|Bid||3.3190 x N/A|
|Ask||3.3425 x N/A|
|Day's Range||3.2760 - 3.5095|
|52 Week Range||3.0405 - 9.7400|
|Beta (3Y Monthly)||0.76|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||N/A|
Aphria Inc. stock fell 8% Wednesday to pace decliners in the cannabis sector, a day after it reported earnings for its fiscal first quarter that showed a profit that was mostly due to a change in its stock price and shift in its stake in another company.
The pot bubble has burst, but many companies’ shares are still trading at unjustified levels, says Brian Livingston.
With a boost from Aphria’s (APHA) impressive first-quarter earnings, cannabis stocks and ETFs were trading higher today. Let's take a closer look.
October has been tough for the cannabis sector. As of Monday, MedMen was trading at 1.58 Canadian dollars, which represents a fall of 18.6% this year.
Mexico is fast approaching its October 23 marijuana legalization deadline. Multiple legalization proposals before parliament are creating confusion.
Boom and bust cycles can easily last a few years. A classic case is the dot-com cycle, when lasted from 1998 to 2000, giving investors time to snag juicy returns.But cannabis stocks have been different. Their boom-bust cycle only lasted a year or so. And it is far from clear if marijuana stocks have bottomed.Source: Shutterstock The silver lining is that the valuations of marijuana stocks have become much more attractive, while their growth outlook appears to be intact.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 10 Hot Stocks Staging Huge Reversals There are a variety of high-quality marijuana stocks that investors can consider buying. But let's take a look at one: Aurora Cannabis (NYSE:ACB).Granted, the chart of ACB stock is downright scary. During the past year, Aurora Cannabis stock has gone from $12 to $3.77.While the valuation of ACB stock is still far from cheap, its growth remains particularly strong. Ultimately, that should lead to higher margins and profits, which will make Aurora stock more attractive. The Pros of ACB StockAurora has operations across 25 countries on five continents. Besides a thriving consumer business, ACB also has an extensive medical operation, as it employs more than 40 highly educated researchers, and has conducted a long list of clinical trials and case studies. What's more, the company is making a big play for the CBD-based wellness category, which is likely to become a multi-billion dollar business in the US. The Cons of ACB StockIt's true that ACB stock is facing a great deal of risk. The Canadian cannabis market has been beset with difficulties, as its supply chain has been problematic and it's been hurt by the continuing strength of the black market. Additionally, Hexo's (NYSE:HEXO) negative earnings preannouncement was a sign that the cannabis sector's growth may be decelerating.Moreover, vaping may have caused a number of deaths. While the ultimate cause of the deaths is unclear, they have damaged the cannabis industry's image. The Bottom Line on Aurora Cannabis StockAll in all, these are serious problems, and it will take some time to deal with them. But then again, Wall Street has been factoring all this into ACB stock. So even a small amount of good news could easily spark a rally by Aurora stock.But it's important to keep in mind that there are some potential catalysts that can help get ACB stock back on track. One is Cannabis 2.0. This refers to the legalization of CBD edibles, topicals and beverages in Canada. According to Deloitte, those products could generate $2.7 billion of revenue.Next, ACB has a top-notch strategic advisor, the legendary Nelson Peltz. He runs an activist investment fund and has taken positions in companies like Procter & Gamble (NYSE:PG), Mondelez (NASDAQ:MDLZ), and Wendy's (NASDAQ:WEN). No doubt, he'll be able to leverage his own network to identify strategic partners and investors.Granted, despite all this, ACB stock will likely remain volatile. So it's probably best to refrain from buying too many shares of Aurora stock initially. But in the long-term, ACB does look like it has what it takes to be a winner.Tom Taulli is the author of the book, Artificial Intelligence Basics: A Non-Technical Introduction. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Hot Stocks Staging Huge Reversals * 7 Under-The-Radar Growth Stocks That Could Benefit New Investors * 5 Excellent High-Yield Dividend Stocks to Buy The post Aurora Cannabis Stock: It's Not Time to Throw in the Towel appeared first on InvestorPlace.
