|Bid||7.43 x 42300|
|Ask||7.44 x 800|
|Day's Range||7.22 - 7.46|
|52 Week Range||4.05 - 12.52|
|Beta (3Y Monthly)||2.49|
|PE Ratio (TTM)||34.44|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||N/A|
Cannabis stocks were mostly higher Wednesday, with Curaleaf leading the pack after announcing an $875 million stock-and-cash deal that will help it expand into new states, including Illinois.
The cannabis industry is starting to change on the production side of the business, as a few companies, such as Aurora Cannabis (ACB), are starting to not only grow revenue, but are approaching positive EBITDA as they do so.While I don't think this is going to be a big catalyst for Aurora in the very near term, over the next few quarters, if it performs in alignment with guidance, it's going to be a huge advantage over its competitors, who continue to struggle to grow revenue while reducing costs.In this article we'll look at why this is likely to attract a lot more interest from institutional investors going forward, and why it could surprise to the upside over the next year or so.Revenue vs. earningsFor some time I've been persuaded that revenue will be the key metric to watch for cannabis producers. Those that prove they can grow sales show they have the capacity to supply growing demand. That ensures a steady flow of revenue, which when consistent, should eventually lead to lower costs on scale and becoming more efficient.If companies aren't growing sales, cutting costs becomes an exercise in futility because market demand for cannabis has a long way to go before being satiated. Selling a relatively small amount of pot as a profit isn't going to attract the interest of investors for a prolonged period of time.While I maintain my thesis that revenue is the key catalyst to watch in the near term, I am starting to believe that companies that are able to maintain sales growth and do so at a profit, are going to attract the most investor interest, and their value will increase.Aurora Cannabis is uniquely positioned to do just that, and if it delivers on its guidance for profitable EBITDA in the current quarter, it should result in its valuation jumping significantly, along with its share price.Its major competitor, Canopy Growth on the other hand, continues to grow revenue, but in the latest quarter, it resulted in an adjusted EBITDA loss in the fourth quarter of C$93 million, or about US$74.5 million. That's far beyond any EBITDA losses of its competitors, which are also spending on domestic and international expansion.When asked about that, CEO Bruce Linton said that "it does dwarf our peers and it all comes back to the war chest that we talk about which we think is going to turn into a competitive advantage over time as we're building this global scale."Canopy Growth does like to wave its $4 billion plus on its balance sheet like a magic want before the market, but the reality is Aurora Cannabis has been able to land great partnerships and acquisitions without the money.The company has also rapidly expanded at a pace internationally far beyond Canopy Growth, and is doing so while continuing to lower costs.Profitable expansionAurora is on pace to boost production capacity to about 625,000 kilograms a year by early 2020. There will be some lag time there as the company goes from seed to harvest in the available facility space, but in the relatively near future the company is going to far exceed all its competitors on how much cannabis it can supply to the market.Considering the higher margin products becoming legal in Canada, the increasing revenue coming from higher-margin medical cannabis, the low production cost per gram of $1.42 as of the last reporting period, and rising overall sales, it's easy to see that Aurora Cannabis is close to separating itself from its competitors in a big way.Assuming Aurora can sell the enormous amount of inventory it'll soon have available to it, its numbers are going to shoot through the roof.ConclusionAurora Cannabis has been able to do rapidly increase revenue, lower costs, and expand internationally, without having to give up control of a large part of its company, or seat board members that may or may not align with their business model and strategy.Management has guided for positive EBITDA in this quarter. But even if it were to slightly miss and it takes another quarter to reach that outcome, the company is poised to be profitable in a very short time while it's rapidly growing revenue.As the cannabis market continues to grow on a global basis, it also has available holdings to increase capacity to over 800,000 kilograms annually by my estimates, and possibly beyond 1 million kilograms a year if demand warranted it.Based upon the approximate 625,000 kilograms a year the company will be producing starting in early 2020, it has the flexibility to use its product to sell, research, extract, or apply to whatever segment it needs, without sacrificing revenue.For these and other reasons, I still consider Aurora Cannabis to be the top cannabis company on the production side of the cannabis business.To read more on the nitty gritty of what’s going on in the rising cannabis industry, click here. Disclosure: The author is Long ACB.Read more on ACB: * Aurora Cannabis (ACB) Is Firing on All Cylinders * Aurora Cannabis: Great Prospects… That Are Fully Priced Into the Stock Already * Don’t Jump on the Bandwagon for Aurora Cannabis (ACB) Stock * Aurora Cannabis Stock Set to See Big Gains, Says Analyst More recent articles from Smarter Analyst: * Stifel's Top Analyst Bullish on Netflix (NFLX) Stock Ahead of 2Q:19 Earnings * HEXO Stock Is Ready to Run (If Canada Health Would Get Out of the Way) * Why Aurora Cannabis (ACB) Stock Is Likely to Attract More Institutional-Level Investment * 5 Cannabis Stocks on M&A; Watch
Ladenburg Thalmann initiated coverage of the cannabis sector on Wednesday, assigning buy ratings to market leader Canopy Growth Corp. and Aurora Cannabis Inc. , and a neutral rating to Tilray Inc. Analyst Glenn Mattson said he favors Canadian companies who are focused on long-term value creation and gaining market share, along with those with clear plans to enter the U.S. market, which is expected to become the world's biggest, if and when federal laws allow it. "In the U.S. we look for companies that are building a presence in states with large populations but a limited licensing outlook," Mattson wrote in a series of notes to clients. The analyst views Canopy as a compelling investment opportunity, and said he expects it to retain its leading position in Canada--and beyond. "We believe that Canopy can replicate that effort in other markets as those markets move toward legalization," Mattson wrote. "Canopy has the most aggressive approach to capturing the U.S. market (estimated to be the world's largest potentially) through its potential acquisition of Acreage Holdings (ACRGF: $14.50, Buy)," he said. Aurora is "one of the most aggressive capacity expansion plays" in the cannabis sector, with its aim to become the low-cost provider of premium product. "While some firms are being cautious about expansion with the possibility that the Canadian market may see oversupply, Aurora is taking the view that the market for cannabis will be global and it can export to areas like Europe if the Canadian market sees saturation," he wrote. Turning to Tilray, Mattson said that company is supplying medical cannabis to patients in 15 countries and praised its brand strategy and clinical trials. But the plan of distribution of its big shareholder Privateer will create an overhang on the stock that Mattson expects will weigh for some time. "It remains to be seen what kind of traction TLRY will have with CBD in the U.S. and until then we don't believe an established organic foods company should trade at the same multiple as a high-growth cannabis company," he wrote. The ETFMG Alternative Harvest ETF has gained 21% in 2019 to date, while the S&P 500 has gained 20%.
Ladenburg Thalmann initiated coverage of the cannabis sector, with preference for companies focused on long-term value creation.
