The cannabis industry is on the rise, and investors are pouring money into pot stocks. However, some companies have been more successful than others in attracting Robinhood users.
The sundial growers stock forecast 2025 is a company that has been around for over 100 years. It’s the only cannabis stock on Robinhood that is still in the top 10 most popular stocks.
Cannabis stocks are popular with Robinhood (NASDAQ:HOOD) investors. Given that seven cannabis equities are in the top 100 most popular on the trading site, this seems to be the case.
Two of the stocks ranked in the top 20. Sundial Growers (NASDAQ:SNDL) is ranked No. 4 and Aurora Cannabis (NASDAQ:ACB) is ranked No. 16. Sundial and Aurora, on the other hand, have been major losers in recent months. Sundial’s stock is now trading at a 75 percent discount to its early-year highs. Aurora’s stock has dropped 65% from its February high.
Why are Aurora and Sundial remain Robinhood’s most popular marijuana stocks? Here are some possible reasons.
Making use of physics
Two key physics principles may be used to investing on occasion. In the physical world, momentum refers to a moving body’s motion, while inertia refers to an object’s resistance to change. When it comes to Sundial and Aurora, I believe we’re seeing both of these physics concepts at work with Robinhood investors.
Sundial drew the attention of internet investors in late 2020 and early 2021. It rapidly rose to prominence as one of the most popular meme stocks on the market. Aurora’s popularity dates back to when Canada’s adult-use recreational marijuana industry was set to launch many years ago.
Despite their poor performance in recent months, both marijuana stocks have maintained their celebrity. Sundial and Aurora are unsurprisingly top on the list of options for Robinhood investors interested in the cannabis sector. That’s the power of momentum.
Investors, on the other hand, often despise admitting they’re incorrect about a stock. This is especially true with meme stocks, which have a devoted following among online groups. Investors are hesitant to alter their approach, thus inertia prevails.
Alternatives are few and ineffective.
Another major reason why Sundial and Aurora are so popular with Robinhood investors is because the alternatives are limited and, in most instances, not much better. The chart below, for example, illustrates how all of the marijuana companies in the Robinhood top 100 have dropped from their highs earlier this year.
Sundial and Aurora aren’t the only ones. None of the marijuana companies that Robinhood investors like are doing well. Most of these companies aren’t operating at full capacity.
In Aurora Cannabis’ quarterly conference call this week, for example, the first question from retail investors was when the business will produce positive profits before interest, taxes, depreciation, and amortization (EBITDA). Aurora has previously failed to meet its adjusted EBITDA profitability targets. Sundial also lost adjusted EBITDA in the most recent quarter.
However, the majority of the other top Robinhood marijuana stocks are still losing money. In their most recent quarterly reports, Canopy Growth, Cronos Group, Hexo, and OrganiGram all reported negative adjusted EBITDA. Tilray was the only company to make a profit.
Many cannabis businesses located in the United States are successful and, in some cases, have greater growth potential than Sundial and Aurora. However, for US investors, their shares are only accessible over the counter (OTC). The majority of OTC stocks are not supported by Robinhood.
Picks that are better
One alternative for Robinhood users who want to benefit from cannabis stocks is to switch to a different trading platform that allows them to purchase and sell OTC stocks. There are many over-the-counter options that are superior than Sundial and Aurora. Ayr Wellness (OTC:AYRW.F) and Cresco Labs (OTC:CRLBF) are two companies I’d put towards the top of the list.
Are there any additional cannabis options available on Robinhood? Yep. Innovative Industrial Properties (NYSE:IIPR) is a cannabis-focused real estate investment trust (REIT) with a strong yield and strong growth potential. Scotts Miracle-Gro (NYSE:SMG) is best known for its lawn and garden supplies, but it is also the top hydroponics provider to cannabis growers.
None of these options are likely to replace Sundial and Aurora from the top 100 list of Robinhood very soon. There are, however, better options than either of these two pot stocks if you’re seeking for profits rather than popularity.
The pot stocks to avoid is a list of cannabis companies that are not doing well. Sundial Growers and Aurora Cannabis are still the most popular pot stocks on Robinhood, despite their poor performance.
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