The trading in Tilray (NASDAQ:TLRY) stock has been jaw-dropping. Tilray stock went public just last July -- the first cannabis company to list on a major U.S. exchange. The IPO price was $17. Within three months, the stock had closed at $214, with a brief intra-day run to $300.Source: Jarretera / Shutterstock.com Thirteen months later, those gains are nearly all gone. Tilray stock closed Monday just above $20. To be sure, cannabis stocks have seen volatility over the past year, and nearly all of them have declined sharply of late. But none have had quite the highs -- or the pullback -- of TLRY.The irony is that I still think Tilray stock is one of the more intriguing stocks in the category. The bubble last year -- and it was a bubble -- has given Tilray the reputation of a fly-by-night operator, or even something close to a "pump and dump." That's not the case.InvestorPlace - Stock Market News, Stock Advice & Trading TipsTilray's long-term strategy, which is to focus not on production, but on products, makes some sense. And as I wrote after Tilray earnings in August, investors' sudden interest in profitability is odd. Even Tilray CEO Brendan Kennedy noted it after the second-quarter release. * 10 Hot Stocks Staging Huge Reversals In fact, I called out TLRY as one of 10 mid-cap stocks to buy in late August. But as I noted at the time, patience was advised: The Tilray stock chart looked like a falling knife.It still does -- and that patience still is advised. TLRY, perhaps more than any other pot stock, shows just how much sentiment has changed and how much it will take to reverse it. What Will It Take for TLRY Stock to Rally?Over the last three months, TLRY stock has lost more than half of its value. And yet, in the context of cannabis investor expectations as recently as this summer, the news hardly seems all that grim.Q2 earnings were fine. Yes, Tilray missed analyst expectations for profitability. But profits are not the endgame right now -- positioning for cannabis growth is. Tilray's solid revenue growth is up 371% year-over-year and nicely ahead of analyst estimates. That seemed like a step in the right direction. Investors agreed with that at the start of the year, when pot stocks like TLRY, Canopy Growth (NYSE:CGC) and Aurora Cannabis (NYSE:ACB) were rallying. That's true no more.Indeed, off what was at worst a decent quarter, Tilray stock fell 35% in four sessions. A big whiff at Canopy, which pressured the sector, certainly didn't help. But in no way should the report have driven a 35% decline. And I'd argue that even six months earlier, the same report may well have been perceived as positive, not negative. Even Aphria (NYSE:APHA) has continued to decline despite what was clearly a blowout report. It's hard to imagine what kind of earnings beat it would take to truly change investor sentiment. Political Help, Right?The last time cannabis stocks rallied was late last year. And a key catalyst for the rally was the passage of the Farm Bill, which legalized hemp in the U.S.That new law was seen as a potential first step toward legalization in the U.S. -- an obviously enormous opportunity for legal cannabis producers. And so the rally, admittedly off lows driven in part by a market-wide selloff, seemed to make some sense.Late last month, the SAFE Banking Act passed the U.S. House of Representatives. The act allowed banks to legally work with cannabis companies in states where marijuana was legalized. The impact on cannabis stocks was minimal. TLRY stock gained 2.7% that day and the gains were erased in less than two sessions.To be sure, the SAFE Banking Act isn't necessarily going to become law. Indeed, it's unlikely to pass the Republican-controlled Senate. But, here too, it's not hard to imagine the reaction being very different last year or even earlier this year. It's a step in the right direction for the sector, seemingly. But investors don't care. Anheuser-Busch Can't Even Help Tilray StockTilray announced that its joint venture with Anheuser-Busch InBev (NYSE:BUD) would commercialize non-alcoholic CBD beverages in Canada.In 2018, such an announcement would have sent Tilray stock soaring. On Friday, the day following the after-close announcement, TLRY rose 1.5%. It had declined over 13% the day before.Perhaps nothing for Tilray stock this year -- and maybe nothing for the sector as a whole -- further shows what a shift in sentiment there's been in the past year or so. Tilray is taking a big step forward with a big-time partner toward a legitimate opportunity. And investors seemingly could not care less.That's a hugely dangerous problem for Tilray in the short term. But combined with the reputational impact of last year's TLRY bubble, it's also why the stock still seems intriguing -- at some point. But there's no need yet to try and figure out when that point might be.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Hot Stocks Staging Huge Reversals * 7 Under-The-Radar Growth Stocks That Could Benefit New Investors * 5 Excellent High-Yield Dividend Stocks to Buy The post Plunging Tilray Stock Shows Just How Much Sentiment Has Changed appeared first on InvestorPlace.