Shares of Aurora Cannabis (NYSE:ACB) haven't been looking so hot. In fact, on July 12 alone, shares tumbled more than 5%. But the fall did more than give investors a sour ending to the week. It sent shares through a key level of support and all but put the nail in the short-term coffin of pain.Source: Shutterstock InvestorPlace - Stock Market News, Stock Advice & Trading TipsOK, maybe that's a little extreme. But the point is that ACB stock is not looking healthy on the charts. While that doesn't mean Aurora Cannabis can't bounce back and repair some of that technical damage, it makes it a lot harder to do so. From an investing standpoint, I like to blend technicals and fundamentals. When the technicals are not strong -- like with ACB stock -- we need to lean more heavily on the fundamentals. When the fundamentals are not the stock's strong point, we need the technicals to display strength. Unfortunately for Aurora Cannabis stock investors, while its end market looks to be a long-term opportunity, its fundamentals are not that strong in the short term. Without technicals to lean on, this stock could have more downside coming. Trading ACB Stock Click to EnlargeWith shares of ACB dumping on Friday, the stock lost a key level of support between $7 and $7.25. For the stock to even come close to repairing some of this damage, it needs to reclaim this former level of support. * 7 Dependable Dividend Stocks to Buy The risk here is two-fold, with the first being that Aurora Cannabis stock continues to head lower. The second risk is that it rebounds back up to the $7 to $7.25 range, which then acts as resistance. That would be bad news for the bulls. On Monday, ACB stock was rallying back toward that prior range support, so we should know relatively soon whether it can reclaim this area or if it will be found as resistance. At least we don't have to wait long to find out. Should ACB stock reclaim that key support area, it may run up toward $7.50 to $8. But here's the problem for traders looking to take ACB on the long side. Even if it reclaims prior support, it has to push through this next area too, before looking healthy again. And what's between $7.50 and $8? Just 2019 downtrend resistance (blue line), the 20-day, 50-day and 200-day moving averages. I'm not saying ACB stock is the worst equity to buy or that it's doomed. But until it repairs its technical damage and starts to put together more constructive price action for the bulls, it's a hard one to go long. Particularly as the PowerShares QQQ ETF (NASDAQ:QQQ) and SPDR S&P 500 ETF (NYSEARCA:SPY) are hitting new all-time highs. The breakdown in ACB stock was actually preceded by Canopy Growth (NYSE:CGC). CGC stock broke down ahead of ACB and led the way lower for a number of cannabis stocks. What's Up With Cannabis Stocks?So what's leading this charge lower? Because it's not just CGC and ACB stock. Cronos Group (NASDAQ:CRON), New Age Beverages (NASDAQ:NBEV), Aphria (NYSE:APHA) and others are all taking a very similar bearish setup. On the charts, this setup is known as the bearish descending triangle. Simply put, it's when trend is pushing shares lower against a static level of support. When support gives way, the bearish setup starts to play out, forcing share prices lower. The question is, why is the entire industry all setting up in the same manner? * 10 Best Dividend Stocks to Buy for the Rest of 2019 and Beyond Things really started to unravel when Canopy Growth -- which many consider the "blue chip" stock of the bunch -- ousted its CEO. Canopy was volatile but stable that day, but has been under pressure all month since. It seems to have turned investors into sellers throughout the group, as the cannabis industry awaits a new catalyst. That's even as growth has been incredible, with many of these names turning in earnings reports of triple-digit revenue growth gains.While Aurora Cannabis missed analysts' estimates, it still churned out revenue growth of 289% last quarter. That said, most of these names -- ACB included -- do not generate profits and do not have the strongest financials. Thus, we need the technicals to behave better to justify a long position. For now, I'd wait before establishing a position in ACB stock. Long-term investors may opt to accumulate the stock, but I would rather wait until the stock looks healthier. One alternative would be a position in Constellation Brands (NYSE:STZ), which owns 40% of CGC, but has strong fundamentals and a good-looking chart to boot. Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell held no position in any aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip * 7 Services Stocks to Buy for the Rest of 2019 * 6 Stocks to Buy and 1 to Sell Based on Insider Trading The post Does Aurora Cannabis Stock Chart Point to a Mid-Summer Plunge? appeared first on InvestorPlace.
Most owners of Canopy Growth (NYSE:CGC) stock have embraced micro details like the company's specific acquisitions or macro matters like the slow march towards the legalization of recreation cannabis in the U.S.Source: Shutterstock Most owners of CGC stock, however, have ignored the area in between those two extremes. That's the area where a company takes little building blocks like acquisitions and assembles them on a major foundation, enabling it to earn a profit. * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip Failure to respect that middle ground ultimately cost the now-former co-CEO of Canopy Growth, Bruce Linton, his job. Booze company Constellation Brands (NYSE:STZ), which is not only a major Canopy Growth stock holder but also has effective control of CGC's board of directors, fired Linton in early July primarily because of CGC's continued heavy losses that have weighed on CGC stock price.InvestorPlace - Stock Market News, Stock Advice & Trading TipsCanopy's other top executive, Mark Zekulin, is also on his way out.At first glance, it would be easy to simply chalk the whole affair up to company-specific, and even personnel-specific, misunderstandings. And there's some truth to that.In a much more meaningful sense, though, the surprising shakeup may be a microcosm of bigger cracks starting to form within the cannabis craze. Not unlike the ultimate fate of rare earth metals stocks in 2010, solar panel stocks in 2007 and 3D printing stocks in 2013, reality is starting to seep into marijuana mania.The owners of marijuana stocks are understandably not liking what they're seeing. Trouble in ParadiseDuring Constellation's most recent earnings call, CEO Bill Newlands explained he was "not pleased with Canopy's recent reported year-end results." For Canopy's fourth quarter that ended in March, the company posted an EBITDA loss of CA$257 million on gross revenue of CA$140.5 million. The total loss of CA$323 million translates into a loss of 22 Canadian cents per share of CGC stock, or 17 U.S. cents per share (U.S.) for the NYSE-listed equity of the Canadian company.The full year was even uglier.Perhaps even worse, sales of recreational marijuana -- which only became legal in Canada as of October -- fell nearly 4% versus Q3Don't think for a minute that Canopy Growth is the only marijuana stock flashing warning signs, though.Take CannTrust Holdings (NYSE:CTST), for instance. CTST stock has been nearly cut in half since July 5th, when it was discovered that its cannabis production was exceeding legal limits.I'm not suggesting that all cannabis companies are secretly growing plants they shouldn't be growing. But CannTrust's actions do point to the growing pressure for production hikes within the fiercely competitive cannabis market. That same pressure may well be inspiring other similarly risky efforts, including ill-advised acquisitions.To that end, Aurora