ACB - Marijuana Value Traps Do Exist: Here Are 3 to Avoid
Investors would have a hard time finding an industry with more impressive long-term growth potential than legal cannabis. After generating close to $11 billion in worldwide sales last year, some on Wall Street foresee anywhere from $50 billion on the low end to as much as $200 billion on the high end in global sales by the end of the upcoming decade.
What makes this growth opportunity so exciting is the fact that marijuana stocks have, pardon the cliché, gone up in smoke over the past six months. The Horizons Marijuana Life Sciences ETF, the first exchange-traded fund focused on cannabis, has lost nearly half of its value over that time, which in investors' eyes may be creating some intriguing bargains throughout the pot industry.
On the other side of the coin, this decline in pot stocks could be creating bona fide value traps in an industry where the word "value" would have been almost laughable six months ago. Right now, there are three cannabis stocks that look to be incredible values, based on their price-to-book ratios, but are, in reality, nothing of the sort. Consider these three marijuana value traps as companies you'd be best off avoiding.