Aurora Cannabis (ACB) stock is currently down 29.23% on the NYSE on a YTD (year-to-date) basis. The company has lost 14.81% of its value since October 1.
If you follow the cannabis industry, you probably know that there is a bloodbath occurring. Cronos (NASDAQ:CRON) has not escaped this but it has held up better than other companies. Cronos stock has fallen by almost 33% in the past year.Although this seems bad at first glance, it is not nearly as bad as the performance of the stocks of some of the other cannabis growers.InvestorPlace - Stock Market News, Stock Advice & Trading TipsOver the past 52 weeks, Canopy Growth (NYSE:CGC) has dropped by 65%. Aurora Cannabis (NYSE:ACB) has dropped by almost 70%. Even worse, Tilray (NASDAQ:TLRY), the first cannabis company to list on the NASDAQ that everyone seemed so bullish on when it went public last July, has lost almost 90% of its value.This is probably because Cronos stock is different from these others. Unlike Tilray and Canopy, Cronos actually has turned a profit while the other two have not. In 2018 it reported a net income of $2.5 million.It lost money last year but it was 'only' about $20 million. Tilray lost $7.8 million in 2017 and $68 million in 2018. Meanwhile, Canopy lost $51 million in 2018 and $647 million in fiscal 2018, which ended in June.As for Aurora, the company has an enormous amount of Goodwill in its valuation while Cronos stock has almost none. Goodwill is a measure of intangible assets any many analysts have argued that at 70%, Aurora's is exceedingly high. The Action in Cronos Stock Was TellingProfessional traders are not surprised that this selloff has occurred. This is because, despite two recent events that should be very bullish for the cannabis industry, many stocks traded lower as if this news never happened. * 7 Beverage Stocks to Buy Now This is what traders call bad action. In other words, if news comes out on a company that should be bullish for the stock and it sells off, that is bad action.Conversely, if news is released that should be bad for a stock and it goes higher, that would be considered good action. Understanding this concept can help you evaluate investments. This is because the market is always right, while the commentators in the financial media that are trying to explain it are almost always wrong. Good News for Cronos StockOn Aug. 26 the Department of Justice announced that it is taking steps to facilitate and expand research on cannabis.For the past 50 years, the only institution in the United States that was legally allowed to grow cannabis for research purposes has been the University of Mississippi. Now the DOJ has been processing applications for other institutions to be able to do so. This is extremely bullish news for the industry.In addition to this, there was also news that the House of Representatives voted overwhelmingly to pass the SAFE Banking Act. This move is meant to give cannabis companies access to traditional banking and financial services. As of now, most banks will not service cannabis companies due to questions of legality.This is a step towards changing that. It still needs to pass the Senate which some think will be more difficult to do, but this is still a very bullish development.Despite these two very positive developments for the industry, when they were announced the stocks continued to trend lower. There is a classic example of bad action being a signal that the selloff will continue. Unfortunately for CRON there is a chance that it could go significantly lower from here. I do not see any obvious support until levels down around $5.50. Support at a level is when there is enough demand for the stock that the sellers can sell as much as they need to without adversely affecting the price. When stocks are dropping and they get to these levels they stop going down.From February through August of 2018, there was support around the $5.50 level. If CRON stock does get to that level it would be a decline of about 30%.At the time of this writing, Mark Putrino did not have any positions in the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Beverage Stocks to Buy Now * 10 Groundbreaking Technologies Created by Universities * 5 Semiconductor Stocks Worth Your Time The post There Probably Is a Lot More Bad News Ahead for Cronos Stock appeared first on InvestorPlace.
Hexo Corp. shares took another bath on Monday, after Seaport Global downgraded the stock along with market leader Canopy Growth, in a note that advises investors to switch out of Canadian cannabis stocks and into U.S. multistate operators.
