Penny stocks — those trading under $5 per share — are risky by their very nature. And that statement is arguably doubly true for cannabis stocks. Numerous pot companies, after all, have run afoul of regulators for questionable business practices in the past.
That being said, there are some potential diamonds in the rough bumping around the penny cannabis stock landscape right now. For example…
Here’s a brief overview of the potential risks and rewards associated with these two penny pot stocks.
A new top-10 Canadian cultivator
Canada’s Aleafia isn’t particularly well known among marijuana investors but that could soon change in the wake of the company’s acquisition of health and wellness specialist Emblem last March. By acquiring Emblem, Aleafia instantly moved into the realm of top ten Canadian cannabis cultivators, with an estimated peak production capacity of 138,000 kg/year of cannabis. The combined entity also sports a whopping 40 health and wellness clinics spread across Canada. In a nutshell, Aleafia now has a decent shot at capturing a healthy portion of the multi-billion dollar medical marijuana market in the years to come.
Equally as critical, Aleafia has also been working toward expanding its footprint beyond Canada, evinced by its 10% stake in the Australian medical cannabis company CannaPacific and recent expansion of Emblem’s joint venture with the German pharmaceutical wholesaler Acnos Pharma GmbH. The company thus has two international channels to soak up at least some of this increased production capacity.
The big drawback with this promising medical marijuana company is that it doesn’t have a major partnering deal in place. As such, Aleafia is probably going to have to continue to rely on secondary offerings to fund its ongoing expansion for the foreseeable future, which is far from ideal given its sub-$1 share price at the moment.
Aleafia, in turn, might want to bite the bullet and execute a reverse split soon to boost its share price. Such a move would…
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