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While marijuana stock investors didn’t get the momentum they were hoping for in the recent election, all state cannabis legalization measures passed. Recreational cannabis was legalized in Mississippi, South Dakota, Montana, Arizona, and New Jersey. The clock is ticking for key states to legalize recreational marijuana. This could be the reason behind the recent excitement in cannabis stock.

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Sure, there are still financial and stability issues. In fact, 2020 wasn’t the best for most cannabis companies. But marijuana stocks have begun soaring up in 2021. So, for many investors, the patience is now paying off. The Prime Alternative Harvest Index started picking off in December 2020. Buying now allows a marijuana investor to reap big. But you are probably asking: Which are the CBD stocks to watch? Well, we have picked the three best stocks to buy now.  

How to Buy Marijuana Stocks 2021?

Before we look at the top marijuana penny stocks 2021, it is important to understand a few aspects of buying marijuana stocks. When it comes to picking the best CBD companies to invest in, value investing plays a crucial role. This is a factor-based strategy where you choose stocks based on their worth. In most cases, you will pick stocks that you believe are trading for less than their potential worth, as their stock prices may rise faster. 

 

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You could also look at it from a growth perspective. Here you choose stocks that grow significantly faster than the whole industry. Alternatively, you could choose your stock based on momentum. In this factor-based investing strategy, you will select stocks whose prices have increased faster than that of the whole industry. 

Another approach to cannabis investing is to conduct a full cycle analysis of the industry and stock. Here is how it goes: 

  • Understand different marijuana stocks: Cannabis-focused biotechs, marijuana growers and retailers, and providers of ancillary products and services. 
  • Know what to look for in a cannabis stock. Look at each company, its growth strategy, management team, competitive angle, and financial position. 
  • Understand the risks associated with cannabis stocks.
  • Monitor and analyze top marijuana stocks
  • Invest like a professional.
  • Keep tabs on industry dynamics.

Top Marijuana Penny Stocks 2021

 

1. Cresco Labs (OTC: CRLBF)

Cresco Labs ranks as the largest multi-state marijuana operator in the US. Currently, the company is the largest supplier of branded marijuana products. Through its increasing cannabis chain of stores, Cresco has cemented its position in the majority of the states it operates. And there is no sign of slowing down. 

Recently, the company sealed its acquisition of four medical marijuana dispensaries from Verdant. Besides this, Cresco won a license to sell recreational cannabis in Arizona. The company was already selling medical marijuana in the state. 

Another interesting investment that Cresco eyes are Bluma Wellness. The deal is expected to be completed by mid-2021. As we speak, Bluma runs seven medical cannabis dispensaries in Florida, and it is planning to open an additional branch in the state. Bluma’s stores, which operate under the One Plant brand, rank second in Florida when it comes to smokable flower sales.

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To say the least, Cresco’s stocks have been impressive. So far, the share price has risen by more than 35%. Despite this rise, many experts consider that there is still more room for growth, as its price-to-sale ratio is still low when compared to its peers. This valuation backed by Cresco’s strong growth path, makes this pick one of the attractive pure-play pot stocks in 2021. 

2. Innovative Industrial Properties (NYSE: IIPR)

This is another marijuana stock to watch out for in 2021. The interesting part is that Innovative Industrial Properties is a real estate investment trust specializing in the cannabis industry. If there was a landlord in the medical marijuana industry, then Innovative Industrial Properties will be the biggest of all. This company buys indoor marijuana cultivation space, then leases it to smaller cannabis companies. 

What makes this company very attractive to marijuana investors is that it is profitable and offers great dividends. As a REIT, the firm should set aside at least 90% of its income as dividends to shareholders.  

Its business is picking due to the increasing investments from its customers, thanks to the nationwide marijuana decriminalization trend. Right now, 100% of its floor space is taken, and given that an average lease lasts for at least 16 years, its revenue is secured from most cannabis industry risks. This was evident in 2020. Amid the economic disruption caused by the pandemic, Innovative Industrial Properties’ income grew by 162%. 

 

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3. Scotts Miracle-Gro (NYSE: SMG)

To most people, Scotts Miracle-Gro is a provider of gardening and lawn care products. But in recent years, the company has made inroads in the hydroponic supply, making it one of the hottest CBD companies to invest in. Hydroponic solutions are vital for most growers, especially those growing cannabis. In 2018, Scotts purchased Sunlight Supply, a leading distributor of hydroponics products. This acquisition, amounting to $450 million, together Hawthorne catapulted Scotts as one of the leading suppliers to marijuana operators. 

Going against the industry trend, Scott’s shares rose by over 95% last year. Its first-quarter results have further cemented the growth momentum. 

Its Hawthorn division focuses heavily on the marijuana market. Surprisingly, this division has been the company’s significant growth driver. In the first quarter that ended January 2021, Hawthorne registered a 71% year-over-year income growth. Over the last four quarters, the company saw a 60% growth in sales.  

Now that key markets such as New Jersey (and hopefully New York will follow suit) have legalized recreational marijuana use, Hawthorne will likely continue to enjoy consistent growth.  

Hawthorne growth doesn’t mean that other Scott’s core business units will stagnate. This diversity of growth will provide steady cash flow and growth angles, making the stock less risky. This steady growth has enabled the company to pay dividends yields greater than 1.1%. Overall, Scott Miracle-Gro is an ideal stock for conservative marijuana investors who want to take advantage of the cannabis boom.

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Takeaway

Marijuana legalization is sweeping over the US. The global cannabis market is growing, too. As of December 2020, marijuana spending was $29. Statista predicted that this figure would rise to about $63 billion in 2024. So, if the industry can sustain this immense growth, then marijuana investors will continue to enjoy better dividends and rising stock prices. If you want to learn more about this growing billion-dollar medical marijuana industry, MMJDoctor can be your trusted resource.  

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