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Once heating up, cannabis stocks are beginning to lose their steam. Yahoo Finance talks to Hershel Gerson, ELLO Capital CEO & Managing Director who says since the Farm Bill passed "CBD is going to grow a little bit quicker cannabis generally."
Investors can now get a piece of the booming cannabis market without having to buy the individual stocks. Matt Markiewicz, Innovation Shares managing director, joins Akiko Fujita on 'The Ticker' to discuss.
Cannabis companies that have made acquisitions at the height of excitement about Canadian legalization last year may be facing some big goodwill writedowns.
In the last two quarters, billionaire, hedge fund manager, and mathematical genius Jim Simons has moved decisively into the cannabis sector, taking large positions in both Aurora Cannabis (ACB) and Aphria (APHA).Simons, known for his work in higher mathematics and military cryptography, founded the Renaissance Technologies hedge fund in 1982. The firm was a pioneer in quantitative trading, the application of higher mathematics to the financial markets, and has developed a reputation as one of the best returning hedge funds in the business. Simons retired from active direction of the company in 2009, but continues as non-executive chairman in an advisory role.Simons’ new positions in cannabis are considerable. Per the 13F filings, his firm purchased 788,595 shares of ACB, for $6.3 million, in Q1, and followed up in Q2 with an additional 905,305 shares at $7.1 million. Also in Q2, Simons picked up 241,500 shares of Aphria, at $1.7 million. Clearly, Simons sees something of value in the cannabis sector.Even the Skeptics See Potential in Aurora Cannabis Writing earlier this month, 4-star analyst Rommel Dionisio of Compass Point noted Aurora’s (ACB) high quarterly production and strong brand presence in the Canadian marijuana market. Aurora reported nearly 30,000 kilos of cannabis production in the last quarter, significantly more than the previous guidance of 25,000, and making Aurora one of the world’s largest medical/recreational cannabis producers.Dionisio hedges his bets on Aurora. He rates ACB as a Hold, but gives the stock a $8 price target, indicating a 33.5% upside from the current share price of $5.99. The analyst sees plenty of growth potential in Aurora’s strong production and hefty market share – all factors that brought Renaissance Technologies into this stock, as well. (To watch Dionisio's track record, click here)On the negative side of the ledger, Aurora lowered guidance of fiscal Q4 revenue, from $111 million to the range of $100 to $107 million. The reduction in revenue guidance comes even as the company is ramping up production, and Dionisio attributes it to “modest pricing pressure” as supplies increase in the Canadian market.Summing up Aurora’s situation, Dionisio says, “Aurora enjoys the second leading share of the important Canadian market, with approximately 20% market share in both the recreational and medical use markets. Moreover, through a series of acquisitions and license wins, Aurora has become one of the global front-runners in establishing an early presence in several countries in Europe and Latin America. Aurora … appears well positioned to remain one of the leading companies in the global cannabis industry, and as such warrants a premium valuation…”Overall, ACB gets a Moderate Buy rating from the analyst consensus, based on 3 buys and 4 holds given in the past three months. As mentioned, shares are selling for $5.99, so the $8.68 average price target suggests an upside of 45%. It’s important to note here that even the low-end price target, of $7, still suggests an upside of 16%, so even the true skeptics see some potential in the stock. (See ACB's price targets and analyst ratings on TipRanks)APHA Presents a Buying CaseWith a 967% increase in net sales recorded in Q2 2019, compared to the year-ago quarter, Aphria (APHA) presents on the surface with a much more clear-cut case for buying. Unlike many cannabis companies, which are still bleeding red ink as they work to pay for recent acquisitions and expansions, Aphria brought in a net profit of C$15.8 million.There is a possible shadow here. Of Aphria’s total revenue, C$128 million, C$99.2 million came from “distribution revenue” credited to its acquisition earlier this year of CC Pharma, the German medical cannabis company. Aphria’s own recreational sales increased 158% since last year, but still only totaled C$18.5 million. If Aphria should have to write down the CC Pharma acquisition costs, it may still show a profit – but that is not guaranteed.Despite the questions lingering around Aphria’s Q2 profits, analyst Justin Keywood, from GMP FirstEnergy, puts a Buy rating on APHA shares. In line with his bullish rating, Keywood gives APHA a C$14 price target – or $10.55 in US currency. His target implies an impressive upside of 70% from the stock’s current sales price on the NYSE. (To watch Keywood's track record, click here)Keywood sees the company’s combination of rapidly expanding production, high-quality product, and solid relations with government contacts (important for medical cannabis distribution in Canada’s nationalized health system) forming a solid foundation for both current operations and future growth.Keywood says, “Aphria is executing on a plan to significantly improve how it operates, while expanding rapidly. This is supported by our conversations with experts in the industry. Aphria also has $571mm in cash to support growth initiatives, while investing in derivative products, international operations and other strategic areas.”The Street largely seems to echo Keywood’s positive sentiment, considering TipRanks analytics showcase APHA as a Moderate Buy. Out of 7 analysts polled in the last 3 months, four are bullish on Aphria stock, while two remain sidelined, and one is bearish. The stock’s average price target of $10.57 represents about 70% upside potential. Like ACB, APHA’s lowest price target is significantly higher than the current share price, indicating an underlying confidence in the company, even among the naysayers. (See APHA's price targets and analyst ratings on TipRanks)
A look at cannabis producer Aphria Inc.’s stock since it released its annual report suggests something of a turnaround.
Despite Aurora Cannabis providing higher-than-expected guidance for fiscal 2019's fourth quarter early this year, its stock has fallen 25.6% this month.
