U.S. Markets close in 5 hrs 44 mins

Why Shares of Aurora Cannabis, Cronos Group, and Tilray Jumped Today

Keith Speights, The Motley Fool

What happened

Three top Canadian marijuana stocks enjoyed big moves on Monday. Shares of Aurora Cannabis (NYSE: ACB) jumped 7.4% as of 2:38 p.m. EST after rising as much as 12.7% earlier in the day. Tilray (NASDAQ: TLRY) moved 5.5% higher after racking up a 9.7% gain earlier. The biggest winner, though, was Cronos Group (NASDAQ: CRON), which soared as much as 20.6% before settling down to a 12.7% increase on Monday.

Neither Cronos Group nor Tilray announced any news. Aurora's only development related to its partner, Radient Technologies, receiving a standard processing license from Health Canada. So why did these three stocks rise? 

The most likely factor behind the solid gains is increasing confidence in the prospects for the global cannabis industry. The Canadian recreational marijuana market is just getting cranked up. Global medical marijuana markets continue to expand. The U.S. legalization of hemp opens the door for a major new market for the big Canadian producers. And there are encouraging signs about the potential for changes to U.S. federal marijuana laws in the not-too-distant future. 

Three marijuana leaves of increasing size on top of a red line trending upward

Image source: Getty Images.

So what

Several big marijuana stocks rising on no major news is positive because it signals overall investor confidence in the cannabis industry's prospects. But the difference in how much the stocks moved raises a couple of questions.

First, why did Cronos Group jump more than its peers? Perhaps the best answer to this question is that Cronos has a big partner at its side. In December, tobacco giant Altria announced that it was investing $1.8 billion to buy a 45% stake in Cronos Group. This deal will give Cronos plenty of cash to use in expanding its operations and a partner with significant expertise in marketing consumer brands across the world.

Aurora Cannabis hasn't landed a major partner outside of the cannabis industry yet. Tilray is partnering with Anheuser-Busch InBev to research cannabis-infused beverages. However, the big beer company didn't make an investment in Tilray, and the deal between the two companies is limited in scope.

But another question is: Why didn't Canopy Growth rise as much as Cronos did? Shares of Canopy increased by low single digits even though the company scored the biggest partnership deal of all last year. Probably the most likely reason behind Canopy's relative underperformance was that the company's market cap of close to $17 billion might make some investors wary of driving the price a lot higher.

Now what

Aurora Cannabis, Cronos Group, and Tilray are set to report their latest quarterly financial results within the next few weeks. Look for significantly greater sales from all three companies thanks to the opening of the recreational marijuana market in Canada. Probably the most important thing to look for, though, is what the companies say about their expectations for the rest of 2019.

Investors should also expect continued volatility with marijuana stocks. Any hints of problems can send these stocks reeling as quickly as good news can send them higher. But as we saw today, sometimes the best news of all is no news.

More From The Motley Fool

Keith Speights has no position in any of the stocks mentioned. The Motley Fool recommends Anheuser-Busch InBev NV. The Motley Fool has a disclosure policy.