The 10 Best Marijuana Stocks in February

Following a more than one-year downtrend, there’s no longer any doubt about it: Marijuana stocks are back in a big way…

Cannabis projects as one of the fastest-growing industries this decade, with a report from New Frontier Data suggesting that U.S. pot sales could potentially triple by 2025 to as high as $41.5 billion annually. Finding customers won’t be difficult. Rather, it’s a matter of legalizing cannabis and progressively moving consumers from illicit to legal channels.

Cannabis stocks were on fire in February

The excitement surrounding pot stocks was readily evident when analyzing their monthly returns in February. Whereas the benchmark S&P 500 ended last month higher by 2.6%, 10 marijuana stocks crossed the finish line with a gain of at least 20%. In descending order, the best marijuana stocks of February were:

  1. MedMen Enterprises (NASDAQOTCBB:MMNFF): Up 208%.
  2. OrganiGram Holdings (NASDAQ:OGI): Up 66%.
  3. Sundial Growers (NASDAQ:SNDL): Up 63%.
  4. Aphria (NASDAQ:APHA): Up 46%.
  5. GW Pharmaceuticals (NASDAQ:GWPH): Up 40%.
  6. Tilray (NASDAQ:TLRY): Up 35%.
  7. Planet 13 Holdings: Up 29%.
  8. Harvest Health & Recreation: Up 27%.
  9. Curaleaf Holdings (OTC:CURLF): Up 22%.
  10. Cresco Labs: Up 20%.

This might seem like a random mashing together of cannabis stocks, but three trends stood out as catalysts behind these enormous gains.

The Reddit community fell in love with penny stocks

Arguably the biggest factor that pushed marijuana stocks higher in February was the retail investor-fueled rally originating from Reddit. Initially, retail investors chose to focus on stocks that were heavily short-sold. But this quickly manifested into a movement that targeted highly liquid penny stocks. Not surprisingly, the three biggest gainers in February — MedMen, OrganiGram, and Sundial — are all penny stocks.

What’s worrisome is that penny stocks often have low share prices for a very good reason. Sundial, for example, has yet to crack the code to generating a profit, and is in the midst of a business transformation that’ll see it focusing on retail instead of wholesale. This will push its opportunity be profitable even further out. It also doesn’t help that the company has issued more than 1.1 billion shares via offerings and debt-to-equity swaps in just five months.

Meanwhile, MedMen Enterprises isn’t even a certainty to survive. The company’s previous management team was far too aggressive with its expansion efforts. Plus, being based in the U.S. means it’s…

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