Has the entire market gone to pot? Or should you be looking for hot marijuana stocks in 2020?
Marijuana stocks were totally hot in 2015, then again in 2018 and the beginning of 2019. But toward the end of last year, they started to tank. Now, a lot of traders speculate that it’s high time for another surge.
Is it for real? Are pot stocks about to spike again? If so … what stocks should you be watching?
Every trader wants hot stock picks. And yeah, I’m happy to share my watchlist with you — subscribe to my FREE weekly watchlist here.
But here’s the thing that you have to remember … A watchlist is a list of stocks to watch, not stocks that you need to trade right now. You should NEVER blindly trade someone else’s picks. Not even mine.
I don’t just want to give you hot picks, because that won’t do you any good in the long run. I want you to understand how to choose stocks to trade and create smart trading plans. That’s how you can really take advantage of hot sectors and trading opportunities.
So let’s talk about what’s happening with marijuana stocks right now in 2020. This post is here to help you with your pot stock education. Pay attention so you can watch the market and make your own decisions.
Table of Contents
- 1 Should You Trade Marijuana Stocks?
- 2 Marijuana Stocks to Watch
- 3 How Do You Buy Marijuana Stocks?
- 4 How Do You Choose Marijuana Stocks?
- 5 5 Strategies to Trade Marijuana Stocks in 2020
- 6 Trading Challenge
- 7 The Final Word on Marijuana Stocks in 2020
Should You Trade Marijuana Stocks?
Everyone wants to know what the hot stocks are … But you’re here because you want to separate yourself from idiot traders, right? I don’t want to blindly follow hot picks and inevitably blow up your accounts. So you need to think differently.
You’ve gotta think about what makes stocks move, how they move, and what you can learn from these movements that can inform future trades.
Remember what I’m telling you right now. It applies to any sector — not just marijuana stocks.
If you’re trying to decide if a sector is worth your time, you need to look for two key things…
First, does the sector have growth potential? Are people talking about it, are they excited about it? A new technology or emerging sector can seem super cool. But if nobody knows about it, the stocks won’t do much.
Second, are there specific companies or stocks in that sector with growth potential? Are there small companies getting good buzz or attention? It’s not just about getting the public excited … it’s also about getting traders excited.
Supply and demand, baby! That’s what drives the prices up.
Based on this short checklist, marijuana stocks get a big thumbs up.
It’s an emerging and buzz-worthy sector. Legalization is slowly but surely happening in more and more places … the tide has turned. It’s only going to continue.
As recreational and medical marijuana becomes more widespread, it means more products, more partnerships, more news … And all that means more opportunities for traders.
With every new development, there’s a potential catalyst for a spike.
Are you willing to take the time to do research and filter out the losers? Then yeah, this sector is worth your time.
But remember: the same prospecting that could make marijuana stocks a good ground-floor opportunity can also make them dangerous.
There’s no proven history with these stocks. It’s like the Wild West. So yeah, there could be schemes, pumps, or so-called “opportunities” that go nowhere.
If it sounds like I’m trying to scare you … I am. You should be scared, especially if you’re a newbie. But not so scared that you don’t pursue trading. Just scared enough to do a TON of research before you trade.
Marijuana vs. Beer and Tobacco Stocks
Maybe you’re thinking, hey, marijuana’s a party kind of thing … Why not look at other vices like beer and tobacco?
It’s not bad logic, but you won’t necessarily find easy comparisons. After all, these are more established industries. And, you know, prohibition ended close to 90 years ago.
But here’s an interesting idea: why not think ahead?
Consider potential partnerships. How marijuana could create sympathy plays for both beer or tobacco-related companies?
Here’s a hypothetical … Say that a major beer company partners with a cannabis company to make hemp beer. That could move stocks for both cannabis and beer companies across the board.
Marijuana Stocks to Watch
What pot stocks should you be watching right now?
Let’s get this straight: I can’t and won’t tell you what stocks to trade. That’s your responsibility, your work, and your decision. It depends on your lifestyle, your trading style, your account size…
But I can make observations on pot stocks that might be worth watching for one reason or another.
This isn’t the same as saying these are awesome stocks that you should trade. Instead, they’re worth watching to see if you can learn anything from their patterns and price action … And they could help you find potential plays.
Aphria Inc. (NYSE: APHA)
Aphria Inc. is a Canada-based company that produces and distributes medical marijuana, creates cultivation and grow systems, and makes and sells hemp-related food items. It was founded in 2014 by two veterans in the agriculture industry.
