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.

I had thought that I would find more than 2 larger cap stocks with low betas so, for the record, I present below 6 other lower beta "pot" stocks, albeit with much smaller market capitalizations, as follows:

1. Neptune Wellness Solutions Inc. (TSE: NEPT) has a Market Cap of $726.1M and a Beta of 1.6

Neptune Wellness Solutions Inc. is engaged in extraction, purification, and formulation of value-added differentiated science-based products. 

Of all the "pot" stocks covered in this analysis only Neptune's stock price is UP and by a very respectable 96% from its mid-March low.

2. iAnthus Capital Holdings Inc. (CSE:IAN, OTCQX:ITHUF) has a Mkt. Cap: $526.7M and a Beta of 1.1 

iAnthus Capital Holdings Inc. owns and operates licensed cannabis cultivators, processors and dispensaries throughout the United States with operations in Vermont, Colorado, New Mexico, and in Massachusetts where the majority of its revenue is generated.

The stock is down 54% from its mid-March high and has been in a downtrend since then.

3. Emerald Health Therapeutics, Inc. (TSXV:EMH, OTCQX:EMHTF) has a Mkt. Cap: $333.1M and a Beta of 1.8

Emerald Health Therapeutics Inc. is a vertically integrated Canadian licensed producer of cannabis, focused on developing proprietary, cannabis products for medical and adult-use customers. 

Again, like all the other stocks above, Emerald Health is down (-56%) from its mid-march high.

4. TerrAscend Corp. (CSE:TER; OTCQX:TRSSF) has a Market Cap of $272.4M; and a Beta of 0.18

TerrAscend Corp is a Canadian company focused on creating and delivering quality cannabis products to patients suffering from chronic pain and debilitating illnesses and providing education and support programs to physicians and patients through healthcare professionals.

The stock is only down 27% from its early February high.

5.  The Flowr Corporation (TSXV:FLWR; OTCPK:FLWPF) has a Mkt. Cap of $397M and a Beta of 0.58

The Flowr Corp. is mainly engaged in the cultivation and selling of cannabis for medical use.

The stock is down 42% from its mid-March high.

6. Liberty Health Sciences Inc. (CSE:LHS, OTCQX:LHSIF) has a Mkt. Cap of $186M and a Beta of 0.46 

Liberty Health Sciences Inc. operates in the United States and Canada and produces pharmaceutical-grade medical cannabis. 

The stock is down 55% from its mid-February price.


Imagine, out of 135 "pot" stocks reviewed only the above 8 have somewhat respectable beta scores (that's less than 6%!) and those stocks are still rather risky compared to the price change of the overall market. I have provided links to each company's web site so you can dig deeper into each company to determine which, if any, of the stocks are worth the risk. Indeed, given the volatility of the marijuana sector, it might well be prudent to buy the entire basket of stocks  above (currently down 30% from their February/March high to provide you with greater diversity on one hand and less risk on the other. The beta of the above 8 stocks is 1.08.

How did you like this article? Let us know so we can better customize your reading experience.


Leave a comment to automatically be entered into our contest to win a free Echo Show.
Moon Kil Woong 4 years 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.