Aurora Cannabis (NYSE:ACB) stock continues to tumble. Shares have fallen from around $6 in early September to $3.68 at the close Oct. 11. Terrible results from its competitors have impacted ACB stock.Source: Shutterstock Hexo's (NYSE:HEXO) preliminary results could be the canary in the coalmine. The cannabisphere is waiting on December's rollout of derivative products to provide a sales boost. But what happens if this too is a bust?With this in mind, it's easy to say Aurora stock could fall further. Valuation remains high. But a speckle of good news could shoot shares higher. Let's take a closer look, and see what's the call on ACB stock today.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Recent News with ACB StockAfter the Hexo report, analysts are taking a harder look at the pot industry's future prospects. But Jeffries' Owen Bennett remains positive on the stock. Bennett sees Aurora as one of the stronger cannabis companies, likely to survive the maelstrom. * 7 Beverage Stocks to Buy Now Their strategic relationship with investor Nelson Peltz remains a key positive. The potential of them entering the U.S. market remains a catalyst to drive shares higher.Bennett's key concern is the upcoming convertible debt maturity. $230 Canadian million dollars worth of notes come due in March 2020. Given that the current share price is far below the conversion price, Aurora needs to raise more capital to retire the debt. In other words, the potential for more share dilution. While this dilution may not be material, is remains another negative for Aurora Cannabis stock.Another key question on investor's minds is "positive EBITDA." Aurora previously implied they were are on target to hit this milestone by Q4 FY19 (quarter ending June 30, 2019). But they backtracked this before releasing Q4 results. Their current preferred wording is "on track", without a defined date.Aurora management continued with this on the last conference call, dancing around a target date for positive EBITDA.Analyst consensus sees revenue rising from $438.3 million for the period ending Jun 2020 to $775.2 million for the period ending Jun 2021, but with excess inventory and falling average selling prices, is this achievable? Aurora's Upside Remains Priced InACB stock continues to sell at a high valuation. Aurora stock trades at an enterprise value/sales (EV/Sales) ratio of 21.3. This is a discount to peer Canopy Growth (NYSE:CGC), which trades at an EV/Sales of 28.1. But Aurora trades at a substantial premium to pot stocks like Aphria (NYSE:APHA). Aphria's EV/Sales is 6.5. Aurora trades in line with Hexo's current valuation (EV/Sales of 21.9).Aurora's potential growth is already priced into the share price. Even with shares trading below the $4 price level, ACB stock is no bargain. With skepticism over pot industry growth, could Aurora Cannabis stock fall further? The company next releases results in mid-November.Last quarter, the company narrowly missed revenue estimates ($75 million actual vs. $78.2 million projected). For this quarter, sales are estimated to be $79.4 million. If the company misses the mark again, there will be concrete doubts over the Aurora growth story.But what kinds of catalysts are in the pipeline? In prior analysis, I highlighted the company's European business. As seen from September's investor presentation, Aurora's big presence in Germany could pay off in the long-term. But, for now, European medical sales remain a small part of Aurora's business. European sales were just CAD$11.8 million out of CAD$281 million in total FY2019 sales.In the short-term, "Cannabis 2.0" is the biggest mover of Aurora stock. Canada is on track to allow sales of products like edibles in December. It remains to be seen if sales will meet expectations, or become another disappointment. Taking into account these potential catalysts, it appears that Aurora stock offers very little for investors. Bottom Line on ACB StockI am skeptical about Aurora's future prospects. The company stands at the cusp of opportunity. But so do scores of other publicly-traded pot stocks. The Canadian pot space got ahead of itself, ramping up production to levels that exceed demand.The roll-out of edibles and other derivative products could be a saving grace, but reality may not line up with expectations. At the current trading price, Aurora stock is far too expensive to justify a position.At the same time, Aurora is too risky a stock to short. A modicum of good news could send the depressed stock price higher. Aurora is the kind of stock you need to throw into the "too hard" pile. Look for clearer growth opportunities, and steer clear of ACB stock.As of this writing, Thomas Niel did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Beverage Stocks to Buy Now * 10 Groundbreaking Technologies Created by Universities * 5 Semiconductor Stocks Worth Your Time The post Sure, ACB Stock Is a Falling Knife, but It's Too Risky to Go Short appeared first on InvestorPlace.
The broader US markets were relatively flat today. Weakness in the cannabis sector continued, with the ETFMG Alternative Harvest ETF down 0.4%.
