Why I Bought These 3 Ridiculously Cheap Pot Stocks
When it comes to buying stocks, my main focus is on value. Now, defining value can be tricky. Some investors like Warren Buffett tend to define value in relation to a company's competitive moat, and hence, its long-term ability to generate profits on a consistent basis. That's certainly a useful definition in the classic sense. But it doesn't exactly capture what the term means in emerging industries like legal cannabis. Legal cannabis, after all, is a highly fragmented landscape with a cloudly outlook, to put it mildly.
In fact, the stock market has shown almost no ability whatsoever to accurately assess value in the cannabis space over the past three years. When Canada officially legalized recreational pot back in October 2018, for example, the whole industry caught fire. Once actual sales data started to pour in, however, the market couldn't sell off these names fast enough. Part of the problem was that investors initially valued pot stocks like rare-disease drugmakers (extreme sales multiples reflecting enormous long-term growth prospects).
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Source Fool.com