It was clear and obvious at the time of the firing of Canopy Growth (CGC) co-CEO Bruce Linton, that Constellation Brands wanted the company to start to move toward lowering costs and widening margins. At the time I noted that this would inevitably cause the revenue of the company to decline, and that was confirmed in its latest earnings report.Even so, the size of the miss for revenue was deeper than I was thinking, and it doesn't bode well for the earnings trajectory of the company when it not only failed to increase sales of oil and softgels, but experienced a disappointing decline in revenue in those important product categories. I'm far more concerned about that than the one-off adjustment it made in relationship to warrants held by Constellation Brands, associated with Canopy Growth buying the rights to acquire U.S.-based Acreage Holdings.That's exasperated by its unfavorable product mix that is heavily weighted to low-margin recreational pot sold in Canada.Unsurprisingly, investor sentiment is very negative, with individual portfolios in the TipRanks database showing a net pullback from CGC.Some Nasty NumbersThe biggest disappointment and surprise in the earnings report of Canopy Growth was its failure to even match the revenue generated in the prior quarter, which also fell short of expectations. Net revenue of C$90.5 million was 4 percent lower sequentially. The market was expecting an increase of 17 percent for the quarter against the previous quarter.Of that, C$60.8 million of that came from the Canadian dried cannabis recreational pot market, which is a low-margin product. It needs to improve its product mix going forward in order to boost sales while widening margins. If it doesn't accomplish that, it's going to decline far faster than I think it will as the company stands today.One bright spot in revenue was with medical cannabis sales at the international level, where the company managed to boost net sales from C1.8 million in the previous quarter to C$10.5 million in the reporting period.On the other hand, the drop in oil and softgel revenue in the first quarter was staggering. It only managed to sell C$0.2 million in the quarter, significantly down from oil and softgel revenue of C$36.5 million in its fiscal fourth quarter.Part of that was the result of the company making an adjustment concerning oils and softgels estimated product returns, but that was only part of the reason for the decline.Another concern I have in regard to revenue is the company saying it was the consequence of supply restraints, and yet Aphria (APHA), Cronos (CRON) and Aurora Cannabis (ACB) don't appear to have been hindered by that in the Canadian market to the same level Canopy Growth was. In the case of Aurora Cannabis, I'm assuming its unaudited numbers it released are close to its actual results, as it won't be reporting until September.Gross margin in the quarter was also dismal, finishing at 15 percent, not even reaching the 16 percent in the prior quarter. Analysts were looking for close to 23 percent.According to management, the weak gross margin was primarily from C$16.2 million in operating costs associated with production facilities that weren't fully operational in the quarter.The other factor was the aforementioned disastrous decline in oil and softgel sales, which would have offset some of the low margins related to dry cannabis sales.ConclusionAfter the last couple of weak earnings reports and the debacle surrounding the firing of Bruce Linton, it's apparent to me that Canopy Growth is struggling to find its identity and the way to go forward.One of the obvious problems to me in the timing of firing Linton was Constellation Brands had nothing in place to replace his vision for growth. That points to there being more problems than are visible to those on the outside. That's why the numbers are bad, even when accounting for adjustments.For that reason, the assertion by its CEO that it will have an annual revenue run rate of C$1 billion has to be taken with a healthy grain of salt, as the company is going in the wrong direction, and even with it saying CBD and derivative sales should climb in the quarters ahead, it's hard to believe it's going to find a way to generate C$250 million in quarterly sales anytime soon.That said, it can't do much worse in softgels and oils, so there's really nowhere to go but up, yet the company pointing to weaknesses in demand in the Canadian market against supply, means it'll have to rely heavily on other products to reach its revenue guidance. It don't see that happening within the time frame the company stated.Investors also have to remember that expectations are there will be a new CEO put in place that is officially approved of by Constellation Brands, which is now essentially in control of Canopy Growth.How that transition plays out is yet to be determined, and if the new CEO continues on with the strategy being implemented at this time, why is there a need for a new CEO, if that's how it works out?The truth is, there needs to be a new CEO hired sooner rather than later. As the company stands today, there won't be a sense of stability until that happens. And when it happens, I for one want to know what the real reason for changing management was, and if it is concerning growth as has been stated, than what is the difference in the type of growth instituted by Linton, and the type of growth Constellation Brands wants?I think the state of flux the company is in now will continue to hinder it from reaching its potential, and if things keep on going as they are, it's going to take a long time for the company to dig itself out of the hole it's now in.
By now, most InvestorPlace readers who follow my work will recognize my overall bullishness toward marijuana stocks. However, not all sector players are built the same, as controversial Aphria (NYSE:APHA) can attest. In an industry where competitors feed off each other, Aphria stock is in many ways a major liability.Source: Shutterstock That's because for all the work toward credibility that marijuana companies forward, APHA stock undoes this broader effort. As you may recall, Aphria was involved in a massive scandal over the past several months. It began with a short-seller's report making a damning accusation: management engaged in shady dealings for acquisitions that mostly benefitted insiders at the expense of shareholders.In response, the company's board of directors hired an independent committee to investigate the accusation. Eventually, that led to the ouster of former Aphria CEO Vic Neufeld and co-founder Cole Cacciavillani. Hain Celestial's (NASDAQ:HAIN) Irwin Simon stepped in as interim and now full-time CEO. In theory, this should spark a new direction for Aphria.InvestorPlace - Stock Market News, Stock Advice & Trading TipsAnd to some extent, Simon helped steady the ship. Unfortunately, the company still has a credibility problem, which impacts both APHA stock and the cannabis industry. First, during the height of the controversy, Aphria promised to issue a line-by-line rebuttal of the short-seller report. Not only did management fail to provide that rebuttal, but they're also playing dumb about the whole issue. * 15 Growth Stocks to Buy for the Long Haul Second, APHA still maintains vagaries in its financial reporting. That makes Aphria look amateurish compared to proper heavyweights like Canopy Growth (NYSE:CGC). It's also a bad look for the stock, with investors questioning the equity's longer-term viability.Is it finally time to let APHA stock go? Aphria Stock Is Still Risky, but Also TemptingOn the surface, I can't help but have reservations toward APHA stock. We've seen short sellers attack marijuana firms before, but this was a very specific accusation. Worse yet, the targeted company is being very coy about the incident.As I dig deeper, the narrative gets uglier. Like I said before, it doesn't help that rivals are complying with GAAP reporting and regulatory standards. And more recently, the illegal growing scandal impacting CannTrust (NYSE:CTST) clouds the entire cannabis industry. Bluntly, why buy Aphria when you have so many other superior options available?It's a fair question and explains why part of me is extremely hesitant about these shares. On the other hand, the speculative side of my brain wonders why APHA stock has effectively mitigated PR damages.For instance, if you look at the year-to-date return for Aphria stock, they're firmly in positive territory at nearly 23%. Yes, APHA dipped badly in July, but it came back strong this month. I'd say that's unusual for a company facing incredibly damaging accusations, especially one doing a poor job defending itself.Furthermore, I can't help but ask an obvious question: why did Irwin Simon decide to not only jump to cannabis but also to take over one of the industry's most controversial companies? Earlier this month, Simon told Mad Money's Jim Cramer that "cannabis is big business," and that Aphria has a strong foothold in this market.I don't think this is your typical corporate rah-rah speech. Simon had a perfectly fine career in a perfectly fine (and inoffensive) industry. By jumping to marijuana, he could easily damage his reputation. Therefore, the fact that he's willing to put his neck out gives me confidence toward Aphria stock. Markets Are Also Demonstrating Belief in APHA StockOf course, you typically shouldn't base your investment decisions on what other people are thinking or doing. That said, Aphria stock is a different beast because of its underlining industry: cannabis stocks are heavily narrative-driven.But ultimately, the markets represent the true arbiters of any equity. And right now, they have established that the $7 price point is strong support for APHA stock. So long as it can maintain this level, I think the upside potential is greater than the downside risk.That's not an invitation to load the boat. As I mentioned up top, Aphria stock has no shortage of bearish catalysts. But because of this robust minefield, APHA really should have collapsed by now. That it's holding its own despite the risks implies that the bulls will give this troubled name a second chance.As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Real Estate Investments to Ride Out the Current Storm * 7 Marijuana Penny Stocks to Consider for Those Who Can Handle Risk * 7 Safe Dividend Stocks for Investors to Buy Right Now The post Aphria Stock Is Ugly but Still Here, and That Is a Win appeared first on InvestorPlace.
