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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...
