Best Marijuana Stocks to Buy in 2020

TL;DR

Industry challenges and opportunities in marijuana stocks for 2020, with potential in ancillary companies and multi-state operators.

Transcript

Chris Hill: Hey, thanks for watching. We're coming to you from Fool Global Headquarters in Alexandria, Virginia. I'm Chris Hill, here with senior analyst Shannon Jones and Emily Flippen. Thanks for being here. Shannon Jones: Hey, glad to be here! Emily Flippen: Thanks for having us. Hill: We're talking marijuana stocks for 2020. We're going to be... Read More

Key Insights

• 🥺 Supply challenges and regulatory issues are impacting the marijuana industry, leading to market shakeouts and opportunities for investors in undervalued stocks.
• 🎁 Ancillary companies like EnWave offer innovative solutions for the cannabis industry, such as dehydration technology for cannabis products, presenting growth potential in a supportive role.
• ✖️ Multi-state operators like Green Thumb Industries show promise in navigating diverse regulatory environments and expanding market presence through strategic acquisitions and operational efficiencies.
• 💐 Financial metrics, including operating cash flow, shareholder dilution, and debt structure, are crucial for evaluating the long-term sustainability and profitability of marijuana stocks.

Questions & Answers

Q: What are the primary challenges facing the marijuana industry in 2020?

The challenges include oversupply, limited retail stores, regulatory hurdles, financial troubles, and management turnover affecting Canadian and U.S. producers.

Q: How do management departures impact marijuana companies, and what should investors look for in executives?

Management departures can signal instability; investors should seek executives with relevant industry experience, transparent communication, good governance, and stakeholder focus.

Q: Are there any marijuana stocks that investors should avoid in 2020?

Aurora Cannabis is highlighted as a company with numerous issues, including excessive dilution, financial troubles, management turnover, and overall poor performance, making it a stock to avoid.

Q: What are some key metrics to consider when investing in marijuana stocks?

Key metrics include operating losses, shareholder dilution, cash reserves, debt structure, production costs per gram, and revenue trends, providing insight into the financial health and sustainability of marijuana companies.

Summary & Key Takeaways

• Industry facing challenges with oversupply, lack of retail stores, and regulatory issues affecting Canadian and U.S. producers.

• Bad and good aspects in 2019, such as derivatives legalization and market shakeouts leading to potential in valuations for investors.

• Options for investing in the marijuana industry include pure play companies, picks-and-shovels, and ancillary businesses.