Our American Green Stock Prediction in 2020 (Buy or Sell?)
Penny stocks are popping up in the marijuana industry like mushrooms in the rain. Some of these penny stocks are future growth companies and they’re worth a look by aggressive investors. But most of them, sad to say, are inherently weak investments poised to crash.
One cannabis penny stock getting attention these days is American Green (OTC: ERBB), an entrepreneurial micro-cap based in Tempe, Arizona.
American Green announced on June 27 that its Sweet Virginia Grow cannabis brand (under American Green’s agreement with licensor Natural Herbal Remedies) surpassed $870,000 in sales after just seven months on the market and is now being produced at near-capability within American Green’s 12,000-square foot facility in Phoenix.
American Green President David Gwyther stated: “Sweet Virginia Grow reached its first major sales milestone faster than originally expected.” Management says the product is on track to achieve a new milestone of $1 million in sales sometime this summer, for fiscal year 2019.
The company is rapidly expanding its Phoenix facilities, to capitalize on the latest Arizona Supreme Court ruling on marijuana. The supreme court ruled in May that medical marijuana extracts are legal in the state.
American Green-grown medical marijuana is currently being sold in 36 Arizona state-licensed dispensaries that sell cannabis products to their patients. These dispensaries represent about 33% of Arizona’s active medical marijuana patients.
Is American Green’s stock worth a shot, for risk-tolerant traders? Or is ERBB yet another marijuana time bomb ready to blow up the portfolios of gullible investors?
Let’s examine the pros and cons of American Green and give it a fair shake, as we try to determine what the future has in store for the company.
What Is American Green?
With a market cap of $5.9 million, American Green develops branded, retail, and commercial cultivating solutions for licensed medical marijuana dispensaries. These dispensaries are operated under the American Green brand name. A major American Green licensed product is the aforementioned Sweet Virginia Grow.
American Green even has a vending machine called ZaZZZ, which allows consumers to get (age-verified) dispensing of medicines that are cannabis-based.
American Green’s cultivation support comes in the form of its product called “Jurassic Water” for cannabis plants. The company offers an LED lighting product called “truth lighting,” some teas, and a fertilizer product.
How Has American Green Stock Performed?
What is American Green’s Stock History?
- Over the past 12 months, American Green’s stock has fallen 80% whereas the S&P 500 has gained 7.1%.
- Year to date, American Green has fallen 33.3% whereas the S&P 500 has gained 19%.
How Has American Green Performed in 2017/2018?
- In 2017, American Green’s stock lost 24% whereas the S&P 500 gained 19.4%.
- In 2018, American Green’s stock lost 75% whereas the S&P 500 lost 7.5%.
Who Are American Green’s Rivals?
To fully gauge our ERBB stock prediction, we must look at American Green’s competitors.
Aerogrow International (OTC: AERO), with a market cap of $49.7 million, sells, markets, and develops indoor garden systems for commercial and individual users. Aerogrow sells proprietary seed kits to cultivate flowers and vegetables, for both experienced and amateur gardeners. The company also offers various support products, such as lights.
Aerogrow’s major advantage: it’s supported by the juggernaut Scotts Miracle-Gro (NYSE: SMG), which owns 80% of the company.
Scotts Miracle-Grow is a $5.4 billion market cap firm famous for its lawn care products. Scotts jumped into the cannabis world with its Hawthorne Gardening Company.
Scotts offers products that include hydroponics, plant cultivation, plant nutrients, and horticultural products through its Vermicrop Organics brand.
SMG also offers specialized lighting products through its Gavita Horticultural Lighting and Agrolux brands, and also sells filters, fans and accessories.
Aerogrow offers seed pods, and what it calls a “rainforest” nutrient delivery system for more efficient cultivation. The products are called Miracle-Gro AeroGarden, which means Scotts is taking its ownership stake seriously.
CannaGrow Holdings (OTC: CGRW)
CannaGrow Holdings is another marijuana penny stock. The company offers site management and marijuana facility development, in one location in Colorado.
CannaGrow (market cap: $36.4 million) claims this facility has Colorado’s first probiotic, living soils grow operation. It apparently uses only healthful, non-toxic methods to ensure the cleanest yields. The company says the facility doesn’t use fertilizer or chemical pesticides. The facility also mixes natural sunlight with lighting packages in greenhouses to mitigate energy costs.
Future Farm Technologies (CSE: FFT, OTC: FFRMF)
Future Farm Technologies (market cap: $8.4 million) provides growing services across three states and cultivates hemp in three others.
Future Farm uses controlled environment agriculture systems that are designed to use as little land, water, and energy as possible.
Future Farm has designed a common vertical farming solution, using LED lighting. The company also produces cannabis oil and purified distillate.
Will American Green Go Up in 2019 (Should You Buy?)
Penny stocks. Those words can strike fear, or greed, in the hearts of investors.
There are two sides to the penny stock coin. One side entails market-crushing gains, instant wealth, and 20-something millionaires flaunting their yachts and Maseratis. The other side? Fraud, pump-and-dump schemes, broken promises, bankrupt companies, and massive losses.
So what kind of penny stock is American Green? First, you need to go into the penny stock realm with your eyes wide open. This video explains the risks.
We’d like to make a bull case for penny stock American Green, but it’s difficult. Despite the company’s ostensible success in sales growth in recent months, the company isn’t making money, as this table shows:
Will American Green Go Down in 2019 (Should You Sell?)
Like most sub-penny stocks, the company’s financial statements and disclosures are littered with transactions that have occurred over the past 10 years, which include various debentures, and countless issuances of common and preferred stock.
We’re not kidding when we state that the company’s recent set of financials has 22 pages worth of these transactions. That is reason enough to avoid getting involved.
American Green does not do anything special nor does it solve an industry problem. The company provides an agricultural commodity, which eventually will become subject to downward price pressure as the marijuana industry consolidates.
Shares currently trade at $0.0002. It’s overpriced even at this price.
Overall American Green Forecast and Prediction for 2019
There’s only one reason ERBB stock is even being discussed by the financial media, and that’s because marijuana stocks have struck a resonant chord on Wall Street.
Ever since the legalization train left the station, the investment herd has been yabbering about the huge potential in marijuana stocks. The marijuana industry has become a frenzied “green rush,” like the gold rush of the 19th century.
Let’s be clear: some cannabis stocks are indeed stellar investments. But many others are not. You need to conduct due diligence and remain selective.
No need to mince words: penny stocks such as American Green are junk.
So what is our ERBB stock prediction for 2019 and beyond?
It will trade between zero and $0.0002 per share.
Just say “no.”