In the ultra-hot marijuana market, MariMed’s rapidly-rising business takes on one of the industry’s best in CV Sciences.
Inarguably, one of the hottest trends in the investing markets is legal cannabis. While the much-maligned and controversial plant has been around since the beginning of time, marijuana as a portfolio booster is a completely novel concept. For decades, government bodies have categorized weed as a dangerous narcotic, leading to untold law-enforcement expenditures.
But earlier this year, Canada took the bold first step of moving towards a fully-legal recreational environment. As the first and so far only G7 member-state to endorse total marijuana legality, Canada’s actions haven’t gone unnoticed. Several “weedpreneurs” have flocked northbound, eager to capitalize on an unprecedented opportunity.
Despite these advancements, though, the American market is considerably larger than Canada. While legal challenges remain, several companies such as MariMed (OTCQB: MRMD) and CV Sciences (OTCQB: CVSI), are headquartered in the U.S.
But which one of these organizations offer the better investment outlook? Let’s dive into both names, beginning with CV Sciences:
High-flying CV Sciences Proves Viability of Marijuana Investments
When the first cannabis-related stocks trickled into the financial markets, several investors were initially hesitant. Not only was this an unprecedented industry, legality concerns weighed heavily. Even the most hardened speculator wants to limit risks wherever possible.
But two factors eventually eased those concerns. First, public sentiment shifted positively towards medical and recreational marijuana, most notably during the 2016 presidential election. Second, individual competitors like CV Sciences have torn up the markets.
There’s nothing like green bills to get eyeballs on an opportunity, and CVSI stock has provided shareholders plenty of it. On a year-to-date basis, CVSI skyrocketed to an astonishing 566% lead. This follows a very respectable 44% profit in 2017.
Unfortunately, the wrong kind of eyeballs can also be attracted to rip-roaring opportunities. Noted – or is that notorious? – short seller Andrew Left took an interest in CVSI stock. Left’s company, Citron Research, alleged that CV Sciences misrepresented the status of a rejected patent that they continued to market.
CVSI management firmly rejected the accusation, countering that Citron is the one misrepresenting the facts. Make of it what you want, Left quickly covered his short position, creating a volatile movement in the technical charts.
Granted, marijuana investments will always feature significant risks. Still, for an over-the-counter offering, CV Sciences reports surprisingly solid financials. Primarily, the company has a strong balance sheet, with a particular highlight being a very favorable 7.44 cash-to-debt ratio. This handily beats the global-drug manufacturing industry median in which CV Sciences is classified.
Another positive is steadily-increasing profitability margins over the past three quarters. Between 2014 and 2016, CVSI dramatically widened net-income losses. Last year, the company pared its losses, while this year, it’s on pace to deliver positive earnings.
Nevertheless, the one significant knock against CV Sciences is that investors are currently paying a rich premium for those earnings. For those seeking a better discount, it may be time to consider an alternative.
MariMed: Great People, an Even Greater Opportunity!
MariMed and MRMD stock has also been a revelation in its own right. Since the opening price of this year, MRMD has jumped to an incredibly robust 240% lead. This follows a stunning banner year in 2017 when the company returned 200%.
If we assume a similar performance to CV Sciences based on broad bullishness towards the legal-marijuana industry, we can easily see how undervalued MRMD is. As previously discussed, CVSI has gained over 560%, which is a far cry from MariMed’s 240%.
Furthermore, lifetime profitability for MRMD stock currently stands at 976%. However, CVSI’s trailing one-year performance is at a mind-blowing 1,783%. Despite the already impressive stats for MRMD, it still has room for further improvement.
I’m especially intrigued at the current technical setup. MRMD stock peaked in market value this year around mid-June. Since then, shares have entered a largely sideways consolidation phase. This is a period where bulls and bears are locked in tight negotiations.
Typically, though, the markets never stay in consolidation for long. At some point, MRMD is likely to resolve to the upside. Based on the chart signals available, MRMD appears to have formed a bullish pennant formation. Take a look at Stockcharts.com’s discussion on this pattern – the opportunity certainly appears enticing!
Beyond the technicals, MariMed’s management team provides confidence for investors and speculators. Led by founder and CEO Robert Fireman, MariMed covers a wide spectrum of expertise, ranging from cannabis law, finance, taxation, real-estate development, agriculture, and health care. Furthermore, the company features advisors with critical experience in facility management, law enforcement, and compliance measures.
In any over-the-counter venture, the most important distinguishing factor is people. Without responsible and disciplined leadership, even the brightest prospects can quickly unravel. The MariMed difference is that you’re dealing with proven, successful executives that are focused on sustainable growth.
Concluding Remarks about MRMD and CVSI
Ultimately, the debate between MRMD and CVSI shares comes down to personal investing style. If you find confidence in core financial metrics, CV Sciences offers the better print. On the flipside, if you’re seeking better return potential in exchange for fundamental risks, MariMed is your ticket.
That said, significant bearish attention has recently entered the picture for CV Sciences, which makes CVSI especially prone to volatility. Moreover, CVSI has experienced almost-unfathomable success in a condensed time period. A correction appears only natural.
Despite MariMed’s own robust performance, it still levers some leeway for additional substantive gains. And the management team is simply one of the best and most respected within the legal-marijuana industry. That, in my opinion, gives MRMD the edge at this juncture.
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