E Cannabis Central: These "Pot" Stocks Are The Least Volatile In A High Beta Sector

TM Editors' Note; This article discusses one or more penny stocks and/or microcaps. Such stocks are readily manipulated; do your own careful due diligence.

The knock on stocks in the marijuana sector is their high volatility but here are some marijuana stocks with betas less than 2.

Beta is a statistical value that measures the rate of change of a stock versus the price change of the overall market and is commonly used to determine the volatility of a stock.

  • When a stock’s beta is 1, it means the stock price moves with the market.
  • When a stock’s beta is less than 1 but above zero it is less volatile than the overall market.
  • When a stock's beta is more than 1 it is more volatile than the overall market.

I have analyzed 135 "pot" stocks and could not find any with a market cap of $1B or more that had a beta of less than 1. In fact, I could only find 2 such stocks with a beta of less than 2, namely:

1. Cresco Labs Inc. (CSE:CL, OTCQX:CRLBF) has a Mkt. Cap of $1.4B and a Beta of 1.3

Cresco Labs Inc. is engaged in the production and sale of cannabis distributing its products to dispensaries across the U.S. including company-owned & operated dispensaries in Illinois, Pennsylvania, Ohio, California, Maryland, and Arizona. All the revenues of the company were generated in the United States.  

You will note from the above, however, that the stock is down 39% from its high in April and has been in a downtrend since then.

2. Aurora Cannabis Inc. (TSX:ACB; NYSE:ACB) has a Mkt. Cap: $8.6B and a Beta of 1.6

Aurora Cannabis Inc. cultivates and sells medicinal and recreational cannabis primarily in Canada but has expanded internationally through medical cannabis exporting agreements or cultivation facilities in more than 20 countries. 

The stock is down 36% from its high in March and has been in a downtrend since then.

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Moon Kil Woong 10 months ago Contributor's comment

The main issue for cannabis is that it is being promoted as a fix all wonder drug and there is overproduction and low barriers to entry. Worse yet it isn't commercialized into the farming states where if they legalize it, then mass farming of marijuana can sink the price further. The final issue is this sector is well capitalized so losing money for now isn't even a barrier to entry. I'd avoid it until there is a decent barrier to entry like size and brand names.

The fun in this sector has ended all besides medical applications and maybe consumables. As you can see, the trend lines of most of these are clearly down.