Marijuana stocks are hot. It's wrong, though, to think that all marijuana stocks are performing well.
They're not. There are plenty of examples of marijuana stocks that were flying high at multi hundred dollar valuations, and went on to lose most of their value.
By far the largest marijuana stock, or company taking advantage of cannabinoids and their derivatives, is GW Pharma (NASDAQ:GWPH), a UK-based company with multiple late-stage studies of its Epidiolex and Sativex cannabinoid-based drugs. The company targets epilepsy and other neurological disorders, and its stock has gone from $10 in 2013 to $130 today, a $2.7 billion market value.
Following a swoon in 2016, the stock is back on the upswing again, but only time will tell whether this valuation is sustainable.
Cannabics Pharmaceuticals (OTCMKTS: CNBX) has taken investors on a wild, and very profitable, ride. In just the past 12 months, CNBX has gone from .02 per share to a high of $7.60 per share – a 3800% return! CNBX is now a $400 million company despite pulling back to $4.00.
CNBX develops personalized anti-cancer treatments based on Cannabinoid compounds. The company’s technology is precommercial, but initial testing will begin this month on ten patients at an Israeli hospital. In a lot of ways, this has become a trading stock, and investors are ignoring valuation and fundamentals and simply betting that the stock will continue to appreciate as new buyers enter the market.
Axim Biotechnologies (OTCKMTS:AXIM) has likewise gone from $0.40 in October of last year to a high of $19.00 this January – a 4300% return in months. Axim is working on a cannabinoid-containing chewing gum, called MedChewRx, that will be tested in neurological and pain conditions. A Phase I study is already underway in Irritable Bowel Syndrome, and the company plans to begin new studies in Multiple Sclerosis and Parkinson’s Disease soon. Momentum has waned, and the stock has lost half of its value since the beginning of this year.
Although CNBX and AXIM may end up being longterm winners for shareholders, investors that have made a several hundred, or several thousand percent, return may want to consider taking profits at this valuation and seeking other stocks they can buy at cheap valuations. The goal? Find stocks with solid fundamentals that have potential for the same kind of multi-hundred percent return that was realized with CNBX.
Could Immudyne (OTC: IMMD) make a similar move?
Immudyne is a company that markets health related products directly to consumers. It’s an innovative and highly scalable business model that relies on online advertising to generate product sales. The company plays in large, multi-billion dollar markets. The company is positioned to take advantage of the well-established and growing market for aesthetics. Lets face it, humans are vain, and that’s an investable trend.
A little execution could mean big returns for shareholders. The company has already proved it can scale in 2016, with an expected 500% growth in product sales over 2015. Revenue is clearly ramping, and tight spending habits mean profitability isn’t nearly as elusive as for precommercial marijuana stocks.
This kind of growth—improving sales figures that actually trickle down to the bottom line—are exactly what growth-oriented investors should be looking for. The valuation is very conservative and if Immudyne can maintain this momentum, EPS of $0.10 or $0.15 is not out of the question in the next 12 months. Today, the S&P carries a Price to Earnings ratio of 29. Do the math and it quickly becomes apparent why some investors are betting that IMMD could go from $0.30 to a $1-2 per share.
About One Equity Stocks
One Equity Stocks is a leading provider of research on publicly traded emerging growth companies. Our team is comprised of sophisticated financial professionals that strive to find the companies and management teams that will outperform the market and deliver investment returns to our subscribers. We are not a licensed broker dealer and do not publish investment advice and remind readers that investing involves considerable risk. One Equity Stocks encourages all readers to carefully review the SEC filings of any issuers we cover and consult with an investment professional before making any investment decisions. One Equity Stocks is a for profit business and is usually compensated for coverage of issuers. In the case of Immudyne, we have been compensated 250,000 shares of common stock in for advisory, marketing and business development services. The owner of One Equity stocks is long IMMD.