Cannabis (NYSE:ACB) was pegged by Motley Fool's Sean Williams as a name that's exceedingly vulnerable to major writedowns in upcoming quarters. It's sitting on more than $3 billion worth of goodwill added to its balance sheet to account for a wave of dealmaking that's yet to bear fruit. The company must soon start conceding, via writedowns, that it overpaid for those companies.Bloomberg issued the same warning just a few days ago, with Bloomberg Intelligence analyst Kenneth Shea noting that some of the industry's most-loved names had driven an "aggressive pace of acquisitions at prices above book value." Aurora, Canopy Growth and Aphria (NYSE:APHA) were specifically cited as at-risk cannabis stocks.Hexo's (NYSEAMERICAN:HEXO) shares fell sharply last month after it reported that its cannabis sales somehow slumped during its third quarter, while its loss increased again.The list of red flags facing marijuana stocks continues to grow. And those red flags are starting to weigh on cannabis stocks in general and Canopy stock in particular. The Bottom Line on CGC Stock and Other Marijuana StocksOn their own, none of these developments or data nuggets is insurmountable. Indeed, most cannabis investors appear to know they're counting on hype rather than results to drive marijuana stocks higher, and that the cannabis market may not fully gel for years.In the aggregate, however, the paradigm shift in the tone and quality of the headlines not only poses a threat to the CGC stock price, but to all cannabis stocks.For the first time since the cannabis craze took shape in 2017, with Canopy Growth stock largely leading the charge, the industry and its individual components are being asked to justify their heavy spending in the name of future market share.As Charles Taerk, the CEO of Faircourt Asset Management, recently put it, the market is taking note of winners and losers. He explains "Now investors are starting to judge the companies a little differently. They're starting to say, 'Wait a second, how are they profitable and you're so far from profitable?'"An inability to justify the rapid move away from that profitability just cost Canopy Growth's co-CEO his job, serving as a shot across the bow for other cannabis company chiefs.The CGC stock price may have started this week out with a recovery effort, but the bar is quickly being raised for Canopy Growth stock and its peers. As we learned from crazes like 3D printing, rare earth metals and solar panels, not every player survives once the hype fades and companies have to at least move towards, rather than away from, profitability.As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about him at his website jamesbrumley.com, or follow him on Twitter, at @jbrumley. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip * 7 Services Stocks to Buy for the Rest of 2019 * 6 Stocks to Buy and 1 to Sell Based on Insider Trading The post The Firing of Canopy Growth's co-CEO Is Only Part of the Case Against CGC Stock appeared first on InvestorPlace.
Aurora Cannabis (ACB) has a problem.Valued at $7.1 billion, Aurora sold only $129 million worth of marijuana over the last 12 months. Worse, it didn't make any money selling that weed -- losing more than $160 million instead. Aurora sports a positive trailing gross margin of 67.5% on its product, but negative operating and net margins.In order to grow into its valuation, Aurora needs to do two things: Scale up production (i.e. grow revenue) and reduce the cost of that production (i.e. become more profitable).Growing more marijuana outdoors, where sunlight is free and you don't need to pay an electric bill or maintain buildings -- or even better, hiring someone else to grow their marijuana for them, sourcing the product from third parties and focusing on building Aurora's "brand" in the marketplace -- could help to solve both these problems.This is why it's such good news, says Jefferies cannabis analyst Owen Bennett, that Aurora Cannabis has just received two licenses from Health Canada to operate outdoor production fields for its marijuana. Bennett reiterates a Buy rating on ACB stock with a C$14.00 (USD$10.73) price target, which implies over 50% upside from current levels.Aurora will employ the two new sites, located in Quebec and in British Columbia, not with the aim of increasing production necessarily, but rather "to develop new technology, genetics and intellectual property in order to drive sustainable, high-quality outdoor production." To be clear, Aurora's aim will still ultimately be to have someone else take care of the production for it, while Aurora focuses its efforts on "growing brands." But in order to ensure that its subcontractors produce and sell it only product of consistently high quality and reliable attributes, Aurora first needs to get a better grasp of the science.As Bennett explains, "for high quality flower, and higher quality derivative products (particularly vapour), cultivation [currently] needs to be done indoors or in a greenhouse." Marijuana produced out of doors, in contrast, "is not at the required level, particularly around consistency from harvest to harvest." Indeed, thanks to its long history as a banned and outlawed crop, outdoor marijuana cultivation is "around 100 years behind when it comes to modern breeding techniques and scientific development."As a result, Aurora sort of has to play catch-up here, and this is what it aims to do with its two new licensed sites. Located on opposite ends of the continent, running grow sites in Quebec (in the east) and British Columbia (in the west) will help give Aurora a better grasp of how marijuana grows in the field in two very different environments, allowing the company to experiment with different cultivation methods on both coasts. It will give the company the opportunity to refine the genetics of its plants in both environments, selecting and preserving those specific genetic profiles that will, in each respective environment, demonstrate greater disease and pest resistance, and require the least amount of upkeep by the farmers to which Aurora eventually wants to outsource production.A successful test program, says Bennett, should drive down costs and permit more outsourcing of production, giving Aurora a first-mover advantage over rivals who have yet to figure out the trick of growing weed in the great outdoors.To read more on the nitty gritty of what’s going on in the rising cannabis industry, click here.Read more on ACB: * Aurora Cannabis: Great Prospects… That Are Fully Priced Into the Stock Already * Don’t Jump on the Bandwagon for Aurora Cannabis (ACB) Stock * Aurora Cannabis (ACB) Stock Set to See Big Gains, Says Analyst * What Is Aurora Cannabis (ACB) Competitive Advantage? More recent articles from Smarter Analyst: * Rosenblatt: Buy AMD Stock Ahead of Q2 Earnings and Toss Aside Intel (INTC) * Stifel's Top Analyst Bullish on Netflix (NFLX) Stock Ahead of 2Q:19 Earnings * HEXO Stock Is Ready to Run (If Canada Health Would Get Out of the Way) * Why Aurora Cannabis Is Likely to Attract More Institutional-Level Investment
MYM Nutraceuticals (CSE: MYM) (OTCBB: MYMMF) reported that planting is now complete for the 2019 growing season at the CBD-rich hemp project situated on 120-acres in Nye County, Nev. MYM has entered into a production agreement with Elite Ventures and invested $500,000 to grow one pivot of 120-acres of CBD-rich hemp in Nevada. Elite will […]The post Cannabis Stock News Daily Roundup July 16 appeared first on Market Exclusive.
Cannabis stocks were mostly higher on Monday, after the U.S. Food and Drug Administration said it is expediting its effort to create a regulatory framework for CBD with plans to publish a report on its progress by early fall.
