Marijuana Penny Stocks Guide: Finding Hot Pot Stocks in 2020

marijuana penny stocks

Could marijuana penny stocks be making a rebound as a hot sector? Hot sectors can move the market … and create opportunities for traders.

As a trader, you probably already know that trends lead to incredible percent gainers. Just ask anyone who killed it trading crypto, shipping stocks, or AI stocks in their heydays. This is what’s happening in 2020 with coronavirus and electric vehicle plays.

By definition, trends peak and then fade. But sometimes they cycle back.

Let’s take a look at how the sector has evolved. For savvy traders, there might still be a way to take advantage of marijuana penny stocks in 2020.

Table of Contents

What Are Marijuana Penny Stocks?

marijuana penny stocks what are
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Marijuana penny stocks come from smaller companies operating in the legal weed sector. These stocks trade for under $5 per share.

Keep in mind, not all of these companies are directly related to weed. The big players are growing operations or retail dispensaries, sure. But others make protective containers, rolling papers, and so on.

Why People Are Trading Marijuana Stocks

When a sector heats up and people take notice, it can create some crazy price moves. And then everyone wants in on the action.

Marijuana penny stocks are still relatively new. But self-serving promoters are still out there. These stocks are just as susceptible to traditional penny stock schemes like pumps.

This should make them very scary for newbies and amateurs. But for smart traders with the right skillset, opportunities abound.

The Growth of the Marijuana Market

The marijuana market has seen some serious booms. Legalization in Colorado, Washington, and Canada created huge spikes in the market. Continued reform will grow the business model for the U.S. and other countries too.

It’s a brave new world, and there are plenty of opportunities.

Think about how much legal alcohol is sold every day at liquor stores. In a decade, the legal marijuana industry could equal or even surpass this industry. That can mean serious opportunities for traders.

The California Pot Stock Explosion

California residents may have a stoner reputation, but there’s nothing lazy about the state’s thriving marijuana trade.

Medical marijuana has been legal in California for years. And at the beginning of 2018, the state legalized recreational use as well. It’s basically as easy to buy weed as it is to buy alcohol.

The Country-Wide Potential in Canada For Pot Companies

In 2018, Canada made recreational pot completely legal. This was the first country to legalize it on a national level. That created huge market moves with marijuana penny stocks in Canada and the U.S.

It created crazy, thousand-percent gainers. Analysts talked about how Canada might rake in million-dollar-plus sales.

But looking at these marijuana penny stocks in 2020, Canada failed to live up to the hype.

That failure to thrive is due to a lot of reasons. There were supply issues, illegal activity, restrictions, and holdups from regulatory agencies. Huge backlogs caused year-long waits for grow licenses.

Are Marijuana Penny Stocks Worth It?

Two key things play into whether a sector is worth your time.

First, the sector needs to have massive growth potential. Are there stories making moves in the market? Are people excited about it?

Second, as a penny stock trader, you need to be able to find small companies poised to profit from the hot sector. You need the promise of a flood of frenzied traders who can push the prices up.

How to Buy Marijuana Penny Stocks

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Ready to light up — I mean start up — your laptop and get trading? Not so fast. Just because you could be trading weed stocks within minutes doesn’t mean you should.

Before you trade, make sure that you’re educated and prepared. You should have a trading plan. Here are some tips for moving forward intelligently…

Top Marijuana Penny Stocks to Watch in 2020

marijuana penny stocks top to watch in 2020
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Are you looking for marijuana penny stocks that will explode? Well, I can’t promise that, but I can tell you how I find stocks to trade.

Get my watchlist here FREE OF CHARGE.

Note that this is a “watchlist.” Not every stock on my watchlist will provide a trading opportunity. But I share it to help students learn the reasons for my picks, not so they follow and trade each stock. You need to learn to become a self-sufficient trader.

Looking for a beginner’s guide to penny stocks? Check out my FREE penny stock guide.

3 Marijuana Penny Stocks That Could Explode in 2020

Before trading any marijuana penny stocks in 2020, remember my Sykes Sliding Scale. These indicators can help you prepare for the best trades.

You can find out more about the Sykes Sliding Scale in my “Trader Checklist Part Deux” DVD. This is one of the best crash courses I have to offer. And you’ll want to be prepared before you enter the wild world of marijuana penny stocks…

Aurora Cannabis Inc. (NYSE: ACB)

In May, Aurora Cannabis did a reverse stock split. Then they released some better than expected earnings. A few days later they announced the acquisition of an American CBD company. This brought the Canadian grower into the American market.

From there, the stock went on a three-day run. Newbies hit it hard. You could tell because a lot of the buyers for this marijuana penny stock were on Robinhood.

