Why the MGC Pharmaceuticals Ltd share price rocketed 21% today

The market may have sunk lower today, but that hasn’t stopped the MGC Pharmaceuticals Ltd (ASX: MXC) share price from rocketing higher.

At the time of writing the pot stock is up a whopping 21% to 5.2 cents.

Why did it rocket?

Last Thursday the medicinal cannabis company placed its shares in a trading halt pending an announcement relating to its European operations.

This morning that announcement was finally made and revealed that MGC has signed an agreement with the Biotechnical Faculty of the University of Ljubljana in Slovenia to begin a three-year comprehensive botanical research program.

In order to facilitate the research program, the Slovenian Ministry of Health has granted the Biotechnical Faculty a full medical cannabis license which allows it to grow and conduct botanical research with MGC for all strains of CBD and THC medical cannabis.

Ultimately the two parties aim to develop medicinal cannabis strains tailored for specific medical indications which include epilepsy, chronic pain, and the side effects of oncology.

Management believes the program will create critical new genetic intellectual property, giving it a strong competitive advantage for future production operations.

Should you invest?

As well as MGC, Auscann Group Holdings Ltd (ASX: AC8) is also in the process of developing products to treat epilepsy and chronic pain.

At this stage it is near impossible to know which company will come out with the winning product or whether the product will then be accepted by enough prescribing physicians to generate sufficient sales to make it a viable business.

Whilst this is promising news and the Biotechnical Faculty of the University of Ljubljana is led by a talented team, I feel it is still too early for an investment.

In the meantime I would suggest investors look at these fast-growing shares instead. They may not be as exciting as pot stocks, but in the long-term they could provide just as strong returns in my opinion.

Top 3 ASX Blue Chips To Buy In 2017

For many, blue chip stocks means stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool's in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool's Top 3 Blue Chip Stocks for 2017."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

If you're expecting to see the likes of Commonwealth Bank, Telstra and Wesfarmers shares on this list, you'll be sorely disappointed. Not only are their dividends growing at a snail's pace, their profits are under pressure too due to the increasing competitive environment.

The contrast to these "new breed" blue chips couldn't be greater... especially the very real prospect of significant share price gains, something that's looking less likely from the usual blue chip suspects.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand - and how quickly the share prices of these companies moves - we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.