What is a real company and what isn't? What are the industry wide macro themes and issues to consider?

There are many opportunities for profitable long-term investments in the Legal Cannabis and Medicinal Marijuana Industries.  There are now hundreds of publically traded companies.  The question is how do you know what is a 'real' company, verses a 'not real' company that is a penny stock now, and will still be a penny stock for the foreseeable future? 

Here are some basic fundamentals that I think it makes sense to consider when evaluating individual companies: 

  1. How many people work there?  What are their ages and how much experience do they have?
  2. How old is it?
  3. Do they have a nice up to date Website and LNKD page?  Where are the offices located?  Are they at someone's house or is it in an office complex?
  4. Are they hiring?  Is this on their website?
  5. Do they have any earnings?  Do the have financial statements?  Is their an investor relations person and if so how long have they been there?  If not are there plans to hire one?   
  6. Are there any institutional holders of the stock?  Are legitimate brokers trading the stock?  Are institutions buying the stock?
  7. Are there legitimate research reports available?  Is there sell-side coverage?
  8. How does the chart look?  Is there enough trading history to have developed recognizable resistance and support levels?
  9. What is the price and volume of the stock? What is the market cap?  
  10. Are there news releases from third party sources?

 

Industry Wide Themes and Issues to Consider:

  1. What is the best exchange to trade the stocks on?  Will it be in Canada, or are the ADRs better?  How will exchange rates impact the returns?
  2. How will legislation impact the industry?  
  3. What are the potential growth statistics and forecasts of the Industry and its various subsectors?  How can they be targeted for investing?  Where will the biggest areas of potential growth within the industries?
  4. What are the peripheral industries and types of companies that will also benefit from the growth of this industry?
  5. How do you evaluate and differentiate opportunities in the recreational industry and the medicinal industry?
  6. Don't have tunnel vision.  Should international opportunities be considered?
  7. When do institutional investors start to invest in these companies?  Who are the PE funds, institutional investors, bankers, and boutique brokers that have an expertise in these industries?
  8. Will a futures and commodities market develop?
  9. What are the issues and opportunities with regards to cryptocurrencies and block chains?
  10. What are the banking and financing issues?  Will traditional banking institutions do business with these companies?