Since then it’s been on a downtrend. But some of these beaten-down stocks have the potential to squeeze big. All it takes is a news release or more positive earnings.

marijuana penny stocks acb
ACB chart: 6-month, daily candle — courtesy of

Tilray, Inc. (NASDAQ: TLRY)

Tilray was the biggest mover of all the marijuana penny stocks in 2018. That year it went from $2 to $300 a share. Could it get back to that price? I doubt it. But we know it has the potential to run.

It had a small spike back in mid-May when there was a news release that cannabis could cure the coronavirus. Any news linking cannabis to a coronavirus treatment could reignite this sector.

marijuana penny stocks tlry
TLRY chart: 6-month, daily candle — courtesy of

Aphria Inc. (NASDAQ: APHA)

Aphria is another one of the big marijuana companies. It’s currently trading under $5 a share. It’s been in a slight uptrend since March lows. I’d only be watching for Aphria as a sympathy play to the bigger names if the sector starts to heat up again.

marijuana penny stocks apha
APHA chart: 6-month, daily candle — courtesy of

How to Find the Best Marijuana Stocks

So how do you start to find the best pot stocks?

First, I stick to short-term trading. These companies haven’t proven themselves. Most of these stocks have shown that they can’t hold their value over days, months, and years. If the setup is right for you, get in and out for singles.

Second, do your homework. Do you have StocksToTrade? If not, it’s time to sign up for this amazing stock screener. People love to ask me how I find trades. I use this scanner every single day along with the new Breaking News Chat. It’s a must-have tool.

1. Decide Which Marijuana Stocks to Grab Right Now

Again, I can’t tell you what stocks you should buy right now. That’s your job. But I can tell you a few things to look for.

First, concentrate on volatility. If there’s no price action, there’s no profit potential. You want a spiky chart that shows predictable patterns between support and resistance.

Check out my no-cost “Volatility Survival Guide” to help you learn how to trade in this volatile market.

You also want to look for high-volume penny pot stocks. If there are only 1,000 shares in play, there’s no reason to dive in. You might not be able to sell quickly, which means you can’t control your losses. No bueno.

2. Use Technical Analysis and Chart Patterns to Find the Best Opportunities

Before you make any trade, you must do a ton of research. The market is risky enough … do everything you can to stay safe!

When it comes to fast-moving penny stocks, it’s all about the charts. Base your trades on high-opportunity chart patterns. Even if the stock has amazing fundamentals.

Using technical analysis, you can find roughly a million chart patterns and indicators. But I prefer to use simple, clean chart patterns.

Look for clean price action. That could be a hot ticker making clean higher highs and higher lows every few days. Or it could be a stock with a recent exciting news story that’s just broken above its all-time high.

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3. Fundamental Analysis for Penny Pot Stocks

Surprise, surprise. Like most penny stocks, these don’t often have strong fundamentals.

Most penny stock movements are based on hype. You have to be on the right side of hype. You need to know that stocks rarely live up to their hype. And that’s how you learn to take advantage of penny stocks.

Make sure to keep up to date with news and company announcements. These will key you into earnings, contracts, financing, and regulatory issues.

4. Only Trade Hot Stocks and Be Ready to Grab Your Profits

Make sure to only be in stocks that are currently hot. You want stocks people are talking about.

The company might be in the news. The charts should look clean and primed for big moves.

And this is important — don’t stick around for too long. Take the meat of the move. If you land a hot trade and make a healthy profit, get out. I can tell you from my 20+ years of experience … it’s better to be out too early than too late.

These crazy moves often end in major declines when the party’s over…

So if the trade doesn’t go as you planned, get out. That’s rule #1: cut losses quickly.

5. Create a List of the Best Stocks

Your watchlist is a handy tool. Keep five or six stocks on your watchlist at all times so you can pounce quickly on opportunities. 

I also recommend maintaining a trading journal. Track it all: your failures, successes, trade plans, entries, and exits. Go back and review often so you can spot your strengths and weaknesses. Avoid making the same mistakes twice.

Key Tips for Choosing the Best Penny Pot Stocks

So you’re set up with a broker… You’ve got your charting software and news feed on deck. What now? Here are a few more tips for finding great marijuana penny stocks…

1. Look for Unicorns

Look for stocks with a rainbow trail … Figuratively speaking.

In any booming market, you want stocks with buzz. Exciting news stories and rumors pop up regularly. Trading volume is picking up. These stocks are making clean higher highs and higher lows.

This excitement and price action can create a self-fulfilling prophecy. Everyone starts to jump on board. Journalists notice and start to write more stories. It’s all a recipe for the potential for huge price moves.

