Tilray is volatile but there are other cannabis stocks you can consider

By @chelean on
stock exchange
People can’t help investing in cannabis stocks but they should proceed with caution too. Creative Commons

The cannabis industry is bringing in some new players into the stock market and investors are seeing this as an opportunity to invest in a booming market.

One of the biggest gainers is Tilray. Since launching at a price of US$22.39 (AU$31.43) per share in July, Tilray has been able to reach the US$200 (AU$281) mark in short time. It is also one of the biggest losers as it lost its big momentum just as fast and it is now somewhat stuck in the US$140 (AU$197) mark.

Tilray is based in Canada, where there is a booming market for cannabis. The legalisation of recreational marijuana has come on Wednesday, with many expecting Tilray’s stock to perform well. However, despite the solid market it is standing on, the company remains to be a victim of market volatility, making it undesirable for certain investors.

The safer option

People are not giving up on the cannabis industry yet and they are instead looking for other companies to invest in. According to Motley Fool, one company worth considering is Liberty Health Sciences.

Liberty Health Sciences is also based in Canada, and like Tilray, it cultivates marijuana for medical use. The difference between the two companies is that Liberty Health Sciences operates in Florida, wherein it has a whopping 41,200 square feet of growing space for marijuana. It is planning to expand soon as it is readying around 225,000 square feet sometime next year.

Miami skyline Liberty Health Sciences is sitting on Florida’s strong cannabis market.  Creative Commons

Aside from its farms, the company also operates four dispensaries in Florida. There will be seven extra dispensaries opening in February next year. These dispensaries are supported by six delivery hubs, which deliver products to customers in Florida within a day.

Liberty Health Sciences’ services and growing capacity make it an ideal company to invest in. When picking a pot stock to support, investors should look towards the company’s capacity to meet the demand for marijuana. By having the capacity to produce high quality and large amounts of marijuana, companies are able to easily trail ahead of the competition.

Is CBD the way to go?

Alternatively, investors can also look towards the direction of cannabidiol (CBD) companies. Unlike marijuana products, CBD faces less restriction from the government as it contains trace amounts of tetrahydrocannabinol (THC), the psychoactive compound of cannabis. In terms of demand, people are clamouring for CBD in various states and there are already many companies capable of generating a good supply line.

PotNetwork Holdings, Inc. (OTCMKTS:POTN) is one of the leaders in the research and development of CBD. It extracts the compound in premium-quality hemp only so it has this aspect in the bag. As for its supply, the company is able to produce enough products which it distributes through its wholly owned subsidiary, Diamond CBD, Inc.

Revenue-wise, POTN and Diamond CBD have met success again and again. During the first half of this year, the distributor had more than US$12 million (AU$16.84 million) in sales.

The cannabis industry may look like a smart choice for investors but volatility remains an issue. Their best bet towards making gains is by looking for companies that have the potential to keep up with the growing demand.

IBTimes Australia does not endorse any product or practice mentioned here. The article is based on press releases sent for consideration.