|Bid||7.58 x 28000|
|Ask||7.59 x 3100|
|Day's Range||7.51 - 7.64|
|52 Week Range||4.05 - 12.52|
|Beta (3Y Monthly)||2.87|
|PE Ratio (TTM)||35.07|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||N/A|
On Friday, Health Canada dealt another blow to the cannabis sector already struggling with weak demand from recreational-use sales. The so called “Cannabis 2.0” products like edibles and vapes are set for at least a 60-day delay when companies like Aurora Cannabis (ACB) are already ramping up inventory. The mix isn’t good for the stock.Cannabis 2.0 DelayThe market originally expected Health Canada to provide approval for consumable products effectively October 17. Instead, the Canadian government organization provided final regulations on June 14 on edibles, extracts and topicals setting an October 17, 2019 effective date for the amended regulations.The issue for Aurora Cannabis is that Health Canada is requiring the federally licensed processors to seek an amendment to their license that won’t be approved until the new regulations go into force on October 17. After that, the companies will have to provide a 60-day written notice to Health Canada before the products are available for sale.The end result is that Health Canada expects only a limited supply of new products available in physical and online stores by mid-December. In addition, the government organization released regulations around THC limits and advertising that might trip up companies supply chains.What really isn’t known is whether accompany like Aurora Cannabis were heading forward under the amended regulation path surrounding THC limits and packaging restrictions. The end result is that sales of edibles and topicals will slip into 2020.Aurora Cannabis ImpactThe problem for Aurora Cannabis is that the company is aggressively building supply, yet the cannabis market continues to face delays and lackluster sales. Management spent the FQ1 earnings call on May 14 discussing shifting dried flower production into inventories for the upcoming vapes and edibles market that now might take several more months to reach market while costs are mounting.The company is already planning to ramp annual cannabis capacity output to 625,000 kg by the end of 2020 after only producing 15,000 kg in the March quarter. The June quarter supply was set to jump to 25,000 kg followed by a quick push to 37,500 kg per quarter by year end.The issue here is that Aurora Cannabis isn’t going to have a market for this ramped up inventory with adult-use sales stalling and the market for consumables not opening up in a timely manner. The outcome is bad for a stock trading at a market valuation of ~$8 billion and analysts poised to cut sales estimates.Analysts were forecasting FY20 revenues that end next June at $561 million but estimates for large sequential revenue gains will likely take a hit now. Estimates of quarterly sequential revenue gains of $10 to $20 million could end up hitting FY20 revenues by up to $50 million. The market isn’t going to keep paying multiples of sales for the stock of up to 15x potential revenues that are cut to $500 million or lower.TakeawayThe key investor takeaway is that Aurora Cannabis remains too rich for the value proposition in the cannabis market that isn’t matching lofty expectations. The Canadian market will eventually see edibles and vapes reach the market in volumes, but the biggest problem is that supplies will surpass demand as the products finally reach market.Investors will want to pay attention to prices and margins due to these delays. Don’t pay up for Aurora Cannabis until analysts cut estimates and the stock offers a better value that is in line with realistic expectations.To read more on the nitty gritty of what’s going on in the rising cannabis industry, click here. Read more on ACB: * Can Aurora Cannabis (ACB) Stock Set Up for Another Breakout? * Will Aurora Cannabis Be Impacted by Low-Cost Latin Competitors? * Aurora Cannabis (ACB) Stock Gets Caution Flags * This Dip in Aurora Cannabis (ACB) Stock Is a Buying Opportunity More recent articles from Smarter Analyst: * Hexo: When the Bulls Aren’t Bullish Enough * Nvidia (NVDA): A Real Lift or a Dead Cat Bounce? * Stay Away from Cresco Labs Stock Until the Smoke Clears * Can Aurora Cannabis (ACB) Stock Set Up for Another Breakout?
Cannabis stocks rose Tuesday, buoyed by gains in the broader market and hopes for a bill that would block the Justice Department from interfering in states that have legalized weed for medical or recreational use.
After recreational marijuana sales were legalized last year, Canopy Growth Corp.’s pot sales jumped 360%. When the world’s largest pot company reports a fresher crop of results this week, that number may be less than 40%.
There are many ways of looking at the exciting but volatile marijuana industry. Based on my own admittedly anecdotal perspective, I'd guess that most people take the fundamental approach. For instance, they view companies like Canopy Growth (NYSE:CGC) using traditional metrics like revenue and earnings growth. I think that has caused some of the wild trading in CGC stock and its peers.Source: Shutterstock If you were to divorce Canopy Growth stock from the potential full-legalization narrative, the picture would look rather bleak. For instance, Gurufocus.com has multiple red flags on the company's equity, and for many good reasons. Against commonly utilized metrics for growth and stability, CGC ranks poorly.After all, if Canopy stock wasn't a marijuana play, who would invest in a company that went from a loss of less than $6 million in 2017 to over $300 million in the trailing 12-month period? Probably not too many.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Top-Rated Biotech Stocks to Invest In Today Yet clearly, people are buying into the cannabis firm. For the year-to-date, the CGC stock price has skyrocketed nearly 58%. What then keeps speculators buying into an organization that is awash in red ink? It's simple, really. They believe that eventually, the fierce headwinds will give way to untapped potential.From that point-of-view, I believe the case for Canopy Growth stock makes sense despite the ugly print. Let's be real: The reason why marijuana investments like Aurora Cannabis (NYSE:ACB) and Hexo (AMEX:HEXO) have disappointed recently is Canada. Primarily, the northern market is too small. Secondarily, Canada has their own internal issues to work out, such as legalization of edible cannabis products.But even if those issues are resolved soon, the real focus for CGC stock has always been the U.S. It's All About Jobs for CGC StockOn the surface, this is a bold statement for Canopy Growth stock. Under U.S. federal law, the government considers marijuana as a Schedule I drug. That's the major difference between our form of legalization and how the progressive Canadians do it: the feds essentially turn a blind eye to individual states with favorable legislation, while the Canadians eliminated all pretenses.Although Uncle Sam clearly has bigger problems to worry about, marijuana is still serious business. De-scheduling the maligned plant would conspicuously admit government failure in combating the war on drugs. As such, many domestic financial institutions refuse to touch cannabis businesses for fear of a crackdown. Obviously, this has kept a lid on the true potential for the CGC stock price.And yet, I highly doubt that the federal government can hold onto its archaic drug-classification system. Interestingly, current geopolitical dynamics bolster the case for Canopy Growth stock and its peers. At the end of the day, President Trump's aggressive foreign policy stance kills jobs. On the other hand, marijuana literally grows them.Aside from the economic pain resultant from the U.S.-China trade war, experts forecast that tensions could slash one million jobs. That's a lot of Americans out of work. It's especially unfavorable timing given next year's election.The easy solution? Full marijuana legalization. Last year, the weed industry contributed over 64,000 jobs. According to a report earlier this year from CNBC, cannabis is the fastest-growing job market in the nation. All in all, the plant known as Mary Jane has contributed 211,000 full-time jobs.But right now, the feds are playing Hanoi Jane with the American people, killing jobs and stifling new ones. I don't think the information-savvy electorate will stand for that, which in turn benefits the longer-term case for the CGC stock price. Canopy Growth Stock Sitting on a GoldminePiper Jaffray analyst Michael Lavery recently wrote to clients that he expects U.S. legalization "in the next 1.5-4.5 years." I'm with him. In fact, I wouldn't be surprised at all if legalization occurred within the quicker end of the estimate spectrum. * 10 Tech Stocks to Buy Now for 2025 That's because the Trump administration has very few good options here. If the Democrats haven't completely lost their minds, they'd pick someone with a true counterpoint to Trump: read Andrew Yang. Even if they pick a stupidly obvious candidate like Joe Biden, nothing motivates voters more than pain to the wallet.This is where Trumpism fails. The President can't go around claiming America is great again if millions are out of work; millions, by the way, that went out of work because of his policies. Again, the easy fix here is marijuana legalization, which is a proven job creator.As the markets turn shaky on geopolitical tensions, I can't help but think, hold on! Things will get a lot better for Canopy stock and the rest of the marijuana complex.As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * The 7 Best Tech Stocks to Buy for the Second Half of 2019 * 7 Top-Rated Biotech Stocks to Invest In Today * 4 Semiconductor Stocks to Sell Compare Brokers The post Canopy Growth Stock Has One Massive Lever: Job Growth appeared first on InvestorPlace.
