What happened

Shares of wellness products specialist Neptune Technologies & Bioressources (NASDAQ:NEPT) rose as much as 14% Monday after the company announced a new partnership with Tetra Bio Pharma. The pair will collaborate to develop, commercialize, and market purified cannabinoid oil products for the treatment of pain and inflammation. Products will also be sold in veterinary markets.

Both Canadian companies have repositioned themselves with a focus on cannabis products in recent years, and risen from penny stocks to companies with $100 million-plus market caps in the process. As of 3:43 p.m. EST Monday, the stock had settled to a 13.7% gain.

A person in a shirt and tie drawing a green chart showing growth on the screen.

Image source: Getty Images.

So what

The fact that both Neptune Technologies and Tetra Bio Pharma are based in Canada has no doubt aided the share prices of the companies. Canada is nearing the opening of a retail cannabis market following a series of deregulatory actions. Meanwhile, both Canada and the United States allow at least a few specific uses of cannabis-based products for veterinary applications.

That said, investors should not overlook the fact that the businesses have much to prove. Neptune Technologies reported just $6.7 million in revenue in the most recent quarter and continues to record losses. The business does report healthy profit margins near 20%, but it remains a long way from cash-flow-neutral or profitable operations.

Now what

Marijuana stocks have been on fire in the last year or so following several sweeping changes to the regulation of cannabis products in North America. While that could create newfound opportunities for companies, investors should stick to traditional financial analysis when evaluating potential investments. Monday's announcement could be a step in the right direction for Neptune Technologies, but the company is a drop in the bucket and quarters away from producing results. Just something to keep in mind.

Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.