One Thing Investors Need to Know Before Investing in Cannabis

Credit: The Street
Published on May 15, 2019 - Duration: 01:08s

One Thing Investors Need to Know Before Investing in Cannabis

Looking to invest in a cannabis company?

Some cannabis companies--such as Aurora and Tilray --are not currently profitable.

So, how should an investor decide what cannabis companies to invest in and what should they keep an eye on?

Action Alerts Plus senior analyst, Jeff Marks, weighs in on a key thing for all investors to watch when it comes to investing in any company that isn't profitable.

"So I think when, when you're evaluating these companies, first and foremost, you've got to look at the sales, right?

So companies can get pretty, I'll say flexible on the bottom line when they're looking at earnings.

You know, a lot of people, they look at adjusted numbers and [that can] be flexible.

But the one thing you can't touch, the one thing that really is it is what it is sales.

So if you see some good sales growth, that's going to be one area where you know you have a solid company," said Marks.

"Also, you know, these companies aren't profitable right now, but that's not necessarily a bad thing because they're investing in their future.

So take for example Hulu, right?

So [Tuesday,] Comcast and Disney they signed off [on a deal]...Comcast will be selling their stake in Hulu at a valuation of like $26 billion.

Hulu has steep operating losses right now.

So it's not necessarily a bad thing to not be profitable as long as there's a path for profitability in the future." Watch Jim Cramer's Daily NYSE Show and Replays Below

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