Aurora Cannabis (ACB) has been under downward pressure lately, primarily because of the broader market becoming increasingly risk averse because of the uncertainty surrounding the trade wars and saber-rattling in the Middle East.This has caused a lot of investors to move their capital into what they perceive as safer places to park their money, which has resulted in the cannabis sector as a whole losing value and overall positive sentiment, which has had an effect on the share price of Aurora Cannabis, even though it still remains up over 50 percent on the year.There is no doubt the stock will rebound from this, and one of the key catalysts that will be part of that is the upcoming legalization in Canada of CBD edibles, extracts, beverages and topicals in the latter part of 2019.Combined with its rapidly increasing production capacity, the company is positioned well to boost sales as a result of these changes.Strong demand for alternative consumptionIn the short term Aurora Cannabis is going to get a nice boost from recreational pot sales in Canada, as last quarter it accounted for a little over 50 percent of the company's overall sales. I anticipate that becoming a larger percentage of sales over the three quarters at least, before it probably starts leveling off again as recreational pot supply meets demand in Canada.Over the long term it'll be more beneficial for Aurora to reduce its exposure to low-margin recreational pot, but for now, it's an important part of its growth narrative.The good news in that regard is edibles, extracts and topicals, because of their demand and popularity, generate wider margins than dried flower. That means not only higher revenue, but also better margins and earnings.Barring any unforeseen events, this should become legal in October. Assuming the supply chain issues that have emerged after recreational pot was legalized in Canada aren't part of the next stage of legalization, it should provide a nice boost to the last quarter for Aurora, which is already projected to significantly boost sales in the second half of the calendar year. This won't come from sales, which won't be allowed until 60 days after the legalization on October 17, rather it'll come from an improvement in investor sentiment, as they look forward to the impact in 2020.That said, the initial practical boost concerning the performance of Aurora from the legalization of edibles and other means of pot consumption will be in the first calendar quarter of 2020.ConclusionAurora Cannabis will have about an annual run rate of 625,000 kilograms in the first half of 2020, making it easily the leading cannabis producer in the world. From the point of view of supply, it will be more than able to meet any demand from the markets it competes in.There has been some concern about what Aurora will do if its supply exceeds demand in all the markets it competes in. Under that scenario it would have to find a way to sell or use its excess product. I'm not yet convinced it's going to be an issue because it will use some of its pot for extraction; not all of it is being produced for immediate sale.Another thing to take into account is Aurora's production scale will continue to lower its market-leading cost per gram, which should bring it to profitability before the end of 2019.Add to that the increase in margins from Canada legalizing CBD edibles, extracts, beverages and topicals in 2019, and being a big part of its revenue and earnings in 2020, and it's easy to see the key catalyst this will be going forward for Aurora.It's one of many reasons I remain a short and long-term bull on the company.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: * Market Delays Can Derail Aurora Cannabis (ACB) Stock * Will Aurora Cannabis Be Impacted by Low-Cost Latin Competitors? * Aurora Cannabis (ACB) Stock Gets Caution Flags * This Dip in Aurora Cannabis (ACB) Stock Is a Buying Opportunity More recent articles from Smarter Analyst: * Hexo: When the Bulls Aren’t Bullish Enough * Market Delays Can Derail Aurora Cannabis (ACB) Stock * Nvidia (NVDA): A Real Lift or a Dead Cat Bounce? * Stay Away from Cresco Labs Stock Until the Smoke Clears
Hexo (NYSE:HEXO) reported third-quarter earnings Thursday before the bell. The Quebec-based cannabis company's revenues missed analysts' estimate by a wide margin and even declined versus Q2, causing HEXO stock to plunge on both Thursday and Friday.Still, while this report might have scared investors, it does not appear to have affected the overall trajectory of Hexo Corp. HEXO Fell on a Massive Revenue MissThe HEXO stock price fell by another 5% on Friday. That came on top of an 8.5% decline on Thursday, as the fallout from the sequential revenue decline sent HEXO stock price plunging.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 5 Stocks to Buy for $20 or Less For Q3, analysts, on average, had expected a loss of 5 cents per share. The company reported a loss of 4 cents per share, coming in ahead of estimates. However, its revenue of C$13 million was well short of the C$14.8 million analysts, on average, had expected.But HEXO's sales soared more than tenfold from the C$1.2 million of revenue it reported in the same quarter a year earlier. However, its $400,000 sequential revenue decline may have further dampened traders' view on HEXO stock. HEXO Is Still Poised for Robust GrowthUp to this point, HEXO had begun to develop a reputation as a sleeper play in this industry. It does not garner the attention that is devoted to Canopy Growth (NYSE:CGC), Aurora Cannabis (NYSE:ACB), Tilray (NASDAQ:TLRY), or Cronos Group (NASDAQ:CRON).However, its home province of Quebec is Canada's second-largest. In this province of about 8.4 million people, HEXO controls more than 30% of the cannabis market. It has been able to be so successful in large part because of a supply deal it made to bring 200,000 kg of cannabis to the province over five years.Meanwhile, HEXO recently agreed to buy Newstrike Brands (OTCMKTS:NWKRF). The deal increases HEXO's production space by 470,000 sf. That gives the company enough capacity to produce 150,000 kg of cannabis per year. HEXO also wants to enter the edibles and beverage markets. In the beverage space, it has partnered with Molson Coors (NYSE:TAP).On top of that, though analysts expect HEXO to post a 17 cent per share loss this year, they expect its EPS to rise to positive 11 cents next year. Also, notwithstanding the quarterly report, its revenues appear robust. The company only brought in C$4.93 million last year. However, for fiscal 2019, analysts' consensus revenue estimates rise to C$62.62 million. In 2020, analysts expect its revenue to reach C$319.4 million. This triple-digit growth may turn Thursday's results into an anomaly Wall