This Low-Priced Marijuana Stock Could Make You Rich
Low-priced equities (usually defined as stocks with share prices under $5) are a favorite vehicle among risk-tolerant investors for a host of reasons. One of the most important reasons is that investors can buy a large number of shares with a small amount of capital. This strategy creates instant leverage for shareholders (potentially amplifying returns) in a manner similar to buying a call or a put option, without having to worry about the all-important problem of an expiration date. Companies with exceedingly low share prices, however, often have underlying fundamental problems or operate in a high-risk industry (e.g., clinical-stage biotechs). As such, these types of equities are inherently risky, making them suited for only the most aggressive of investors.
Despite the fact that legalized cannabis is one of the fastest-growing industries in the world right now, most publicly traded marijuana stocks have rarely been kind to their early shareholders. As a result, scores of marijuana stocks currently sport share prices well below $5. This subsection of the healthcare sector has suffered from the slow pace of legalization in key commercial territories like the U.S., overly aggressive management teams who have wasted immense amounts of capital on unnecessary facilities, and a thriving black market that typically offers consumers illicit products at far lower prices. One Canadian cannabis company, though, might have what it takes to overcome all these hurdles to deliver mind-boggling returns for its shareholders in the years to come.
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Source Fool.com