CALGARY , Aug. 15, 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 the Canna Cabana retail store located at Unit #310, 4602 46th Street in the city of Olds (the "Olds Store") received its first delivery of cannabis products from Alberta Gaming, Liquor and Cannabis ("AGLC") and has begun selling recreational cannabis for adult use. Inclusive of the Olds Store, High Tide currently has 17 branded Canna Cabana locations selling recreation cannabis products across Canada .
The largest licensed cannabis producers in Canada have recorded more than $4 billion in goodwill—the amount allocated to certain acquisitions beyond the value of their physical assets—risking large and potentially punishing write-downs in the future.
It seems like Tilray (NASDAQ:TLRY) has returned to normal. Heading into second-quarter earnings on Tuesday, Tilray news had been relatively quiet. Tilray stock had traded sideways.Source: Shutterstock Put another way, there hasn't been much in the way of fireworks. But that's not necessarily a bad thing. The first cannabis IPO on the NASDAQ (NASDAQ:NDAQ) exchange, TLRY very quickly turned into what looked like a bubble.The IPO priced at $17, and early trading was solid, if not spectacular. But after its first month of trading, TLRY suddenly took off: at one point, the stock touched $300.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 15 Growth Stocks to Buy for the Long Haul Since then, it's been a long, painful slide -- until the last few months. Tilray stock actually has held up reasonably well in a market that has been unkind to most pot plays, with leaders like Canopy Growth (NYSE:CGC) and Cronos (NASDAQ:CRON) well off their highs.Some disappointing Tilray news has changed that somewhat, as TLRY slid more than 10% in after-hours trading following earnings on Tuesday afternoon. But the report, from here, looks reasonably positive.More importantly, this is not a stock that necessarily should be judged on single quarters -- at least not yet. Tilray isn't looking to maximize near-term revenue or profits. It's taking the long view. And while there's a reasonable debate over whether that view is correct, Q2 earnings don't seem to change the case all that much. Tilray News Looks OKTilray seems to have been hit by a somewhat odd fact of cannabis investing at the moment: investors suddenly seem to be focusing on profitability over revenue. The fact that Aphria (NYSE:APHA) posted a blowout quarter last month, and guided for positive Adjusted EBITDA, may be a factor. So too may be waning patience with recreational legalization stalling out in Canada in and beyond.Whatever the cause, that focus doesn't seem to make a lot of sense. Tilray CEO Brendan Kennedy explained why on Tuesday's Q2 conference call:If your company is a small to midsize LP [licensed producer] in Canada, or an MSO [multi-state operator] in the United States that can export to other countries then I think those countries -- those companies should be focused on profitability.But you only see an opportunity like this once in your lifetime. And if you're trying to dominate a global industry, you'd be constraining yourself if you were focusing entirely on profitability at this point. Globally, it's very early in the emergence of a $200 billion industry. And globally, if now is not the time to invest, I don't know when is.Tilray's revenue of US$45.9 million was nicely ahead of consensus expectations for US$41.1 million. But Tilray news on the profit front was softer: an Adjusted EBITDA loss of US$17.9 million against an average estimate of -US$14.4 million. That profit miss seems to be one of the catalysts sending TLRY stock lower after-hours. The Sell-Off in Tilray StockTo be fair, there's another catalyst. TLRY shares gained over 8% in regular trading. Cannabis stocks on the whole did well: CGC gained 4%, and CRON 5%. But it's likely some traders were betting on a big earnings report as well, and felt Tilray didn't quite deliver.That said, Tilray did post a big revenue beat relative to expectations. Adult-use revenue almost doubled from Q1 levels. The acquisition of Manitoba Harvest for US$317 million in February added another $20 million in sales.As Kennedy argues, that's what should matter at this point in the development of the cannabis industry. There's not a lot of sense in cutting costs now ahead of what bulls expect will be a massive global opportunity. If an investor wants profits -- or doesn't think that opportunity is as big as optimists believe -- there are thousands of other stocks to buy. The Long-Term Case for TLRYThere's another aspect to the sell-off worth noting. Tilray isn't looking to maximize near-term revenue. Unlike many larger cannabis plays, it's not even looking to build out actual production. Rather, it's happy to simply buy cannabis from third-party producers.As I wrote in May, the reason for that strategy is that Tilray management believes cannabis prices are going to come down over the long term. Cannabis will be a commodity product, which means spending capital to build production is unlikely to be an investment that drives big returns.Instead, Tilray is focusing on hemp-based food products through the Manitoba Harvest, and derivatives such as cannabis oil. It has entered the U.S. CBD market. A partnership with Anheuser-Busch InBev (NYSE:BUD) will research drinks including either CBD or THC.It's a strategy that may not work. Vertically integrated producers like Canopy, Cronos, or Aurora Cannabis (NYSE:ACB) may be able to leverage their production to out-compete Tilray in cannabis derivatives.At the least, it's a strategy based on the thesis that those companies spending hundreds of millions of dollars to build production -- and drive near-term revenue -- are making a mistake. A single quarter's earnings don't really change the case all that much. In addition, TLRY's higher multiples based on revenue do make some sense; it's focusing on driving better, and more profitable, revenue over time.Again, that doesn't make TLRY a buy. In fact, I wouldn't recommend it yet even at after-hours levels. As I have written before, Tilray is being patient, and investors can do the same.But it does mean that 2019 earnings simply don't change the case all that much. That's important to keep in mind particularly if the sell-off in Tilray stock accelerates.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 15 Growth Stocks to Buy for the Long Haul * 5 More Cloud Stocks With Plenty of Potential * 5 Clean Energy ETFs to Buy for 2019 The post After Earnings, TLRY Stock Remains a Strategy Play appeared first on InvestorPlace.