Street will soon forget. Should Investors Buy HEXO Stock?In fairness, most of HEXO's marijuana stock peers also sold off on the news. Hexo's report could have left many with second thoughts about the industry's lofty valuations. Still, I see the decline of HEXO stock price as an overreaction. Its sequential revenue decline does nothing to undermine the longer-term case for HEXO stock.For this reason, I think investors should still be bullish on HEXO. Its revenue decline might have blindsided Wall Street. However, by focusing on that revenue number, investors apparently ignored an acquisition that will dramatically increase both the company's production capacity and its reach in its home country.Moreover, HEXO has attracted an ally in Molson Coors that can give the company the financial muscle and marketing knowledge it needs to launch cannabis-based beverages. Additionally, its lucrative supply agreement in its home province has bolstered its position in edibles and other markets. Given its growth potential, investors should add to their positions in HEXO, instead of selling HEXO stock.As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can follow Will on Twitter at @HealyWriting. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 5 Red-Hot IPO Stocks to Buy for the Long Run * 5 Stocks to Buy for $20 or Less * 4 Dow Jones Stocks Ready to Rise Compare Brokers The post Hexo Stock Remains Attractive Despite Revenue Miss appeared first on InvestorPlace.
Late last month I fleshed out some thoughts on Aurora Cannabis (NYSE:ACB), ultimately deciding that an investment in Aurora stock was mostly an investment in medical marijuana with an emphasis on Europe.Source: Aurora Cannabis It's a difference that still doesn't entirely matter. While Canopy Growth (NYSE:CGC) appears to be catering to recreational users while New Age Beverages (NASDAQ:NBEV) is, of course, looking to take an early lead in the CBD-infused beverage space, most of the major names in the business are still acting as a lot of things to a lot of people.The nascent industry has made the race a very messy and complex one. The proverbial land-grab of smaller names in the business has only made matters messier.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThe legalized marijuana movement has matured enough to start making meaningful comparisons of all these companies. There's yet-another nuance to Aurora Cannabis that keeps Aurora stock at the upper portion of a list of marijuana stocks to buy. * 7 Top-Rated Biotech Stocks to Invest In Today Latin American MarijuanaAs yours truly predicted would be the case several times last year and earlier this year, cannabis is becoming a commodity and is increasingly priced as such. Though up recently, marijuana prices are broadly falling as its cultivation scales up, and the business is increasingly focused on low-cost production now that suppliers have to compete on price.My intuition about where newly-developed crops would be planted has so far been wrong, however. I widely assumed most new growth would actually take shape where it was sold and consumed, but it's actually been Latin America.That growth has been largely spurred and sponsored by pharmaceutical companies. Khiron Life Sciences is partnering with a research hospital in Colombia. Canada's PharmaCielo now owns a piece of Mexico's Mino Labs that ensures a supply of cannabis oil.Non-pharmaceutical players are also plugging into the low-cost and low-hurdle supply offered by growers in Latin America as well, however. Tilray (NASDAQ:TLRY), for instance, has acquired Chile's Alef Biotechnology, which grants the company a valuable production license.The moves, and others like them, put North American companies into a Latin American cannabis market expected to be worth $12.7 billion by 2028; most of that would be sales of medicinal cannabis.But, as laws progress and minds are changed, it's likely that restrictions currently making importing and exporting cannabis incredibly difficult will be eased.That makes Latin America a marijuana hub that Aurora isn't a part of. Except, it is. Aurora Stock and Latin AmericaThe company seems vulnerable on the surface. It's one of the largest names in the business in terms of production potential, with something on the order of 570,000 kilograms' worth of annual yield possible now that the MedReleaf deal is done. But, given its acquisition trend, the eventual output of as much as one million kilos per year doesn't seem outlandish.Since home-grown production is important to Aurora, the prospect of lower-cost production from Latin America is a concern.Aurora Cannabis acquired Uruguay-based ICC Labs in November. The deal not only gave Aurora 70% of the Uruguayan recreational market, but it also grants the new owners licenses to grow medical marijuana in Colombia and plugs it into an agreement with Mexico that allows imports of the commodity into that country.It's a foothold in a continent that 650,000 people call home and a continent that Europe's buyers are increasingly turning to in order to source cannabis, for a variety of uses. That's just another nuance that dovetails into the business Aurora has been developing.It's also a collective of countries that have been a little more progressive about cannabis than its neighbor to the north.What Cam Battley, Chief Corporate Officer for Aurora, meant when he commented, "We see ICC as the jewel of the South American market. This is going to be our anchor in South America and we have very big plans for that continent" still isn't exactly clear. But, it does suggest more deal-making and more market penetration are on the way. Looking Ahead for Aurora StockIt's still the early innings for the cannabis revolution. The dust is still settling, and a wide array of potential outcomes lie ahead.It is becoming clear, however, that Aurora Cannabis is emerging as one of the more deliberately and strategically-managed players of the marijuana movement.It remains focused on Europe and medicinal marijuana but is also establishing roots in a mostly-underserved South American market. Though not neglecting North America, it appears it's being selective, picking and choosing its battles in what's become an overwhelmingly competitive Canadian market. The U.S. market is ready to see some overflow too.As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about James at his site, jamesbrumley.com, or follow him on Twitter, at @jbrumley. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * The 7 Best Tech Stocks to Buy for the Second Half of 2019 * 7 Top-Rated Biotech Stocks to Invest In Today * 4 Semiconductor Stocks to Sell Compare Brokers The post Diversification Is What Makes Aurora Stock a Solid Marijuana Play appeared first on InvestorPlace.
