The cannabis industry is living in the shadow of the stigma that is associated with its uses. Who would even think that the time will come when the economy would recognize it as one of the fastest-growing industries and the most promising as well.
The debate about “are marijuana penny stocks worth it?” is the hottest topic in the cannabis world. Since cannabis is a booming industry, it got the attention of entrepreneurs. It doesn’t matter if they are consumers or not, for as long as they want to invest or put their money on the business. One way to invest in marijuana stock is by penny stocks. Though some would raise their eyebrows with penny stocks, it can be a good start if you want to invest in the cannabis industry.
What are Marijuana Penny Stocks?
These stocks are traded for less than 5% per share. They are also known as nano-cap stocks, small-cap stocks, over-the-counter stocks, and micro-cap stocks. Unlike normal stocks, small-cap stocks are not listed in the main lists of stockholders; instead, they are listed over the counter exchanges or OTC. Penny stocks are cheap stocks. You may wonder why these stocks are cheap. They are cheap because:
- The company is still new and still doesn’t have records that can create extensive investor interest. A starting company that needs financial funding to start fuel up their business.
- The company is losing its stock value because of poor sales record, regulatory or legal issues that have brought the company into facing near bankruptcy. This company may have been doing well in the past, but for some reason and some circumstances that they have faced, their operation weakened and maybe needing additional financial funding to keep going or for expansion.
Are Marijuana Penny Stocks Worth It?
Yes, it is worth it. Investing in these stocks can be beneficial, but it depends on your business strategy. It is a good starting point if you want to get into the marijuana business, though it can be a high-risk investment, and you need to perform extensive research to the company that you intend to invest your money with. Here are several reasons why it is worth your investment:
- The potential for a big return on investment. If the company does well, then that is a definite profit. For example, your investment gets an annual gain of 10 – 15% per annum in five years, then that is considered a good investment, and your stocks are doing good.
- Fast return on investment. The advantage of investing in nano-stocks is that you do not need to wait for years to see your investment to grow. Investing your money with these stocks can have a profit at a shorter period like a year or even just months, which is possible, especially on a company that utilized your money for expansion and released new products.
- The fastest way to get rich. Traditional stock trading is a slow investment though there is real growth in the money you have invested. The reason why some people take the risk of investing in penny stocks because they can see their money grow fast. Considering the market of marijuana, if you have invested your money in a new company and it made profits in the succeeding months, then you have made the right financial decision.
What to Look for in a Marijuana Penny Stock?
As mentioned earlier, investing can be very risky, but you don’t need to worry about that if you know what to do. Note that even though the cannabis industry is thriving, not all businesses are doing well. In choosing a good penny stock, make sure to look for these very important factors:
- Is it making money or any profit for the lost few months? It doesn’t matter how low they offer the share price, the thing that you should be your priority is checking if the company is making profit or money in the past few months. It is not a good idea to invest in a marijuana company that is consistently losing money. This would mean you may be losing your money as well.
- The company must have a strong business and marketing strategy that can make them stand out. A good strategy implemented by the company would mean that they can deal with the competition, and with your investment, they can use the money to expand the business.
- The company needs additional assets or cash. When you invest in penny stocks, it doesn’t right away mean that you have to put your investments on the top company, which is thriving very well. Most of the time, some companies need additional funding to keep their operations going. These can be new companies that have no products yet or an existing company whose business went down because of a lack of funding. All you need to do is to do some research on the company and check their business strategy. With your investment, you may be able to save a company that is nearing closure.
If you have decided to invest your money in these stocks, start by investing just a small percentage of your portfolio. You can start with ten percent and see what happens after. Some investors also diversify their investments across several penny stocks. Look for other companies that have the potential to make your money grow.
The marijuana industry is fresh, and the hype is overwhelming. The success of your investments depends on the decisions that you will be making. Thus, if you will be investing in these stocks, study your prospects very well and make a very clear plan.
To wrap it up, are marijuana penny stocks worth it? The answer is YES. It has the potential for big gains. It can be competitive, especially in this fast-growing industry. If you are willing to take the risk, then take it. Just make sure that you are ready with a good business plan, study the stocks, and partner with a company that is worth your investment.