It’s been a while since there was much life in ASX cannabis shares. But as the industry matures, it’s offering new investment opportunities.
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The marijuana business is slowly, but inexorably, moving from the world’s black markets onto global share markets.
During the initial round of exuberance, as Canada and some of the biggest states in the US legalised not just marijuana’s medicinal use but also its recreational use, most every share involved in the cannabis field saw its share price soar.
From boom to bust to renewal
Inevitably, reality came into play and when revenues didn’t match sky-high valuations the pot stock bubble burst.
In 2019 global cannabis shares – with the biggest listed on the Canadian and US exchanges – lost roughly half their value. And earlier this year, driven by the COVID-19 share market rout and a dearth of funding, cannabis shares tumbled even further.
But the past few weeks has seen numerous ASX listed pot stocks’ share prices soaring.
Three ASX cannabis shares rocketing in September
Medicinal cannabis was given the green light in Australia in 2016. Recreational use remains strictly illegal outside of the Australian Capital Territory. But there are a number of Aussie companies involved in both medical and recreational cannabis production as well as hemp, marijuana’s non-narcotic cousin.
On the hemp front, the Australian Primary Hemp Ltd (ASX: APH) share price has enjoyed a stellar few weeks, up 32% so far in September. The share price is now up 9% year-to-date and a whopping 270% since the low on 7 April. Most of the September gains came this week after the company announced it was producing hemp-based protective face masks providing 99.9% microbial reduction. This came alongside its launch of a hemp-infused hand sanitiser.
On the medicinal marijuana front, the Auscann Group Holdings Ltd (ASX: AC8) share price is up 14% so far in September. Year-to-date it’s nowhere near to recovering from the February and March selloff, with the share price still down 47% in 2020. But the recent gains are encouraging, coming after the company announced it had completed its first clinical trial of a cannabis-based capsule intended to treat nerve pain.
And on the recreational marijuana front, the Althea Group Holdings Ltd (ASX: AGH) share price is up 38% so far in September, despite falling sharply yesterday. The share price is now up 35% year-to-date and has gained an eye-popping 228% from the 23 March low.
By comparison, the All Ordinaries Index (ASX: XAO) is up 33% since 23 March.
Althea’s share price owes much of its September gains to its Canadian Standard Processing Licence announcement earlier this week. After getting the nod from Health Canada, Althea’s wholly-owned subsidiary, Peak Processing Solutions can now begin commercial cannabis operations at the company’s facility in Tecumseh, Ontario.
While the prices of these cannabis companies, and indeed throughout the industry, remain volatile, the trend for well-run ASX cannabis shares is once again upwards.
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- Australian Primary Hemp (ASX:APH) share price up 15% on PPE launch
- RED 5 (ASX:RED) share price up 4% on feasibility study
- The Mayne Pharma (ASX:MYX) share price leaps almost 8% higher
- Althea (ASX:AGH) share price surges 11% on Canadian cannabis licence
- Auscann (ASX:AC8) share price up 6% on phase I study results
Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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