Cannabis stocks are mixed, with market leader Canopy Growth Corp. gaining after it announced its latest growth moves ahead of Wednesday’s shareholder vote on its proposal to acquire Acreage Holdings.
Aurora Cannabis (NYSE:ACG) isn't consistently profitable and has failed to meet Wall Street analysts' earnings estimates in three out of the past four quarters. Like other pot shares, ACG stock is on a tear, up more than 50% since the start of the year as investors bet that better times lie ahead.Source: Shutterstock However, expectations for Aurora stock don't appear to be justified by the fundamentals. The company's penchant for dilutive acquisitions is particularly troubling. Massive DilutionAs of the latest quarter, ACB had had more than 1 billion shares outstanding, more than twice the 478 million shares it had a year earlier. Rival Canopy Growth's (NYSE:CGC) share count is about 238 million. Fortune 500 stalwarts such as CBS (NYSE:CBS) (351.9 million), Southwest Airlines (NYSE:LUV) (543.7 million) and McDonald's (NYSE:MCD) (763.6 million), each have fewer shares outstanding than ACB.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 High-Quality Cheap Stocks to Buy With $10 Let's not forget the options to purchase 19.96 million ACB shares awarded in March to billionaire Nelson Peltz when Aurora named him as a strategic advisor. Though Peltz certainly has the connections to make things happen for ACB, that award is still massive since the company's current top shareholder Vanguard "only" had 20.3 million shares, as of the end of 2018. Profitability StrugglesMeanwhile, ACB is struggling to achieve consistent profitability. Wall Street analysts are expecting the red ink to continue through at least 2020. They have an average price target on the stock of $14.27, a potential upside of 40% for reasons that elude me.A glut in the Canadian pot market will keep prices depressed for the next two to three years just as ACB ramps up production. While I realize that ACB aims to push down prices, it seems that the plan may work too well.Demand also hasn't been robust. According to Health Canada, total sales of dried cannabis grew 7% to 16,488 kilograms between January 1 and March 31 compared with October 16 to December 31, 2018. The total inventory of weed was 30,802 kilograms, as of the end of March, nearly twice the 18,940 kilograms at the end of December 2018. Negative View On BeveragesSpeaking during the company's recent earnings conference call, chief executive Terry Booth surprised investors with his negative comments regarding the demand for cannabidiol (CBD)-infused beverages given the reports that his company held talks with Coca-Cola (NYSE:KO) about a partnership. * 10 Stocks to Buy That Wall Street Expects to Soar for the Rest of 2019 Other companies including Canopy, are more optimistic about the potential for CBD, which lacks the THC compound that makes users high, in beverages. Constellation Brands (NYSE:STZ) invested $4 billion in CGC last year. Anheuser-Busch InBev (NYSE:BUD) teamed up with Canadian pot producer Tilray (NASDAQ: TLRY) on a $100 million initiative to research uses of CBD in non-alcoholic beverages. Heineken's Lagunitas brewery released a non-alcoholic THC-infused beer called Hi-Fi Hops last year. Molson Coors (NYSE:TAP) joined forces with Quebec-based cannabis company HEXO to develop non-alcoholic beverages. Bottom Line on ACB StockThough I had some concerns about Canopy Growth, I like those shares more than ACB stock. Canopy's partnership with STZ gives it financial flexibility that Aurora Cannabis lacks. If you want to buy stock in the highly risky legal pot sector, there are better choices than ACB.-Jonathan Berr doesn't own shares in any of the stocks discussed in this post. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * The 7 Best Tech Stocks to Buy for the Second Half of 2019 * 7 Top-Rated Biotech Stocks to Invest In Today * 4 Semiconductor Stocks to Sell Compare Brokers The post Amid A Pot Stock Boom, I Have Misgivings About Aurora Cannabis Stock appeared first on InvestorPlace.
A good rule of thumb in the stock market is to not buy stocks just because they are cheap or low. Cheap stocks, or stocks that trade at discounted valuation multiples, are often cheap for a reason. The same is true for low-price stocks, or stocks that trade in the under-$10 and under-$20 ranges.As such, when dealing with super cheap stocks or super low-price stocks, investors should exercise caution. These stocks are at these levels for a reason, and it's not usually a good reason.Having said that, this group of beaten up stocks does offer significant upside potential. These stocks are priced for death. Thus, if anything good happens, these stocks will rise by a lot, and quickly. But you need something good to happen first, and something good only materializes for a handful of these sub-$10 and sub-$20 stocks.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Top-Rated Biotech Stocks to Invest In Today With that in mind, I've put together a list of high quality stocks in the under $20 bucket which are supported by healthy fundamentals, and have a realistic opportunity to rally in a big way from their current prices. Which stocks made the list? Let's take a deeper look. Luckin Cofffe (LK)Source: Shutterstock Stock Price: $18The first stock on this list is freshly public Luckin Coffee (NYSE:LK), the hyper-growth China retail coffee chain which many dub the Starbucks (NASDAQ:SBUX) of China.The core growth narrative here is very favorable. Luckin is the fastest growing and second largest retail coffee operator in China, and is on track to soon become the largest player in the space. At the same time, the China economy is rapidly urbanizing and expanding, and the coffee market in that economy is surging higher, rising by over 30% last year. That makes Luckin the hyper-growth leader in a rapidly expanding market, a combination which ultimately implies tremendous long-term growth potential.The numbers underlying LK stock are equally favorable. Luckin Coffee has a market cap of about $4 billion. Starbucks has a $100 billion market cap. To be sure, Luckin Coffee will never be as big as Starbucks. But, if the company does become a leader in what projects to be a $25 billion-plus China retail coffee market, then today's $4 billion market cap looks like a steal.Starbucks has about 40% market share in the U.S. Luckin can maybe do 20% share in China. A 20% share