The cannabis sector has been struggling -- that's no secret to those that follow along with the space. But with key companies like Tilray (NASDAQ:TLRY) and Canopy Growth (NYSE:CGC) reporting earnings this week, even more attention is being thrust onto the group.Source: Shutterstock We outlined a few of the key spots for TLRY stock ahead of earnings -- some upside targets should the post-earnings reaction be positive and some downside targets if the stock is under pressure. It's only fair to do the same thing for Canopy Growth stock, given the volatile nature of this industry.Because of the regulatory hurdles, speculative nature of M&A, incredible growth rates and high valuations, cannabis stocks are volatile bunch. That's not just TLRY and CGC either. That goes for names like Cronos Group (NASDAQ:CRON), Aphria (NYSE:APHA), Aurora Cannabis (NYSE:ACB) and others.InvestorPlace - Stock Market News, Stock Advice & Trading TipsLet's look at the charts. Trading CGC Stock Click to EnlargeJust over a month ago, we flagged the bearish price action in Canopy Growth stock price. Shares were setting up in a descending triangle, a bearish development where downtrend resistance is squeezing the stock price against a static level of support. For CGC, you can see that in the above chart.Downtrend resistance (blue line) has been squeezing CGC lower since May. However, $38 support (black line) continued to buoy the name.These setups are attractive in the sense that, once we get a break, we know which direction has the new path of least resistance. For the record, CGC wasn't the only cannabis stock tipping its bearish hand. * 15 Growth Stocks to Buy for the Long Haul In any regard, where does that leave us now?Shares rallied on Tuesday, but CGC was swiftly batted down from the 20-day moving average. It was rallying alongside TLRY ahead of the latter's quarterly results. Now back down toward $32, Canopy Growth stock is near a key level.When the markets were in "selloff mode" at the start of August, CGC found support at $31. Should CGC close below this mark, it puts the $28 level on the table, as well as the year-to-date low at $26.30.On the upside, CGC stock needs to clear the 20-day moving average and downtrend resistance (blue line). If it does, it can begin to work on a new uptrend line. It will also put the 50-day moving as its first upside target, with the 61.8% retracement at $37.75 as the second target.At the very least, staying north of $31 would give the bulls some reprieve and allow CGC to start working on a series of higher lows. Canopy Growth Stock Earnings PreviewWithout question, CGC is considered one of the "blue chips" of cannabis stocks. A big part of that came after a large investment from a well-known company. Constellation Brands (NYSE:STZ) poured some $4 billion into Canopy, forging its balance sheet as one of the strongest in the group.The cash infusion gave CGC a treasure chest to gobble up smaller, strategic entities in the space. But beyond that, it also put on a display of confidence. STZ is well-run outfit, and if it's investing billions into Canopy, management is obviously bullish on its prospects.That said, CGC is going through a bit of a rough patch at the moment. Will earnings turn its woes around?When the company reports its first quarter results for fiscal 2020, analysts expect sales of $84.2 million (CAD). For the year, estimates call for roughly $540 million in sales. They still expect CGC to lose 31 cents per share this quarter and $1.06 per share this year. In fiscal 2021, estimates call for almost $1 billion in sales. Progress toward this figure will be in close focus.If Canopy continues to make progress, then the post-earnings reaction may be favorable. If investors feel that that sales figure is less likely to be achieved, it may lead to selling. Adding volatility in the broader market may not help CGC -- or other cannabis plays -- in the short term.What matters is the trend and the strength of the balance sheet. Are more countries and states legalizing cannabis? Are they companies working toward positive free cash flow and have enough cash to comfortably cover their costs? Can revenue growth keep pace?That's what investors want answers to. Basically, they want to know that the long-term trends remain in place, helping to justify some of these huge valuations.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 * 15 Growth Stocks to Buy for the Long Haul * 5 More Cloud Stocks With Plenty of Potential * 5 Clean Energy ETFs to Buy for 2019 The post Canopy Needs Its Earnings to Answer These Key Questions appeared first on InvestorPlace.
[Editor's note: This story will be updated each week with new stocks and analysis. Please check back often for Mark's latest take on marijuana stocks.]I heard someone say recently that technical analysis of marijuana stocks is like reading tea leaves. It is unfortunate that technical analysis has such a bad reputation, but I can totally understand why it does.The vast majority of technical analysts that I see seem to look at charts and mindlessly identify patterns without understanding what they are supposed to mean. Even worse, some analysts are proponents of bizarre methods like Elliot Waves and Gann theory. These techniques are like the Loch Ness Sea Monster, Bigfoot and UFOs. They may be fun to talk about, but they are not real.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIn financial markets, there are certain levels that are more important than others with regards to the amount of supply and demand that exists at them. In addition, in financial markets prices are always doing one of three things. They are either going up, going down, or staying the same. When understood and applied correctly, technical analysis should be an illustration of these dynamics. * 15 Growth Stocks to Buy for the Long Haul Knowing where the important levels and trends are can help you profit. For example, suppose you want to buy a stock if it drops to $20. If there is support at the $21 level, the stock may never get to $20. It may get to $21 and rally. You would have missed out on a large profit because you didn't understand that the market dynamics made the stock getting to $20 unlikely. Marijuana Stocks: Aurora Cannabis (ACB)Aurora Cannabis (NYSE:ACB) is a Canadian-based company that grows are sells medical marijuana, indoor cultivation systems and hemp-related food products.ACB stock has been in a small downtrend since running into resistance at the $7 level. I would expect this level to continue to be resistance in the short term.There is resistance at the $7 level because it was a support level in February, May, and June. How does this happen? How does a support level become a resistance level? Few people consider this but I think that it is an amazing phenomenon. It is really a picture of mass psychology.Those who bought ACB at $7 were feeling pretty good when it went higher. But then when the stock broke that level, they were looking at a loss. They tell themselves that if it rallies back to $7 they will sell it and get out so they can break even.They shorts are happy that the stock went lower because they are looking at a profit. They tell themselves that if the stock gets back to $7, they will short more and add to their positions. Added to this are professional traders seeking to profit off of a clear level.You can see that there are now three different groups that are interested in selling stock at the $7 level. This supply creates resistance. Aphria (APHA) Aphria (NYSE:APHA) grows and sells cannabis.About a month ago, I pointed out that if the $6.30 level broke, this stock would probably trend lower. After the company reported earnings and rebounded, someone sent me a nasty email telling me I have no clue about Aphria.I must admit, I had to laugh. The stock lost 20% of its value in the two weeks after I talked about it. If this person could identify stocks that were about to move by 20% in two weeks I would most certainly subscribe to his or her newsletter. If I had a short position, I would have covered it the day before the earnings release. I never hold short positions going into an earnings releases because it is too risky.After the rally, APHA stock hit resistance at the $7.50 level. This level was also resistance in May and June. It will probably continue to be so in the near-term. * 7 Safe Dividend Stocks for Investors to Buy Right Now There is support at the $6.30 level. This level was support from May through July. It will probably continue to be support in the near-term. Cronos Group (CRON)Cronos Group (NASDAQ:CRON) grows