To be blunt, marijuana stocks are on fire. Following the passage of the Cannabis Act in Canada this past June, and the official kickoff of recreational weed sales on Oct. 17, 2018, the cannabis industry is now viewed as a legitimate business model that’s here to stay. With sales projected to be in the tens of billions of dollars globally within the next decade, it’s simply a matter of trying to figure out where those dollars might end up. As a result, pot stocks throughout the industry have soared.
Just since the year began, through March 3, the Horizons Marijuana Life Sciences ETF, the first-ever tradable cannabis ETF, was up a jaw-dropping 60%. Unfortunately, it also means that most pot stocks are now far too pricey to consider for investment purposes.
There are, however, three marijuana stocks that still offer value, even with significant industry growth being factored in by Wall Street and investors. If you’re looking for new investment opportunities in the green rush, here are three pot stocks to consider buying in March…
Whereas most of the cannabis industry has been unstoppable in 2019, KushCo Holdings(NASDAQOTH:KSHB) has been somewhat of a dud. Through this past weekend, shares of the company were up just 11% year to date, which is actually underperforming the broad-based S&P 500.
However, there probably isn’t a cannabis-focused stock that’s valued a lower price-to-sales ratio than KushCo, which is what makes it so intriguing. With between $110 million and $120 million in sales forecast for 2019, representing revenue growth of around 121% year over year at the midpoint, KushCo is only valued at a little more than four times sales. Comparatively, most direct pot players have triple-digit price-to-sales ratios at present.
What makes KushCo so unique is the company’s niche focus in two exceptionally high-growth areas. First, it’s a packaging and branding powerhouse that’s currently serving more than 5,000 pot growers worldwide. The logistics of what’s allowed on packaging can change between country, province, state, and even locale. Thus, KushCo ensures that packaging remains compliant with all applicable laws, while also providing branding and packaging solutions to help growers stand out from an increasingly crowded field. Although packaging isn’t an impenetrable moat, KushCo has the clear market share edge for the time being.
Additionally, KushCo’s acquisition of Summit Innovations thrust it into another niche industry: the supply of hydrocarbon gases. As a supplier of hydrocarbon gases, which are essential for the production of cannabidiol (CBD) oil, and a supplier of solvents that are necessary for the production of cannabis concentrates, KushCo has established itself as a presence in the high-margin CBD and alternative pot product industry.
Though profitability may elude KushCo in 2019, and common stock sales could stymie share price appreciation in the very near term, it remains an incredibly attractive marijuana stock given its ancillary market share in packaging and its microscopic price-to-sales multiple…
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