in a $25 billion market implies $5 billion revenue potential. On 10% operating margins and after a 20% tax rate, that equates to $400 million in net profits. A market average 16 multiple on that implies a potential future valuation target of over $6 billion. That's way bigger than $4 billion. Aurora Cannabis (ACB)Source: Aurora Cannabis Stock Price: $7.50In the under $10 category, one of the more attractive stocks to buy is undervalued Canadian cannabis producer Aurora (NYSE:ACB).No matter which way you slice it, Aurora is one of the more undervalued pot stocks in the market. It's cheaper than most peers on a trailing sales basis, forward sales basis, volume basis, and on pretty much every other important operating metric. That relative cheapness in ACB stock comes despite Aurora having many strengths. Aurora is the second largest player in the Canadian cannabis market behind Canopy Growth (NYSE:CGC), is one of the fastest growers in the market, is behind some of the top selling products across Canada and has one of the largest production capacities.Why, then, is ACB stock cheap relative to peers? Balance sheet. Cronos (NASDAQ:CRON) and Canopy are loaded up with billion dollar investments from consumer staples giants, which simultaneously shore up their balance sheets and give those companies ample firepower to grow rapidly. * The 7 Best Tech Stocks to Buy for the Second Half of 2019 Aurora has no such investment. But if the stock stays this cheap for long, it's only a matter of time before they get a big investment. Also, the company is tapping into the debt markets to raise sufficient capital to compete, meaning that in the big picture, this valuation disconnect has no reason to exist. If it gets wiped out -- as it should -- ACB stock could fly higher. Vipshop (VIPS)Source: Shutterstock Stock Price: $7.75Another hidden gem in the under $10 category is Chinese e-retailer Vipshop (NASDAQ:VIPS).Although China's economy is slowing, it is still growing at a robust mid single digit rate. At the same time, the digital economy remains red hot, with e-retail sales projected to rise 30% this year. Vipshop is at the heart of this robust e-retail sales growth narrative. Further, Vipshop is a discount retailer, and if the U.S. retail landscape has shown us anything, it is that off-price retail is a winning strategy. See the stocks of Ross Stores (NASDAQ:ROST), TJX (NYSE:TJX), Walmart (NYSE:WMT) and Five Below (NASDAQ:FIVE), versus the stocks of Nordstorm (NYSE:JWN) and Macy's (NYSE:M).Thus, Vipshop finds itself at the convergence of two favorable trends. On one end, you have robust growth through expansion of China's e-commerce landscape. On the other end, you have sustained popularity through an off-price retailing strategy.Net net, that means Vipshop projects as a sustained big grower for the foreseeable future. That sustained big growth should shoot VIPS stock materially higher from today's sub-$10 price. American Eagle Outfitters (AEO)Source: Mike Mozart via Flickr (Modified)Stock Price: $17A bunch of mall retailers trade in the under $20 range. But, only one retail stock is really worth buying at these levels and that stock is American Eagle Outfitters (NYSE:AEO).Put simply, American Eagle is a winning retailer. They are succeeding where others are not. American Eagle has transformed into the king of the denim category, and denim has made a strong comeback over the past several years. At the same time, American Eagle's Aerie brand has been one of the hottest stories in retail because the brand has aligned itself with body positivity tailwinds. Because of these favorable dynamics, American Eagle demand has remained resilient in the face of broader mall retail demand turbulence, which has allowed American Eagle to report far better than peer numbers over the past several quarters.The numbers speak for themselves here. American Eagle has rattled off 17 consecutive quarters of comparable sales growth, and 6 consecutive quarters of 5%plus comparable sales growth, including a 6% comp last quarter. In the overlapping period, peer mall retailers Nordstorm, J.C. Penney (NYSE:JCP), Gap (NYSE:GPS), Express (NYSE:EXPR) and many others pretty much all reported negative comps. The norm was also big gross margin compression. American Eagle's gross margins only fell back 30 basis points. * 5 Red-Hot IPO Stocks to Buy for the Long Run Broadly, American Eagle Outfitters is significantly outperforming its retail peers. This is nothing new. This has been the trend for a long time. It also projects to remain the trend for the foreseeable future. Consequently, if you're gonna buy a mall retail stock in the under $20 category, AEO should be your first choice. Ford (F)Source: Jens Mayer via Flickr (Modified)Stock Price: $10The last stock on this list is another stock in the sub-$10 category which has compelling upside in a medium to long term window.We all know Ford (NYSE:F), the U.S. automotive giant that makes great pick-up trucks and a variety of other good cars. Naturally, that sounds like a stable business, since auto demand is fairly stable, and Ford has been a relevant player in that space for what seems like forever. But the narrative supporting Ford stock has weakened over the past several years, mostly because the auto space is shrinking thanks to ride-sharing, and because Ford is losing share thanks to the emergence of electric vehicles.These headwinds are very real. But they are also overstated. Sure, some urban residents will chose to forego car ownership as a result of increased ride-sharing prevalence. But most won't, because no matter how good ride-sharing gets, it won't ever parallel the convenience of car ownership. Further, electric vehicles are ramping. But, Ford isn't just sitting on its hands while consumption pivots. They are pivoting into the EV space, too, and the company should be able to command respectable EV share at scale.Overall, then, the fears dominating the Ford narrative at present are overstated. Ultimately, they will pass, and when they do, Ford stock will rally from today's depressed levels.As of this writing, Luke Lango was long LK, ACB, CGC, TJX, WMT, FIVE, and JWN. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * The 7 Best Tech Stocks to Buy for the Second Half of 2019 * 7 Top-Rated Biotech Stocks to Invest In Today * 4 Semiconductor Stocks to Sell Compare Brokers The post 5 Stocks to Buy for $20 or Less appeared first on InvestorPlace.
