Analysis of cannabis stocks before buying or selling

Among the "new" stock market sectors attracting investors is the cannabis sector with more and more shares available online. But before trading in the shares of companies specialising in this field, one must be able to carry out relevant analyses of these somewhat specific stocks. We therefore offer you our help in this respect and in this article we will tell you which shares of cannabis companies you can trade online and how to carry out good analyses of them.  

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Analysis of cannabis stocks before buying or selling

How to analyse movements in the cannabis share price:

To invest effectively in these assets it is of course necessary to thoroughly understand how the cannabis market operates and thereby be able to understand the factors that can influence it. When completing a fundamental analysis on these assets you should therefore favour the following factors that are the most influential:

  • Changes in regulations: As indicated previously, cannabis is currently becoming legal to use in an increasing number of American states and countries around the world, 43 American states at the last count plus Canada. These countries are in fact those that have generated the most trade in the cannabis sector recently. As it is probable that this sector will experience a continued increase in growth as the legalisation of cannabis spreads worldwide this will have a positive effect on companies share prices in this sector. Of course if a country then decides to reverse its decision and forbid the use of cannabis then this will of course have the opposite effect.
  • The difference between supply and demand: As with any asset supply and demand also influence cannabis share prices. We know for example that public demand and that of investors is increasing as is also the number of suppliers. It is therefore possible that supply will manage to satisfy demand and even surpass it over the long term.
  • Market events and specialised companies: Finally, it is also important to base our analyses on the events in this activity sector and news and announcements relating to the companies concerned such as their financial results, an expansion in operations and any changes in management.


Some shares to think about for investing in cannabis:

You then simply need to choose the type of assets in which you wish to concentrate your investments. Here are a few examples of companies in different sectors of the cannabis industry that you may invest in at present:

  • Canopy Growth Corporation, one of the major cannabis producers worldwide as well as one of the most profitable with high performances.
  • CRON, or the Cronus Group that works with the Altria cigarette manufacturer which enables this company to boost its growth.
  • Tilray, which is one of the best performing companies on the stock markets with an increase of over 800% recorded in 40 days with regular interesting consolidation periods.
  • ETFMG Alternative Harvest ETF, which as an ETF enables a lessening of risk.
  • Neptune Wellness Solutions, a biotechnology company that is notably specialised in therapeutic cannabis, also one of the only companies in this sector that resisted the subprime crisis.
  • Aurora Cannabis, which has grown by over 1,700% of its value between the lowest and highest share price and that regularly experiences rebounds considered by the analysts as extremely attractive.
  • Aphria, that has also experienced a growth on the stock market of 2,000% between its lowest and highest levels and which can also be profitable for trading on the rebound.
  • Hemp, this is one of the oldest assets on this market and offers a highly beneficial volatility with numerous rising and falling micro movements which makes this ideal for trading over the short term.


How to achieve a technical analysis of the cannabis companies share prices on the stock markets?

Although the information we have previously supplied will assist you in completing a comprehensive fundamental analysis of the cannabis stock market share prices, a complementary technical analysis is undeniably useful to achieve signals that are truly reliable and advantageous.

For this type of analysis you will above all need to carefully choose your stock market charts and benefit from the most innovative and pertinent charts to ensure you can complete a rapid and precise interpretation. The online charts available through the brokers are generally particularly advantageous with this as they offer different trading tools for the customisation of the information displayed on your charts such as the type of charts and the timeline, as well as the possibility to display several technical indicators in real time so you can also examine the real time rates and share prices.

Although it is no longer necessary for you to complete the calculations to obtain these indicators, you will still need to understand them in order to correctly interpret them and thereby identify the most probable future trends of the various assets.

Concerning the choice of indicators to monitor for the completion of your technical analyses of the companies that exercise activities in the cannabis sector, these are the same for all assets. You could notably use the most popular trend and volatility indicators such as the MACD indicator, the mobile averages, or the Bollinger bands.

The strategic reversal and trend acceleration points can also be particularly useful such as for example the pivot points, the technical support and resistance levels and other similar data.


How to obtain reliable quality information on the cannabis companies quoted on the stock markets?

As you may have observed from the previous information, a comprehensive analysis of the share prices of the companies quoted on the stock market in the cannabis sector requires an examination of the share prices with a technical analysis but the completion of a fundamental analysis is also useful which requires certain prior knowledge and information. So, where can you find the necessary information? 

To assist you in completing your analyses of the larger assets in this activity sector we have completed dedicated articles for each of the most popular companies quoted. For each company and its share price that you examine you will be able to read precise and useful information relating to many aspects of this asset including the following:

  • The data you should take into account for your fundamental analysis.
  • Information relating to the stock market quotation of the company’s share price (stock market capital, number of shares, position on the stock market, major stock market index and activity sector).
  • A complete presentation of the company with details relating to its activities and the distribution of its revenue sources from segmental and geographical points of view.
  • A presentation of its major competitors on the market to assist you in the completion of your segmental analysis.
  • Some examples of partnerships that the company has implemented recently which will assist you in better understanding its strategic alliances.
  • Finally, a ‘Frequently Asked Questions’ section offers you answers to your principal queries relating to each company quoted.

Of course, the information provided by us is only a selection and should be completed with other information such as the news and announcements relating to these companies, their financial results and other data and events that could influence their stock market share prices. Therefore, don’t hesitate to complete your own research on these companies.


The Cannabis Stock Market Index:

It is still a little known fact that the cannabis sector has experienced such a strong growth that a stock market index has in fact been dedicated to it. This is the Cannabis Stock Index which is a global index of the major cannabis companies that follows the performance of the top 20 quoted companies in this market.  

The companies included in this index must exercise at least 50% of their activities in this sector.

It was a German company that created this stock market index in 2018 with the aim of effectively monitoring the performance of the companies that were the most exposed to the medical cannabis market. Its initial quotation was with a beginning value of just 1,000 points.

To be eligible for inclusion in the composition of this stock market index a company will need to comply with certain conditions as follows:

  • The company should display a sales exposure of 50% to the cannabis industry.
  • Its daily transactions volume should be a minimum of a million dollars over the last three months.
  • The company should also be traded on a global stock market with a high liquidity.

By using the exposure filters to the liquidity and revenue of these companies that we have just examined, the top 20 global companies of this sector are therefore included in this index.

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