Most Undervalued Cannabis Stocks
Updated March 2026Cannabis stocks with the lowest price-to-sales ratios, potentially undervalued relative to their revenue. Ranked by P/S from lowest to highest.
Finding undervalued cannabis stocks requires looking beyond share price to fundamental valuation metrics. The price-to-sales (P/S) ratio is the most widely used valuation tool in cannabis because many companies are not yet profitable, making price-to-earnings (P/E) ratios meaningless. A low P/S ratio suggests the market is assigning relatively little value to each dollar of revenue a company generates — which can indicate either a genuine bargain or a business with serious problems the market has already priced in.
The cannabis sector has experienced dramatic valuation compression since the 2021 highs, when leading MSOs traded at 5-10x revenue. Today, many of those same companies trade at 1-3x revenue, creating potential opportunities for value-oriented investors who believe the sector's structural challenges (federal illegality, 280E, limited banking) will eventually be resolved.
The table below lists every cannabis stock with a P/S ratio between 0 and 3x, sorted from the lowest (cheapest) to the highest. A P/S below 1.0x means the company's market capitalization is less than its annual revenue — a level that historically has been associated with deep value or distress situations in other sectors.
Most Undervalued Cannabis Stocks — Full Rankings
13 stocks · Ranked by p/s ratio
| # | Ticker | Name | Price | Change | Market Cap | Revenue | Margin | P/S | P/S Ratio |
|---|---|---|---|---|---|---|---|---|---|
| 1 | HYFM | Hydrofarm Holdings | $1.19 | -6.30% | $5.6M | $146.4M | 11.6% | 0.04x | 0.04x |
| 2 | XXII | 22nd Century Group | $3.88 | +1.97% | $2.0M | $18.1M | 36.3% | 0.11x | 0.11x |
| 3 | YCBD | cbdMD Inc | $0.71 | -0.75% | $7.5M | $19.1M | 59.8% | 0.39x | 0.39x |
| 4 | GRWG | GrowGeneration | $1.06 | -2.75% | $63.4M | $161.4M | 27.2% | 0.39x | 0.39x |
| 5 | MAPS | WM Technology (Weedmaps) | $0.68 | -7.27% | $73.0M | $174.7M | 94.9% | 0.42x | 0.42x |
| 6 | GNLN | Greenlane Holdings | $0.82 | -1.84% | $4.1M | $4.7M | -692.4% | 0.89x | 0.89x |
| 7 | TLRY | Tilray Brands | $6.89 | -1.57% | $802.7M | $837.3M | 26.4% | 0.96x | 0.96x |
| 8 | SMG | Scotts Miracle-Gro | $60.96 | +0.96% | $3.54B | $3.35B | 25.0% | 1.06x | 1.06x |
| 9 | VFF | Village Farms International | $2.87 | -6.51% | $331.5M | $253.3M | 38.7% | 1.31x | 1.31x |
| 10 | CGC | Canopy Growth | $1.02 | -2.86% | $385.4M | $278.4M | 28.8% | 1.38x | 1.38x |
| 11 | FORA | Forian Inc | $2.05 | -0.97% | $63.7M | $28.1M | 51.6% | 2.27x | 2.27x |
| 12 | AFCG | AFC Gamma (Advanced Flower Capital) | $2.63 | +0.38% | $61.9M | $24.6M | — | 2.52x | 2.52x |
| 13 | JAZZ | Jazz Pharmaceuticals | $178.55 | -1.66% | $10.99B | $4.16B | — | 2.64x | 2.64x |
Top 3 Spotlight
Hydrofarm Holdings
Hydrofarm Holdings ranks #1 in the most undervalued cannabis stocks category with a share price of $1.19 and a market capitalization of $5.6M. The company operates in the Ancillary sector and is listed on the NASDAQ. With trailing twelve-month revenue of $146.4M and a gross margin of 11.6%, HYFM represents the top-ranked stock in this category based on p/s ratio.
22nd Century Group
22nd Century Group ranks #2 in the most undervalued cannabis stocks category with a share price of $3.88 and a market capitalization of $2.0M. The company operates in the Biotech sector and is listed on the NASDAQ. With trailing twelve-month revenue of $18.1M and a gross margin of 36.3%, XXII represents the second-ranked stock in this category based on p/s ratio.
cbdMD Inc
cbdMD Inc ranks #3 in the most undervalued cannabis stocks category with a share price of $0.71 and a market capitalization of $7.5M. The company operates in the CBD sector and is listed on the NYSE. With trailing twelve-month revenue of $19.1M and a gross margin of 59.8%, YCBD represents the third-ranked stock in this category based on p/s ratio.
Methodology
Stocks are filtered to include only companies with a positive price-to-sales (P/S TTM) ratio below 3.0x and ranked in ascending order by P/S ratio, surfacing the cheapest stocks relative to revenue first. Data is sourced from company filings, exchange feeds, and financial data providers. Rankings update automatically as new data becomes available. All financial figures are based on trailing twelve-month (TTM) data unless otherwise noted. The current ranking includes 13 qualifying stocks out of 100 total cannabis companies tracked by Cannabismarketcap.
