Successfully Investing In Cannabis (Marijuana) Stocks

Currently, in the United States of America, thirty-two states including Washington, D.C. have legalized the use of marijuana in one way or another. And 10 more states further legalizing it could legalize recreational cannabis by 2020. With the legalization of marijuana, it is believed that the stocks will soar by 380% in the markets from $13.8 billion to $66.3 billion by 2025.

 

Currently, there are many marijuana stocks popping in the stock markets and knowing the right one to invest in could be quite difficult and tasking. For this reason, Investing port has researched to make this easy and will be sharing three useful tips with you (our readers) on how to successfully invest in cannabis stocks.

 

·      Ensure you invest with big names in the stock market

Provided you are a novice in marijuana investment, the best step is to buy cannabis stocks on big exchanges like Nasdaq and the New York Stock Exchange (NYSE), This idea was advice given by the Director of Cannabis Investing Research Greg Miller. This approach is fairly straightforward. Other stock exchanges like the over-the-counter markets (OTCs) are not so strict based on the requirements a company needs to list. OTCs often lack reliable information on companies, and the stocks themselves are often from firms with low valuations and are traded at lower volumes. 

On the other hand, companies listing on the Nasdaq and NYSE require thorough audits, and must have at least 1.1 million shares and have a minimum valuation of $40 million. Many companies listed on the Nasdaq index and NYSE are mainly the largest cannabis companies around; thus are the safest and most reliable marijuana stock platforms for marijuana investing. Targeting North American firms like Constellation Brands Inc. (NYSE:STZ) will be ideal for beginners. STZ has a $35 billion market capital and is in charge of over 100 brands of beer, wine, and spirits like Corona and Svedka, and more recently, it has become heavily invested in marijuana.

 

·      Learn to Diversify

Despite the fact that Constellation Brands are quite diverse, it is still important to want a variety of cannabis stocks to balance out your portfolio. This implies investing in companies that grow, cultivate, and produce recreational and medicinal marijuana products like Canopy Growth. CGC is a massive marijuana producer with a market cap of $7.2 billion. Most cannabis stocks are still prone to volatility because the industry is still new, hence making them riskier. That is why it is important to diversify holdings by spreading your money across a few different companies, especially those stocks that soars and not neutral.

 

 

·      Learn to limit your orders

Though a marijuana stock like STZ can be bought similarly to other blue-chip stocks, it is very important to use limit orders for most others. When buying a stock, there is an option to use a market order or a limit order. Choose a market order, means the brokerage will buy the stock at the price it is selling for at the moment it executes the trade. This means an investor will pay more for a stock than expected. Because cannabis stock prices are volatile, that could have a negative effect on the wallet. The best option is to use a limit order that lets the investor set a specific price to pay for the stock. This means the order doesn't execute immediately but offers protection against volatility.

 

Conclusion: Marijuana/Cannabis stocks are losing money right now because most of these stocks are overpriced. However, the market for weed stocks is huge and there is more money to be made in it.  Investors should understand the financial record of any Cannabis stocks that they wish to invest in before they put their money on the line.  Be sure that the stock is not overpriced before investing in it. 

 

Disclaimer: Investingport does not own any cannabis stocks at this time.