The high times for Aurora Cannabis (NYSE:ACB) have certainly come down over the past couple months. But before you think a cheaper-priced ACB stock means better value, risks off and on the price chart remain. Let me explain.Source: Aurora Cannabis There's still a lot of buzz surrounding the cannabis industry and plenty of support from Wall Street pitching optimistic favor about the group's growth prospects. No doubt there's also some very well-supported and cash-flush companies like Canopy Growth (NYSE:CGC) and Cronos (NASDAQ:CRON), which are in position to emerge as future leaders in the space. Many investors also agree Aurora stock is another standout in this emerging market.Still, the other side of this argument is the growing pains and delays the cannabis industry will undoubtedly continue to face. Discounting these would be a mistake. It would also be neglectful to not respect some of ACB stock's company-specific risks.InvestorPlace - Stock Market News, Stock Advice & Trading TipsRightfully, investors can make the case for Aurora due to the company's valuation discount versus competitors in today's market or the company's impressive sales beat last quarter. But massive goodwill tied to ACB stock's aggressive acquisition strategy over the past couple years is approaching 60% of the company's valuation and a definite yellow flag for investors. * 7 Top-Rated Biotech Stocks to Invest In Today Also, Aurora stock's quest to capitalize on the cannabis market's secular growth prospects has come with the very real cost of share-based dilution.The varied and extensive costs associated with Aurora positioning itself as industry leader has been fueled by massive dilution. In the process ACB's share count has exploded from about 16 million to roughly 1.0 billion shares. And that's a huge burden on earnings. ACB Stock Weekly Chart Click to EnlargeThe risks on ACB stock's price chart also shouldn't be overlooked. As the weekly chart shows, a couple momentum phases have been replaced by 13 weeks of Aurora shares grinding lower. But today's 40% discount from last year's marginal all-time-high also doesn't necessarily mean value is at hand.As Aurora stock has declined in price the past couple months shares have failed to hold the 50% retracement level from 2018's high to December's corrective bottom. In our view that weakness could be an indication the cannabis narrative is growing long in-the-tooth and riskier every day for investors to buy into. It's akin to the glass being just half empty rather than half full in ACB shares.If there is any chance for ACB stock to shake off what could be a long road downhill, I believe it needs to happen sooner rather than later. Optimistically, there is a weekly doji and inside candle in place. If the pattern high of $8.16 is penetrated, it's a bullish signal.Backing up that promise, shares are also testing the 50% level of ACB's 2019 Fibonacci cycle and critical longer-term 40-week simple moving average. Aurora stock is also sporting a supportive oversold stochastics condition. Bottom line, the right technical ingredients for ACB stock to regain its mojo are there. However, I'd strongly caution keeping a lid on any losses generated from a pending buy signal in a name and an industry with a lot to prove.Disclosure: Investment accounts under Christopher Tyler's management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler's observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies and related musings, follow Chris on Twitter @Options_CAT and StockTwits. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * The 7 Best Tech Stocks to Buy for the Second Half of 2019 * 7 Top-Rated Biotech Stocks to Invest In Today * 4 Semiconductor Stocks to Sell Compare Brokers The post Avoid Getting Burned by Aurora Cannabis (ACB) Stock appeared first on InvestorPlace.
CALGARY , June 17, 2019 /CNW/ - High Tide Inc. ("High Tide" or the "Company") (HITI.CN) (HITIF) (2LY.F), an Alberta -based, retail-focused cannabis corporation enhanced by the manufacturing and wholesale distribution of smoking accessories and cannabis lifestyle products, today announced that it has closed the final tranche (the "Final Tranche") of the sale of unsecured convertible debentures (the "Debentures") of the Company under the non-brokered private placement (the "Offering") previously announced on April 10, 2019 . Gross proceeds from the Final Tranche were $3,200,000 and included a subsequent investment of $1,000,000 from Aurora Cannabis Inc. (ACB) (ACB.TO), one of the Company's key industry partners.
With many cannabis stocks at sky-high valuations, there's little room for making mistakes. Just look at Hexo (NYSEAmerican:HEXO). On news of its latest earnings report, the stock price dropped 8.53%. Note that the HEXO stock price is about 50% off its 52-week high.Source: Shutterstock So let's drill-down on the quarter. For the bottom line, the company actually beat expectations. HEXO reported a loss of 7.75 million CAD ($5.77 million) , or 4 cents a share, while the consensus was for a loss of 5 cents a share.But the top-line was another story. Revenue came in at 13.02 million CAD yet the Street was looking for a more robust 14.8 million CAD. What's more, there was an 8.6% quarter-over-quarter drop in sales.InvestorPlace - Stock Market News, Stock Advice & Trading TipsNow predicting quarterly numbers has not been easy as Canada is still in the early phases of legalization for recreational purposes. There are also ongoing shortages, supply complications and regulatory issues to deal with. * 7 Stocks to Buy for the Coming Recession But then again, investors are certainly baking in lots of growth. So it should be no surprise that HEXO stock took at hit.Here are some other worrisome metrics for the quarter: * The average price of adult-use dried grams dropped from $5.83 CAD in January to $5.29 CAD in April. * The average gross selling price per gram was also soft, going from $9.15 CAD to $9.11 CAD.But of course, there was also some good news in the report. The company announced it received a medical cannabis installation license from the Greek government for "cultivation, processing and manufacturing facilities."To this end, Hexo plans to begin construction of a 323,000 square-foot facility in the country by the fourth quarter of this year. No doubt, this should ultimately be a nice catalyst for long-term growth.In the meantime, Hexo has other promising initiatives. For example, the company has entered a partnership with Molson Coors (NYSE:TAP) to develop cannabis-infused beverages. There are also aggressive plans to benefit from the cannabidiol (CBD) market (this involves the use of compounds in the cannabis sativa plant that do not produce a high).With the passage of the U.S. farm bill last year, the category is likely to see a spike in growth in the coming years. According to research from the Brightfield Group, the market in the U.S. could hit $22 billion by 2022. Bottom Line on Hexo StockAccording to InvestorPlace's James Brumley, Hexo stock has been mostly overlooked -- say compared to names like Canopy Growth (NYSE:CGC), Tilray (NASDAQ:TLRY), Aurora Cannabis (NYSE:ACB) and Cronos Group (NASDAQ:CRON). I agree. * 7 High-Quality Cheap Stocks to Buy With $10 I also think this presents an opportunity for investors. Consider that Bank of America (NYSE:BAC) analyst Christopher Carey holds that Hexo stock has the most attractive valuation within his coverage universe. The price target is actually $10, which assumes a whopping 78% upside from current levels!Hexo's management is also not backing off its revenue estimates. They not only call for a doubling in the current quarter but $400 million CAD for fiscal year 2020, which does not include the impact from the Molson Coors's partnership.Now when it comes to cannabis stocks, there should always be caution. Again, the industry is in the early stages and there will likely be continued volatility. Let's face it, the competitive environment is getting more intense and the legal environment is far from certain.So yes, investors should be diligent with their money. But as for Hexo stock, there are certainly many positives, in terms of the global expansion, CBD opportunity and the growth in Canada.Tom Taulli is the author of the upcoming 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 * 4 Top American Penny Pot Stocks (Buy Before June 21) * 10 Stocks to Buy That Wall Street Expects to Soar for the Rest of 2019 * 7 Value Stocks That Are Flying Under the Radar * 6 Mouth-Watering Fast Food Stocks for Growth Investors Compare Brokers The post Hexo Stock Has An Earnings Buzz Kill That Simply Isn't Deserved appeared first on InvestorPlace.