It may sound like a familiar refrain, and it is, but cannabis equities are imperiled at the moment and Aurora Cannabis (NYSE:ACB) stock is not immune to that theme. Last week, shares of the Canadian medical marijuana grower plunged 16.36%, extending the stock's 12-month loss to over 63%.Some that tumble is attributable to Hexo (NYSE:HEXO), which slid after issuing slack revenue guidance. Hexo forecast fourth-quarter sales of $14.50 million to $16.50 million and full-year revenue to be between $46.50 million and $48.50 million. Basically, Hexo sneezed and other cannabis stocks caught colds last week.These days, there aren't places to hide in the cannabis space. It's either hold on tight or get out. There is no in between. Last Friday, Canopy Growth (NYSE:CGC) tumbled, dragging Aurora Cannabis stock and other rivals down with it after Jefferies downgraded Canopy.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Beverage Stocks to Buy Now In a note, the Jefferies analysts said "that a number of negative headlines have impacted the sector in the past six months, as well as few signs of profitability. Still, they feel greater risk and volatility is priced in for many stocks," reports Connor Smith for Barron's.The Jefferies analysts added that the next 12 months will be pivotal for the fortunes of many cannabis companies as markets continue separating the winners from the losers. The analysts bring up a point I've frequently mentioned regarding marijuana companies: the ability to execute.Sure, there are some reasons to consider holding onto Aurora Cannabis stock, despite a dubious record of execution. Investors with high risk tolerance or the extremely patient that are waiting for increased liberalization of the Canadian recreational market and other fundamental factors can hold this name."Looking beyond Canada, forecasts suggest medical and recreational markets will continue to open up worldwide, providing ample opportunity for long-term growth if these companies can ramp up their supply quickly and build compelling brands," according to Bloomberg. ACB Stock Problems RemainAt last Friday's close of $3.68, Aurora Cannabis stock is cheap in price tag only. The shares still trade at a whopping 500x forward earnings. However, the company isn't profitable, though management is trying to get there."As a result of its focus on profitability, adjusted EBITDA losses narrowed to $12 million in the quarter, down from $37 million in the third quarter," said Morningstar. "Nonetheless, full-year adjusted EBITDA losses widened by $100 million versus 2018 to $156 million for the full year, reflecting higher overhead expenses to support growth."That's fine and dandy, but some channel checks suggest Aurora's inventories are increasing, indicating management didn't properly forecast demand. Remember that when the company reported fiscal fourth-quarter results last month, it said revenue was up in its medical and Canadian consumer businesses, but it also said "production volume increased 86% sequentially to 29,034 kgs."For Aurora Cannabis stock, two of the bright spots include a 3% margin on revenue increase to 58% and, perhaps more importantly, declining production costs. In the fiscal fourth quarter, "cash cost to produce per gram sold declined 20% sequentially to $1.14 per gram in Q4 2019," according to the company. Bottom Line: Making Good South of the BorderOne of the keys for Aurora Cannabis stock, though its more of a medium- to long-term story, is the company's ability to establish some hold in the fast-growing U.S. market. This is a reoccurring across the Canadian cannabis space and one investors must be mindful of.The company has some presence in the U.S. via a marketing deal with the Ultimate Fighting Championship (UFC), but as price action in Aurora Cannabis stock suggests, investors are demanding more.Aurora Chairman Michael Singer recently said Nelson Peltz, the activist investor that has a stake in the company, has been setting up meetings between the cannabis firm and potential U.S. partners.The company "lans to aggressively pursue the United States cannabis market with an acquisition in the hemp-derived CBD space as its likely first big play," according to CNN Business.Such a move could appease investors, but for Aurora Cannabis stock to move higher on acquisition news, the company cannot overpay for its target, and management must prove adept at realizing cost synergies and effectively integrate the acquired firm when the time comes. Bottom line: execution remains a critical part of the Aurora Cannabis stock narrative.Todd Shriber does not own any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Beverage Stocks to Buy Now * 10 Groundbreaking Technologies Created by Universities * 5 Semiconductor Stocks Worth Your Time The post Aurora Cannabis Flirts With Penny Stock Status appeared first on InvestorPlace.
MKM Partners analyst Bill Kirk cut his stock price target on Aurora Cannabis Inc. on Monday and said there is still some optimism in the stock “to shake and trim.
