Marijuana penny stocks are one of the most popular ways to profit from the booming marijuana industry.

You see, marijuana penny stocks have the kind of explosive growth potential large-cap stocks often can’t match.

They also give investors an opportunity to get in on the ground floor in the marijuana industry without breaking the bank.

Now, these benefits don’t mean marijuana penny stock investing is risk free. As always, penny stock investors should never invest more than they can afford to lose.

However, we’ve identified a pot penny stock on the verge of surging more than 300%, which is why you need to see this stock pick before it’s too late…

Marijuana Penny Stocks Have Room to Run

Mainstream marijuana stocks have already locked in tremendous gains this year, and that could be just the beginning as the legalization movement gains momentum.

Marijuana cultivation supplier Canopy Growth Corp. (NYSE: CGC) has risen 132% since January.

Cannabis start-up Tilray Inc. (NASDAQ: TLRY) jumped an astonishing 631% since this year.

And Aurora Cannabis Inc. (OTCMKTS: ACBFF) is up 173% since August.

These are exciting gains. However, surging share prices have pushed these stocks out of reach for many investors.

And while these are some of the best marijuana stocks available, you’re unlikely to get the best value for your investment if you buy these companies today.

This is especially the case when we look at the price-to-sales (PS) ratio of these firms.

The PS ratio reveals the value of a company’s sales revenue. PS ratios relative to industry averages can tell us if a company is over- or undervalued.

Canopy Growth, which is valued at $11.4 billion, currently trades at a PS ratio of 132.

And Aurora Cannabis, valued at $9.2 billion, has a PS of 106.

For leading businesses in the marijuana sector, these PS ratios are incredibly high.

For comparison, our top marijuana penny stock to watch right now only has a PS ratio of 14.34, indicating the company is undervalued and has plenty of room to grow.

It’s currently trading for just over $2 a share.

And it could surge over 300% this year alone…

Our Top Marijuana Penny Stock to Watch Today

22nd Century Group Inc. (NYSE: XXII) is a New York–based plant-biotech firm that uses advanced engineering technology to regulate the levels of nicotine in plants.

XXII is currently growing tobacco with up to 97% less nicotine content than its natural counterparts. As a result, a smoker looking to reduce their risk of addiction now has a viable alternative.

This breakthrough will allow XXII to join a growing industry of tobacco alternatives that generated $2.9 billion in revenue last year.

22nd Century is also using this advanced technology in the legal cannabis market. 22nd Century is helping hemp farmers meet federal requirements for THC content. According to U.S. law, Hemp crops with THC levels above 0.3% must be destroyed.

Grand View Research Inc. reports that the global hemp market is expected to be worth $10.6 billion by 2025 – a massive growth that XXII will able to cash in on.

XXII is currently trading at $2.48. But the 12-month price target issued by global investment bank Chardan is $11.50 per share – a potential gain of 363% in just one year.

That’s a tremendous gain.

Source: Money Morning