Organigram earnings missed Q3 views. Aurora Cannabis got two new cultivation licenses. Organigram, Aurora and other marijuana stocks rose.
Aurora Cannabis Inc. (NYSE: ACB) said Monday it has obtained Health Canada licenses for outdoor cannabis cultivation in Canada, and also a processing license for its Aurora Air facility, where the company’s new edible products will be manufactured. The company will use two new sites for cannabis cultivation research, one being located in British Columbia and the other in Quebec. Benzinga's Cannabis Capital Conference heads to Detroit on Aug. 15 -- Click here to learn more!
It's a news item that may have nonchalantly passed over many traditionally minded investors' radars. In a few days, Hexo (AMEX:HEXO) will trade on the grandest stage of all: the New York Stock Exchange. Therefore, even though the HEXO stock price incurred ugly volatility in recent months, that could soon change for the better.Source: Shutterstock After a tough earnings report, Hexo could use some good news. This is the positive development that embattled stakeholders have been looking for.Getting listed on the top exchange is a significant event for any publicly traded company. But what makes the promotion for HEXO different is that it also positively impacts the broader marijuana industry. That's because, from day one, all cannabis players searched for one thing: credibility.InvestorPlace - Stock Market News, Stock Advice & Trading TipsWith the "upgrade" in Hexo, the organization joins powerhouse names like Canopy Growth (NYSE:CGC) and Aurora Cannabis (NYSE:ACB). And this in turn gives the green sector one more name within the elite circle.Now, I'm not suggesting that mere inclusion in the NYSE is the end all, be all. Over the years, we've seen the top exchange delist several names that didn't meet its standards. But that's also the draw for Hexo stock: the NYSE won't let just anyone in. * 10 Best Dividend Stocks to Buy for the Rest of 2019 and Beyond Among many other factors, a prospective corporation must demonstrate broad demand and value of its equity. Furthermore, they must submit financial documents proving their viability. Given every opportunity to find something wrong, the NYSE gave HEXO stock a pass.That's got to be worth something! Good News Is Gold for HEXO StockDespite the above points, I may still have some doubters regarding the NYSE move's importance. At the end of the day, critics might argue, it's just a change of scenery for Hexo.Nevertheless, it's still a positive development for the budding company, and good news in this sector is worth its weight in gold. Unlike most other investment markets, cannabis-based securities primarily are not driven by the fundamentals. Instead, they're narrative-driven, which can be good and bad.On the negative end of the spectrum, you just need to look at the recent earnings season for marijuana firms. Company after company tumbled over the past several weeks, and for what? Failing to meet consensus expectations for earnings per share and revenue growth?As I explained regarding Aurora Cannabis' bout with volatility, Wall Street is not playing fair with marijuana businesses. Analysts know that due to a murky legal environment in the U.S., cannabis operators have limited options. Thus, the poor earnings results don't accurately reflect demand. Rather, they reflect unnecessary market inefficiencies due to myopic laws.Yet HEXO falls because most investors are trained to look at the numbers. Admittedly, they don't look good.But the numbers don't matter now as much as the narrative. Because for botanical advocates, the main goal was never about Canadian legalization. Instead, the grand prize is full legalization in the U.S.And stories like HEXO being listed in the NYSE add more leverage and credibility to this prospect. With enough positive headlines, the narrative can quickly shift from cannabis firms not making their numbers to potentially advantaging an unprecedented opportunity.That's why I'd advise against panicking: we're just getting into the good stuff for Hexo Corp stock. Ample Evidence Points to Full LegalizationSeveral years from now, I'm almost certain that we'll look back on names like Hexo stock with regret. Not because their shares did poorly but because they catapulted to unbelievable heights.Think I'm high on something? Consider that right now, cannabis is the fastest-growing job market in the U.S. Remarkably, this is true despite the fact that many states still haven't legalized marijuana to any degree.Moreover, several European countries are shifting favorably to weed. Late-last year, South Korea legalized medical marijuana. The concept was so groundbreaking - because the country is socially very conservative -- that it caught observers by surprise.I could go on and on. But the point is that the world is gravitating toward marijuana legalization. Eventually, the rest of the markets will catch up to this fact. And this is the ultimate narrative that can push Hexo Corp stock to crazy levels.Josh Enomoto is considering buying Hexo stock in the next 72 hours. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Buy for Less Than Book * 7 Marijuana Stocks With Critical Levels to Watch * The 10 Best Dividend Stocks to Buy for the Rest of 2019 and Beyond The post The NYSE Listing Means Legitimacy and Bigger Things for Hexo Stock appeared first on InvestorPlace.
The stock market is slowly but surely pushing higher. It seems as though the bulls are reluctant to run too far, too fast. At the same time, the bears simply can't garner any staying power when it comes to pushing this market lower. At least not while rate cuts are on the way. Let's look at a few top stock trades for next week. Top Stock Trades for Monday 1: Johnson & Johnson Click to EnlargeShares of Johnson & Johnson (NYSE:JNJ) were smacked lower on Friday, falling over 4%. The stock is approaching the same level we flagged earlier in the year, near $130.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThis level is currently acting as support, but has played a key role over the past 12 months. If JNJ stock falls down to this level, it may be worth investors nibbling at on the long side. Keep in mind, J&J reports earnings next week. * 10 Best Dividend Stocks to Buy for the Rest of 2019 and Beyond If it hold this mark on an earnings decline, that's even better. Top Stock Trades for Monday 2: Square Click to EnlargeWe had Square (NYSE:SQ) on watch for a break higher, and that's exactly what we've gotten this week. The stock is up big over the past four trading sessions, rallying over 10%.For the short-term traders in this name, it would be prudent to book some of these gains with SQ stock heading straight into prior resistance.From here, let's see how SQ stock behaves. Does it pullback and consolidate a bit? Do shares push through resistance, which turns to support?I would love to see SQ stock coil under this level for a few days while holding up above $80. A breakout could Square flying higher, but the more rest it has before the breakout, the more powerful the move can be. On a decline, see that $78 holds as support. If it doesn't, $75 is on the table. Top Stock Trades for Monday 3: Illumina Click to EnlargeIt was a tough day to be a shareholder in Illumina (NASDAQ:ILMN). The stock plunged more than 15% after management warned about a big shortcoming in earnings.The action on Thursday spoke clearly. However, investors used the pullback to the 21-day moving average as an opportunity to get long rather than an opportunity to exit the name once steep channel support gave way.Given how big of a run ILMN has been on, you can't blame dip-buyers too much on this one. One day later and the stock is down huge. Its inability to stay above the 200-day moving average near $317 or the 61.8% retracement near $311 doesn't bode well for bulls. Under prior downtrend resistance (purple line) just adds salt to the wound.The longer shares stay below $311, the worse off bulls are. Let's give this one a few days to see where it settles down at. If it reclaims the $311 mark quickly, then we at least have a point of reference to use on the downside. Top Stock Trades for Monday 4: Aurora Cannabis Click to EnlargeYesterday we wrote about the bearish setup in Canopy Growth (NYSE:CGC) with its descending triangle formation. On Friday the stock plunged more than 7% and Aurora Cannabis (NYSE:ACB) isn't doing much better, down more than 5%.ACB is setting up the same descending triangle formation that CGC is and it's playing out exactly the same. Below the $7 to $7.25 area is very troubling for ACB. A rally back to this area and a failure to reclaim it sets it up for more downside. * 7 Stocks to Buy for Monster Growth in the Second Half of 2019 Be careful with this one. I wouldn't touch this one on the long side with a chart like this.Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Buy for Less Than Book * 7 Marijuana Stocks With Critical Levels to Watch * The 10 Best Dividend Stocks to Buy for the Rest of 2019 and Beyond The post 4 Top Stock Trades for Monday:JNJ, SQ, ILMN, ACB appeared first on InvestorPlace.