and sell marijuana.You don't need to be a Market Guru to see that the $14 level is important for CRON stock. It was resistance in September and December of 2018. Then it became support from May through July before breaking and becoming resistance again over the past month.How does a resistance level become a support level? Those who sold it at the level believe that they have made a mistake when the stock trades higher. They tell themselves that if it falls back to the level, they will buy it back. This demand for stock at the level is what creates support.On Aug. 8, Cronos reported earnings, and the action in the stock was very weak. It opened around $15.50, which was the day's high. It sold off over the course of the day and closed near its lows. This is probably a bearish dynamic and it could be the start of a new downtrend. Canopy Growth (CGC)Canopy Growth (NYSE:CGC) grows and sells marijuana.CGC stock may have broken its recent downtrend. This means that the forces of demand may be equalizing with or about to overcome the forces of supply.In financial markets, prices are always doing one of three things. They either are rising, falling or staying the same. When prices are going up the forces of demand are in control of the market. When prices are falling the forces of supply are in control. When prices are staying the same the forces are equal.The break of a properly drawn trendline means that the leadership may be about to change. It takes some practice, but if you understand what trendlines illustrate you can profit. * 7 Stocks Under $7 to Invest in Now CGC has broken the downtrend that began in July. This could be a sign that it may rally as the demand forces take over. At the very least, it is an indication that it has stopped declining. Hexo (HEXO)Hexo (NYSE:HEXO) grows and sells medical marijuana.From April through August, HEXO stock lost about 50% of its value. Then it became oversold and found support at the $4 level. It has recovered nicely since then. The most recent close was $4.94.This stock illustrates an important dynamic about trading. When markets get to important support and are oversold, they tend to rebound and rally. This was the case here.When they get to important support and are not oversold they tend to spend time consolidating before breaking the level and trending lower.What does oversold mean? It is a measurement of momentum. It is where the current price is versus where it was X many days ago. When it reaches extreme readings to the downside it is considered oversold.That was the case here. HEXO was extremely oversold when it reached the $4 level in July. KushCo Holdings (KSHB)KushCo Holdings (OTCMKTS:KSHB) produces and sells packaging materials for companies in the cannabis industry.KSHB stock is testing support around the $4.30 level. This level was support in June and again in late July. On each occasion a large rally followed.If you are tempted to buy this stock, you may want to wait to see if the level holds. A potential strategy is to wait until the downtrend line breaks before buying it. This could be a signal that the forces of demand are about to equalize with or overcome the forces of supply. * 8 Dividend Aristocrat Stocks to Buy Now No Matter What While you won't get the exact low price, this will decrease the chances of buying it and getting run over if the stock continues to trend lower. Scotts Miracle-Gro (SMG)Among other things, Scotts Miracle-Gro (NYSE:SMG) manufactures and sells equipment and accessories for hydroponic growing.Over the past two weeks, SMG has been testing resistance around the $110 level. There is resistance around these levels because it is where the top was in late December 2017 and January of 2018.This is a good example of how markets have memories. Certain levels can be important for years, and sometimes even decades.After failing at the resistance, the stock traded all the way down to $57 in December of 2018 before recovering and rallying all the way back to current levels.If you are bearish on the long-term prospects of this company and are considering selling SMG stock, this would be a logical place to do so.At the time of this writing Mark Putrino did not hold any positions in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 15 Growth Stocks to Buy for the Long Haul * 5 More Cloud Stocks With Plenty of Potential * 5 Clean Energy ETFs to Buy for 2019 The post 7 Marijuana Stocks With Critical Levels to Watch appeared first on InvestorPlace.
There's no way to possibly buy every pot stock on the market; there are just too many of them to choose from. Therefore, you'll need to narrow your focus, and Canada is truly the epicenter of activity when it comes to legalized cannabis. While everyone else is focusing on well-known brands like Canopy Growth (NYSE:CGC) and Aurora Cannabis (NYSE:ACB), I believe that Hexo (NYSE:HEXO) stock is a terrific way to build a position in Canadian cannabis.Source: Shutterstock Of course, not everybody agrees with me on this point -- what else is new? Critics are quick to point out that Hexo has run into a bit of potential controversy recently, which I will address momentarily. * 15 Growth Stocks to Buy for the Long Haul In any case, I'm always open to debate and never afraid of controversy, so let's open up this big can of worms and talk about exactly why I'm leaning bullish on Hexo stock.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Big Cannabis Meets Big BeerEver since the U.S. government eased restrictions on hemp with the passage of the Farm Bill in December, I knew that large corporations would want to plant their flags in the cannabis market. Molson Coors (NYSE:TAP) was quick to move into the legalized cannabis space with a joint venture to sell pot-enhanced beverages with none other than -- you guessed it -- Hexo Corp.Interestingly, although Molson Coors is known as a beer manufacturer, the cannabis-infused beverages reportedly won't contain alcohol. I actually view this as a smart move, as the cannabis crowd and the beer crowd aren't necessarily the same people (though I'm sure there's some overlap there). In any case, the joint venture will be called Truss and these drinks are slated to begin selling on Dec. 16 of this year (the day when it's legal to consume these beverages in Canada, assuming regulators don't create any delays).Jay McMillan, the vice president of strategic development at Hexo, believes that the company is fully prepared for the Truss product launch:We'll have a very large supply so we'll be in a good position to be able to meet the demand of the marketplace and at the same time also ensure that we're meeting the variety that the marketplace wants.Mr. McMillan also said that Truss is looking into rolling out a CBD-enhanced drink in eight U.S. states by the year 2020. I feel that these products are the future of cannabis and will bolster the Hexo stock price in the long term; even if the naysayers can't see it now, they'll jump on the bandwagon after the HEXO share price is much higher than it is today. Don't Let the Controversy Stop You from Owning HEXO StockAmazingly, HEXO controls around 30% of the cannabis market in Quebec, a region which is projected to represent 20% or so of the Canadian market for marijuana. Of course, Hexo's partnership with Molson Coors could provide access to markets far beyond Quebec, so it's hard for me to imagine what the critics and short-sellers think will to happen to the HEXO stock price in the long term.Perhaps they're bearish because Hexo has run ads on Snap (NYSE:SNAP)'s Snapchat app. The ads contained cannabis-related content, thereby potentially running afoul of Health Canada's advertising guidelines. However, as Megan Henderson, the director of marketing and business development for HelloMD points out, there's a lot of gray area in Health Canada's guidelines.Hexo's Snapchat ads aren't any more controversial than similar ads run by Canopy Growth or Aphria (NYSE:APHA). Henderson feels that Health Canada isn't likely to mete out any severe punishment to Hexo (or Snap for that matter), and I tend to concur with that stance on the matter. The Takeaway on Hexo StockBring on the controversy, I say -- as well as the CBD-enhanced beverage revenues, as Hexo stock is a rock-solid entry point into the fascinating world of legalized Canadian cannabis.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 * 15 Growth Stocks to Buy for the Long Haul * 5 More Cloud Stocks With Plenty of Potential * 5 Clean Energy ETFs to Buy for 2019 The post Stake Your Claim in Canadian Cannabis with Hexo Stock appeared first on InvestorPlace.
