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credits:istock.com/Morrison1977 One Cheap Weed Stock Worth Watching in 2018
Prices of top marijuana stocks are far outgrowing their valuations as investors continue to jump in with both feet. Cheap marijuana stocks are now like needles in a haystack. Hunting for them is becoming increasingly laborious, but I have managed to find yet another marijuana penny stock that is worth a second look.
The company I’ve shortlisted today is a “picks and shovels” play. For investors new to this concept, the term originates from the California Gold Rush, when sellers of mining equipment (that is, picks and shovels), made fortunes by selling equipment to the forty-niners in the booming gold mining industry.
Today’s pick is a Canadian company that makes money by selling figurative picks and shovels to the flourishing marijuana industry in the North American (U.S. and Canada) and international markets. On top of that, with two new initiatives underway, this company is striving to become the Amazon.com of the marijuana industry.
Before I divulge more, let me rehash some of the key developments that solidify my faith in the legal marijuana industry.
Why Marijuana Stocks Have a Promising Future
The social stigma attached to marijuana use is living its last days. Today, long-held orthodox anti-marijuana beliefs are being questioned everywhere in the world. Medical research supporting the therapeutic properties of cannabis has further subverted the negativity surrounding this green grass.
North America is moving toward legalization. Canada has obviously taken the big leap, with intentions to legalize marijuana for recreational adult use this summer. Canada will soon join Uruguay and become the second country to fully legalize pot.
Albeit with baby steps, the U.S. is headed in the same direction as its northern neighbor. Just earlier this month, Vermont became the ninth American state to legalize weed for recreational use. What’s striking is that the Green Mountain State managed to do so without a ballot initiative. Vermont is the first U.S. state to have legalized marijuana via its legislature.
A ballot initiative would have likely resulted in the same decision anyway. After all, more Americans today support marijuana legalization than they did a decade ago. Countless surveys have recently shown that the majority of Americans are swinging in favor of legalization.
Other studies have identified that marijuana use is now more commonplace among teens than is tobacco use. High school students prefer to smoke marijuana over cigarettes.
It’s easy to put two and two together now. The demand for marijuana will predictably grow in the coming years as the new generations favor weed over tobacco. Plus, legalization will pave the way for swift adoption.
So, to sum it all up, the marijuana industry is all set to boom, and early investors may have a chance to multiply their investments through this initial growth phase.
This Is the Marijuana Penny Stock You Should Be Watching Right Now
So, we finally come to today’s pick. This company has three distinct business lines and, at first glance, it may seem like the company has spread itself too thin. But, once you put all the pieces together, the big picture appears.
The company in question is not a marijuana producer. Instead, it sells marijuana equipment, precisely vaporizers.
This Vancouver, Canada-based company is one of the largest online sellers of vaporizers in the world. Despite originally being a North America-centric business, it has evolved into a global seller of vape pens and desktop vaporizers.
I’m talking about Namaste Technologies Inc (OTCMKTS: NXTTF), (CVE: N).
Namaste Technologies released its latest financials on Monday, reporting record-breaking sales. This is when I started paying closer attention to this relatively lesser-known company.
The company had its best quarter yet, making $4.9 million in revenue, which accounted for a 133% year-over-year increase in sales.
Although modest compared to its peers in the industry, this marijuana company is gradually filling up its coffers. Namaste’s recent expansion into European and emerging South American markets is what’s primarily contributing to its rapidly growing sales.
During its recent quarter, this marijuana company generated more than two-thirds of its revenue from outside its North American market. Australia, Brazil, Germany, and the U.K. were four of its biggest markets outside of the U.S. and Canada.
Here’s how this marijuana penny stock has fared against the market in the trailing year.
Chart courtesy of TradingView.com
But here comes the best part why I shortlisted this marijuana penny stock. While it’s making most of its money from selling vaporizers, Namaste Technologies has recently initiated two new business lines with an aim to become the biggest e-commerce platform (read: “Amazon”) for marijuana.
After a recent acquisition, the company is now making a foray into selling medical marijuana. Namaste is in the process of creating an online marketplace where consumers may buy (or possibly, even sell) marijuana.
To make it possible, the company is building a facility for warehousing marijuana sourced from the top growers in Canada and around the world. This project is currently underway at its recently acquired subsidiary CannMart Inc.
CannMart has just received a license from Health Canada to begin selling medical marijuana within that country. The company will be procuring its supply from established industry names like Aphria Inc (OTCMKTS: APHQF), (TSE: APH) and Supreme Cannabis Company Inc. (OTCMKTS: SPRWF), CVE: FIRE)
In addition to this, Namaste has another project in the works. The company has created a telemedicine platform, “NamasteMD,” to connect medical marijuana patients with doctors. With NamasteMD, medical marijuana patients can receive virtual consultation from doctors and get their prescriptions written online, without ever having to leave their homes.
Companies like Aurora Cannabis Inc (OTCMKTS: ACBFF), (TSE: ACB) have signed up with NamasteMD to make use of its digital portal to drive medical marijuana sales. NamasteMD offers Web-based tools and smartphone apps.
In the grand scheme of things, all three of Namaste’s business lines will converge. NamasteMD will connect with CannMart, the shopping platform where Namaste would be selling its vaporizers and externally procured marijuana products.
Patients will be able to digitally receive their prescriptions via NamasteMD and then fill their prescriptions at CannMart. It would create a seamless online buying experience for marijuana consumers, thus ostensibly giving us the “Amazon” of marijuana. It may seem too incredible on first thought, but it’s not too hard to achieve.
Analyst Take:
As always, I’ll deliver a fair warning to my readers before I conclude. Remember that this nascent industry is rife with pitfalls. The majority of marijuana stocks are trading at high multiples. Stock valuations are largely being carried out on speculation. So it’s best that investors do their own research to avoid going down the rabbit hole.
Having said that, I reiterate that Namaste Technologies is one marijuana penny stock that investors shouldn’t let pass under their radar. This picks and shovels company could turn out to be the Amazon of the marijuana world.