Stocks are often a wise choice when it comes to financial gains. However, you also want to be careful on which stocks you invest in so that you make money and not lose it. There are stocks for practically everything, including the rising cannabis industry. But are cannabis stocks safe for Canadians to invest in? Although not exactly the first choice many would pick when it comes down to preferable stocks, marijuana stocks can yield high profits.
Now that recreational cannabis will become legalized in Canada, many are looking to invest their money in the popular niche. However, given desire and popularity of cannabis, are we just waiting for a marijuana bubble to happen now? Nothing is certain right now, but there is a lot of talk on a volatile cannabis market, which can be trouble for investors later on.
Last year, the four biggest cannabis stock companies in Canada reported high returns (in the triple-digits), and those early investors were profiting big. But that growth wasn’t always constant, giving investors a run for their money. It was a nerve-wrecking roller coaster ride! And many experts admit that it doesn’t look like the cannabis market will become stable after it’s legalized either.
Right now, there’s a shortage of product, but by fall 2019, that should balance out as more people get into the industry because of the legalization. However, the majority of the industry estimates that there will be huge growth in the long term. Many look to what’s happening in the U.S. as a reliable model of what will happen in Canada once cannabis is legalized.
Support for marijuana legalization is at an all-time high in the states and the American model is providing generous estimates of profits. Just three years after it was legalized in Colorado, profits continue to grow about 30% a year, while sales in Washington are up by 50% since last year. Nevada is the most recent state to legalize marijuana and they had more than $60 million in sales in just two months!
But Canada’s path to legalization hasn’t been so easy, which is why many think there will be a marijuana bubble soon. However, investors shouldn’t be scare, but should remain cautious, keeping in mind the actual federal regulations that will impact stock prices.
A good rule of thumb for newbie investors thinking of the cannabis sector is that they should diversify their stocks instead of solely investing in marijuana companies, which can be risky. Sure, cannabis can be a sector with huge growth and profits, but it’s better to also identify companies that are undervalued by the market.