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Summary
- With Joe Biden to be sworn-in as the 46th President of the United States, the stage seems to be set for a stock market bull run.
- Canopy Rivers (TSX:RIV), Auxly Cannabis (TSXV:XLY), and Numinus Wellness (TSX:NUMI) are three Canadian penny pot stocks that could take-off ahead of Democrats’ promised pot legalization.
- Lithium stocks such as Neo Lithium (TSXV:NLC) and Millennial Lithium (TSXV:ML) may also gain with the ongoing clean energy movement.
These are changing times. In less than seven weeks, Joe Biden will be sworn-in as the 46th President of the United States, and we’ll all bid goodbye to Donald Trump.
In this world of the ever-expanding universe (Hubble’s Law), change is the only constant (courtesy ancient Greek philosopher Heraclitus).
Now, many traders aren’t typically big fans of change when it comes to stocks markets. But being prepared and well-equipped can help many overcome disruptive market changes.
With the upcoming change in the US presidency, several analysts feel that a young Biden bull market is at its tipping point. There’s hope for additional fiscal stimulus to support the ailing pandemic-crushed US economy. Moreover, a divided US Congress may not change corporate tax rates anytime soon. Add to all this, the historically low benchmark interest rates. The stage is set for a stock market bull run.
Keeping all this in mind, we quickly skim through five Canadian penny stocks that are worth exploring ahead of a potential Biden bull market run.
Cannabis Stocks
It will soon be legit to score pot in the United States, thanks to the upcoming reforms that the Democrats promised in the poll campaigns. The US pot market is massive. And legalization of weed in the world’s largest economy (by net wealth and nominal GDP) will only pave the way for more markets in other countries.
Bearing that in mind, penny pot stocks such as Canopy Rivers Inc. (TSX:RIV), Auxly Cannabis Group Inc. (TSXV:XLY), and Numinus Wellness Inc. (TSX:NUMI), may have long innings ahead.
Canopy Rivers, currently trading at C$ 1.23 apiece, has grown by nearly 8 per cent this year. In the last three months, the pot stock grew by over 40 per cent. The C$ 190-million venture capital firm has stakes in upcoming cannabis firms to value chain organizations dealing with beverages, edibles, dry flower / pre-rolls, vaporizers, hardware and so on. It reported an operating loss of nearly C$ 5.8 million in second quarter fiscal year 2021 (ending September 30, 2020), down from an operating profit of C$ 2.17 million a year ago.
Auxly Cannabis stock has zoomed by 110+ per cent in the last three months. However, the stock is down by 44 per cent year-to-date (YTD). Its 10-day average trading volume is 2.6 million. Its current price-to-cashflow (P/CF) ratio is 194 and price-to-book (P/B) ratio is 1.09, as per data on TMX site. Auxly’s net revenue for the three months ended September 30, 2020, was C$ 13.4 million, up 85% quarter-over-quarter. The firm has launched several new products including capsules and edibles, ahead of the expected cannabis expansion. The stock is trading at C$ 0.35 apiece.
Numinus, currently trading at C$ 0.78, went public in June this year. Since then, it has declined by about 13 per cent. But in the last three months, the stock has advanced by 230+ per cent. Numinus claims to be the first Canadian firm to harvest Psilocybe mushrooms at its Health Canada licensed facility. Psychedelic is an upcoming field, gaining steam among investors. With this development, Numinus is certainly a stock to watch out in the future.
Lithium Stocks
Demand for lithium, the future battery fuel, is increasing with the rise in electric vehicles and thrust on clean tech and green energy. The Biden government will likely be working in tandem with the Trudeau-led Canadian government – both pushing for clean energy initiatives for the future generations.
Neo Lithium Corp. (TSXV:NLC) and Millennial Lithium Corp. (TSXV:ML) are two junior lithium stocks, currently trending high on TMX’s Top Metal stocklist.
Neo stocks are up 200 per cent YTD while Millennial stocks have gained 166 per cent in the same time frame.
Neo’s current P/CF ratio is 29.40 and P/B ratio is 2.94 while Millennial’s P/B ratio is 3.133.