Canadian cannabis companies have leapt onto U.S. stock markets, dazzling investors. Here's a rundown of industry facts and how to invest in marijuana stocks.
Valued at $7.3 billion in market capitalization, and holding the title of Canada's second biggest marijuana company, Aurora Cannabis (ACB) gets a lot of attention on Wall Street, where 13 analysts vie to cover the company's comings and goings.Actually, make that 14. Because this week, Compass Point analyst Rommel Dionisio joined the club, and initiated coverage of Aurora Cannabis stock with a Neutral rating and a 12-month price target of $8.00.Dionisio explained that "with approximately 20% market share in both the recreational and medical use markets," Aurora is "well positioned to benefit not only from the legalization of cannabis for recreational use last fall, but also the scheduled expansion of the market later this year to include advanced delivery forms such as vapes and edibles, which generally carry higher profit margins" -- both at home and abroad.Around the world, but especially in Europe and South America, more than 35 countries now permit at least the medical use of marijuana among their populations. Aurora Cannabis, with its "early presence" in these markets, is positioned to take a leading role in supplying them with legal cannabis products as adoption rates increase and more countries join the market. This, says Dionisio, justifies paying "a premium valuation multiple" for the stock.That being said, at a recent share price north of $7.00, Dionisio is of the opinion that Aurora already enjoys this premium valuation. Even if the stock did touch highs north of $16 a share in the past year, there's no guarantee it will return to that price point any time soon. Indeed, Dionisio values the stock at no more than $8 a share today -- and accordingly, does not endorse it as a "buy," rating the stock only "neutral."Is that fair?As Aurora moves from selling dried marijuana flower into higher margin products such as vapes, beverages, and edibles, Dionisio believes we'll see both an expansion of marijuana's popularity (noting that "these advanced delivery forms comprise about 1/3 of total cannabis product sales" in U.S. markets where they're legal today), and profit margins as well.That being said, Canada has already pushed back the date at which it will permit sale of these products once, from October to December 2019, and other delays could arise. Furthermore, Dionisio doesn't see Aurora turning a quarterly profit again (much less an annual profit) before Q4 2020 at the earliest. At the same time, the stock's share price, combined with Dionisio's $0.20 per share earnings estimate for 2021, show the stock to be very highly valued at 36 times earnings (that may or may not happen) two years in the future.That could be a long time to wait in a rapidly changing market, and one in which Aurora Cannabis is far from the only player. To the contrary, Dionisio notes that he's aware of "approximately 100 companies are on the list of licensed producers of cannabis products in Canada." In the meantime, Aurora Cannabis is losing money and burning nearly a half billion dollars in cash every year, and valued at 56.5 times revenues."With the stock already trading at over a 100% premium to the peer group average on an Enterprise Value/2020 Revenue multiple basis, we believe shares of ACB appear largely fully valued, and we recommend investors await a more attractive entry point before accumulating the stock," the analyst concluded. (Original Source)To read more on the nitty gritty of what’s going on in the rising cannabis industry, click here.Read more on ACB: * Don’t Jump on the Bandwagon for Aurora Cannabis (ACB) Stock * Aurora Cannabis (ACB) Stock Set to See Big Gains, Says Analyst * What Is Aurora Cannabis (ACB) Competitive Advantage? * Aurora Has Substantial Upside on Soaring Production Capacity More recent articles from Smarter Analyst: * Rosenblatt: Buy AMD Stock Ahead of Q2 Earnings and Toss Aside Intel (INTC) * Stifel's Top Analyst Bullish on Netflix (NFLX) Stock Ahead of 2Q:19 Earnings * HEXO Stock Is Ready to Run (If Canada Health Would Get Out of the Way) * Why Aurora Cannabis Is Likely to Attract More Institutional-Level Investment
Aurora Cannabis (NYSE:ACB) bulls are looking tired. ACB stock has now hit $10 on three occasions: January 2018, last fall, and most recently this March. Each time ACB stock has fallen sharply from that resistance level. If Aurora stock can't get back above $10 soon, the stock could be in deep trouble.The fundamental picture for ACB stock hardly looks better. Canadian marijuana companies continue to run big losses. We see management controversies developing. A scandal at a rival pot company has people worried.And the core problem in the Canadian market -- excess supply -- continues to mount. Even the Ontario market coming online has done little to fix this disturbing trend. Aurora in particular looks to have too much supply given the weak demand trends.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 10 Best Dividend Stocks to Buy for the Rest of 2019 and Beyond This plays into another mounting concern; companies like Aurora will have to take write-downs if their businesses don't start generating profits soon. All in all, ACB stock's recent 21% slide is well-founded and more room to go. CannTrust: A Big Warning for the SectorEarlier this week, shares of Canadian marijuana rival CannTrust (NYSE:CTST) plummeted. Investors dumped CannTrust stock on news that regulators had seized a large quantity of its pot inventory. Why would they do that? The government claims that CannTrust was growing marijuana in unlicensed facilities.CTST stock has gone into free fall. It dropped more than 20% immediately following the news, and has now lost 40% of its value in the past week alone. It's down 70% from where it traded in March, and has hit fresh two-year lows. It's a stunning reminder to the rest of the industry that even in generally tolerant countries, like Canada, regulators are still a big concern if companies get sloppy with their paperwork.Why is this so important to ACB stock in particular? Because Aurora is aiming to be the global leader in medicinal cannabis. As Aurora's latest corporate presentation notes, it is active on five continents and in 25 different countries. Aurora claims to be the industry leader in both the EU and Latin America.With such far-flung operations, what are the odds that Aurora will run into regulatory trouble with at least one of its operations? I'm not suggesting Aurora is doing anything incorrectly. But in the course of making so many acquisitions and entering so many markets, it can be hard to keep everything 100% up-to-date as far as licensing and paperwork go. The market, with CannTrust at least, has said that it will take a stock to the cleaners if they run into any government headaches. It's a big risk to monitor for ACB stock going forward with its unusually extensive global footprint. Industry Bracing for Write-DownsA Bloomberg article this week noted that the marijuana industry is facing rough times ahead. Of the big players, analysts expect only Cronos (NASDAQ:CRON) to make positive net income this year. That's not a favorable result, given that 2019 was supposed