Marijuana News Today
The marijuana news today looks good, as two recently recommended pot stocks surge even while the majority of the industry continues to flounder.
On the news side of things, we have an interesting look into an often-overlooked part of the market: manufacturing.
A recent article detailed the rise of a homegrown manufacturing business, Precision Extraction Solutions, that is tailored to the marijuana business—specifically, the extraction side of things. (Source: “Troy business is a world leader in hemp extraction,” Detroit Free Press, July 3, 2019.)
The article goes on to detail the company’s rise from idea to major supplier of extraction equipment to many pot companies across the world.
While there isn’t a whole lot you can do with that right now—most of these companies are privately owned—it is worth noting how strong they are becoming. Should they go public, there is a chance for marijuana investors to profit from the rush in equipment sales that is sure to spike as more and more countries legalize marijuana.
For instance, Precision Extraction Solutions saw a growth in business when cannabidiol (CBD) was legalized in the U.S. via the Agriculture Improvement Act of 2018. With the U.S. CBD market booming, equipment that could help extract the substance from marijuana plants is naturally going to be in high demand.
It’s really a perfect example of the old adage: in the gold rush, sell picks and shovels. Which is to say that, sure, marijuana itself may be lucrative (in fact, very lucrative, as we’ve seen), but you can often make just as much money by facilitating the process of marijuana growth and processing.
In the case of a literal gold rush, you also don’t have to spend days upon days clawing at dirt hoping to sift through enough of it to find a speck of gold. While marijuana is a little bit more of a sure thing compared to gold mining, there’s still a lot of question marks (legalization, black market, competition) that make it a potentially risky venture.
I’d keep an eye out for marijuana production companies that go public in the next few years, or larger equipment providers getting in on the marijuana production space. Both could be lucrative buys for investors looking to profit off the green rush that is sure to take the world by storm in the next few years.
The marijuana news today, as far the pot stock market is concerned, is making me look good, so I have to be grateful.
Yesterday I wrote about two marijuana stocks I thought would be strong moving forward, and a day later, only a handful of pot stocks have risen, those two among them.
The first marijuana stock we’ll tackle is OrganiGram Holdings Inc (NASDAQ:OGI). OGI stock jumped by 4.5% in early morning trading and finds itself up by six percent over the last five days.
OGI stock was and remains a top pot stock of mine due to its size and fundamentals. We’re talking about a marijuana penny stock that has a number of supply deals across Canada and a ton of room left for it to grow via partnerships or acquisition.
That being said, OrganiGram Holdings didn’t use its shift to the Nasdaq to best effect, but that wasn’t really the fault of the company. It made the jump in the midst of a marijuana downturn, which in turn put a damper on much of the excitement that otherwise would have greeted the move.
Still, all that being said, I’m still bullish on OGI stock. The fact is that it is trading below its value and I believe that more growth is on the way for the company. In fact, OrganiGram Holdings is likely one of the few companies that is undervalued in the marijuana stock market, or at least undervalued without taking into account the true global potential of pot.
Investors ought to watch OrganiGram Holdings Inc as we head into July as the company’s quarterly report is set to drop on July 15. If that is as successful as it has been in the past, expect to see huge gains from OGI stock in the near future.
Another company I wrote about yesterday that showed quick returns, Innovative Industrial Properties Inc (NYSE:IIPR), is up today, again numbering as one of the few positive performers on the pot stock market so far today.
IIPR stock gained two percent in early morning trading and has been flat over the past five days. Considering how most pot stocks have fallen in recent weeks, that’s not a bad performance.
Much like the first part of this article, IIPR stock represents a pick-and-shovel model of investing in the marijuana trade. Rather than try and directly profit from the green leaf, Innovative Industrial Properties instead leases land used to produce pot to companies, operating as a marijuana real estate investment trust (REIT).
As I mentioned yesterday, there are major benefits for investors when buying a marijuana REIT, namely a dividend that is paid out and a legal mandate that requires 90% of profits be distributed among shareholders. In an age when many companies like to hoard wealth in unused war chests, that’s a very beneficial rule for investors.
Meanwhile, as I said before, more and more marijuana producers are going to crop up in need of land to get started. Whether they boom or bust is irrelevant to IIPR stock; all that matters is that they sign the lease on the land.
With that in mind, Innovative Industrial Properties Inc may be one of the safer bets as the marijuana industry continues to mature.
On the flip side, I do believe that a correction is in store for Innovative Industrial Properties (it’s gained over 200% in the past year). But even with that setback, I believe that more growth long-term is on the way for IIPR stock.
OGI and IIPR Stock Performances
The performances of OGI stock (black line) and IIPR stock (blue line) over the past week are seen on the chart below:
Chart courtesy of StockCharts.com
The marijuana news today is fairly positive all around.
While the pot stock market continues to see losses across the board, two marijuana companies have bucked the trend and gained instead: OrganiGram Holdings Inc and Innovative Industrial Properties Inc.
On the news side of things, we examined the potential of manufacturing in the marijuana industry and how adjacent businesses to the marijuana trade stand to profit immensely as the industry grows across the world. All around, it’s a good day to be bullish on the long-term viability of marijuana investments.