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7 Marijuana Penny Stocks to Consider for Those Who Can Handle Risk

Mark Putrino

[Editor’s note: This story will be updated each week with new stocks and analysis. Please check back often for Mark’s latest take on marijuana penny stocks.]

Every investor has dreams of investing a couple thousand dollars into the penny stock company that with become the next Amazon (NASDAQ:AMZN) or Microsoft (NASDAQ:MSFT). Marijuana penny stocks are especially appealing to some of these investors because they understand how much potential this industry has.

But you need to be very careful investing in this highly risky sector of the market. Many of these companies will not survive. There is a reason why they are trading as penny stocks.

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A few weeks ago I was at the local farmers market and I had an interesting conversation with a farmer. I mentioned that I thought the vegetables that come from the market are significantly better than those that come from the grocery store. He said it was because the vegetables were grown with natural sunlight, while the ones grown in the grocery store were grown indoors or in greenhouses.

That made me think about if the same thing applies to growing cannabis. I have done some research, and sure enough there is a trend towards outdoor growing. Investors are starting to understand that in many cases, the cost and quality advantages of growing outside exceed any advantages that can be gained by indoor or greenhouse growing.

A few of the companies that I have included are in the cannabis outside growing (aka farming) business. In addition, I have also included a few stocks with cool technical patterns.

These are not buy recommendations. I just want to give you some insight that may help your investments.


Marijuana Penny Stocks: 48North Cannabis (NRTH)

Marijuana Penny Stocks: 48North Cannabis (NRTH)

48North Cannabis (TSE:NRTH) produces and sells medical cannabis. This a company that I am looking at as a potential investment into outdoor growing. It recently announced that it completed planting its 100-acre outdoor growing facility.

Most of the larger growers such as Tilray (NASDAQ:TLRY), Aphria (NYSE:APHA) and Canopy Growth (NYSE:CGC) primarily grow their cannabis either in indoor growing facilities or greenhouses.

As mentioned above, there are some advantages to indoor growing. These include things such as better security and the ability to grow yearlong in cold climates. However, some investors are starting to understand that the cost benefits of outdoor growing exceed any benefits that are derived from the other methods.

In addition, similar to what the farmer told me, some marijuana consumers believe that cannabis that is grown under natural sunlight is better than that grown inside. If the big companies that are growing indoors do not address this dynamic, it could provide a great opportunity for companies like 48North.


Emerald Health Therapeutics (EMHTF)

Marijuana Penny Stocks: Emerald Health Therapeutics (EMHTF)

Emerald Health Therapeutics (OTCMKTS:EMHTF) is a Canadian producer of cannabis products.

Like 48North, the management of this company is putting some focus on outside growing. It recently announced that it had received it’s outdoor cultivation license from Health Canada. The larger Canadian indoor growers have used their influence to slow down the issuance of outdoor licenses. However, as the industry is evolving, they are losing their ability to continue to do so.

There are two other things happening here that may be bullish for EMHTF stock. First, it is holding above support around the $1.50 level. This level was where the lows were in December.

In addition, the company announced the appointment of a new CEO. Riaz Bandali has over 25 years of experience. The appointment of this veteran to run the company could give it an advantage over its competitors that are being managed by those with less experience.


KushCo Holdings (KSHB)

Marijuana Penny Stocks: KushCo Holdings (KSHB)

KushCo Holdings (OTCMKTS:KSHB) produces and sells packaging products for companies that are in the marijuana industry.

KSHB stock is approaching the $4.30 level. In June and July, it found support there and sub sequentially rallied. At the end of July, the stock was oversold. If it gets to $4.30 again while being oversold, there is a chance it will rally again.

When stocks get to important support levels and become oversold, they tend to rally. If they get to important support and spend time consolidating, they tend to eventually break the level and go lower.

What does oversold mean? It is a measurement of momentum. It is where the price is today versus where it was X many days ago. When this number reaches an extreme on the downside, it is considered oversold.

For example, statistics tell us the 95% of all trading should be within two standard deviations of the mean. If a stock is more than two standard deviations below the mean, it would be considered oversold.


Cannabis Sativa (CBDS)

Marijuana Penny Stocks: Cannabis Sativa (CBDS)

Cannabis Sativa (OTCMKTS:CBDS) researches and develops specialized natural cannabis-related products.

Last August, CBDS stock found support around the $2 level. After rallying and then trending lower, it once again found support at this level at the end of April and throughout May.

Then the level was broken, and the stock traded lower before recovering. Now $2 is a resistance level. How does this happen? How does a level that was formally support become a resistance level?

Consider the following. The people who bought the stock at $2 are losing money once it trades lower. They tell themselves that if the stock recovers and gets back to $2, they will sell it so they can get out break even. (Sound familiar?) This concentration of sellers is what creates a resistance level.


Green Organic Dutchman Holdings (TGODF)

Marijuana Penny Stocks: Green Organic Dutchman Holdings (TGODF)

Green Organic Dutchman Holdings (OTCMKTS:TGODF) provides medical cannabis solutions. The downtrend that began in TGODF stock in April seems to have broken.

Some people do not understand how profitable the ability to draw and understand trendlines can be. It is obviously an art and not a science, but with some practice and an understanding it will help your trading or investing.

In financial markets, prices are always doing one of three things — going up, going down, or staying the same. If they are going up, the forces of demand are in control of the market. When prices are going lower, the forces of supply are in control. When prices are staying the same, the forces are equal. A popularly drawn trendline should simply be an illustration of these dynamics.

We can see here that from a longer-term perspective, the forces of supply have been in control of this market. The downtrend line that I drew has been broken. This could mean that the forces of demand are about to take over and drive the price higher.


CannTrust Holdings (CTST)

Marijuana Penny Stocks: CannTrust Holdings (CTST)

CannTrust Holdings (NYSE:CTST) produces and sells medical cannabis.

This company is now known affectionately as Can’t Trust. This is because it has recently been accused of growing cannabis in illegal grow rooms that were not licensed. Since then CTST stock has dropped from $5 to $2.

Senior management seems to have been well aware that this illicit activity was occurring. We know this because they discussed it in emails which are now in possession of the authorities. When will people ever learn? If you wouldn’t want your grandmother to read it, do not put it in an email.

My guess is that there are other companies that are engaged in similar illegal activity, and we will soon be hearing about others.

Over the past three weeks the stock has found support around the $2 level. Despite this, I can’t trust CannTrust to be a safe investment. Until we know more details, I would stay away.


CGrowth Capital (CGRA)

Marijuana Penny Stocks: CGrowth Capital (CGRA)

CGrowth Capital (OTCMKTS:CGRA) is a holding company that is engaged in exploration, mining and commodities.

This stock illustrates a valuable lesson. Every stock has a bid and an offer. The bid is the highest price someone will pay for a stock. The offer is the lowest price that someone is willing to sell it at.

Now suppose a stocks bid is 1 cent and the offer is 2 cents. If someone sells it, the last trade will be 1 cent. Then suppose 10 minutes later someone else buys it. Now the last trade is 2 cents. The stock price has doubled but it hasn’t really moved!

CGRA stock illustrates a similar dynamic. Over the past week, the price has nearly doubled in value. It has gone from 45 thousandths to 70 thousandths of 1 cent. Could you have made money on this move? Absolutely not. Commission costs and market impact would have made it impossible. The stock has almost doubled in price but the shareholders haven’t benefited.

At the time of this writing Mark Putrino did not hold any positions in any of the aforementioned securities.

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