prevent you from listening to or paying for deceptive research. Let’s take a look at some penny stocks so you can get a better understanding.
Marijuana Penny Stocks: Demand Brands (DMAN)
Take a look at the chart. It has doubled in a week. Seems pretty good, doesn’t it?
But take a closer look at the scale …
The price went from$3 to $6. But this wasn’t a move of 0.003 to 0.006 and it wasn’t a move 3 cents to 6 cents. The appreciation was from 3 thousandths of a cent to 6 thousandths of a cent. Did the stock double in price? Yes, it did double in price. Could you have made money by investing in this stock? Not a chance.
If you wanted to invest $5,000 in DMAN when it was at 3 thousandth of a cent, you would have needed to acquire almost 17 million shares. This would be impossible to do without adversely impacting the price of the stock. Also, DMAN’s average three-month volume is a laughable 1.8 million, which means it’s just a logistic nightmare moving enough shares around at such volume.
Plandai Biotechnology (PLPL)
Click to Enlarge Plandai Biotechnology (OTCMKTS:PLPL) produces botanical extracts for the pharmaceutical and nutriceutical industries. It focuses on the farming of whole fruits and vegetables. Apparently, this is not a very good business to be in. At least in the way that PLPL operates.
The stock has declined by about 90% over the past year. Does this mean that it is a good value at these levels? The last trade was at .0008. If you were able to invest $10,000 at that levels, you would be the proud owner of 12,500,000 shares. As a matter of fact, if you wanted to buy the entire company all you would need is $190,000!
Obviously, you would not be able to execute these trades. There would be no possible way to acquire share amounts that are that large without moving the stock.
Stevia Corp (STEV)
Click to Enlarge Stevia Corp. (OTCMKTS:STEV) is a farm management company. It focuses a delivering quality agribusiness solutions to its costumers. Based on the price of the stock, I would guess that the management at STEV has no clue.
In April, the stock of STEV rallied 300%. That sounds pretty impressive, but trust me … it isn’t. You didn’t miss anything. STEV stock did not go from $10 to $30 or even $5 to $15. It “rallied” from 2 thousandths of a share to 5 thousandths of a share. At this level $1 would buy you 500 shares.
Mathematically this is a triple. Could you have purchased and sold a meaningful amount of shares at these levels? Not a chance.
Priority Aviation (PJET)
Click to Enlarge Priority Aviation, Inc (OTCMKTS:PJET) operates as a full service aviation company. It provides charter services, charter memberships and aircraft sales. I don’t know how it ended up on the list of marijuana penny stocks that I looked at for this article. Maybe it is because you would need to be stoned to want to own it. P
JET soared like a jet when is rose by 700% in December. But this is yet another situation where you didn’t miss anything. This ‘rally’ took the stock from .001 to .007.
There is no feasible way that you could have profited. It would have been impossible to buy and sell enough shares in the market and pay the commissions and fees to do so. Once again, if it seems to good to be true than it probably is.
PAO Group (PAOG)
Click to Enlarge PAO Group (OTCMKTS:PAOG) produces oral capsules that contain THC and CBD. They recently debuted this at The Cannabis Cup, which is considered the worlds premier marijuana industry trade show.
If you look at the chart you can see that PAOG has traded in a well defined range. Could you trade this range profitably? In other words, could you buy it at the bottom of the range and sell it at the top of the range?
Of course not. This range is only 1 thousandths of a cent. You would need a microscope to see what you are doing. This is yet another situation where you can’t gain an understanding of the chart without considering the scale.
Uviquitech Software (UBQU)
This one makes the list to day just because of the value of the stock. In my 20 years as a professional trader I don’t recall ever seeing anything like this. The last trade was at .0002. That is 2 ten-thousandths of a share.
I didn’t even know that a stock could trade so low. At .0002, you could buy 1 million shares with $200.
As we have seen, as nice as this sounds it would be impossible to transaction. This thing go double, triple, go up 100X, etc… You can’t trade it and you can’t make money off of it.
Grow Solutions Holdings (GRSO)
GRSO has broken its recent downtrend. You can tell because the trend-line was broken. Trend-lines are not mysterious. If used and understood correctly, they simply illustrate the supply and demand dynamics that are occurring in a market. In a downtrend the forces of supply are in control. When the trend-line breaks, it is illustrating that the forces of demand are equalizing with the forces of supply. That is the case here.
Or is it? If you look closely you will that this two month trend has been a total of just 1 cent. Does that really mean the tide has turned? Of course not. Like the others GRSO is not trade-able and this trend-line analysis is meaningless.
As of this writing, Mark Putrino did not hold a position in any of the aforementioned securities.