3 Marijuana Stocks Trading Below Their Book Value
Last year was supposed to be a breakout year for marijuana stocks. The stage appeared to be set for a good portion of the industry to push toward profitability. Canada was selling adult-use weed, and higher-margin derivatives were slated to hit dispensary shelves later in the year. Meanwhile, legalization momentum in the U.S. remained strong, striking hope that pot sales would continue to soar.
Unfortunately for investors, none of this came to fruition. In reality, supply issues have continued to persist in Canada, with the official launch of high-margin derivatives being delayed until mid-December. Then, in the U.S., high tax rates in select states (ahem, California) have made it virtually impossible for legal retailers to compete with black-market producers. As a result, marijuana stocks were clobbered in 2019.
One of the more interesting effects of this precipitous decline can be seen on the book value of pot stocks. While book value isn't exactly a valuation measure that cannabis investors would be expected to pay much attention to, the simple fact that three marijuana stocks are now trading below their book value is bound to raise a few eyebrows and catch some attention from value seekers. Of course, as you're about to see, there are very good reasons these below-book-value pot stocks aren't necessarily good deals.
Source Fool.com