Why APHA is worth watching: Not long after the company was founded, it was licensed to start selling medical cannabis. The wholesale orders were big and showed potential … so much that the company quickly doubled the size of its grow operation.
Over the past few years, it’s acquired smaller companies and expanded to even more greenhouse space. This is a positive sign for potential growth. It’s not all good news, though. For example, analysts just issued a full-year guidance cut. But there still could be some spikes ahead for this one.
Keep in mind APHA is a former multi-day runner from December 2017 and August 2018. When a stock proves it can break through resistance and run for multiple days, it’s worth remembering.
Aurora Cannabis (NYSE: ACB)
Aurora Cannabis is a Canadian marijuana producer and distributor. The company’s been around since 2006. It also sells indoor growing equipment and hemp food products.
Why Aurora is worth watching: If Aurora Cannabis looks like a real loser, that’s because it is. In March 2019 it was trading for close to $10 per share … Now it’s about $2 per share.
But that doesn’t mean you should sell short just yet. Open a longer-term chart and you’ll see ACB was a multi-day runner in December 2017. The stock has proved it can spike on news and volume.
No, I’m not saying I believe in this company as a long-term prospect. I basically don’t believe in many penny stocks. But there are some potential catalysts that could bring on some short-lived spikes.
For one, it’s not a new company. It was founded over a decade ago … so it has plenty of name recognition. This means that news mentions really have the power to move this stock. And it does have good volume and volatility.
And there’s been some news recently. Aurora completed its first shipment to the Czech Republic in 2018 … That started its rocky expansion into European markets.
CannTrust Holdings, Inc. (NYSE: CTST)
CannTrust is a Canada-based medical cannabis company. It develops products for the medical and recreational markets. That includes beauty and wellness products and yeah, pet products too.
Why CTST is worth watching: CannTrust has been a very naughty company … Last year, it had a big scandal related to unlicensed growing. It was penalized and still can’t sell marijuana. The company is also at risk of being delisted. Awesome, right?
But there are other factors to look at. If it meets certain agreed-upon standards, it could get its license back. This could make the stock worth watching. If and when it’s back in good standing, that could potentially create a spike.
Don’t trust this company … but keep an eye on it.
GreenGro Technologies (OTCMKTS: GRNH)
This Anaheim, California-based company designs and markets eco-friendly cultivation systems. That means it creates indoor and outdoor vertical marijuana grow setups. That includes greenhouses, stands, lights, plant food, and cloning systems for DIY marijuana growing.
Why GRNH is worth watching: Green technology is hot, and marijuana is an interesting sector. This company has a history of spiking based on news catalysts. For instance, in October the stock spiked when it announced that it had created a new proprietary breed of hemp.
This is a true penny stock that’s trading for fractions of a penny. There’s a potential for big moves if the news is strong. Like APHA and ACB, this stock has a history of multi-day runs.
But to really get an idea how it can spike, look back to January 2014. The stock went full supernova, spiking from 4.5 cents to an intraday high of $1.20 in five days.
How Do You Buy Marijuana Stocks?
The actual process of buying marijuana stocks is as easy as picking a stock and executing the order on your trading platform…
But that doesn’t mean you should wake, bake, and buy shares of marijuana stocks without a trading plan.
Don’t blow up your account by chasing the first cheap marijuana stock you find. Be smart about choosing promising trades.
How Do You Choose Marijuana Stocks?
To make the most of pot stocks (any stocks, really), you’ve got to get really smart about choosing promising trades.
If you’re looking for a new car, you don’t just go to a dealership, throw money at them, and take the first car you see. You narrow down your choices by doing online searches, go scope things out, and take a test drive before purchasing.
Be discerning as a trader. A stock screener can help you filter down the many choices to a manageable watchlist. Do you have StocksToTrade? No? Time to grow up and give it a try.
This is how I find trades. I use customized scans that help me find stocks that fit my go-to setups. Best of all, you can test drive it with an awesome trial.
5 Strategies to Trade Marijuana Stocks in 2020
Ready to start trading? Here are some pro tips for maximizing marijuana penny stock opportunities.
1. Stick to Short-Term Trading
Marijuana stocks are kind of like Tinder dates: you never know what’s gonna happen.
That means you should think short term, no strings attached. See the stock for what it is.
Right now, marijuana stocks are volatile. The sector is still emerging. There’s no proven track record. In fact, if anything the companies have proven that they’re very unstable.