Last year, Wall Street investors could not get enough of cannabis stocks and Canopy Growth (NYSE:CGC) was the cream of the crop. This is because it received a large $4.5 billion investment from Constellation Brands (NYSE:STZ). But we have since seen since other mistakes in valuations like the one in WeWork that cast doubt over business acumen.Source: Shutterstock At this moment, CGC is also looking like it won't pan out as planned for STZ. CGC stock has fallen over 60% from its October 2018 highs. So the question now is it a broken company or merely a broken stock that has lost its momentum?This is a complicated answer because no one really knows the future of the cannabis industry. So CGC is not alone -- all of its peers are also in free fall. Tilray (NASDQ:TLRY) an Cronos (NASDAQ:CRON) are down 70% and 30% year-to-date. After all, cannabis is still illegal in the United States at the federal level. This means that these companies are at a disadvantage on Wall Street. Something will need to change so that the market unshackles these stocks. It will take a miracle for CGC stock to live up to expectations.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Beverage Stocks to Buy Now The bullish story burst onto the scene with great excitement. The applications for cannabis into the mainstream were endless. Now that the frenzy has ended, realism set in. The pudding has to hit the plate in a manner of speaking. CGC Stock Is BrokenTechnically, CGC stock is in free fall with a potential target of $16.50 per share. This is a zone more so than a hard line in the sand. Nevertheless this is a far cry from its high of almost $60 a share. So this is a wake-up call for Constellation Brands' assessment of its original Canopy Growth valuation. The bulls most recently presented their best effort at $19.78. That's the line to beat for now. Ledges like this become heavy resistance until the bulls recover them.Fundamentally the drop in CGC and its competitors makes their valuations now slightly less insane. This is not to say that cannabis stocks are cheap by any means. But now they have shed a lot of their froth. But in reality, no one really can assess how cheap they are because they are trying to establish something that has not yet existed in the legal Wall Street realm. This is a bet that I personally am not willing to take. But some investors, who are more familiar with the ins and outs of the industry, can make more educated guesses on the likelihood of a CGC recovery. The Bottom Line on Canopy GrowthSome of the stock drop is self-inflicted from management headlines. So if the company can get its act together, perhaps it can again retrace its steps in the stock market. Short term, there is significant resistance for CGC at $23 per share. The onus is on the bulls to recover that level so they can start building positive momentum over time once again.The alternative would be for the bulls of CGC stock to get a miracle headline that would bring them back to levels from say six months ago. This is truly a hopium trade where if I buy the stock today I am hoping that things will work out for this struggling industry. Nothing currently in the charts or in the headlines is looking promising. So whatever drives CGC stock higher will have to come from somewhere else.Nicolas Chahine is the managing director of SellSpreads.com. As of this writing, he did not hold a position in any of the aforementioned securities. Join his live chat room for free here. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Beverage Stocks to Buy Now * 10 Groundbreaking Technologies Created by Universities * 5 Semiconductor Stocks Worth Your Time The post Canopy Growth Stock Has Gone Up in Smoke appeared first on InvestorPlace.
Aurora Cannabis Inc (NYSE: ACB ) stock is down 30.03% on a year-to-date basis, and 35.1% over the last 30 days. The Analyst MKM Partners analyst Bill Kirk maintained a Sell on Aurora and lowered the ...
In case you didn't get the memo, what's popularly known as "Cannabis 2.0" is coming to Canada on Oct. 17 as the nation finally legalizes cannabis-infused beverages, edibles, vapes, and similar products. Owners of Aurora Cannabis (NYSE:ACB) stock could potentially be sitting on a green-hued gold mine if the pot-stock sector explodes to the upside in the wake of this historic event.Source: Jarretera / Shutterstock.com Or, it could be a great big dud; you just never know with these things. With the vaping controversy bringing negative publicity to the cannabis industry, October might not be so auspicious for Aurora stock holders -- but then, we could perhaps dig a little deeper to find some very good reasons to hold onto those Aurora Cannabis stock shares. One Analyst's Mixed Messages on ACB StockIt's funny how an analyst can run hot and cold on the same exact stock at the same exact time, and we've got a textbook example of this with Aurora stock. In particular, Jefferies analyst Owen Bennett recently proclaimed that ACB stock is "one of the best-placed to succeed on a global basis over the long term," a ringing endorsement if I ever heard one. He also predicted that the company's EBITDA will turn positive during Q2 of 2019.