The important thing is to get on board right before the stock takes off on a massive run. But if you miss it, that’s OK. More plays will come along.

2. Look for Pot Stocks Where Legalization Is New

When legalization was new in Colorado … and Washington … and Canada … pot stocks peaked.

The lesson? It’s not that you missed the boat. It’s that it could happen again.

When there’s a new area of legalization, it could make marijuana penny stocks pop. It could also mean sympathy plays.

So be sure to follow the news and any budding (get it?) legislation measures in the works. It could give you a clue to the hottest opportunities.

3. Build Your Pot Stock Portfolio

Yeah, stock research can be a chore. You gotta keep up with charts, news, SEC filings, and top percentage gainers and losers. But it’s absolutely crucial to finding the best opportunities for you.

In the old days, I’d be clicking between 20 different websites, spreadsheets, and trading platforms. Luckily those days are gone.

You can now use StocksToTrade to keep a watchlist for all of it. It will track your favorite stocks, filter for high-impact news stories, scan for new trades, and so much more.

It’s an all-in-one solution that I helped create a few years ago. It can make your trading day so much easier.

4. Master Your Trading Skills

It’s no secret that the vast majority of traders lose. Sad, but I’m not just telling you this to be a downer. There’s good news, too.

Separating yourself from the losers isn’t all that complicated. Seriously — I figured this out as a kid. I’d sneak out of class to research stocks while I was in high school and college

If you’re dedicated and willing to put in the work, you can study and learn the patterns that move penny stocks. You can learn to take advantage of them. But you gotta be dedicated.

How to Lower Risks When Trading Marijuana Penny Stocks

marijuana penny stocks how to lower risks
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Now you’re asking the right questions! To cut down on exposure, wait for a news catalyst and a pattern to set up before putting in your hard-earned money.

When the marijuana sector was hot in 2018, a lot of companies got in on the act. These new companies got into production, products, or CBD. What they were really doing was trying to ride the hype.

Now the sector has cooled down and the pretenders have been exposed. Trade cautiously and don’t hold and hope these stocks will go back to their previous highs.

Trading Challenge

Are you ready to get serious about your trading career? Are you ready to learn how to trade penny stocks intelligently? Apply for my Trading Challenge.

I created my Trading Challenge to turn even absolute newbies into self-sufficient penny stock traders. I teach them everything I’ve learned in over two decades in the markets. Wins, losses, mistakes — I share it all with my students. And you can join us.

What’s it all about? You don’t just get tons of video lessons, interactive webinars, and blog posts. You also get a real-life trading education.

If you’re lazy, it’s not for you. But if you decide that you’re ready, apply for my Trading Challenge today.

Frequently Asked Questions About Marijuana Penny Stocks

marijuana penny stocks frequently asked questions
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What Are Marijuana Penny Stocks?

Marijuana stocks are stocks of companies that sell cannabis-based products. Penny stocks trade for less than $5 per share.

Are Marijuana Penny Stocks Worth it?

Most penny stock companies fail in the long-run, regardless of sector. As a trading vehicle, marijuana penny stocks can be worth it if you understand how (and when) to trade them.

What Are the Largest Marijuana Stocks?

According to the Marijuana Index, the largest marijuana stocks are Curaleaf Holdings Inc (OTCQX: CURLF) and Green Thumb Industries Inc (CNSX: GTII) (OTCQX: GTBIF). The second ticker is for the U.S. traders out there.

How Do You Buy Marijuana Penny Stocks?

Marijuana penny stocks trade like any other penny stocks on the various exchanges. If you know the ticker symbol, you can buy or sell using your preferred trading platform. Do your due diligence and create a trading plan first.

Should I Buy Marijuana Penny Stocks and Hold Long Term?

I’m not an investor so I never recommend anyone buy penny stocks and hold long term. Wait until the sector shows some momentum again to the upside or there’s exciting news in the sector, then make short-term trades based on your well-tested strategy.

Will Marijuana Companies Have to Use Cryptocurrency?

In places where marijuana is legal, companies can use cash for their business dealings.

Can I Invest in Canadian Marijuana Stocks?

Yes, there are many Canadian marijuana stocks listed on the American exchanges. You could also trade and invest in them on the Canadian market if your broker allows access.

The Bottom Line on Marijuana Penny Stocks

marijuana penny stocks the bottom line
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Marijuana penny stocks can provide opportunities for some wild moves. The industry is still emerging. All signs point to the sector delivering massive profits.

But like with any sector, you’ve gotta be on the right side of the hype. Always be ready to close your position…

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Your number one mission in this trading life is to hold on to your profits or cut your losses.

Are you trading marijuana penny stocks? Let me know in the comments… I love to hear from my readers!