Canopy Growth Corp (NYSE:CGC) closed down 2.29% on Thursday, with CGC stock at $41.86 -- nearly one dollar lower than its Monday open after spiking over $44 on Tuesday. What caused the latest slide in CGC stock price? Besides the usual cannabis industry volatility (more on that shortly), the world's largest cannabis company announced on Thursday that it will release its Q4 results on June 20. And that comes just two days after the company's CFO gave an interview where he said his company will continue to lose money "for the foreseeable future."Source: Canopy Growth Why the Latest Slide in CGC Stock Price?In its Q3 earnings, Canopy Growth reported a surprise net income of $74.8 million CAD, however the company also posted an operating loss of over $157 million. It turned that loss into a positive only because of a change in the fair value of assets and liabilities -- which added over $233 million to its bottom line for the quarter. Naturally, CGC stock got a nice boost based on those results. * 7 First-Half IPO Stocks That Will Falter in 2019's Second Half In Q4, the company is expected to once again show an operating loss, but it won't have a repeat of last quarter's accounting boost. On the contrary, Canopy Growth's CFO told Bloomberg that CGC will likely be generating negative income "for the foreseeable future." The question there is whether the operating loss is shrinking -- showing a move toward eventual profitability -- or growing.InvestorPlace - Stock Market News, Stock Advice & Trading TipsRevenue is also something investors are nervous about. The Canadian recreational cannabis market has not taken off as quickly as expected. Marijuana sales dropped early in the year as the legalization excitement wore off, and unsold inventory built up. And just last week, Canopy Growth's Tweed cannabis retail operation was forced to lay off 12% of staff in the province of Manitoba in what it described as "growing pains."The dip in CGC stock reflects uncertainty about what is going to be seen in those Q4 (and full-year fiscal 2019) financial reports. CGC Stock Also Reflects Volatility in the Cannabis IndustryInvestors in CGC stock may be happy to see this week come to a close, however other cannabis stocks have also had a bumpy ride. In particular, Cronos Group Inc (NASDAQ:CRON) dropped 4.33% on Thursday, while Aurora Cannabis Inc (NYSE:ACB) repeated its pattern of last week, starting off up and then losing ground through the week (it dropped another 2.26% on Thursday). While this week has been up and down for CGC stock price, it reflects a 12-month period that's been a veritable roller coaster ride: below $25 last August to nearly $57 by October, dropping to the $27 range in December, back over $50 in January, topping $52 in April, and now just under $42.The overall theme is that the cannabis industry is still a relatively new one with recreational marijuana in particular in the early stages of growth.That means cannabis companies are still dealing with large expenditures as they open new production facilities. Retail outlets and supporting supply chain operations are still ramping up in most markets, and actual consumer demand for the product can be tough to judge accurately. Regulations can vary wildly in the different markets cannabis companies operate in, adding a high level of complexity to their business.In addition, many recreational marijuana producers are still perfecting methods for growing, harvesting, packaging and distribution.And then there's the hype surrounding the cannabis industry. It's not just the prospect of legalization in another state or even at the federal level that get's investors excited and buying up Canopy Growth stock. Headlines about cannabis products like CBD and its potential health benefits can cause big spikes in cannabis stocks as investors stampede to get in early. * 10 Stocks to Buy That Wall Street Expects to Soar for the Rest of 2019 All of these factors mean costs and revenue can vary significantly from quarter to quarter. And until the industry matures, CGC stock and other cannabis stocks are best for patient investors who are willing to wait and ride out the rocky weeks and wild swings.As of this writing, Brad Moon did not hold a position in any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 10 Stocks to Buy That Wall Street Expects to Soar for the Rest of 2019 * 7 Value Stocks That Are Flying Under the Radar * 6 Mouth-Watering Fast Food Stocks for Growth Investors Compare Brokers The post CGC Stock Continues Week of Losses for Pot Stocks appeared first on InvestorPlace.
Cannabis stock traded broadly lower Friday, putting the sector on track for a fourth-straight loss, as Hexo Corp. shares extended losses toward a 3-month low in the wake of disappointing quarterly results. The ETFMG Alternative Harvest ETF dropped 2.1%, as 31 of 38 components sold off, and the Horizons U.S. Marijuana Index ETF shed 3.2%. The ETFMG ETF has now lost 5.2% over the past four sessions. Among the sector's more-active components, shares of Hexo Corp. dropped 4.1%, after losing 8.8% on Thursday, to put them on track for the lowest close since March 12. Elsewhere, shares of Aurora Cannabis Inc. inched up 0.1%, after losing 4.7% over the past three days; Cronos Group Inc. dropped 5.7%; Aphria Inc. shed 2.0%; and Canopy Growth Corp. declined 2.0%. The ETFMG ETF has now shed 15% over the past three months while the S&P 500 has gained 2.7%.
[Editor's note: This story was previously published in March 2019. It has since been updated and republished.]Often, when analysts or bloggers talk up the potential of marijuana stocks, the focus is on the consumer side of the industry. But some of the best stocks in the pot sector may be medical marijuana stocks.Indeed, it's on the medical side where growth likely is to be largest in the near term. Canada did legalize recreational marijuana in October, but investors promptly sold the news in response. U.S. legalization is likely to be a long slog. Attitudes are mixed in Europe -- but even in legalized markets anywhere, black market (and untaxed) operators will be able to take share.InvestorPlace - Stock Market News, Stock Advice & Trading TipsMeanwhile, approval of medical marijuana (in the U.S. and elsewhere) seems to be moving at a faster pace. In such a highly regulated market, black market and even smaller producers likely will be shut out. Quality and consistency will be key. Here, scale will matter. And those companies that win early have the best chance of becoming market leaders -- and providing big gains for investors. * 10 Stocks to Buy That Wall Street Expects to Soar for the Rest of 2019 As always -- and particularly in this space -- investors need to mind the risks and size positions accordingly. But for investors who see medical marijuana stocks as the next big thing, these three are the best stocks to buy for investors enamored with weed.Source: Shutterstock Charlotte's Web (CWBHF)Charlotte's Web (OTCMKTS:CWBHF) has become one of the leading players in CBD oil (cannabidiol). And though Charlotte's Web products are made from hemp -- at least for now -- instead of marijuana, the stock still looks like one of the best plays in the sector.InvestorPlace's Matt McCall named CWBHF (the stock also trades on the Canadian Securities Exchange, ticker CWEB) as his pick for our list of the best stocks for 2019. And the case makes some sense. CBD oil sales are soaring, and Charlotte's Web is a market leader. As McCall pointed out, the federal farm bill in the U.S. provided a catalyst by legalizing hemp.With so many customers yet to try CBD oil -- and so many existing users attached -- market growth should be huge. And while CWBHF isn't cheap from a valuation standpoint, its position as a market leader should allow it to grow into its valuation.Source: Shutterstock Cronos (CRON)Of late, marijuana producer Cronos Group (NASDAQ:CRON) has made the headlines for its consumer business. Most recently, tobacco giant Altria (NYSE:MO) invested some $1.8 billion in the company. The combination of Altria's advertising and distribution reach and Cronos' production capabilities would seem to be the best fit for the consumer side of the business.But investors can't ignore that Cronos is a medical marijuana stock as well. In fact, it's that business that drives the majority of its revenue at the moment. And it also has given the company a beachhead in multiple markets around the world, from its home market of Canada to Germany, Israel and Poland. * 10 Stocks to Buy That Wall Street Expects to Soar for the Rest of 2019 I wrote after the Altria deal that investors should stay patient with CRON stock. And in this market, that might still be wise advice.Source: Shutterstock CannTrust (CTST)CannTrust (NYSE:CTST) has been one of the biggest victims of the post-legalization selloff. The stock lost more than half its value and touched a 52-week low in the process last year. And it's been in an almost continuous slump again since March.Unlike many peers, the company usually posts gross profits. And its established leadership in the Canadian medical marijuana industry should drive consistent growth and allow CannTrust to stay profitable. There is some retail exposure here as well, but unlike peers, CannTrust seems to have room to drive upside on the medical side alone.CannTrust also was able to get a listing on the New York Stock Exchange this year. Admittedly, uplisting hasn't helped pot stocks in and of itself (most notably Aurora Cannabis (NYSE:ACB) took a lot longer to take off than was expected), but it certainly didn't hurt.From a profitability standpoint, at least, CNNTF seems like one of the best stocks in the pot sector. And with valuation near the lows, at least some of the risks here likely are priced in.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 10 Stocks to Buy That Wall Street Expects to Soar for the Rest of 2019 * 7 Value Stocks That Are Flying Under the Radar * 6 Mouth-Watering Fast Food Stocks for Growth Investors Compare Brokers The post 3 Medical Marijuana Stocks to Buy appeared first on InvestorPlace.
