After a parabolic rally in 2018, the cannabis sector came has come back down to earth in 2019.
Here's a look at some of the main players in the space, which started perking up again this week.
- Tilray (NASDAQ: TLRY) blasted to $300 in September 2018 and traded down to $25.15 earlier this week. The stock was trading near the $32 level at the time of publication.
- Cronos Group (NASDAQ: CRON) was halved from its February high of $25.10 when it bottomed on Aug. 28 at $10.50. It traded at $12.03 Friday afternoon.
- Aurora Cannabis Inc. (NYSE: ACB) has been more than halved from its October 2018 peak of $12.53. It recently dropped into the $5 handle before trading above $6 on Friday.
- Canopy Growth (NYSE: CGC) peaked at $59.25 in October 2018 on the heels of a large investment by the liquor company Constellation Brands (NYSE: STZ).
Canopy Growth has posted the largest percentage gain of the quartet. At $28, it's 23% off its Aug. 28 low of $22.76.
That low coincides with a May 2018 low of $22.37, which provided the base for its explosive rally in late 2018.
Click here for more information about the upcoming Benzinga Cannabis Capital Conference Oct. 22-23 in Chicago.
A Few Things To Consider
Investors should keep a few things in mind when considering investing in these stocks for the long term.
First of all, many of the issues in this sector trade at a huge premium to their earnings, resulting in unjustified valuations.
The next rally in these sectors will be met with tons of overhead supply. In other words, on their initial rally, there was a preponderance of buyers willing to sell at higher prices. This time around, there are many investors that are underwater in the issue and hoping to just break even or eke out a small gain.
From a technical standpoint, investors will want to put emphasis on each issue's recent low as a possible exit point if a rally does not materialize.
Friday’s high and closing price in each issue may be a good indicator to follow next week if looking for a continuation rally.
Finally, investments in the sector should be treated as extremely speculative, and investors should be comfortable with the worst-case scenario as opposed to an avenue to getting rich quickly.
Tilray Is Down 55% In 2019: What Do The Fundamentals Say?
See more from Benzinga
- This Analyst Thinks Guidewire Needs To Work Through Near-Term Changes
- Mid-Afternoon Market Update: Dow Up Over 100 Points; Domo Shares Tumble On Weak Forecast
- Want To Enter The Cannabis Industry? Professionals Share Their Top Advice
© 2019 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.