Key Observations
The top-ranked stock in the most undervalued cannabis stocks category is HYFM (Hydrofarm Holdings) with a p/s ratio of 0.04x. The stock trades at $1.19 per share with a market capitalization of $5.6M. In second place is XXII (0.11x), followed by YCBD (0.39x) in third.
Across all 13 qualifying stocks, the average share price is $20.25 and the average market capitalization is $1.26B. The combined trailing twelve-month revenue of all companies in this category is $9.45B. The average gross margin among companies with positive margins is 40.0%. The average price-to-sales ratio is 1.11x.
The most represented sector in this category is Ancillary with 6 out of 13 companies (46%). Among the ranked stocks, 3 are trading higher today while 10 are trading lower. Investors should use these observations as a starting point for further research rather than as the basis for trading decisions.
Investment Considerations
When evaluating stocks in the most undervalued cannabis stocks category, consider looking beyond the primary ranking metric to build a holistic view of each company. A stock that ranks well by p/s ratio may have weaknesses in other areas — such as high debt, poor margins, or slowing growth — that the ranking alone does not capture. Cross-reference this list with other Cannabismarketcap category pages and the screener tool to identify stocks that score well across multiple dimensions.
Position sizing is particularly important in cannabis. The sector is inherently volatile, and even the strongest companies can experience 30-50% drawdowns during sector-wide sell-offs triggered by legislative disappointments or broader market risk-off events. Most financial advisors suggest limiting total cannabis exposure to 5-15% of your portfolio, and individual positions to 1-3% depending on your risk tolerance and conviction level.
Dollar-cost averaging (DCA) is a widely recommended approach for building cannabis stock positions over time. Rather than investing your entire allocation at a single price point, spreading purchases across weeks or months can reduce the impact of short-term volatility and lower your average cost basis if prices decline after your initial purchase. This strategy is particularly relevant for the stocks in this category given the sector's history of sharp and sometimes prolonged drawdowns.
Risk Factors
Risk Warning
Low valuation multiples often exist for valid reasons. A cannabis stock trading at 0.5x revenue may face declining sales, insurmountable debt, regulatory headwinds in key markets, or management credibility issues. 'Value traps' are common in cannabis — stocks that appear cheap by the numbers but continue to decline because the underlying business is deteriorating. Before investing in a low-P/S cannabis stock, investigate whether revenue is growing or shrinking, whether the company has sufficient cash to fund operations, and whether there are any near-term catalysts that could drive a rerating. Also consider enterprise value-to-revenue (EV/Rev) rather than P/S alone, as EV accounts for debt on the balance sheet.
Compare These Stocks
Head-to-head comparisons between top-ranked stocks in this category.
Frequently Asked Questions
What is a good P/S ratio for a cannabis stock?
In the current market, the median cannabis stock P/S ratio is approximately 1.5-2.5x trailing revenue. A P/S below 1.0x is considered deeply discounted and warrants investigation — it could be a genuine bargain or a value trap. A P/S above 4.0x typically indicates the market expects significant future growth. Compare P/S ratios within peer groups: MSOs typically trade at different multiples than LPs or ancillary companies due to differences in growth profiles, margin structures, and regulatory exposure.
Why is P/S used instead of P/E for cannabis stocks?
Most cannabis companies are not yet profitable on a GAAP basis, primarily due to the 280E tax provision that denies standard business deductions to plant-touching companies. This makes the P/E ratio either negative (meaningless for comparison) or artificially inflated. The P/S ratio works regardless of profitability and allows apples-to-apples comparison across the sector. For companies that are profitable, you can supplement P/S analysis with EV/EBITDA, price-to-free-cash-flow, or P/E ratios.
How do I tell the difference between a value stock and a value trap?
A true value stock has a low multiple but a stable or improving business: revenue is growing (even modestly), margins are stable or expanding, and the company has enough cash to operate for at least 12-18 months without additional fundraising. A value trap has a low multiple because the business is deteriorating: declining revenue, contracting margins, rising debt, and a need for near-term capital raises that will dilute existing shareholders. Check recent earnings trends (last 3-4 quarters) and management guidance to differentiate the two.
Should I combine value and growth criteria when screening cannabis stocks?
Absolutely. The most compelling cannabis investments often combine reasonable valuations with solid growth — sometimes called 'GARP' (Growth at a Reasonable Price). A stock growing revenue at 25% with a P/S of 1.5x is arguably more attractive than a stock growing at 50% with a P/S of 5.0x or a stock with no growth at a P/S of 0.5x. Use CannaCap's screener tool to filter for companies that meet both your growth and valuation thresholds.
More on Cannabismarketcap
Disclaimer: The information on this page is for informational and educational purposes only and does not constitute investment advice, a recommendation, or a solicitation to buy or sell any security. Cannabis stocks are highly speculative and carry significant risk of loss, including the potential loss of your entire investment. Past performance is not indicative of future results. The rankings and data presented are based on publicly available financial information and may contain errors or omissions. Always do your own research and consult with a qualified financial advisor before making investment decisions. Cannabismarketcap is not a registered investment advisor, broker-dealer, or financial planner.