This doesn’t mean you shouldn’t trade pot stocks, though. Look at the price and volume. Keep your trades short term so you can get in and out with profits and move on. Let other traders hold the bag.
Profit.ly user Rocco gets it:
“Price/volume MUST dictate the trader’s response, otherwise you’re predicting and we’re all just good enough at that to go broke. Thanks for everything Tim”
And if your trade goes south, get out. Remember rule #1: cut losses quickly.
2. Look for Buzz
I feel like I need to pound this into your head: news moves stocks. You don’t just want to trade any marijuana stocks. Focus on stocks that generate buzz…
News stories, rumors, sympathy plays — these things can all make stocks spike — in both directions.
You have to be smart about your timing. Once the stock is already on a massive run, it could be too late to get in on it.
Missed a big spike? Don’t get FOMO. Don’t get depressed or regret your mistake. And don’t revenge trade. Learn from the experience. Put yourself in a trading timeout if you have to.
More good plays will come along, it’s just a matter of time. Have some restraint, study, and be ready for the next one.
Don't regret your mistakes/failures as they help mold you and teach you what not to do, they are a crucial part of your education!
— Timothy Sykes (@timothysykes) January 31, 2020
3. Follow Legalization News
History tends to repeat itself with stocks … including marijuana stocks. And this trend has been pretty consistent: pot stocks tend to spike when marijuana is legalized somewhere new.
It happened when recreational marijuana was legalized in Colorado … then Washington … then Canada. And so on.
The good news? Legalization measures are in the works in a ton of places. And it could continue to make marijuana stocks spike and lead to sympathy plays.
4. Maintain a Good Watchlist
You already know that you need to have a stock watchlist, right? That’s a shortlist of stocks you’re considering for potential trades.
But here’s the thing. That list needs constant weeding (yep).
Things change fast with low-priced stocks. The same stock that’s hot today could be as cold as ice tomorrow.
Here’s the good thing: watchlists don’t have to be complicated. Gone are the days of multi-tab spreadsheets and different websites.
Yeah, I’ve gotta plug StocksToTrade again. It makes keeping a watchlist easy — you can filter stocks, look for news and social media mentions, and maintain a watchlist. All on the same platform.
5. Educate Yourself!
Study, study, study. I wish I could put that in 200-point type, but it’s not good for SEO. But listen to me: STUDY!
Idiot traders who don’t know what they’re doing can actually be your friend, if you’re willing to learn how the market works.
Or as Profit.ly user TrentUGlow says:
“Thank you idiots for making this so easy! Also thanks Tim for making learning so easy!”
These traders put a ton of money into the market … and usually lose it. But if you take the time to learn how the market works, you can learn to run circles around them.
I learned the hard way, through self-taught study. I skipped classes in high school to trade on the library computers. In college I finally had access to high-speed internet in my dorm room. Sometimes I’d spend all day in my bathrobe researching and trading. It was great, but I didn’t have a mentor.
But you don’t have to do it alone.
If you want to learn how the market works and get a real-world education on penny stocks, think about applying for my Trading Challenge.
I want to share my 20+ years of experience trading penny stocks with traders. I want anyone who’s dedicated to take advantage of what I’ve learned.
I’ve learned a lot — both good and bad. And I want to share it with you.
If you’re accepted — and not everyone is — you’ll be invited to come and train with me. What comes with that? Tons of video lessons. Interactive webinars. Trading commentary from me and some of my top students.
I purposefully trade with a small account so I can be on the same level as you. I show every single trade publicly. That lets me use every trade as a lesson — you’ll always get commentary and lessons that you can put to work.
It’s not always easy. You’ll have to study and work hard. It will take time. But according to Challenge student @AL401k, it’s worth it:
Joined the Tim Challenge in July '19, started trading full-time in October. Every month since, my losses have been less and less. January is my first profitable month. It's not a lot, but green is green and progress is progress. @timothysykes
— Allison R (@AL401k) January 31, 2020
Ready to get started? Apply today.
The Final Word on Marijuana Stocks in 2020
When it comes to trading penny stocks, volatility is your friend. Marijuana stocks have plenty of volatility, so they’re creating a ton of opportunities for smart traders in 2020.
But that doesn’t mean you should trade just any stock in the sector. You’ve got to be extremely diligent about studying. Only choose the most promising setups, otherwise, you can really get burned.
As I always say, you’ve got two accounts as a trader: your education account and your monetary account. If you want to make the most of weed stock opportunities, you’ve got to invest in your education account first.
What do you think about marijuana stocks? Are any of these tickers on your watchlist?