to be the big year. Marijuana companies were going to move from story and hype to becoming solid businesses with legalization in place and many other market opportunities opening up.But the stream of red ink hasn't let up. On top of that, producers have overwhelmed the Canadian market with way too much inventory. As a result, Bloomberg reported that:"Instead of profit, writedowns related to unfinished inventory may be in the offing for some Canadian companies. That has some investors voting with their feet, moving out of Canada and into the U.S., where the marijuana companies are generally performing better despite a patchwork of state-by-state regulations."Investors have been increasingly moving their funds into the American marijuana plays given the state of the Canadian industry. And we saw a big sign of industry unease when Canopy's (NYSE:CGC) former CEO was forced out of his position when, seemingly, major backer Constellation (NYSE:STZ) had a disagreement over business strategy going forward.As Canopy and others have failed to turn acquisitions into profits, this raises the possibility of asset write-downs. Companies like Aurora, Canopy, and Aphria (NYSE:APHA) have bought many other smaller pot firms. Bloomberg Intelligence analyst Kenneth Shea says these companies will have to take charges against earnings in coming quarters if those assets don't start producing profits. ACB Stock VerdictYes, the price of Aurora stock has gone down a lot recently. But that doesn't necessarily mean it is cheap yet. Just look at CannTrust's non-stop plunge from $10 to $3 since March. What looks cheap often gets a lot cheaper.Let's face it: The Canadian marijuana industry is suffering from a big shakeout at the moment. People dreamed of easy profits following legalization. But it isn't working out that way. Aurora has a unique pitch for investors with its focus on medicinal and international markets, but that brings its own share of risks. With sentiment turning downward -- with good reason -- ACB stock could have a good deal farther to fall.At the time of this writing, Ian Bezek held no positions in any of the aforementioned securities. You can reach him on Twitter at @irbezek. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Buy for Less Than Book * 7 Marijuana Stocks With Critical Levels to Watch * The 10 Best Dividend Stocks to Buy for the Rest of 2019 and Beyond The post Aurora Cannabis: Here's Why ACB Stock Continues to Sink appeared first on InvestorPlace.
A full year after its widely publicized initial public offering, Tilray (NASDAQ:TLRY) shares experienced breathtaking highs and gut-wrenching lows. This dynamic attracted a fair share of skeptics and detractors. Even in an already volatile cannabis sector, Tilray stock is a big mover in both directions. Therefore, TLRY isn't for the faint of heart.Source: Shutterstock If you're seeking relative safety in the cannabis stock niche, you're probably better off sticking with a cannabis old-timer: Speaking relatively, I'm referring to names such as Canopy Growth (NYSE:CGC) or Aurora Cannabis (NYSE:ACB).But if you're ready to take a walk on the wild side, though, then buckle up for some cannabis controversy. Compared to other weed plays, Tilray stock is a veritable roller-coaster ride.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Not Your Grandfather's StockMillennials and younger traders are drawn to volatile stocks like TLRY; thus, don't expect to see this in a lot of retirement accounts. With a jaw-dropping 52-week range of $20.10 to $300.00, it's fair to say that Tilray stock experienced some growing pains before real price discovery finally took hold. * 10 Stocks to Sell for an Economic Slowdown Plus, with no price-earnings ratio listed because the earnings are negative, this is a "proceed with caution" play. Still, the price action for TLRY seemed to have calmed down this summer. After generating considerable noise as the NASDAQ's first listed pot stock, investors might identify a trading range for this wildcard. No Lock-up Worries for TLRYMuch of the bearish sentiment surrounding TLRY involved the company's largest shareholder, a private-equity firm known as Privateer Holdings. You may recall the hubbub over the ominous-sounding Tilray news that its insider shareholder lock-up period was ending earlier this year (Jan. 15, to be exact). That means that Privateer would now be allowed to sell all of its TLRY shares.This most likely caused some investors to panic and sell their holdings of Tilray stock before Privateer could sell theirs. But as it turned out, their fears were unwarranted: Privateer announced that it wouldn't sell any of its TLRY shares immediately after the lock-up period expiration.That was quite a relief, as Privateer owned approximately 76% of Tilray's outstanding shares. Not only that, they've agreed to extend their lock-up provision on those TLRY shares for two years. Street CredFor Tilray, gaining credibility on Wall Street wasn't easy. But they managed to align themselves with a bona fide giant when they partnered with beer-maker Anheuser Busch Inbev (NYSE:BUD). The purpose of their joint endeavor is to research nonalcoholic beverages containing THC and CBD.Personally, I feel that this partnership will prove transformative for the cannabis industry; investors and the media practically ignored this landmark arrangement, which is unfortunate. This deal will position Tilray in a unique position to capitalize on the potentially massive Canadian market for cannabis-infused beverages.Another boost to Tilray's credibility is the recent announcement that they're importing medical cannabis oral solutions in large quantities to the U.K. Sascha Mielcarek, the managing director of Tilray Europe, noted that Tilray already has six medical cannabis products approved for medical use in the U.K. Mielcarek also expressed optimism as the company continues to make inroads into the burgeoning European cannabis market, stating:Regulations are progressing as more and more countries across Europe are recognizing the benefits of medical cannabis and its potential to improve patients' quality of life. We're pleased to reaffirm our commitment to delivering medical cannabis to patients in the U.K. and look forward to offering a variety of GMP-certified, pharmaceutical-grade products in the coming months.Skeptics should also be aware that Tilray already ships to 12 countries with legalized cannabis. Among them is Germany, which has a population more than twice the size of Canada's. The Bottom Line on Tilray StockPlease don't misunderstand -- I'm not saying that retirees should load up their investment accounts with shares of TLRY stock. It's something of an acquired taste.However, cannabis-infused beverages and the rising cannabis market in Europe present huge opportunities. Therefore, I'm not at all against the idea of buying Tilray stock on the dip. It could turn into a joyride as the company strives for stability in this decidedly unstable industry.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 * 10 Stocks to Sell for an Economic Slowdown * 7 Marijuana Penny Stocks That I May Buy * 7 of The Best Schwab ETFs for Low Fees The post 'High' Caliber: Can Tilray Stock Close the Credibility Gap? appeared first on InvestorPlace.
