Today’s investing environment can provide many investors with questions as to which companies to choose as core holdings in a given portfolio.
With growth options available to investors today in industries ready to explode such as the Canadian marijuana industry [think Canopy Growth Corp.: (TSX:WEED)], investors looking for companies that can provide explosive returns have been increasingly considering those industries which have had a track record of success in recent years.
Investing in growth sectors such as marijuana have thus become the new flavour for investors hoping to double or triple their investment in a short amount of time, something that has intrigued short-term and long-term investors alike.
When considering such investments, an investor must do in-depth research on the industry as a whole. Many growth-focused investments, taking the Canadian cannabis industry as an example, rely on very high long-term growth rates with respect to revenue and earnings, with many such companies less focused on generating short-term profitability, more concerned with taking over market share.
With the green commodity not yet fully legalized, and the competitive landscape for cannabis largely unknown, a large number of factors which would make one investment better than another may not fully be realized for some time.
Over the coming quarters, it would serve many investors well to fully assess the fundamentals and underlying business models of the top five or six firms in an industry to gain a full picture of the relative performance of the companies one is considering as a portfolio holding.
Invest wisely, my friends.