Ahead of its earnings report set for Aug. 14, shares of Canopy Growth (NYSE:CGC) are already down by nearly 25% in the quarter. A combination of risk aversion and CannTrust Holdings (NYSE:CTST) single-handedly pulling down the cannabis sector are contributing to the drop in CGC stock. With Canopy Growth stock down by over 40% from its 52-week high, investors do not expect much from the upcoming report. But can Canopy Growth report strong enough results to reverse the downtrend?Source: Shutterstock Aphria (NYSE:APHA) shares rose from around $5 to nearly $7 after it reported quarterly results Aug. 2. It reported net revenue growth of a whopping 969% to $128.6 million CAD. Distribution revenue rose 72% to $99.2 million CAD while net cannabis revenue rose 86% to $28.6 million CAD. Importantly, the company reported cash levels of $571 million at the end of the quarter. Its annual production capacity will reach 255,000 kilograms when all its facilities are fully licensed.By comparison, Canopy Growth reported revenue growing 312.5% year-over-year to $94.1 million CAD in the fourth quarter posted Jun. 20. Quarterly revenue grew 13% sequentially, helped by additional revenue generation from value-added products, extraction services and clinic partners. Shipments topped 24,300 kilograms.InvestorPlace - Stock Market News, Stock Advice & Trading TipsFor the current quarter (the fiscal first quarter), Canopy expects to harvest around 34,000 kilograms. It ended the quarter with cash, cash equivalents available and marketable securities totaling $4.5 billion. Canopy's Sales Channels GrowingInvestors should spot the glaring differences between Aphria and Canopy. First, Canopy has far more cash on hand and has Constellation Brands (NYSE:STZ) as its biggest partner. More worrisome is that Canopy's production fell sequentially. Management blamed static platforms in Alberta and Ontario for slowing its output. In Alberta, additional licensing requirements for stores slowed production. And in Ontario, the ramp-up in store openings in April hurt its output. Canopy may only wait for these channels to grow. By Q3 or Q4, the channel should get bigger, while a favorable product mix should diversify its revenue stream. * 15 Growth Stocks to Buy for the Long Haul Since Canopy is forecasting better production numbers as late as Q3, expect underwhelming output in tonight's earnings report. A month before Canopy's Q4 report, in May, the stock peaked at over $50 only to fall to below $40 when it reported results. Other Expectations from First-Quarter EarningsIn the medical segment, revenue grew 170% year-over-year to $10 million CAD. A product transitioning to the recreational channel, plus the supply challenges in specific product categories, limited its growth. Now that it has been remedied, expect revenue from this channel to improve. Net annual gross revenue from the Canadian recreational channel, which totaled $140.5 million CAD, should grow again this quarter. Shipments nearly tripled to 24,000 kilograms in the last quarter. Canopy shipped 5 million units in the fiscal year, compared to around 1 million in the prior year.Expect a big non-cash charge in the quarter. A new investor rights agreement subjects the firm to fair value adjustments. Canopy's management reports that they expect to record a material non-cash charge related to these adjustments, which will contribute to a material net loss.Increases in the company's harvest will support its long-term view on revenue growth in the coming quarters. But sales of the Q1 harvest will be sold in sequential quarters (Q2 and Q3). This is due to the timing of post-harvest processing, value-added product manufacturing and the timing of lab testing and quality assurance processes. Your Takeaway on CGC StockBrace for a weak revenue number from Canopy Growth in the earnings report. But since the market already expects these results, CGC stock may not fall by much. Cannabis investors need not be concerned over the short-term performance. Growth will come in later quarters as production continues rising and sell-through occurs in later quarters.As of this writing, Chris Lau did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 15 Growth Stocks to Buy for the Long Haul * 5 More Cloud Stocks With Plenty of Potential * 5 Clean Energy ETFs to Buy for 2019 The post Investors Shouldn't Worry About Canopy Growth Stock's Weak Q1 appeared first on InvestorPlace.
About a month ago, I wrote my first piece on newly public Canadian cannabis producer HEXO (NYSE:HEXO). I wrote that HEXO stock is interesting because the company is in the cannabis market, which is a non-cyclical growth sector. But I contended that HEXO stock wasn't compelling because HEXO had not yet proven that it was a good company.So I simply recommended that investors monitor HEXO stock but refrain from buying it. * 7 Safe Dividend Stocks for Investors to Buy Right Now Ever since my initial column was published, HEXO stock price has been exceptionally volatile. First, it dropped from $5 to $4 in just over a week. Then, it showed strong support at $4, and subsequently rebounded to $4.75.InvestorPlace - Stock Market News, Stock Advice & Trading TipsNow I'm doubling down on my initial thesis. There are a lot of marijuana stocks out there. Most of them won't make it. Probabilities and fundamentals suggest that HEXO will be one of the companies that won't survive. Until that changes, long-term investors should stay away from HEXO stock. HEXO Is a Fine CompanyAt its core, HEXO is a fine company in a really good sector.For all intents and purposes, HEXO looks just like many other Canadian cannabis companies. HEXO grows, distributes, and sells medical and recreational cannabis, mostly in Canada, although it also exports cannabis to many other countries. The company, which has ample growing capacity, is focused on lowering its production costs and is excited about the upcoming legalization of cannabis vapes and edibles in Canada in late 2019.HEXO also has a unique partnership with Molson Coors (NYSE:TAP) which focuses on creating cannabis-infused, non-alcoholic beverages.All in all, HEXO is very similar to Tilray (NASDAQ:TLRY), Cronos (NASDAQ:CRON). Aphria (NYSE:APHA), and most of the other cannabis producers.But that's not a bad thing. All of these companies are competing for the global cannabis crown, which will one day be worth a ton. The global tobacco and alcoholic beverage markets each generate several hundred billion dollars of revenue annually and support several companies with annual top lines of $50 billion-plus.The cannabis industry will one day reach a similar size, and, like the alcohol and tobacco sectors, it will eventually support several $50 billion-plus companies. HEXO could be one of those companies some day, but that scenario probably won't materialize. The Long Term Outlook of HEXO Stock Is UncertainThe reality is that there are a lot of cannabis companies today, and, as I mentioned earlier, most of them won't survive. As the market matures, it will consolidate around a few large players, as the global tobacco and alcoholic beverage markets did. After this consolidation occurs, a few marijuana stocks will be big winners, and the rest of the names will fall by the wayside.The internet industry went through a similar process. Marijuana stocks in 2019 feel very similar to dot-com stocks back in 1999. Today, everyone is convinced that cannabis will become the next big thing, just as everyone was convinced back in 1999 that the internet was going to become the next big thing.The masses were right back in 1999, since today the internet is everywhere. But, between 1999 and 2019, a lot of dot-com stocks disappeared. Only a few titans, like Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOG), became winners over the long-term.In other words, back in 1999, there were a lot of dot-com stocks. Most of them didn't make it to 2019. Only a few did. The few that did turned into huge winners. But an equally-weighted portfolio of dot com stocks assembled back in 1999 would've produced awful returns.Thus, when picking pot stocks in 2019, it's important to be selective. Don't expect every cannabis company to become a winner over the long-term. Most of them will be losers over the long-term.As a result, it's probably a good idea to only invest in cannabis companies that actually differentiate themselves by obtaining a large investment - see Canopy Growth (NYSE:CGC) - or with huge volumes and growth over the long-term, like Aurora (NYSE:ACB).Right now, HEXO has not yet meaningfully differentiated itself from the pack. This lack of differentiation is a reason to avoid HEXO stock for the foreseeable future. The Bottom Line on HEXO StockAt the risk of sounding like a broken record, I'll reiterate my thesis on HEXO stock.There are a lot of marijuana stocks out there. Most of them won't make it. So probabilities suggest that if you pick a random marijuana stock out of a hat, that marijuana stock won't produce good returns over the next decade. Because of that dynamic, investors have to be selective when picking pot stocks in 2019.In other words, they should only pick marijuana stocks of companies that have meaningfully differentiated themselves. HEXO has not done that. Consequently, investors should stay away from HEXO stock until the company finds a way to meaningfully differentiate itself.As of this writing, Luke Lango was long AMZN, GOOG, CGC, and ACB. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Real Estate Investments to Ride Out the Current Storm * 7 Marijuana Penny Stocks to Consider for Those Who Can Handle Risk * 7 Safe Dividend Stocks for Investors to Buy Right Now The post Why HEXO Stock Still Isn't a Compelling Investment appeared first on InvestorPlace.