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Beverage Stocks to Buy Now In the same breath, however, Bennett turned around and literally halved his price objective on Aurora Cannabis stock from C$14 to C$7. And yet, he's assigning a "buy" rating on ACB stock -- go figure.Bennett reminds me of those Katy Perry lyrics: "You're hot and you're cold/You're yes and you're no." In a way, though, I can understand the price-target cut, as the ACB stock price has recently dipped under the C$5 level, making C$14 perhaps a bit unrealistic even with Cannabis 2.0 coming up. So yes, I understand why Bennett chose C$7 as a price target, but it still felt drastic when I first heard about it. The Incredible Edibles MarketIn order to sidestep the controversial vaping market, some cannabis companies have chosen to focus on edibles, a niche which I find fascinating. It's important to understand that the term "edibles" covers a variety of products: as the University of Colorado Boulder's Jacob Kirsch explains in a highly informative research paper on taxation in the cannabis industry, extracts from the hemp plant are "infused into food and beverages to produce edibles. Additional ingestible goods such as capsules and tinctures are also sold as edibles."Moreover, a study conducted by research firm Deloitte found that half of surveyed respondents were likely to try cannabis-enhanced cookies, while nearly as many (49%, to be exact) were likely to try cannabis-infused gummies. It's probably no coincidence, then, that Aurora Cannabis is shifting towards edibles in a time when vaping is less fashionable.To that end, Aurora has been granted a processing license from Health Canada (the nation's regulatory agency) for a facility known as Aurora Air. This particular facility will produce edible products including chocolates and gummies, which are expected to go public in Canada as soon as December of this year.I consider that to be a very forward-thinking move on Aurora's part, as edibles don't carry the stigma that vaping products do. The fact that Health Canada granted the Aurora Air license, moreover, is a sign that the nation's regulators accept and embrace edibles as a publicly purveyed commodity; you can love 'em or hate 'em, but edibles are here to stay. The Takeaway on Aurora StockDon't let the Jeffries analyst's mixed bag of expectations on ACB stock throw you for a loop; with an early move into the burgeoning edibles market and the green light from Health Canada, Aurora will flourish through Cannabis 2.0 and beyond.As of this writing, David Moadel did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Beverage Stocks to Buy Now * 10 Groundbreaking Technologies Created by Universities * 5 Semiconductor Stocks Worth Your Time The post Cannabis 2.0 Is Coming: Watch ACB Stock Very Closely appeared first on InvestorPlace.
Cannabis stocks see dark clouds looming. The week ending on October 11 was disastrous for the sector. Hexo stock fell after it withdrew its fiscal 2020 outlook.
OrganiGram Holdings (OGI) received a “buy” rating from Jefferies on October 11. However, the investment firm lowered its price for the stock.
Colorado reported $1.16 billion in marijuana sales in the first eight months of 2019. In 2018, the state reported marijuana sales of $1.54 billion.
Marijuana stocks were mixed Friday, even as a Jefferies analyst made deep cuts to price targets on Aurora Cannabis and Canopy Growth.
At 2:00 PM ET, the S&P; 500 and the Dow Jones were up by 1.7%. Despite the surge in the equity market, the cannabis sector showed a mixed performance today.
In 2019, marijuana stocks have been on a roller coaster ride. Until mid-March, cannabis investors enjoyed an uptrend. And many marijuana stocks have surged 100%+ in just a few weeks.Source: Shutterstock But since April, many of them have lost considerable value, driven by the sector's general weakness and poor earnings results.Investors are now wondering which marijuana stocks to buy and hold for the-long term. If you are interested in buying marijuana shares, you may also want to take a closer look at the ETFMG Alternative Harvest ETF (NYSEARCA:MJ). The MJ ETF is a marijuana ETF that has about $1 billion of assets under management.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 A-Rated Stocks to Buy for the Rest of 2019 Long-term investors should have realistic expectations about the cannabis market. They should also be ready for large daily stock price fluctuations.The marijuana stocks that make up the majority of the MJ ETF also tend to be very volatile around the time when their quarterly earnings are announced. Given the risk posed by the cannabis sector, no cannabis-oriented ETF is going to be completely safe. But MJ's diversification makes it safer than many alternatives. Cannabis Companies in the MJ ETFThe MJ ETF currently holds 38 stocks. About 70% of its assets are allocated to pot companies and growers. Many of the companies whose stock it owns are based in Canada.Among the major stocks in the MJ ETF are Aurora Cannabis (NYSE:ACB), Cronos Group (NASDAQ:CRON), Canopy Growth (NYSE:CGC), Tilray (NASDAQ:TLRY) and Green