Chief Financial Officer Mike Lee told Jefferies analyst Ryan Tomkins that earnings before interest, taxes, depreciation and amortization could be negative for the next 2 fiscal years.
Marijuana legalization efforts are moving forward following a reform hearing on Wednesday concerning the drug. During Wednesday's hearing, Rep. Tom McClintock expressed an optimism that legalization efforts could extend across the aisle: "It ought to be crystal clear to everyone that our laws have not accomplished their goals," McClintock said.Source: Shutterstock Currently, a number of marijuana bills are on the table, including the STATES Act (PDF), put forth by Senator Elizabeth Warren and Senator Cory Gardner, which seeks to provide individual states with the right to decide how marijuana is regulated without fear of facing repercussions from federal agencies. The goal of this bill is to act as an amendment to the Controlled Substances Act.The Marijuana Justice Act, sponsored by Senator Cory Booker, is another candidate for marijuiana reform. It seeks to legalize the drug and also clear the records of anyone having served time for possession or use of marijuana.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIf this historic reform pans out, the impact of marijuana legalization will be felt across all marijuana stocks, including Canopy Growth (NYSE:CGC) and Aurora Cannabis (NYSE:ACB) which are both down 25% from their 2019 highs. Even with bipartisan support, however, reaching a consensus on the best path forward still appears problematic.Many lawmakers clashed over the idea of what broad-scale marijuana reform should be and how all of its nuances should be handled. One major point of contention is just how should marijuana reform in the U.S. deal with the repairment of communities crippled by year-after-year of President Nixon's costly war on drugs.The following are some key highlights from the historic hearing: * With Democrats controlling the House of Representatives, efforts to legalize or reduce restrictions on marijuana will likely pass in the House. * A Republican-controlled Senate could put a stop to any new laws that seek to cut down the red tape around the drug. * Across-the-aisle support is a possibility, however, and lawmakers believe marijuana legalization in 2019 could be on the table with bipartisan effort. * Majority Leader Mitch McConnell is a major roadblock to national marijuana reform. * Chairwoman Karen Bass accused the war on drugs of being "racially biased from its inception." * Tom McClintock pushed back on Bass' claims, accusing Democrats of "decid[ing] to play the race card in this hearing." * Malik Burnett, a physician at John Hopkins Bloomberg School of Public Health, testified that marijuana policy has been "a tale of two Americas" where the privileged are starting cannabis companies and the marginalized have had their lives ruined by marijuana-related convictions. * Baltimore State Attorney Marilyn Mosby weighed in, saying "there is little public safety value related to the current enforcement of marijuana laws." * Rep. Matt Gaetz, a co-sponsor of the STATES Act, believes his colleagues should support the bill despite it not going far enough with regard to social issues. * Physician David Nathan argued that consenting adults should have never been barred from using marijuana in the first place, comparing it to more harmful substances like alcohol and tobacco.The biggest takeaway from the hearing on national marijuana reform is that both sides of the aisle can agree we need to change how we treat marijuana in the U.S. While this doesn't guarantee marijuana legalization in 2019, it is definitely a bright spot for activists and investors in pot stocks.Rep. Ted Lieu summed it up best with an aside on how much progress we've actually made in America over the past 15 years: "If 15 years ago I were to tell you, in 15 years we would have gay marriage in 50 states and, in some of those states, we'd be smoking weed, you'd think I was crazy--but that is in fact what is happening now."P.S. This pot stock could soar starting Tuesday, Aug. 13 …The opportunity in legal weed is much like the opportunity internet stocks offered in 1994 … or that Bitcoin offered in 2015. It's set to grow so much over the next 10 years that it will turn out to be one of the biggest investment opportunities of your entire life -- no matter when you were born.But you must be prepared to act before this window closes.When you do, you'll benefit from one of the best wealth-creating strategies throughout history: buying early.You can get exclusive access to my new Cannabis Cash Calendar pick the moment it's released on Tuesday, August 13th.Click here for more on this incredible opportunity.As of this writing, William White did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Sell for an Economic Slowdown * 7 Marijuana Penny Stocks That I May Buy * 7 of The Best Schwab ETFs for Low Fees The post Marijuana Legalization Inches Closer With Historic Reform Hearing appeared first on InvestorPlace.
From acquisitions to equity investments, the North American hemp industry has been awash in capital investment since the Farm Bill 2018 was federally passed in the United States last December. The Hemp Business Journal has been closely monitoring such activity, and will soon publish more comprehensive data pertaining to the latest deals. Arguably the biggest deal in the hemp industry so far this year has been the acquisition of Manitoba Harvest by Tilray (NASDAQ: TLRY).
Cronos Group (NASDAQ:CRON) shares have struggled of late. Since early March highs, Cronos stock is down about 35%.Source: Shutterstock Cronos stock managed to put together a modest rally last month, but it has faded. CRON sits at a one-month low at the moment.To be sure, CRON stock isn't alone. Other cannabis majors are scuffling. Canopy Growth (NYSE:CGC) has dropped steadily since late April, losing about a quarter of its value.InvestorPlace - Stock Market News, Stock Advice & Trading TipsAurora Cannabis (NYSE:ACB) is off almost 30% since mid-March. Tilray (NASDAQ:TLRY) has stabilized, but after a long, steep decline. Hexo (NYSEAMERICAN:HEXO) has slid 41%. * 10 Best ETFs for 2019: The Race for 1 Intensifies For the biggest cannabis stocks, investor patience is drying up. Why that is remains unclear. Valuation could be a concern. It's likely that there's a "OK, what's next?" response after Canadian legalization in October.The problem for Cronos Group stock, however, is that even when sentiment returns, it's not clear what the company can do to spark investor enthusiasm.The near- to mid-term worry is that if cannabis stocks continue following, CRON stock will too. And if they rise, Cronos stock may well underperform peers until the wisdom of its plans become more clear - and Cronos starts showing real success. The Canada Problem for Cronos StockIt's become increasingly clear that the Canadian market isn't big enough and that there are real worries about too much supply in cannabis flower more broadly. As I've noted before, prices have crashed in U.S. regulated markets due to oversupply.In March, Tilray's CEO predicted similar issues in Canada as soon as next year. Aurora's strategy clearly is predicated on the idea that Canada alone isn't enough.Cronos seems to be operating on similar principles. Despite its US$1.8 billion investment from Altria (NYSE:MO), its production capacity might not even make the top ten in Canada, as the Motley Fool has noted. Even with that cash on the books, Cronos isn't racing to build out its production capabilities.That strategy makes some sense, particularly if as feared the Canadian market simply isn't big enough. Oversupply in dried flower is a real concern. But as far as CRON stock goes, it raises the question of what catalyst might arrive any time soon.Cronos might be right in playing the long game. Investors - and particularly cannabis stock investors - haven't shown that same patience in recent months. The StrategyAs CEO Mike Gorenstein put it on the Q1 conference call, "Like Altria, we