Pot Stocks to Continue Surging in 2020
One thing we know for certain is that the legal marijuana industry has only started to reach its potential. This multi-billion-dollar sector is still on an impressive growth path that will see it become a global force in the next few years.
Along the way, many marijuana stocks are going to see impressive gains. And the ones best suited to win big are marijuana penny stocks, due to their low valuations and high potential.
That said, pot penny stocks are usually more volatile than the more established pot stocks.
High-volatility stocks are not for everyone, but if you’re the type of investor who wants to double or, at times, triple their money fast—and aren’t opposed to risk—then marijuana penny stocks could be for you.
What’s great about pot stocks is that they’re in an industry that’s a sure thing. After all, many people enjoy marijuana; they’ve been consuming it for hundreds (or thousands) of years.
The marijuana black market is worth billions of dollars today, even in areas where pot is legal. That’s excellent market research; the product is field-tested and popular.
According to Jefferies Group LLC, within the next 10 years, the global marijuana market could be worth $130.0 billion if legalization continues to spread across the U.S., Europe, and Latin America. (Source: “Global cannabis market could be worth up to US$130B by 2029: Jefferies,” BNN Bloomberg, February 25, 2019.)
In my mind, that’s not only possible, but likely. Every year, we see marijuana continue to gain support both politically and socially around the planet.
Even the most conservative estimation of the market (assuming that no new country legalizes pot within the next decade, which is highly unlikely) has the marijuana market at $50.0 billion.
The U.S. marijuana industry alone is projected to be worth $21.7 billion when the country legalizes the substance federally. Note that this is a conservative projection that could very well be short of the true potential of the sector.
To top it all off, these projections don’t include the growing cannabidiol (CBD) market.
Jefferies Group’s report was rather bearish on the CBD subsector. I disagree with that outlook, considering that CBD oil could be a popular wellness ingredient, not to mention that CBD-infused drinks are going to be hitting the market soon.
In any case, it’s abundantly clear from numerous studies that the marijuana industry is getting stronger. Marijuana penny stocks, then, are in fantastic shape to benefit from that growth.
Why Marijuana Penny Stocks Look Strong for 2020
There are three main reasons I’m bullish on pot penny stocks for 2020.
First, the strongest aspect of marijuana is its mass appeal. This is a truly global product that has the ability to rival alcohol in a few years.
After all, cannabis is healthier than alcohol, potentially being beneficial to one’s health in certain instances. That alone should help propel marijuana forward as the stigma surrounding the drug fades.
As mentioned earlier, this is a $100.0-billion industry that is just beginning to realize its potential. Being able to get in at the early stage of such a massive market is a fantastic opportunity.
The second reason I’m extremely bullish on marijuana has to do with legalization. We’re seeing more and more countries considering legalizing pot. The country we’re most focused on, of course, is the United States.
The U.S. enjoys the highest amount of political support for marijuana legalization than it has ever had in modern history. That will likely lead to federal marijuana legalization within the next five years.
The third reason I’m excited about the prospects of the pot sector has to do with the black market. As mentioned above, the black market still dominates the cannabis industry.
The marijuana black market is currently estimated to be worth between $150.0 and $200.0 billion, while the legal market only sits at about $12.3 billion. (Source: BNN Bloomberg, February 25, 2019, op. cit.)
Even in areas where pot is legal, like Canada and California, illicit weed continues to out-earn the legal market. (Source: “Nearly 3,000 illegal marijuana businesses found in California audit, dwarfing legal trade,” Los Angeles Times, September 11, 2019.)
That’s beginning to change. As the legal marijuana industry increasingly eats away at the black market, I anticipate we’ll see a massive shift from illicit pot to legal pot within the next few years.
Marijuana penny stocks are uniquely suited to benefit from this shift as they operate on a relatively small market cap.
Many projections don’t account for black-market revenue moving to the legal market because it is inherently hard to estimate. It involves a confluence of factors, including government regulations, law enforcement, taxation, etc.
What I’m projecting is that the black market is going to be hit hard in the coming years. And when that happens, pot penny stocks will begin to soar as new money hits the legal market.
Top Marijuana Penny Stocks for 2020
So, I have laid out the argument for why legal weed companies are set to thrive in 2020. Now let’s take a look at three pot stocks that are set to rise in value.
Chart courtesy of StockCharts.com
First on my list is OrganiGram Holdings Inc (NASDAQ:OGI). Long considered to be a top marijuana stock, OrganiGram stock is in a very strong position to see massive growth.
For one thing, it has a bevy of supply agreements across Canada that will ensure recurring revenue for years to come.
Couple that with the fact that the Canadian marijuana market is expanding by reducing regulations in key markets and you have a perfect storm for OGI stock to soar.
OrganiGram is perfectly sized to take advantage of the burgeoning marijuana market. It’s large enough to be among the most stable marijuana penny stocks, but small enough that it could be acquired by a larger company, a move that would send its share prices soaring.
The second cannabis penny stock I’m bullish on is Curaleaf Holdings Inc (OTCMKTS:CURLF, CNSX:CURA).
The largest U.S. pot company, Curaleaf is the best suited of any company to take advantage of the impending U.S. marijuana legalization. Whether that’s next year or five years from now makes little difference; CURLF stock will be the first to skyrocket off of that news.
That’s because Curaleaf stock is already prized. It’s looking to be the first marijuana company to register $1.0 billion in profits by the end of 2020.
Again, that’s how much money it’s making in just the fragment of the U.S. market that’s legal today. When marijuana legalization comes in full swing to the U.S., that number will likely grow.
Curaleaf has operations in 12 U.S. states and continues to expand. And while it waits for recreational marijuana to be fully legalized across the country, it’s taking advantage of the U.S. medical marijuana market (33 states and D.C.).
The third marijuana penny stock that I’m bullish on is the riskiest of the three: Vireo Health International Inc (OTCMKTS:VREOF, CNSX:VREO).
The company became instantly recognizable when it added Bruce Linton to its board. Linton was the founder and former CEO of Canopy Growth Corp (NYSE:CGC), the largest marijuana company on Earth by market cap.
Linton helped lead the fledgling Canopy Growth to billions of dollars in market share during his tenure. Now he aims to do the same with a medical marijuana stock operating in the United States.
While not as sexy as the recreational weed market, the medical marijuana market continues to make steady gains around the world.
Although Linton’s not heading Vireo, his addition as chairman of the board instantly transformed this marijuana penny stock into a must-watch stock.
Linton certainly adds credibility and connections to Vireo, but the company is a bit of an unknown quantity.
VREOF stock could balloon in 2020 on the back of Linton’s addition as chairman, or remain stagnant if investors feel that his involvement isn’t impactful enough.
I’m in the former camp, believing that Linton’s standing and connections in the pot industry will help propel this marijuana penny stock to big gains.
The marijuana market is as strong as it has ever been. In 2020, I expect that we will see more progress, growth, and gains in the industry.
Marijuana penny stocks are uniquely suited to benefit from this growth. As such, I’m very bullish on their prospects in 2020—particularly OGI stock, CURLF stock, and VREOF stock.