3 Penny Pot Stocks to Add to Your Watchlist
Penny pot stocks continue to increase in popularity as substantial price swings provide uncommon investment opportunities for cannabis investors. Many investors are capitalizing on significant and frequent price movements of these pot stocks to profit. Let’s take a look at 3 penny pot stocks with significant upside potential to add to your watchlist.
HEXO: Significant Strides to Expand its International Footprint
HEXO (NYSE: HEXO) is one cannabis company that has intrigued investors. The pot stock gained 66% since May and is currently trading at $0.75. The better-than-expected third-quarter results instilled confidence in investors after June. Its net revenue soared 30% YoY (year-on-year) for the quarter, while its adjusted EBITDA loss narrowed to $4.3 million. Higher sales from its “Original Stash” brand as well as the newly launched hash and oil extract drops were the key catalyst of recent growth.
Recently, HEXO has made some great positive progress. The sale of its Niagara facility to fund the expansion of its Belleville, Ontario facility and partnership with Molson Coors in the US are just a couple examples of this. Yesterday, in a very crucial development, HEXO, launched medical cannabis products in Israel markets. This indicates that the marijuana stock is seriously expanding its international footprint.
These developments do stoke investor optimism, however, they wouldn’t favor the pot stock much if it fails to move towards profitability. The marijuana giant is grappling with concerns over dilution and the cash position isn’t too impressive either. Therefore Hexo’s road to recovery is a long one. However, there’s an opportunity for investors to capitalize on short term growth – particularly right after earnings reports. For this reason, we recommend adding this pot stock to your watchlist.
TGOD: Product Innovation and Restructuring Crucial for Recovery
The Green Organic Dutchman (OTC: TGOD) is one of many pot stocks that hasn’t fared well this year. TGOD plummeted nearly 40% since January 2020 amid COVID-19 market volatility and weak financials. Its Q1 revenue stood at $3.1 million which was slightly lower than its previous quarter revenue of $3.3 million. The company is still wrestling with loss and has also reported cash outflow from operations in the first quarter. The fact that its losses and debt are growing at a pace higher than its revenue is weighing on cannabis investors.
With its strategic plan announced in 2019, this cannabis company is taking steps towards operational efficiency and lowering financing obligations. The marijuana stock is foraying into a lot of innovative products like “TGOD Infuser” and dissolvable powder to accelerate its growth. However, at the moment investors should be cautious about TGOD and shouldn’t expect any turnaround in the short-term. However, cannabis investors can still capitalize on short term price movements.
Namaste Technologies: A Risky Bet despite Impressive Financials
Namaste Technologies (OTC: NXTTF), a leading e-commerce platform for the cannabis segment has gained nearly 24% since mid-April. However, after plenty of volatility, its share price hasn’t seen a substantial rise in value this year. Namaste is a marketplace for cannabis products through 24 websites. In its latest Q1 results, the pot stock posted a 16% YoY (year-on-year) revenue, while its CannMart portal saw its revenue surge by 800% YoY.
The cannabis company is making some significant efforts in aligning its corporate structure and adopting AI to help customers make the “perfect product choice”. The pot stock’s strength lies in its robust yet diverse product portfolio. In a move to tap the upcoming growth in edible Cannabis, Namaste has already bought a stake in Choklat, a premium chocolate manufacturer in Alberta in 2019.
The pot stock is evaluating plenty of strategic opportunities but it needs to be profitable in the long-run. Its losses have narrowed but the revenue growth must translate to positive bottom-line growth. Until then, Namaste is a risky long-term proposition for investors but has some very interesting short-term volatility plays.
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