ASX marijuana shares have come under pressure following general market volatility and capital raisings. While I believe the shares are not in the 'buy zone' yet, they are certainly worth keeping an eye out for.
Here are three ASX Marijuana shares to watch:
1. Ecofibre Ltd (ASX: EOF)
Ecofibre listed on the ASX back in March and operates three core business divisions. Ananda Health provides high quality hemp derived nutraceutical products to the United States (US) market. Sales efforts focus on the highly regulated US independent pharmacy market. Ananda Food provides 100% Australian-grown hemp food to the Australian market. And finally, Hemp Black is currently in its pre-commercial phase to provide sustainable hemp-based solutions in the form of high-performance textiles.
I believe Ecofibre shares are not for the faint hearted as it moves in an extremely volatile fashion. However, in the company's recent full year results posted on 29 July, it cited its first full year of commercialisation with strong capabilities across all business units. The company saw revenues rise 519% from $5.7 million to $35.6 million and net profit after tax (NPAT) up 170% from $8.6 million loss to $6.0 million. Ecofibre shares present high risk/reward, but its business divisions are in their early days and showing promising signs of growth and execution.
2. Althea Group Ltd (ASX: AGH)
Althea has emerged as one of the strongest growing cannabis shares focused on producing, supplying and exporting pharmaceutical grade medicinal cannabis. The company is rapidly growing its patient base, having added 334 patients in the last month, representing the largest number of new patients prescribed Althea products in a single month to date.
Althea had recent raised $30 million at $1.00 per new share for the acquisition of Canadian extraction and contract manufacturing company, Peak Processing Solutions. In my previous article, I stated that capital raisings for growth are typically well received but also require time to stabilise around the raise price. It appears the volatility of the broader market and selling pressure has gotten the better of the Althea share price as it is currently trading for $0.86. I believe investors who want to buy Althea shares should avoid trying to "catch the knife" and wait for the share price to find some consolidation.
3. Elixinol Global Ltd (ASX: EXL)
The Elixinol share price has struggled to gain momentum in the past 3 months despite major highlights including acquiring 25% of US-based Pet Releaf, a leading brand in the high growth cannabidiol (CBD) pet products market, a coveted CBD processor authorisation by the New York State providing the ability to scale future operations, and an operational New Colorado production facility that more than doubles current capacity.
While Elixinol continues to build on its production capabilities, strategic partnerships and distribution agreements, investors should wait for the share price to find some consolidation before considering Elixinol as a growth opportunity. The share price is down an eyewatering 50% since its peak in April and showing no signs of a bottom, yet.
