Marijuana Penny Stocks Captivate Traders Ahead Of U.S. Presidential Election
If there is one industry and one group of stocks that are reactive around elections it’s marijuana penny stocks. These low-priced, highly volatile names tend to trade fiercely around election time. A lot of this momentum has to do with speculation relating to legalization efforts. While this vice industry has been around for over 6 years, now, there’s still plenty of runway to focus on.
Much of this has to do with the U.S. cannabis industry. Other countries have gone forward to fully legalize cannabis at a recreational level. However, due to the odd situation that the United States has put itself in, weed is still federally illegal. But this hasn’t stopped the majority of U.S. states from putting forth some form of recreational and/or medicinal marijuana laws.
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The fight for legalization has extended in 2020 with this election cycle focusing on several key states. These include Arizona, New Jersey, Montana, South Dakota, and Mississippi all pushing for cannabis access. Stakes are high in these states and the Democratic nominee has already set forth an initiative to bring federal easing to cannabis if elected. Traders are already baking in the fact that the election could be contested no matter who the winner is. With plenty of uncertainty, we’re sure to see pockets of volatility. However, as speculation remains a key driver, heading into election week, marijuana penny stocks could be some of the most active names to watch right now.
Marijuana Penny Stocks To Watch
- Aphria Inc. (APHA Stock Report)
- Aurora Cannabis Inc. (ACB Stock Report)
- Village Farms International Inc. (VFF Stock Report)
- Neptune Wellness (NEPT Stock Report)
- Harvest Health & Recreation Inc. (HRVSF Stock Report)
The biggest question is amid this speculation, will these be top penny stocks to buy, or are they to be avoided at all costs? Something to consider with any grouping of stocks moving on speculative hype is if there’s follow-through afterward. There’ve been plenty of times that marijuana stock breakout for a day or two, then come crashing back down. This trend has caught plenty of traders off guard over the last few years. In light of that, which part of your list are these names on?
Marijuana Penny Stocks To Buy [or avoid] #1: Aphria Inc. (NASDAQ:APHA)
Aphria Inc. was on our list of top penny stocks on Robinhood for November 2020 this weekend. Among the 12 stocks under $5 in the apps Top 100 Most Popular Stocks, Aphria took a place on that list. The pot penny stock has mounted a 2-day rally, building momentum during the first session of November. Early highs of $4.80 tested the 50-day moving average on the APHA stock chart. This has been a consistent level of resistance over the last few months.
Despite having broken above this level for a few days, APHA failed to hold higher levels due to an earnings disappointment in mid-October. But this week Aphria isn’t just seeing sector momentum from the pot sympathy trade, the company has also come out with a fundamental catalyst of its own.
Aphria announced on Monday that it executed a supply agreement with ODI Pharma AB. Specifically, Aphria’s German subsidiary, CC Pharma GmbH gives ODI exclusive rights to sell a set of co-branded products in Poland. Furthermore, the 5-year term provides that there be an annual minimum of 1,200 kg of medical cannabis (totaling 6,000 kg). CC Pharma will aid ODI in securing regulatory approval to import and sell these products in Poland.
Marijuana Penny Stocks To Buy [or avoid] #2: Aurora Cannabis Inc. (NYSE:ACB)
Aurora Cannabis was another one of the marijuana penny stocks on Robinhood’s top 5 list this weekend. While this hasn’t performed the greatest over the last few years, ACB stock has experienced some nice sympathy momentum this week. One of the things to keep in mind with Aurora, however, is that the company releases earnings in about a week. It will be interesting to see if the company can turn things around at all or if this persistent downtrend continues during the rest of 2020.
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According to the company, it’s expecting to report revenues in the ballpark of $60-$64 million in its fiscal Q1. The company also gave guidance on its adjusted gross margins before adjusting for fair value. Aurora expects this to come in between 46% and 50%. Whatever the case may be, one of the headwinds you need to consider with this company and stock is all of the money Aurora has raised. Dilution has played a huge role in the lack of consistent upward momentum of the last few years. In fact, ACB stock did a reverse split earlier in the year to get out of the penny stock range.
Fast-forward to Q4 and here it is, once again a penny stock. What’s more, is that the company has also filed for a shelf registration to raise up to another half a billion dollars. While the future of the company remains uncertain, sympathy momentum has given ACB stock a boost for now.
Marijuana Penny Stocks To Buy [or avoid] #3:Village Farms International Inc. (NASDAQ:VFF)
When it comes to finding marijuana penny stocks on Robinhood to buy, for instance, choices are limited. The main reason has to do with limited access to certain markets. While there are a few OTC penny stocks on Robinhood, the vast majority are inaccessible. Marijuana stocks are among those that traders can’t buy. However, there are a few that are, including Village Farms International.
This week, VFF stock is experienceing the same momentum that the broader cannabis sector has seen ahead of the U.S. Presidential Election. Aside from that, similar to Aphria, Village Farms also has a fundamental catalyst of its own. The company completed its Pure Sunfarms acquisition this week. The company acquired Pure from Emerald Health therapeutics, which resulted in Viallage now owning 100% of Pure.
“The acquisition of the entirety of Pure Sunfarms is a defining moment for Village Farms, furthering our transformation to a vertically integrated, plant-based consumer packaged goods company.”
Michael DeGiglio, CEO, Village Farms
While VFF stock isn’t the most active marijuana stock, it has seen an uptick in trading activity to begin November. In light of this recent development, will the fourth quarter see a turnaround in the VFF stock price?
Marijuana Penny Stocks To Buy [or avoid] #4: Neptune Wellness (NASDAQ:NEPT)
We talked about Neptune Wellness late last week after a key update from the company. Neptune announced that it had secured a supply agreement with Ontario Cannabis Store. Ontario will sell and distribute Neptune’s Mood Ring product line, gaining access to Ontario, Canada’s market. While this isn’t related much to anything going on in the U.S., the pot penny stock has felt some of the uplift that the rest of the sector experienced this week.
What’s more, is that Neptune just reported a new credit facility with Preceptive Advisors to support the fulfillment of large purchase orders. Perceptive already owns more than 10% of Neptune’s voting securities and the access to capital could help with this latest expansion deal with Ontario Cannabis Store.
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If NEPT stock is on your list right now, keep November 11th in mind. Next Wednesday is when Neptune reports its fiscal 2021 second quarter earnings.
Marijuana Penny Stocks To Buy [or avoid] #5: Harvest Health & Recreation Inc. (OTC:HRVSF)
Last on this list of penny stocks is Harvest Health & Recreation Inc. You won’t find this trading on Robinhood or Webull but you will see other brokers like TD Ameritrade, Etrade and others allowing access. Harvest is a multi-state operator in the U.S. and this week could be a big one for the company itself. How that translates to the stock depends on certain things.
Specifically, the outcome of the vote in Arizona could be a key catalyst for the company. Headquartered in the state, Harvest has established a vertically integrated footprint. Despite not being on Robinhood or Webull, the AdvisorShares Trust Pure US Cannabis ETF (MSOS ETF Report) has taken a position in Harvest.
The attraction to this company recently, in my opinion, has to do with Arizona’s potential legalization. It also has to do with what the company just recently announced. At the end of October, Harvest opened a new medical dispensary in Pennsylvania. This expands its Pennsylvania footprint into King of Prussia. Earlier in October, Harvest opened a new medical dispensary in Camp Hill. As the October 30th update, the company has successfully opened 8 affiliated dispensaries across the state.
