Blog : 3 Marijuana Penny Stocks Reviewed
by Peter Leeds on September 29th, 2015
Great News!
Thanks to hard work, coffee, and weekends, the publication date for the revised edition of "Penny Stocks for Dummies" has been moved up by several months!
Previously the book was slated to hit the shelves (wherever books are sold) in February. Now you can look for it before the end of 2015!
New sections came together great, and include topics such as Bitcoin, marijuana stocks, and investor manias. Speaking of which...
3 Marijuana Penny Stocks Reviewed
Most investors do not recognize buying stampedes, even while they are getting trampled. Perhaps it will help if we take a deeper look into a small sampling of the penny stocks swept up in the latest craze.
Rather than take some time for due diligence, people mistake the spiking share prices as a sign of urgency. Their philosophy becomes buy now at any price, or miss the boat. They forget that the ones that miss the boat do not drown.
A recent investor mania was sparked by the concept of legalized recreational marijuana. Maybe it is going to be a huge trend, maybe not, but either way money thrown at stocks simply because of the "idea" alone, or the promise of the industry, is typically cash stuffed into the paper shredder.
This is because so many dollars and eyeballs are stampeding to the thinly-traded marijuana-related businesses that their valuations are spiking hundreds of times higher than they should. Nobody seems to care about the financials or business plan of the underlying pot stocks.
Enter reality. Down comes the price, into the shadows go millions of investment dollars.
Don't get me wrong, I'm not a "pot hater," or anything of the sort. I am 2 days away from meeting with my medical marijuana doctor, as cannabis has been showing tremendous benefits to people with multiple sclerosis (MS), just like myself.
However, I still know that financially broken businesses end up where they should. To make the point, let's take a look under the hood in a few of the more popular pot penny stocks.
CannaVest (CANV)
In the last 3 month period, CANV lost $2 million (M), or close to $700,000 per month, or over $22,500 per day.
They did generate some revenues ($2.4 M), but that's down from the previous 3 month period, and a significant drop from the quarter one year ago.
Even with the trainwreck of a financial position, and even after collapsing from much greater heights, the CANV corporation still holds a market capitalization of nearly $25 million. This one still has room to slide lower in our opinion, and it will.
GrowLife (PHOT)
PHOT trades for 1.4 cents, and is listed OTC (always avoid OTC stocks!) There is a stack of pending class action lawsuits lined up for GrowLife, presumably based on the fall from prices which were 75 times higher than now.
Their last reported financials were in 2013, where they lost over $21 M on the year. Look closer and you'll see losses of $37.8 M for the most recent 3 month period, which is really hard to do on revenues of only $2 M.
Maybe the balance sheet won't be quite so ugly...? Nope, just as bad. Assets (what they own) of $2.8 M against liabilities (what they owe) of over $8 M.
Medbox (MDBX)
This one traded for over $108 per share. I'll give you 12 guesses where they are trading now. If you said "$12," you are 100 times too high. Recently MDBX shares went for 12 cents.
In MedBox's latest annual financials, they pulled in revenues of $629,132 which resulted in a loss of $16.5 million. That's really hard to do.
In fact, it's even worse over the most recent 3 month period, which saw only $84 K in sales, and a loss of $11.4 million. Wheeee!
But wait...! There's always the balance sheet, right? They owe $14 M, and own $4.5 M. Nothing unusual for a pot company, but a guaranteed loss for investors.
As of January 2017 we no longer publish the blog and it has been removed from the webiste menu.
You are reading this old blog entry because we still like to reference it. :-)
You are reading this old blog entry because we still like to reference it. :-)
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