Cannabis Stocks Under $2: Why Are These Small-Cap Shares Up While Broader Sector Is In The Red?

Four lesser-valued cannabis stocks showed positive performance on Monday, defying the broader sector's downtrend. These stocks—Medical Marijuana Inc., TILT Holdings, Trees Corp., and Village Farms International —present potential investment opportunities.

Positive Performers Among Smaller Cannabis Stocks

• Medical Marijuana Inc. MJNA, priced at $0.0021, has total assets of $72.775 million but faces financial challenges, including a net income loss of $280.475 million and an EBITDA of -$268.242 million. MJNA maintains a gross profit margin of 79.95%.
• TILT Holdings TLLTF, trading at $0.035, has total assets of $231.188 million and reported revenue of $165.956 million over the last twelve months. However, with a net income loss of $62.384 million and an EBITDA of -$22.018 million, TILT's profitability is under pressure. Its gross profit margin stands at 9.54%.
• Trees Corp. CANN, at $0.1 per share, lists total assets of $23.247 million. Despite a negative tangible book value per share and a net income loss of $7.082 million, Trees Corp. maintains a gross profit margin of 25.76%. Trees recently reported its Q1 2024 results, revealing total revenue of $3.686 million and an operating loss of $477,348​.
• Village Farms International VFF, priced at $1.278, holds total assets of $458.439 million with a current ratio of 2.076. With revenue of $299.024 million, VFF shows resilience despite a net income loss of $28.014 million. Their gross profit margin of 19.87% and a market cap of $138.914 million indicate a potential for recovery.

Operational Efficiency

Medical Marijuana Inc. demonstrates operational efficiency with a gross profit margin of 79.95%, indicating strong control over production costs despite its financial challenges. This margin suggests that MJNA could be managing effectively its cost of goods sold relative to its revenue.

On the other hand, Trees Corp. maintains a gross profit margin of 25.76%, reflecting its ability to generate revenue from its operations. Despite reporting a net income loss of $7.082 million and an operating loss in its recent Q1 2024 results, both companies' operational metrics highlight their potential to sustain business activities and improve financial performance.

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Comparison To Larger Cannabis Companies

When compared to larger cannabis companies, the valuation difference is significant. Curaleaf Holdings CURLF is priced at $5.18, down 8.64%, and AdvisorShares Pure US Cannabis ETF MSOS is at $9.08, down 5.47%. Canopy Growth CGC is at $10.48, down 3.46%, Trulieve Cannabis TCNNF at $11.73, down 6.01%, and Green Thumb Industries GTBIF at $12.59, down 4.08%. Only Aurora Cannabis ACB is up, priced at $7.51, up 1.76%.

In contrast to these larger names, the smaller stocks in green today have shown modest gains: MJNA at 4.7619%, TLLTF at 1.4493%, CANN at 11.1111%, and VFF at 1.4286%.

Investors may consider these lesser-valued stocks for their potential to navigate a volatile market. Each company's financial metrics and operational efficiencies could offer entry points for those looking to diversify within the cannabis sector.

Photo: AI-Generated Image.