The CBD industry has been a roller coaster for early investors over the past 1-2 years. But the longer-term analysis in place still points to big things ahead. This is a “mainstreaming” thesis driven by increasing exposure and an outlook of growing mainstream appeal. In other words, CBD is a small niche industry gradually becoming a mainstream product sector in the North American economy.
Think of your hometown. In 2010, maybe 1 in 2000 households around you contained someone who had some appreciation for the value of CBD as a supplement or ingredient. Back then, this was a $50 million industry in annual sales. By 2025, probably 500 of those same 2000 households will have some CBD-based product in the monthly budget. At that point, it will be a $25 billion industry. That’s according to multiple credible boutique analysis firms.
Right now, that growth trend is likely somewhere in the 3rd or 4th inning. With most of these stocks trading at very depressed levels, they may well represent significant opportunities for smart investors in search of both growth and value.
Here are some interesting small and micro-cap stocks that compete in this space.
Charlotte’s Web Holdings Inc (OTCMKTS:CWBHF)
Charlotte’s Web is one of the biggest and most successful brand names in the CBD products marketplace. The company makes 100% hemp-based cannabidiol wellness products, including CBD hemp oils, capsules, topicals, and pet products that feature CBD hemp oil extracts.
Charlotte’s Web Holdings, Inc. sells its products online as well as through distributors, and brick and mortar retailers.
CWBHF hasn’t really done much of anything over the past week, with shares logging no net movement over that period. Shares of the stock have powered higher over the past month, rallying roughly 27% in that time on strong overall action.
Charlotte’s Web Holdings Inc (OTCMKTS:CWBHF) managed to rope in revenues totaling $30.1M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 6.4%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($88.9M against $38.2M).
HempAmericana Inc (OTCMKTS:HMPQ)
HempAmericana is particularly interesting because it seems to be maturing into a high-growth opportunity just as the broader CBD space seems to be bottoming and preparing for a potential new leg of upside returns for investors.
The company has recently lined up a key partnership with Alibaba (BABA), acquired a vast affiliate marketing network of 400 sites, launched its own ecommerce portal, and revamped its marketing and customer service strategies. The company also recently launched a Groupon campaign to build market share.
HempAmericana Inc (OTCMKTS:HMPQ) is an emerging leader in the CBD products market. The Company owns and operates a high-capacity, state-of-the-art CBD extraction and processing facility located in Augusta, Maine. This facility is armed with a supersized supercritical CO2 extraction system, centrifugal partition chromatography refinement technology, and a mechanized fully-automated CBD bottling system.
Medical Marijuana Inc (OTCMKTS:MJNA)
Medical Marijuana Inc bills itself as an investment holding company that operates in the medical marijuana and industrial hemp markets. The company has been one to chronically overpromise and underdeliver, so it warrants caution. Management has been claiming big revenues for many years. Yet the stock has kept trending lower and the company refuses to move off the pink sheets or start producing audited financial data.
Those, taken together, are worrying signals. This one may be best left alone despite its claims. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($6.5M against $10.8M, respectively).
CV Sciences Inc (OTCMKTS:CVSI)
CV Sciences Inc bills itself as a company that operates two distinct business segments: a drug development division focused on developing and commercializing novel therapeutics utilizing synthetic CBD; and, a consumer product division focused on manufacturing, marketing and selling plant-based CBD products to a range of market sectors.
This is one stock that has really ridden a roller coaster over recent years. At one point, this was the poster child for the space, ramping to over $7/share before being toppled by a Citron bear research piece related to intellectual property. It remains an interesting opportunity, but demands some extra due diligence.
The stock has suffered a bit of late, with shares of CVSI taking a hit in recent action, down about -5% over the past week.
Terra Tech Corp (OTCMKTS:TRTC)
Terra Tech trumpets itself as a vertically integrated cannabis-focused agriculture company. The company operates in two segments, Herbs and Produce Products; and Cannabis Dispensary, Cultivation and Production.
TRTC has had a rough past week of trading action, with shares sinking something like -5% in that time. That said, chart support is nearby and we may be in the process of constructing a nice setup for some movement back the other way. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -8%.
Terra Tech Corp (OTCMKTS:TRTC) pulled in sales of $10.3M in its last reported quarterly financials, representing top line growth of 48.3%. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($1.2M against $27.6M, respectively).
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