Top Five Things To Look For When Buying Cannabis Stocks
Ever since Canada legalized recreational cannabis last year, there has been a lot of investor excitement surrounding cannabis stocks. Some pot stocks have had tremendous price movements, causing many to believe that they can get rich overnight by investing. While selecting the correct pot stocks has the potential for outsized returns, investors need to exercise caution as with any up-and-coming industry.
If you’re considering investing in cannabis stocks, here is a list of the top five things to look for:
1. Strong management team.
When it comes to buying a public company, management is integral, and the same applies to buying cannabis stock. So the next time you purchase a small cap pot stock, make sure the right management team is running the business. It would also be best if you avoided companies that shifted management from one company to the next, which is often at the expense of shareholders.
Pharmadrug Inc. has built a solid management team with a significant pedigree in finance and cannabis. Additionally, our Chairman has made significant returns for shareholders, having already sold two cannabis businesses, namely Xanthic Biopharma to Green Growth Brands and Lineage Grow to Harborside.
2. Right capital structure.
Many small and micro-cap companies have capital structures with hundreds and hundreds of millions of shares outstanding. The situation creates a tremendous amount of profit dilution and requires much more volume for the share price to move higher. Selecting the right pot stock has the same limitations.
At Pharmadrug Inc., the company has well less than 100 million shares outstanding with many of these shares owned by management and insiders. This small float of stock creates a fascinating capital structure for shareholders.
3. Personal investment by management.
Many small-cap cannabis stocks have management teams that have not invested any of their own money. The situation does not create confidence among investors. After all, you should put your money where your mouth is, or so the saying goes.
At Pharmadrug Inc., our management team has invested and continues to invest significant capital in the company. Overall, management owns over 10% of the entire company.
4. A focused business model.
There are hundreds of cannabis companies that are publicly-traded in Canada. The problem is that the majority of these pot stocks are all focused on the same area and market, which is cannabis in the U.S.A. and Canada.
We have a very niche focus at Pharmadrug Inc., which is cannabis in Europe and Israel, as we believe that both of these markets are on the verge of becoming very interesting for investors. In Europe, the world’s largest consumer of cannabis is beginning to open its doors for global business. In Israel, newly passed laws will make the nation one of only three countries around the world that allows the export of medical cannabis. We are confident the path less traveled will prove to be fruitful for Pharmadrug investors.
If you’re looking for a pot stock to double overnight, you could get lucky. The difficulty is for the average cannabis investor to trade with this type of volatility in the market.
The management at Pharmadrug Inc. is focused on building an institutional business, focused on long-term growth for cannabis shareholders. After all, we do not look at this as a short term trade for stockholders but as a long-term investment.
If you’re looking to invest in our medical cannabis stock, reach out to us at Pharmadrug Inc. We are at the forefront of medical cannabis markets in Israel and Europe, and our vision is to become a leading global cannabis company. We are committed to bringing safe and affordable medical marijuana to our end markets and also to continuously add value to our shareholders. Our assets include Holycanna, an Israeli cannabis cultivator and nursery license holder, and Cannabisendak which plans to build a network of cannabis dispensaries in Tel Aviv, as well as Pharmadrug, holder of one of ten Germany's Class I Narcotics licenses to distribute medical cannabis throughout the E.U.