Alchemist Mining (
TSX:V.AMS,
Stock Forum) isn’t exactly a company on the lips of a lot of investors. The company has some land claims near Zenyatta, and puts out press releases about as often as Kim Kardashian wins Nobel Prizes, but the long-time nobody stock has been taking off Friday morning on increasing buzz (sorry) that it’s retooling as a medical marijuana play.
Alchemist stock is up 20.69% on the day, and up 260% since mid-February, on no news.
A lack of clear news on corporate direction doesn’t seem to be an impediment for weed players right now, however, as Satori Resources (
TSX:V.BUD,
Stock Forum) has grown 1200% since mid-January on
speculation it will seek to grow medical marijuana in a Flin Flon mine shaft, and Pan American Fertilizer (
TSX:V.PFE,
Stock Forum) rocketed yesterday as on the basis of
shared executives and a likelihood for increased business from growers. That stock has climbed 322% in just a few days, leading to the company putting out a news release that they are “
unaware of any fact which would explain the unusual trading activity.”
Other speculative rumor mill plays include Thelon Capital (
TSX:V.THC,
Stock Forum) which, like Satori and Pan American, have a stated connection with Medical Marijuana
industry consultant Scott Walters, and Seaway Energy Services (
TSX:V.SEW,
Stock Forum), which is cryptically telling shareholders it is
"currently seeking potential business opportunities in various sectors, including agricultural, technology, social media and the medical industry.”.
Whether this craze for weed stocks is sustainable, or has any basis in likelihood of government accreditation, is yet to be seen. Often a sector jump like this feeds into itself, as daytraders take a chance to make quick profits before an eventual correction.
US marijuana plays, like Creative Edge Nutrition (
OTO:FITX,
Stock Forum) (which has permission to build a 50k square foot grow op in Ontario), have already had their explosive run and leveled off. But Canadian players are emerging in plentiful numbers with nothing more than a business plan to either get a license to grow, or invest in those that do.
And with an increasing number of ‘gambler’ investors looking for somewhere to put their Bitcoins, marijuana appears to be just this side of underground enough for that crowd to roll the dice.
It’s important to note that, of the hundreds of companies that have applied to Health Canada to be approved medical marijuana growers, only seven have been permitted to date. And there’s no indication that number will expand wildly, as the number of Canadian medical marijuana patients appears largely restricted to those who have genuine medical need, unlike in the US where users can claim they’re depressed and get a prescription.
But, for now anyway, double-digit share price growth seems to find any company that has the slightest sniff of marijuana about them, so expect this trend to continue for at least a while.