The legalisation of medicinal (and sometimes recreational) marijuana in places around the world has sent cannabis stocks trending.
But it can be a “dangerous space” to invest in, according to Claude Walker, an equity analyst from Sydney start-up Simply Wall Street.
Walker said millennials in particular are questioning if they can get ahead of the cannabis trend and profit from it.
“The opportunity is still small and I think it’s a very risky sector to look at,” he told Brooke Corte and Chris Kohler on Your Money Live on Thursday.
“At the moment what we are seeing mostly is that listed companies in that space on the ASX are actually just cashing in on more the interest rather than the opportunity.”
“The one listed cannabis company on the ASX that has some decent revenue, they are getting most of their revenue from the US.”
“I generally think it’s a dangerous space.”
Walker said an opportunity or area of growth related to cannabis could be hemp products as health food. But he warned many big companies could be cashing in on the trendiness of hemp as a branding exercise.
“It’s like A2 milk, people think that only having the A2 milk protein is good for you and they’ll buy that premium priced milk, I know I do it. I’m not sure of the science personally, I don’t understand it. I think the same thing could occur with hemp.”
For savvy millennials looking to invest in smart stocks, Walker suggested software companies were a good choice.