It's an admittedly tired trope regarding Canopy Growth (NYSE:CGC). Many owners of CGC stock have largely learned to ignore the rhetoric, recognizing it takes money now to make money later. The company's heavy spending is setting the stage for a bright future rather than an impressive present.Source: Shutterstock What most Canopy Growth stock owners may not fully appreciate is the extent to which the company is -- figuratively and somewhat literally -- betting the farm on a future that may or may not materialize. * 7 Safe Dividend Stocks for Investors to Buy Right Now Wednesday's post-close earnings report may help the market better understand this reality, at a point when more than a handful of investors were already starting to entertain doubts.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Seemingly Healthy, But Check Under the HoodIt has been true of every pot stock from Aphria (NYSE:APHA) to Tilray (NASDAQ:TLRY). Even before Canada legalized recreational marijuana in October of last year, its primary players were jockeying for position.Translation: Those cannabis companies were spending money however they could get it in order to acquire or at least tie-up partners before a rival company did.Canopy Growth was able to take a different, healthier route to that destination. Constellation Brands (NYSE:STZ), which makes a variety of spirits and beers including Black Velvet Whisky and Corona (respectively), made a modest investment in the company in 2017, but upped its stake in 2018 with a hefty $4 billion investment in CGC stock.The move gave roughly 40% of the cannabis company to Constellation, and gave Canopy Growth a much-needed cash infusion.A big chunk of that funding was still on the books as of the quarter ending in March too. Canopy Growth's balance sheet consisted of $2.5 billion in cash, and a little more than $2 billion worth of marketable securities. Canopy Growth, it seems, is liquid even if $3.4 billion has been earmarked for the purchase of Acreage Holdings if and when the United States legalizes cannabis at the federal level.Don't think for a minute the company's books are as clean as they may seem with just a cursory glance, though. The potential liabilities are stacking up, even if not in the usual places. Canopy Growth Stock as Cheap CurrencyBloomberg Intelligence analyst Kenneth Shea rang the alarm bells last month, cautioning investors that heavy writedowns were likely to be seen for pot companies during the earnings season currently underway.The accounting adjustments are a means of re-valuing an acquired company once it has been integrated into an existing operation, to better reflect that deal's true value to the buyer.Company purchases are initially added to the 'goodwill' line of the balance sheet … a somewhat arbitrary figure that exists only because a deal has to be debited somewhere, and credited somewhere else. Over time, if an acquisition doesn't add tangible value quickly enough (or at all) the amount of goodwill on the books is reduced. It's not a cash expense, but damaging all the same.Shea specifically names Aphria, Aurora Cannabis (NYSE:ACB) and -- you guessed it -- Canopy Growth as names particularly vulnerable to writedowns.It's not an unreasonable concern. As of the end of the fourth fiscal quarter in March, Canopy Growth was carrying $1.5 billion worth of goodwill on its balance sheet.Other concerns sitting on the balance sheet include $842 million worth of long-term debt that cost the company nearly $12 million in interest payments during the three-month stretch.For perspective, Canopy Growth did $226.3 million in revenue for the quarter ending in March.Perhaps the most alarming, even if not the biggest, expense of all is how much the company's stock-based compensation has been costing it. In its fourth and final quarter of the year alone, stock-based compensation cost Canopy Growth $93.2 million, $74.7 million of which was effectively part of employee paychecks; the other $18.5 million was linked to milestones achieved by acquired companies. And that wasn't unusual. For the quarter ending in December, compensation in the form of CGC stock reached $63.9 million.In both quarters, share-based pay was the company's single-biggest operating expense, outpacing sales and marketing or R&D spending. Looking Ahead for CGC StockTo be fair, other cannabis stocks have employed similar practices, and find themselves in comparable situations as a result. Few investors can convincingly argue that marijuana mania hasn't largely forced the industry's most recognizable names to enter an acquisition race they didn't entirely want to run. Investors so far have been mostly willing to overlook the spending spree.That's changing though.Perhaps with a nudge from CannTrust Holdings (NYSE:CTST) and TILT Holdings (OTC:SVVTF), investors are no longer giving out free passes and ignoring numbers they don't like. The latter already booked the kind of big writedown Bloomberg's Shea warned about, while the former has run into serious accounting concerns and has just been busted for unauthorized storage.That's not to suggest Canopy Growth has to face an uphill battle when it reports quarterly numbers after Wednesday's close. But, by most measures, that is what it will be doing.Bottom line? The backdrop is quickly changing as patience wears thin. Investors may start to pick apart the pieces of Canopy's books that have thus far been overlooked. If the company can't justify all of the expenses and balance sheet concerns in a highly convincing way on Wednesday, an already-struggling CGC stock could start another round of bearishness.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 * 2 Toxic Pot Stocks You Should Avoid * 10 Real Estate Investments to Ride Out the Current Storm * 7 Marijuana Penny Stocks to Consider for Those Who Can Handle Risk * 7 Safe Dividend Stocks for Investors to Buy Right Now The post Canopy Growth is Pushing CGC Stock to an Inflection Point appeared first on InvestorPlace.
Cannabis Countdown: Top 10 Marijuana Stock News Stories of the Week Welcome to the Cannabis Countdown . In this week’s rendition, we’ll recap and countdown the top 10 marijuana stock news stories for ...
