The 5 Top CBD Penny Stocks to Watch in 2020

Shorting cannabis stocks in 2019 made traders a lot of money. 2020 is going to be a different story.

I'll admit, I didn't understand the cannabis short play.

Sure, on a pure fundamental valuation basis, pot stocks were trading at very high prices 12 months ago. But this has never been an industry to take short-term outlook on.

For cannabis, it's all about the long game.

Nobody thinks about the long game, but they should. Because the long-term outlook for cannabis and CBD stocks is incredibly bullish.

During 2019, there were plenty of positive developments in the industry, with CBD products leading the way.

Major retailers like CVS Health Corp. (NYSE: CVS) and Walgreens Boots Alliance Inc. (NASDAQ: WBA) both upped the number of stores selling CBD creams and salves.

Big-time endorsements from celebrity stars and athletes show that CBD is going mainstream.

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Did any of that help CBD stocks during the year?

No, because earnings quite honestly were horrible. But that's not what the market should have been focused on.

Looking forward, all of that selling in marijuana stocks creates opportunities to buy in 2020 at seriously low prices.

Many publicly traded cannabis stocks are now officially trading in penny stock territory.

They are the ones that could rocket higher in 2020.

Here are the five top CBD penny stocks to watch this year...

Top CBD Penny Stocks to Watch in 2020, No. 5

Shares of Cannabis Sativa Inc. (OTCMKTS: CBDS) have more than doubled already in 2020. That's not hard to do when shares trade for less than a dollar a share.

Sativa makes CBD skin care products for deep healing. Another double is more than possible going forward. Shares of Sativa traded above $3 per share a year ago. At its peak in early 2017, Sativa was above $7 per share.

The action is inverse to what one would expect given the spread of CBD usage. As soon as the company demonstrates consistent profits, this one could soar.

Top CBD Penny Stocks to Watch in 2020, No. 4

Going in the opposite direction in the early trading of 2020 is cbdMD Inc. (NYSE: YCBD).

Shares have sunk in January, almost dipping below a dollar per share. The lower price comes thanks to closing on the sale of additional shares, raising some $18 million for the company.

The company is expected to lose money in the current fiscal year but make $0.26 per share in 2021. It's always tough when a company issues shares to raise capital, but in this case, I would view it as an opportunity.

Here are the top three CBD penny stocks for 2020...

Top CBD Penny Stocks to Watch in 2020, No. 3

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Treading water at a dollar per share is CV Sciences Inc. (OTCMKTS: CVSI). The action is like a spring being coiled.

The company sells hemp-derived CBD oils under the PLUSCBD Oil brand name. Analysts expect CV Science to post a small loss in the 2019 calendar year, but a small profit in 2020.

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The upside for the stock is huge. Shares traded for just under $6 per share in the early part of 2019. If the company can show consistent profit growth, it will get there again and then some.

Top CBD Penny Stocks to Watch in 2020, No. 2

With penny stocks, sometimes the more risk you take the better. In the case of Elixinol Global Ltd. (OTCMKTS: ELLXF), shares began trading in 2020 at $0.44 per share.

At the time of writing, the stock has nearly doubled in January to $0.71 per share. That's still well below the $3.86 per share the stock fetched earlier in 2019.

The company is well capitalized, having raised $50 million for expansion in the United States. That makes sense, given the explosive growth that will come in the states as the legalization of marijuana spreads.

If the stock approaches $1 per share, that might be the trigger for getting interested.

Top CBD Penny Stocks to Watch in 2020, No. 1

Another really cheap CBD penny stock to watch in 2020 is MedMen Enterprises Inc. (OTCMKTS: MMNFF).

Shares trade below $0.50 per share and are falling. The stock was above $3 per share a year ago.

It was recently reported that the company was paying vendors with shares of stock. That may or may not be a bad thing, but one analyst noted that the amount paid to vendors is minimal compared to shares outstanding.

Certainly, MedMen is not a stock to buy immediately, but it is the No. 1 stock to watch in 2020. Analysts expect a significant loss of $0.41 per share in the current fiscal year with that number dropping to a loss of $0.14 per share the following year.

If MedMen comes even close to hitting that lower loss number, the stock will likely increase in value - and fairly substantially at that. As a stock to watch, there will be plenty of time to buy with plenty upside.

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