TD’s Marijuana Penny Stocks
A recent Toronto-Dominion Bank (NYSE:TD) internal e-mail revealed that the bank only permits its advisors to recommend three marijuana stocks. It’s a peculiar move, and one that I delved into in depth in another article, but now I’d like to examine the two lesser-known marijuana penny stocks that the bank allows its advisors to recommend: Emblem stock and Emerald Health stock.
The two companies, Emerald Health Therapeutics Inc (OTCMKTS:EMHTF, CVE:EMH) and Emblem Corp (OTCMKTS:EMMBF, CVE:EMC), are both penny stocks with relatively small market caps. And yet, they were two of the three marijuana stocks that were placed on TD’s list of stocks that its advisors are permitted to recommend. (Source: “TD moves to discourage clients from investing in pot stocks, internal e-mail shows,” The Globe and Mail, April 8, 2018.)
It seems that TD chose these three companies because they were not involved in U.S. cannabis—a precautionary move undertaken due to the possibility of a U.S. marijuana crackdown, since the drug is still prohibited under U.S. federal law.
Nevertheless, there are a good number of companies that don’t have holdings in the U.S. but were not approved by the bank.
What makes these two marijuana penny stocks special, then?
Emblem Corp Stock
One of the biggest developments for Emblem Corp stock was its announcement that it had signed a deal with Shoppers Drug Mart Corporation (TSE:SC) to supply the company with medical cannabis, likely to be sold online because Canada has restrictions regarding the sale of cannabis at retail pharmacies.
Shoppers is a massive brand in Canada, and the deal represented something of a coup for such a small marijuana company.
Chart courtesy of StockCharts.com
But the good news did relatively little for Emblem Corp stock. In fact, EMMBF stock has been one of the worst performers in the industry overall.
The company is down almost 50% in 2018 and 46% over the past year. Considering how well most other marijuana stocks have fared in that time—especially marijuana penny stocks, some of which have seen gains of hundreds of percentage points—this is a pretty dismal performance for Emblem Corp stock.
That this marijuana penny stock, in particular, would make it on the TD marijuana list of approved companies is another interesting nugget in this story.
Emerald Health Stock
Emerald Health stock has performed relatively well over the past year, especially when compared to Emblem Corp stock.
Emerald has jumped by 155% since a year ago, despite having a steep dive in 2018 of nearly 40%.
The company’s most recent financial report showed strong revenue gains from the previous year, more than doubling its numbers from the same period.
Chart courtesy of StockCharts.com
Net losses increased as well, but that is to be expected for a small marijuana penny stock that is growing. (Source: “Emerald Health Therapeutics Reports 2017 Financial Results and Provides Corporate Update,” GlobeNewsWire, April 2, 2018.)
But that doesn’t exactly make Emerald a premier marijuana penny stock. Several other companies have been better performers while not taking such heavy hits in 2018. Furthermore, while the company does not currently have any holdings in the U.S., there are a number companies in similar positions with stronger gains.
Again, it’s still unclear why TD placed Emerald Health stock on its exclusive list.
Being on TD’s exclusive approved marijuana stocks list would make you think that these were particularly special companies worth a second look from investors.
While I’m not saying these are bad companies, I am still perplexed as to why Emblem and Emerald were the only marijuana penny stocks on the list.