When it comes to investing in marijuana stocks, there are plenty of options available. Cannabis is a very hot industry and new companies are created every day. This can be confusing or overwhelming to a lot of investors. Use this guide to learn more about the types of marijuana stocks available and which ones you should be paying attention to.
Before You Begin Investing
Investing in marijuana stocks is the same as investing in any other commodity. You need to do your due diligence on every option you have available if you want to succeed. The marijuana industry is quickly growing, which can lead to some additional volatility than what you would normally see in the marketplace. Remember that every stock is a little different and some have more risk attached to them than others.
One tip is to explore as many companies as you can before making a selection. After doing some research, choose a stock or stocks that you believe in.
Types of Marijuana Stocks
The cannabis market primarily consists of s, biotech companies, and researchers, but this is changing everyday. The industry has a lot of products and services attached to it. Retail locations, lending services, warehousing, and technology used to grow or maintain plants are all booming.
Explore this list marijuana stocks and try to narrow down your search a little bit. Here are just a few ideas for types of companies to look at:
- Growers – cannabis farmers often require large facilities and modern tech in order to produce a consistent product. When you invest in a farmer or production company, you are investing in the ability to supply others with product.
- Biotech Companies – cannabis is a hot topic in the medical world. Biotech companies that focus on cannabis are typically modifying the plant so that it can be used in more innovative ways. Like any other medical company, this requires tons of research and testing before a final product can hit the market. When companies make breakthroughs, they often receive a lot of publicity and hype among traders.
- Consumer Equipment Suppliers – as cannabis becomes more mainstream, the need for specialized equipment goes up. Suppliers and manufacturers don’t just produce pipes; there is a demand for packaging, storage containers, grinders, and other consumer goods.
- Growing Equipment – growing marijuana takes a lot of specialized equipment. Hydroponic systems and special lighting have huge demand right now.
- Other Industry Supporters – there are a lot of small and mid-size companies that don’t fit into one of the major categories listed above. These companies usually help with logistics, but there are many ways to contribute to this growing industry.
Keep in mind that a lot of the companies on the market are start-ups. After all, the market is expected to grow by about 21-percent every year until 2021. This means that while there are major players, you are more likely to find companies that are currently small but have a lot of potential to grow.
A wise investor will choose a good mix of start-ups and established companies. Don’t just take a gamble on a bunch of newer companies with cheap shares. Find companies that have solid financials and a good plan for the future.
Marijuana Exchange Traded Funds (ETFs)
Some people want to invest in the marijuana industry, but they worry about putting all of their eggs in one basket. Companies tend to come and go, and this makes getting involved intimidating to a new investor. One way to get around this is to find exchange traded funds that specialize in marijuana. A good marijuana ETF will invest in a wide range of industry-related stocks, allowing it to slowly grow over time.
Choosing an ETF over individual stocks allows you to easily diversify your portfolio. Every ETF will list their current investments online, so you can easily see which companies you are investing in. ETFs aren’t designed to be checked constantly; the funds are actively managed by the owner, rather than the individual investor. This makes them a good choice for those who want to build more passive investments.
Getting Started with Marijuana Stocks
There are many ways to invest in the marijuana industry. Whether you believe in the medical capabilities of the plant or want a piece of the recreational market, there is a stock for you. All you need to do is a little research and due diligence to find an investment that suits your needs.