If seeing is believing, then waiting for Canopy Growth (NYSE:CGC) to report earnings before acting on CGC stock -- either bullishly or bearishly -- makes the most sense. This is is especially true when you consider what's going on CGC's stock chart as well as the basic fundamentals that support it. Let me explain.Source: Shutterstock Earnings are on tap for Canada's largest cannabis play. And be warned, Wednesday night's report should prove to be a pivotal one for CGC stock bulls and bears. But in front of the event, investors would simply be rolling the dice.CGC's upcoming Q1 release follows last week's bullish profit surprise from Aphria (NYSE:APHA). It also comes after an equally surprising, well-received bid in CTST stock despite a whiff of financial trickery at Canntrust Holdings (NYSE:CTST). Throw in a Street whose appetite for cannabis stocks has waned in recent months and the stage is set for a make-or-break type event in Canopy Growth stock.InvestorPlace - Stock Market News, Stock Advice & Trading TipsAs for the report, CGC investors will be keying in on the company's strategy to grow its brand and ability to deliver profitability sooner rather than later. This is all the more important following the surprise ousting of co-CEO Bruce Linton and a decision led by Canopy's partner Constellation Brands (NYSE:STZ) following last quarter's disappointing quarterly results.Bulls and bears alike will be weighing in on kilogram sales for recreational and medical cannabis products, as well as the revenue breakdown of low-margin dried goods versus higher margin, value-added products to confirm Canopy is in fact moving in the right direction. Updates on the regulatory front and legalization of Canada's edibles and beverage markets and Canopy's progress within these areas will also be closely watched. * 10 Internet Stocks Getting Hammered Finally, all eyes should be directed towards Canopy Growth stock's price chart, which is also interpreted as being at a make-or-break point for either bulls or bears. CGC Stock Weekly ChartI have been a critic of CGC in recent months. My bearishness was tied to a bit too much enthusiasm over Canopy's "too big to fail" market position and a volatile price chart failing to match that optimism. And being positioned short CGC stock has definitively been an overall profitable trade. Now though, I'm less confident.A reassessment of CGC's price chart and focus on the weekly view has turned my attention to Canopy Growth's test of a long-standing trendline and 50% retracement level dating back to the 2017 low, which followed an initial whetting of investors' appetites for CGC. This is key support to be certain and why I see today's challenge as a make-or-break situation for bears or bulls.A failure of support should ultimately lead to a challenge of the December low and 62% retracement level near $25 in CGC stock. If a breakdown does occur after earnings, I'd look for counter-trend reactions for shorting shares until a full-fledged test of the lower support area has taken place.Alternatively, a technical hold of today's support should be a big positive for CGC. Again though, I'd wait for an earnings-driven bid to confirm a low. This kind of price action should be a strong platform for a longer-lasting bullish change of trend.The opportunity for bulls is further supported by CGC stock's oversold weekly stochastics, which also happens to be crossed in a bearish formation. If a bid in Canopy Growth prevails, today's mixed signals should result in plenty of room for this secondary indicator to begin supporting a profitable and sustained move higher.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 * 2 Toxic Pot Stocks You Should Avoid * 7 Large-Cap Stocks to Sell Right Now * 7 Stocks Under $7 to Invest in Now * 7 Marijuana Stocks With Critical Levels to Watch The post Don't Mess With Canopy Growth Stock Until CGC Reports Earnings appeared first on InvestorPlace.
Canopy Growth (NYSE:CGC) has yet to report last quarter's results, and any current (or prospective) owners of CGC stock hoping other cannabis companies' releases would help point the way have been disappointed.Source: Shutterstock It's been a mixed bag thus far, with some players turning a profit, and others still not.Still, as a group and even as individual names, pot stocks have been surprisingly contained of late. Neither surges nor stumbles have lasted long.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 8 Dividend Aristocrat Stocks to Buy Now No Matter What That may be because most traders are waiting to hear what Canopy Growth has to say about the three-month stretch in question, and how it may impact the Canopy Growth stock price.After all, CGC is arguably the quintessential cannabis name, being the first to score a big-name partner in Constellation Brands (NYSE:STZ), and subsequently acquiring a healthy collection of marijuana-related outfits.For better or worse, the showdown that could easily create a ripple effect that affects all pot stock is coming this Wednesday. A Hazy PictureAphria (NYSE:APHA) turned a profit, though mostly because of its acquisition of distributor CC Pharma. Cronos Group (NASDAQ:CRON) tripled last quarter's revenue to report a surprising swing to profitability. The report catapulted CRON stock higher, but it failed to hold that ground.Aurora Cannabis (NYSE:ACB) jumped as much 16% following its earnings report, but it too has already given up much of that ground as buyers began changing their minds about their buying spree.Marijuana stocks just haven't been able to re-create the sustained buzz they were able to inspire as recently as a year ago.It's arguable cannabis investors are waiting for Canopy Growth to report its numbers before the crowd can make its final assessment as to whether or not the industry has come far enough, fast enough.Canopy's brand diversity, consisting Tweed, Spectrum Therapeutics, DNA Genetics, CraftGrow, Doja and Maitri as well as a portfolio that offers everything from capsules, CBD oil, hemp and dried flower makes the company something of a barometer for the business, even if it's more than $800 million in debt as a means of funding its deal-making and development.It will be the last of the high-profile cannabis players to report, and in some regards, the last chance for the next three months the cannabis industry has to prove it wasn't merely blowing smoke about pot's near-term potential. Canopy Growth Stock Earnings OutlookTo that end, as of the most recent look, analysts are looking for Canopy Growth to report revenue of $109.2 million (Canadian) for its fiscal first quarter ending in June.That should translate into a loss of 38 cents per share (again, in Canadian dollars) of CGC stock, not much better than the loss of 40 cents per share logged in the same quarter a year earlier, before recreational marijuana had been legalized in Canada.As a reminder, Canopy's recreational marijuana sales fell in the fourth quarter ending in March, from $71.6 million (Canadian) to $68.9 million. Supply challenges may have been as much of a problem as demand. Medical cannabis sales fell more than 40% year-over-year.The biggest stumbling block for investors, however, was the loss of 98 cents per share booked for the quarter in question. Analysts were only expecting a loss of 22 cents per share.Stock-based compensation, administrative and sales-related expenses all shot higher in step with revenue growth, but shot higher than top-line growth.Investors will undoubtedly be watching those metrics closely on Wednesday, looking for a sign that they're wait, and investment, hasn't been in vain. CGC Stock at a Fork in the RoadWhile the showdown is largely a fundamental one, it's also going to manifest itself on the chart at a time when CGC shares are at a make-or-break level.The scenario could very much work for, or against, the Canopy Growth stock price.In short, Canopy Growth shares are testing a major support line that extends back to early-2018 lows. This floor proved to be a pushoff point late last year, and so far has kept the stock from any further breakdown from May's high.But, it can't hover at this precarious level forever. A decision is going to have to be made soon. The upcoming earnings report could readily force that decision be made. Click to EnlargeAnd CGC is hardly the only cannabis stock in this technical situation, although Canopy Growth's long-term support level is better defined than most.Bottom line? This is it. For nearly two years now the cannabis hype has been palpable. Now it needs to start proving it can at least be profitable.If Canopy Growth fails to confirm the same budding evidence that a couple of other pot players have already chipped in, things could get hairy for all of these names.Conversely, a solid, progressive report from Canopy could catapult CGC stock -- and other marijuana names with it - by pushing up and off that rising support level.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 * 2 Toxic Pot Stocks You Should Avoid * 8 Dividend Aristocrat Stocks to Buy Now No Matter What * 7 Stocks to Buy to Ride the Vegan Wave * 4 Safe Stocks to Buy Amid Trade War Turbulence The post CGC Stock Is a Drag on the Rest of the Cannabis Sector appeared first on InvestorPlace.