The cannabis as an industry has been a very hot controversial topic in the past 2-3 years. After the legalisation of marijuana for the recreational purposes, by one of the major economies- Canada, it gave the entire cannabis industry a new hope and sign of exponential business growth. Soon after this, the largest economy of the world, the USA also gave the green signal to marijuana companies for recreational and medical purposes.
After all these legal regulations going soft on the industry on a global scale, we had seen an unprecedented traction in the cannabis stocks. The Canadian Marijuana Index (In Canada) which tracks the listed companies who deal in marijuana products, rose from 200 odd levels to an astonishing 970+ levels in just a matter of 6 months (July17-Jan18). This was also reflected in the global spurt of the entire industry. But these returns were not at all easy to capture, and soon after 6-8 months, the entire trend changed to negative, taking some of the stock down by more than 50% in a few months.
Be that as it may, in Australia, conclusions towards cannabis are yet acrid, with the two sides of government hesitant to take off cannabis-accommodating strategy for either medicinal or recreational use. On a state-by-state premise, things are extraordinary, with spots, for example, Victoria and New South Wales finding a way to build the utilisation of restorative cannabis items.
Now the major question for the investors is whether to hold some cannabis stocks in the portfolio or not considering the excessive sensitivity of the sector towards the government regulations, policies and restrictions. Here are six stocks on the ASX which are into the cannabis business (directly or indirectly) that have given a good roller coaster ride to the investors
- Elixinol Global Limited (ASX: EXL)
Elixinol, that operates in the medical cannabis sector is one such stock that has doubled the investors' wealth within a year. Rising in line with the cannabis trend and backed by strong business growth, the stock has only given high returns to the investors. On 31st January 2019, the company posted strong results with Revenue of $11.9 million for Q4 FY2018, representing a massive 116% growth on prior corresponding period (PCP). Elixinol still remains optimistic that it will receive both cultivation and manufacturing licences. After the approval of these licences, the stock is expected to surpass its all-time high levels and continue its bullish trend. Currently, the stock is trading at $3.47 as on 22nd February 2019 which is down by 4.1% from the previous closing of $3.62.
- Cann Global Limited (ASX: CGB)
Cann Global was first Australia based cannabis company which has received a licence and subsequent permit to cultivate medicinal cannabis in Australia. The company cultivates and manufactures a range of cannabis products for medical purposes. Like most of the cannabis stocks, it has also faced a huge period of volatility. From mere A$0.5 in the first half of 2017 it skyrocketed to more than A$4.5 in the first half of 2018. As the hype wore off, the stock came down to A$1.7 – A$1.8 after a year-long phase of consistent distribution which is evidently seen on the stock price chart. As the stock is down by almost 60% from the highs, new investors are getting in, hoping for another massive rally
- Roto-Gro (ASX: RGI)
Roto-Gro is an agricultural company focused on equity and licence ownership in lawful cannabis space and proprietary agricultural technology. This company has also faced its fair share of ups and downs. The stock has moved more than 100% a couple of times and both times fell back around the same level stating lack of buying at higher levels but also the lack of supply at lower levels; therefore, the stock has stayed around the same level from the past 1.5 years. As the stock is trading around the lower end of the range at A$0.27 as on 22nd February 2019, it could be a buying opportunity looking at the past buying zone from where it has bounced again and again.
- Auscann Group Holdings Limited (ASX: AC8)
Auscann is an Australian based cannabis company which has operations in producing and providing high quality, clinically validated and economical cannabis medicines. The stock has lost more than 70% of the value in the past on year, showing lack of interest from the investors. In contrast, some of its competitors like Elixinol Global Limited has given 170%+ in the same year. Trend still seem to be downwards, and investors might look at other players in the industry to bet on the cannabis story going forward. The stock closed A$0.405, down by3.6% from the previous closing of A$0.42 as on 22 February 2019.
- Bod Australia Limited (ASX: BDA)
Bod Australia is a consumer discretionary company which makes healthcare products. The stock witnessed a huge rise from October 2017 to January 2018, after that fell to 30% to 40% from the peak and continues to be in a range for more than a year, bouncing off the support levels from A$0.35 – A$0.40 to being sold off from the resistance of around A$0.70. The stock has traded in this range for more than a year. As on 22nd February 2019, it closed at A$0.455, up by 1.7% from the previous closing of A$0.448.
- MMJ Group Holdings (ASX: MMJ)
MMJ is a volatile stock and often gives huge swings. Trading at the CMP of A$0.25 as on 22nd February 2019, stock is still in a downtrend falling continuously from the peak of around A$0.60 a year ago, but it seems the price is forming a base around current levels and a further downside risk in minimal with high potential upside of reaching the previous swing high of A$0.60.
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