believe that the best way to create value through the supply chain is by working with contract farmers and not being farmers ourselves."Cronos simply isn't all that interested in producing dried cannabis flower. It would rather let others spend the money to create that supply, assuming it can then buy flower at cheaper rates down the line.Instead, the company is focused on derivatives and R&D. It's working with Ginkgo Biosciences to create new strains of cannabis that can yield purer and easier-to-extract THC and CBD.Its new Cronos Device Labs in Israel will focus on fine-tuning vaporizers for varying customer demands. Production in Colombia is focusing on hemp over cannabis, with Gorenstein predicting on the Q1 call that CBD would outpace THC in terms of growth in the coming years.The Altria partnership should give Cronos an edge in these areas, given that tobacco company's long history with regulators. But there's risk here as well.The efforts with Ginkgo may not pan out. Even if they do, the new strains may not be all that valuable, if 'natural' strains are abundant and cheap as other companies build out capacity. Vaporizer demand may be lower than expected.There's certainly a risk that while Cronos plays around the edges of the market, rivals like Canopy and Aurora simply overpower the market. Canopy has more cash thanks to its deal with Constellation Brands (NYSE:STZ,NYSE:STZ.B).Aurora will give its stock to any company that will take it. If an investor believes that cannabis production will be big business globally, it's tough to believe that Cronos will be the big winner. The Long-Term Case for Cronos StockFrom a long-term standpoint, Cronos' strategy does seem wise. It's a good idea to keep US$1 billion or so in the bank in an industry in upheaval.Canadian suppliers are going to go bust; that's simply the nature of any growing market. Unexpected new markets may emerge elsewhere. Keeping capital on hand enhances flexibility, which seems like a compelling attribute to have as cannabis legalization (both recreational and medical) expands.Similarly, focusing on higher-value-add and higher-margin products makes sense. One need only look at the difference in valuation between Altria and Pyxus International (NYSE:PYX), an Altria grower, to understand what that will be the case in cannabis as well.The issue over the next 1-3 years, however, is that the strategy appeals to those of us (myself included) who think cannabis stocks are too expensive to begin with.Again, Cronos is set up for a future where oversupply hits prices and/or the global cannabis market moves slower than bullish investors expect. In both scenarios, cannabis stocks come down - and it's unlikely, though not impossible, that CRON stock emerges unscathed.In a sense, Cronos stock is the pot stock for investors who question whether pot stocks have rallied too far. If those investors are right, they're betting off staying as patient as Cronos is willing to be. As such, even with CRON stock cheaper, there's seemingly little need to rush in.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Sell for an Economic Slowdown * 7 Marijuana Penny Stocks That I May Buy * 7 of The Best Schwab ETFs for Low Fees The post Cronos Isn't in a Rush. Investors in Cronos Stock Shouldn't Be Either appeared first on InvestorPlace.
Aurora Cannabis (NYSE:ACB) is not a company that I would want to own. Other than being a cannabis player, ACB stock doesn't seem to have much going for it as a potential investment.To me, ACB appears overextended, over-leveraged, and overvalued. It is no surprise that Aurora stock has fallen about 30% since March while the broader markets have rallied. Here are some of the issues that the company has to deal with.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Outdoor versus Indoor Growing CostsA reckoning will soon impact the cannabis market. This will happen when investors realize that the cost advantage of outside growing far outweighs any disadvantages when compared to inside growing.Some experts estimate the cost of outdoor growing to be just 15% of growing in an enclosed facility. So-called weedpreneurs consider indoor growing more secure and creates a higher quality product. But guess what? It is called "weed" for a reason. * 10 Stocks to Sell for an Economic Slowdown Weeds grow rapidly outside. Around the world, producers grow high-quality cannabis outdoors in various environments. Marketers may even use outdoor growing as a positive. I can see it now: Grown with natural sunlight!All joking aside, ACB and the other growers that are mainly internally focused will face intense price competition soon. And that hurts the case for Aurora Cannabis stock. Is Aurora Moving Too Much, Too Fast?I believe that Aurora has taken on more than it can efficiently manage. Although it's not unusual for marijuana firms to adopt acquisitive strategies, ACB takes the cake. Recently, management pulled the trigger on 17 companies. It's not clear if any of these will really pan out for ACB stock.In addition, Aurora has made 12 strategic investments. Management likes to talk about the 88,000 patents that it owns. However, I do not see how anyone can reasonably keep track of such a vast portfolio. Considering that this sector is competitive enough, it's another worry impacting Aurora stock. Share Dilution Hurts ACB StockAurora's shopping spree has led to significant share dilution, and that is not a good thing. In my spare time, I love to read about Wall Street history. One of the most interesting events that happened on the Street is known to historians as the Erie War.This was a fight over the Erie Railway Company that occurred in the 1860s. While Cornelius Vanderbilt was trying to take control of Erie by buying shares, Erie's board of directors just kept issuing and printing new shares to sell to him. In doing so, the company became more and more diluted.This kind of reminds me of the takeover shopping spree that has impacted ACB stock. Want to buy yet another company? No problem. Issue more shares.Most of the acquisitions that Aurora has made have been financed by the issuance of new shares. In theory, this should not matter because management is supposedly buying something of equal or greater value. But in the real world it doesn't always work like that. In my opinion this dilution of Aurora stock is a negative. Goodwill Is a Cautionary Tale for Aurora StockEver since I started analyzing companies, the concept of goodwill has interested me. Goodwill represent intangibles such as corporate reputation. And how would the markets define "reputation?" It is the premium above the value of the company's assets.This will be added to the company's balance sheet as an asset. So basically, if a company goes around overpaying for other companies, the value of the company will increase by the amount that it overspent. And here's where things get tricky for Aurora Cannabis stock.In its last earnings release, Aurora reported almost goodwill of $3.2 billion CAD. This is an astonishing 57% of the value of the company. In theory, this means that over half the value of the company is associated with ACB overspending on its buyouts. This is way too high for my comfort level.Although I don't speak for everyone, I suspect it's too high for most conservative investors. Therefore, it's another reason to steer clear of Aurora stock. Don't Fight the Tape Click to Enlarge It isn't surprising that ACB stock has not performed well. Since March the price has fallen by almost 30% while the broader markets have rallied to all-time highs. My guess is that ACB stock will continue to underperform. I see no reason to invest in it. I would even go so far as to say you would need to be stoned to want to own it.As of this writing, Mark Putrino did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Buy on College Students' Radars * 7 Retail Stocks to Buy for the Second Half of 2019 * The S&P 500's 5 Best Highest-Yielding Dividend Stocks The post Too Many Technical and Fundamental Questions Plague Aurora Stock appeared first on InvestorPlace.