A new study by Robert H. Smith School of Business grad Evan Qiu and Quantum Financial Advisors co-analysts Peng Zhang and Steven Nunez—a 2010 UMD economics graduate—has helped formulate list of hot cannabis investments despite potential regulatory issues.Despite the marijuana industry’s impressive sales projections (sales are projected to rise to just under $23 billion by 2020, from $6.7 billion last year), publicly traded cannabis companies remain a risky investment.
Qiu and his co-authors in the study sought to rank cannabis companies from safest-to-riskiest. The study found that large capitalized public companies with several product lines and a track record of success are safest, medium capitalized stocks that typically have one or just a few product lines fall in the middle, and micro capitalized stocks, or penny stocks, with just one product line, as riskiest.
The team’s research also led them to name these stocks to their hot list of cannabis investments:
- INSYS Therapeutics, with a diverse pharmaceutical portfolio, stable revenue and earnings, and cannabis medicine in phase-three development
- Cara Therapeutics, with five mature diversified products that cover neuropathic chronic and acute pain, plus forthcoming products in phase three development
- GW Pharmaceuticals, a biotech firm with phase-three products in the pipeline and financials that are relatively healthy
- Canopy Growth, publicly traded on the Toronto Stock Exchange, with core brands Tweed and Bedrocan increasing its gross revenues
Despite the optimism in this new, emerging market, Qiu did mention some uncertainty in pot’s future due to the current administration,
“President Trump may continue the pursuit of change for change’s sake and therefore increase the risk for investors contemplating exposure to this arena,” Qiu and the authors say in their white paper.
The team’s research on cannabis comes shortly after Michael Katz from Berkeley’s Haas School of Business revealed his team’s findings on the future of the industry. Katz said, “Cannabis is in the very, very early stages of becoming an advanced business, but the people entering this space are botanists or chemists. They’re not experienced business people.”
You can read more about the Smith School study here.