The fuel for this Southeast Asian country is its export economy and young workforce. But while it may steal some production from China in a trade war, a faltering global economy will hurt. And stocks are pricey.
The long-term prospects for Cronos Group (NASDAQ:CRON) stock look good. That is, if you ask CRON stock fans. There is almost no convincing them otherwise. Critics of Cronos Group stock and the whole industry can offer smartest arguments to prove that the cannabis stocks are headed for disaster, but it will all fall on deaf ears.Source: Shutterstock The bullish thesis for the industry is so vague and the scope is so widespread that it's almost impossible to kill it this year. It is a multi-headed beast where if the bears chop off one head, many others will stare them down with sharp teeth.Don't take my word for it, just consider the scoreboard. CRON is up 64% year-to-date -- leading the pot stock pack. The ETFMG Alternative Harvest ETF (NYSEARCA:MJ) is up only 30%. And I say this while I chuckle because that's still double the S&P 500 performance for the same period. So CRON is up four times more than the S&P.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 6 Growth Stocks That Could Be the Next Big Thing This is similar to how it was for Amazon (NASDAQ:AMZN) and Netflix (NASDAQ:NFLX) in their infancy stages. This is also very similar to the current situation with Beyond Meat (NASDAQ:BYND) and even Uber (NYSE:UBER). The bullish thesis for these types of pioneer stocks is too vague to try too short this early.This is not the same as saying that I drank the Kool-Aid think pot stocks will be as successful as AMZN long term. I am merely saying that it's too early to short them. Trading CRON StockSo do I go all in on CRON? No, but still this all depends on individual time frames and risk appetites. One thing is for sure, pot stocks make for great short-term trading vehicles so CRON has opportunities on both the upside and downside. Those who believe in it long term, this is as good as any to buy at least half their position. It is futile to wait for a perfect sign to enter.Mid term, I favor the upside potential through the rest of the year for CRON stock because it established a solid band of support. Since January of 2018, $14 per share played an important role. It served as a major pivot point, so it is an area where bulls and bears are consistently eager to fight it out hard.This creates congestion so it becomes a sticky zone. And since CRON stock price is above it, the bulls can use it as solid footing. Meaning onus is on the bears to break that. Otherwise, every dip towards it is a buying opportunity. Sustaining the selling then becomes almost impossible.So this leaves us with evaluating the upside potential at hand. Earlier I mentioned that there are shorter- term time frames to trade. Above $18 per share, CRON will invite momentum buyers to launch a $4 rally from there. There will be resistance near $20. This sounds like a wild statement, but it is doable for such a momentum stock.I also noted that the $14 per share zone is a long term pivot, but so is $16. Specifically for this year, it served as a major point of contention. So I expect $16 to be the immediate support. For those who like to sell credit put spreads to generate income, that would be a good short-term level to consider.Conversely, there is risk below especially due to trade uncertainties. So we are vulnerable to geopolitical headlines to cause sporadic selloffs. If Cronos stock fills the gap below and falls below $13.5 per share, it could trigger a $2 overshoot. While this is not my forecast, it is a scenario that exist below. The Bottom Line on Pot StocksIt is also important to note that I am not a super fan of the whole cannabis sector. But I do recognize that it's a tough short.This is a brand new industry to Wall Street, and marijuana still illegal at the federal level in the U.S. So it has everything going against it. Yet pot stocks still have so much support from everyone from retail investors to mega corporations. Constellation Brands (NYSE:STZ) and Altria (NYSE:MO) were the first two to dip their toes in the water by throwing billions at Canopy Growth (NYSE:CGC) and CRON so we know that they are the best leading cannabis companies.This is just the beginning.Dozens more companies are waiting and trying to figure out how they can also grab a piece of this pie. We all know about the popularity of recreational pot. But there are the slew of other applications that are extremely interesting. Mainly medicinal, edibles, and portables. There is a strong consensus that people will be drinking pot-infused drinks instead of soda, beer or wine. * 7 High-Quality Cheap Stocks to Buy With $10 I am not here to judge whether this is a realistic goal; it's definitely not in the very near term, but it's not out of the realm of possibilities. So the theoretical addressable market is literally incalculable. So what are the bears shorting? Without any negative headlines Cronos stock is going higher.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 free here. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 High-Quality Cheap Stocks to Buy With $10 * 7 U.S. Stocks to Buy With Limited Trade War Exposure * 6 Growth Stocks That Could Be the Next Big Thing Compare Brokers The post Cronos Group Stock Is Just Getting Started appeared first on InvestorPlace.
More American farmers are turning to hemp amid the low price of grain and the prolonged trade war between the United States and China. Yahoo Finance's Zack Guzman, Sibile Marcellus, and Heidi Chung discuss.