How to find the best cannabis investment targets

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Adding stocks to an investment portfolio could prove very lucrative

The cannabis market is growing rapidly. 2020 produced almost nothing but positive gains for the majority of the companies in the space and 2021 is expected to see more than a few witness a breakout. For any investor considering cannabis stocks as an option, there are several things to consider that will allow for the biggest return on the investment.

Before settling on a final target, study the numbers. Research the companies’ management teams, growth strategies and market position. Find out what the financial health of the company looks like to determine the probability for growth, and use Fibonacci retracement to uncover patterns. RJO Futures describes Fibonacci retracement as a “helpful tool to find patterns of movement and retracement between the highs and lows of an asset or contract. A Fibonacci level is created by taking two points from a chart, usually a high and low, and dividing those numbers by one of the ratios to create a key level.”

Any investment portfolio needs diversification to be successful, and this holds true if cannabis stocks are going to be considered. Don’t invest in just one company; divide the allotment across several into different areas, such as manufacturers, retailers and more, in order to leverage the investment to the best of its ability.

As with any investment, always look for red flags. Research the options and determine if any companies are currently on the SEC’s radar for questionable activity. Due diligence is a key component of any investment strategy and must be part of cannabis stock purchasing, as well.