3 Psychedelics Stocks to Buy

Are psychedelic stocks in 2021 going to perform like cannabis stocks did in 2017?
Anthony RussoApr 26,2021,16:35

It is no secret that the United States has been in a metnal health tailspin for decades. Then, last year, an already depressed and anxious people locked themselves inside amid the courge of the coronavirus. (Between March and June 2020, calls across the U.S. to the helpline sponsored by the National Alliance on Mental Illness increased by 65%.)

And while vaccinations are in full swing and a return ot normalcy is imminent, the "normal" to which Americans will return represents an abnormal and alarming level of mental illness.

There may be no magic bullet when it comes to the American mental health crises, "magic mushrooms" and other psychedelics are gaining legitimacy as a treatment for anxiety and depression. Yes, hallucinogens are no longer only championed by Joe Rogan and the ghost of Timothy Leary. Pyschedelics are becoming mainstream--the way cannabis did a deacade ago.

Illegal on the U.S. federal level , Oregon became the first state to legalize one type of psychedelic known as psilocybin, the psychoactive chemical in “magic mushrooms” in November.

Currently, the industry is in its early stages, with the psychedelic drugs market forecasted to grow to $6.85 billion by 2027, according to Data Bridge Market Research.

One day, shareholders in the psychedelics sector will hope that the industry will boom as cannabis has in the last several months. Below are three psychedelic stocks to consider buying before that potentially happens.

1. Compass Pathways (Nasdaq: CMPS)

Market Capitalization: $1.27 Billion

The U.K’s Compass made history in September when it became the first company dedicated to research in the mental health benefits of psychedelics to trade on a major exchange.

Investors have definitely been excited about the potential of Compass; its stock shot up as high as $61.69 per share in December, more than triple its IPO price of $17. But Compass has been on a slide since the middle of February, with growth stocks slumping on fears of rising interest rates.

Currently, the London-based company is conducting a phase 2b clinical trial using its psilocybin-based therapy. The trial involves 216 individuals with treatment-resistant depression.

According to Compass, it plans to post data from the trial by the end of the year.

The stock in Compass was trading at $35.30 per share at Friday's close.

2. MindMed (OTC: MMEDF)

Market Capitalization: $1.11 Billion

MindMed, on the other hand, announced today that it will begin trading on Nasdaq on Tuesday. The stock skyrocketed as high as 65% on the news.

Currently, MindMed is developing several treatments that do not produce hallucinogenic effect. (Less fun, but the company hopes still equally effective.)

However, MindMed is still developing some hallucinogenic therapies. According to the company, it has multiple products in phase 2a clinical trials or better including its LSD microdosing project for the treatment of ADHD. Another one of its LSD projects is in phase 2b trials for the treatment of anxiety.

Last week, on news of a Nasdaq uplist, the stock skyrocketed.

While you might want to wait for another dip before buying, the stock is still a good bet for investors looking to capitalize on a booming industry.

Renowned Shark Tank investor Kevin O'Leary is bullish on both the industry generally and the company more specificaly.

“I became a very early investor in MindMed, I became an advocate for the whole sector,” O'Leary told Motley Fool in January.

“I'm a spokesperson for it, I'm a big believer in these medicines, and lo and behold, [JR Rahn’s’] company is now a $2 billion market cap. I'm one of the early seed investors. It's the best investment I've made in decades.”

3. Lobe Sciences (OTC: GTSIF)

Market Capitalization: $17.26 Million

If you think psychedelics stocks are the "new" cannabis (or rather that these stocks will offer the kind of returns that cannaib stocks once did), then Lobe Sciences might be your best bet. This under-the-radar low-priced stock has moved away from cannabis and towards this new exciting industrya.

In fact, Lobe has completely divested out of cannabis, according to the company’s CEO Philip Young. Last month, Lobe completed the sale of Cowlitz County Cannabis Cultivation Inc. to Ionic Brands Corp. (OTC: IONKF) for roughly $32 million. Now, Lobe will solely focus on psychedelics; as of Mar. 8, the company had $1.75 million in cash.

The Vancouver-based company is conducting a preclinical study with the University of Miami for the treatment of post-traumatic stress disorder (PTSD).

It is also developing a Nasal Mist device. According to Lobe’s annual report filing, it teamed up with VisionWork Engineering in December to test the proof-of-concept of the device. The company called the move a “major milestone towards the Company's ultimate goal of development of effective delivery methods and commercialization of the Company's products.”

Most importantly, Lobe might be close to entering human trials regarding its study with the University of Miami. Young is hoping the company will be able to start human testing by the fourth quarter.

Thus far, investors have been on a good trip, with shares hares more than tripling since the beginning of November. CEO Mr. Young attributed the gains to investors showing euphoria to the company’s transition from cannabis to psychedelics.

As of Monday morning, Lobe was trading at 11 cents per share.

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Topics:Compass Pathways, MindMed, Lobe Sciences.