Organic Dutchman Holdings (OTCMKTS:TGODF). It also owns the shares of some tobacco stocks and fertilizer companies.A recent study by Lake Land College has concluded that Canadian "[c]annabis stocks on average possess higher level of risk when compared with growth and speculative stocks on the TSX."With the recent decline in the the price of individual marijuana stocks, many of them have come down to more attractive levels.But one fundamental point that investors need to keep in mind is that most cannabis producers are not profitable yet. Analysts value cannabis companies mostly based on their belief that these companies will be profitable in the future.But I'd bet that several marijuana stocks may not be around in several years because some of them have negative cash flows, poor business models, and intense competition.The MJ ETF can avoid some of the bad marijuana stocks. But the ETF will have difficulty outperforming several of its large holdings, such as Cronos Group, Aurora Cannabis and Canopy Growth. Nonetheless, the diversification of the MJ ETF limits its volatility and declines while retaining exposure to the potential gains of the cannabis market. Two Other Stocks to Note in the MJ ETFA wide range of products are made from cannabis, including CBD oils, edibles, cannabis-infused beverages, and concentrates used in vaping, creams, and lotions. Thus the industry includes companies that make, market, and distributing these products and their components.I'd like to highlight one stock, GW Pharmaceuticals (NASDAQ:GWPH), in the MJ ETF that is quite different than the other marijuana stocks. GW is MJ's largest holding, accounting for 7.91% of its assets.A 2018 report by the United Nations revealed that Britain is the biggest producer and exporter of legal cannabis in the world. In 2016, the UK produced 95 tonnes of marijuana and exported 2.1 tons.Virtually all of the U.K.'s cannabis exports are contained in one drug, Sativex, which is produced by UK-based GW Pharmaceuticals, a leading cannabinoid-focused biotech company.GW's Sativex is used to treat spasms in multiple sclerosis patients. Last year the company obtained U.S. regulatory approval of its CBD drug, Epidiolex, for the treatment of epilepsy.GW stock has gone from about $10 in 2013 to an all-time high of $196 in May 2019. Currently it is hovering around $110.MJ also owns shares of the companies that provide ancillary products and services to the cannabis companies. One such name is Scotts Miracle-Gro (NYSE:SMG), which is known for its fertilizer products. Where Is the MJ ETF Price Now?In the past two years, marijuana stocks have been choppy and highly speculative. Their valuations can and do change suddenly and drastically, both as a result of company news and developments in the industry.For most of 2019, cannabis stocks have struggled. And MJ ETF reflects their weakness.In 2019, the MJ ETF is down over 20%. After reaching an intraday low of $23.3 on Dec. 24, 2018, it rallied to a high of $39.25 on March 19. Its 52-week high remains at $44.29, reached on Oct. 16, 2018. Currently it is hovering around $18.70.Those investors who pay attention to charts should note that, due to the decline of its price since late March, MJ ETF has a not-so-pretty technical picture. In the long run, MJ needs to build a base again before a long-term, sustained rally can occur.MJ stock probably won't surpass the high it reached on March 19, 2019 in the near-term.And MJ may reach a new 52-week low,possibly around $18, very soon. In the coming weeks, I expect MJ to mostly trade between $22.5 and $17.5.However, in case of a broader market selloff, the fund could easily near $15. The Bottom Line on the MJ ETFMJ ETF offers exposure to Canadian cannabis producers and a number of biotech firms. Therefore, it may be appropriate for some long-term investors who are interested in the cannabis sector.It is important to note that unless the U.S. federal government legalizes marijuana, the worldwide cannabis market consists, for the most part, of Canada. And most of these cannabis companies cannot become profitable from the limited Canadian market alone. As a result, the high valuations of some marijuana stock are quite difficult to justify.Most Canada-based cannabis companies have high operating expenses. The continuous red ink at the bottom of their income statements is a major worry for the shareholders. If the international cannabis market does not grow as expected, then MJ ETF could drop further.Investors who buy MJ ETF in the near-term should hold the ETF for several years.As of this writing, Tezcan Gecgil did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Super Boring Stocks to Buy With Super Safe Returns * 10 Winning Stocks to Buy and Stick With for the Long Haul * Don't Give Up on These 4 Cannabis Stocks The post What to Know Before Investing in the ETFMG Cannabis ETF appeared first on InvestorPlace.
Cannabis stocks surrendered some of their early gains Friday, as the concerns about a lack of profits in the sector that sparked a massive re-rating of risk this week persisted, putting the sector on track for double-digits losses on the week.