With Joe Biden heading to the White House, some of the top winners could be marijuana penny stocks.
For one, with Democrats in control of Congress, Piper Sandler analyst Michael Lavery says it “could help provide better access to capital, alleviate operating headwinds, and help drive industry growth.” Two, Biden selected Xavier Becerra to serve as Health and Human Services secretary. He reportedly supports cannabis legalization.
In addition, Biden’s pick for Commerce secretary, Rhode Island Gov. Gina Raimondo, supports legalization and selling it in government-run stores.
While cannabis legalization may not be a slam-dunk on that, that hasn’t stopped investors from sending related marijuana penny stocks to higher highs, including:
- CV Sciences (OTC:CVSI)
- Harvest Health & Recreation (OTC:HRVSF)
- MariMed (OTC:MRMD)
- Aleafia Health (OTC:ALEAF)
Marijuana Penny Stocks: CV Sciences (CVSI)
CV Sciences is seeing a good deal of attention with the CBD boom. Since bottoming out at 40 cents in late Nov., it’s back to 60 cents. With patience, it could see higher highs, especially with institutions calling for a multi-billion-dollar market.
Roth Capital Partners for example sees a $12 billion CBD opportunity, with the potential to see $46 billion. Brightfield Group believes the industry is worth $22 billion. Cowen analysts say it could be worth as much as $16 billion. Plus, we have to consider consumer attitudes towards CBD and cannabis is changing. In addition, we’re seeing more retailers selling CBD products these days, including Sephora, Vitamin Shoppe, Kroger (NYSE:KR), CVS (NYSE:CVS) and Walgreens (NASDAQ:WBA).
CV Sciences also just launched ProCBD. “As the only clinical strength CBD on the market supported by multiple research studies, we believe ProCBD has tremendous potential in the professional healthcare channel,” said CEO Joseph Dowling.
Harvest Health & Recreation (HRVSF)
A second one to consider is Harvest Health & Recreation.
Over the last few months, the stock exploded from an Oct. low of $1 to $3. From here, I’d like to see it at least double, especially with it doing good business in Arizona, California, Florida, Maryland, and Pennsylvania.
Its biggest presence is in Arizona, where it could see big sales. According to New Frontier Data, the adult use market in the state could be up to $340 million in the first year of legalization. Four years in, the state could see $1 billion.
Earnings have been solid for the company, too. Third-quarter revenue was $61.6 million, up 86% from the third quarter 2019 and 11% sequentially. Third-quarter adjusted EBITDA was $10.5 million, compared to $4.1 million in the second quarter of 2020. Net loss was $2.1 million for the third quarter, compared to a net loss of $39.1 million in the third quarter of 2019 and $18.3 million for the second quarter 2020.
MariMed has been just as explosive, running from a Nov. low of 15 cents to its current 72 cents.
Earnings have been solid here, too. In its third quarter, the company posted core cannabis revenues of $13.5 million, which is a 220% increase compared with $4.2 million in the same quarter of 2019. Gross profit from the core cannabis business increased 221% to $8.7 million, as compared with $2.7 million in 2019.
“These strong quarterly results reflect the tremendous growth of our cannabis business units coupled with the consolidation of our Massachusetts and Illinois business units into our company,” said Bob Fireman, CEO of MariMed.
Aleafia Health (ALEAF)
Investors may also want to keep an eye on ALEAF. Since early December, the stock popped from a 36-cent low to 60 cents on a few catalysts.
One, it just announced it will start to export cannabis to the Israeli medical market after signing a letter of intent with Equinox International. That’s a big deal, with Israel quickly becoming one of the fastest growing medical cannabis market.
Two, its subsidiary – Emblem Cannabis Corp. – just entered into a definitive supply agreement with cannabis brand house Robes Cannabis. And it just entered into a partnership with Unifor, Canada’s largest private sector union to provide access to members for medical cannabis coverage.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned in this article. A contributor to InvestorPlace.com, Ian Cooper has been analyzing stocks and options for web-based advisories since 1999.