Many people consider publicly traded companies with a low share price to be bad news. Stocks with meager share prices are usually small for several reasons. This might include uncertainty, persistent losses, or functioning in a very competitive or unproven industry. Although penny stock seems to amaze from time to time, they tend to bring losses for investors.
However, there exist some exceptional penny stocks in the cannabis industry. Although most marijuana penny stocks are often a disaster, there are exceptional cannabis penny stocks that could be profitable.
Since cannabis stocks don’t gain access to nondilutive forms of financing from banks, they have now begun to share offerings or convertible debentures to raise money. This method has successfully diluted the value of existing shareholders and weighs on a company’s share price. This has made the share price to be invaluable when examining cannabis stocks. In this article, we have analyzed marijuana penny stocks with potentially attractive investments.
Aleafia Health (NASDAQOTH: ALEAF)
This company currently boasts a share price of $1 and meets all angles of a penny stock. However, with a market cap of about $280 million and an evolving cultivation asset, this company is a leading Canadian player, this isn’t just a common undervalued stock for 2021.
Recently, Aleafia Health finalized an all-stock acquisition of Emblem. This merger combines two of Canada’s top medical-clinic service providers who also cultivate their cannabis. When the merger was completed, Aleafia and Emblem had acquired 40 clinics which served about 60,000 patients since their creation. Out of the three cultivation assets being developed, the new Aleafia projects 138,000 kilos of peak yearly output. Even though the production space is still very fluid, this should suffice to put Aleafia among the high rated pot producers in Canada.
Auxly Cannabis Group (NASDAQOTH: CBWTF)
Auxly is a bit smaller than Aleafia Health when in concerns share price. However, the $0.5 difference in share price isn’t significant — this company has a value of about $350 million, but it has a lot of outstanding shares.
Auxly Cannabis is comprised of two backgrounds. It was a licensing company that offered capital to breeders who wanted to widen or develop greenhouses. The company receives part of the production at a below-market cost, thus permitting it to sell this marijuana at average retail prices and keep the remainder as profit. This method is very pleasing on paper, but it doesn’t permit Auxly to marginally lower its costs if the per-gram price of dried buds falls. Therefore, Auxly Cannabis is currently part of a joint venture, and the company also grows its marijuana.
During its operations, the company’s goal is to retail the equivalent of 170,000 kilos per year.