![]() ![]() About half of it is likely to come from legal sales. In 2019, the total cannabis market in Canada, including both legal and illegal recreational and medical sales, is expected to be around $7.2 billion CAD. Since legalization in October 2018, Canadian sales numbers have been muted without any signs of increasing. Many investors are concerned that the initial hype surrounding the industry could be decreasing. At present, not everyone is convinced that Canadian recreational pot sales will remain strong. The recent earnings reports from Canada-based pot stocks are important in gauging the health of the industry. After all, early investors in many of these stocks have been rewarded handsomely.īut as the cannabis industry in Canada matures, will the fundamental forces allow for high double-digit returns any more? The lure of higher-than-average returns may be tempting for many pot stock investors. Cannabis Industry in Canada is Still in the Early Innings Nonetheless, the level of diversification helps make the MJ ETF more robust than any individual stock in the sector, limiting volatility and downside while retaining the exposure to the market’s potential upside. While MJ can avoid some of the bad performances of most marijuana stocks, it would be difficult for it to outperform several of its large holdings, such as Cronos Group, Aurora Cannabis and Canopy Growth. Therefore, whenever Wall Street fears the given company is failing to meet growth or expectations, that pot stock will get penalized. Analysts value them mostly based on the expectation of high revenue growth, which would lead to future profits. One fundamental point that investors need to keep in mind is that most of these cannabis producer stocks are not profitable yet. The top 10 holdings represent about 60% of holdings in the MJ ETF. Several of the major stocks in the MJ ETF include Aurora Cannabis (NYSE: ACB), Cronos Group (NASDAQ: CRON), GW Pharmaceuticals (NASDAQ: GWPH), Canopy Growth (NYSE: CGC), Tilray (NASDAQ: TLRY) and Green Organic Dutchman Holdings (OTCMKTS: TGODF) It also has an allocation of tobacco stocks and fertilizer companies. ![]() The MJ ETF currently holds 38 stocks with about 70% allocation to pot companies and growers, many of which are Canada-based and that are becoming increasingly mainstream. Since then, a number of federally licensed Canadian cannabis producers have started trading on the Toronto Stock Exchange (TSE) as well as the New York Stock Exchange (NYSE). Companies in the MJ ETFĬanada is the second country in the world - after Uruguay - to legalize recreational marijuana at the federal level. Before investing in marijuana stocks, though, it is important to do your due diligence on the MJ ETF. While the MJ ETF is still exposed to the industry risk, it may provide a good option for investors, as it is will likely be more stable than owning some of the individual stocks. In recent months, this marijuana ETF has become one of the most popular funds among millennial investors. The MJ ETF also pays dividends with a yield of 2.8%. For many investors, the comfort in owning a basket of stocks might be worth the price. MJ’s expense ratio is 0.75% per year or $75 annually per $10,000 invested. and global companies that are engaged exclusively in legal activities involving cannabis for medical or non-medical purposes. This index tracks the performance of U.S. Similarly, MJ seeks to provide investment results that correspond to the total return performance of the Prime Alternative Harvest Index. InvestorPlace - Stock Market News, Stock Advice & Trading Tips And at InvestorPlace, my colleagues often cover how various ETFs can help investors construct a diversified portfolio. Investors may be able to decrease the volatility of investing in individual stocks by holding more of them, or better yet, investing in an ETF. ![]()
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