S&P Futures
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11,122.25-0.50(-0.00%)
Cronos Group Inc. (CRON)
Chart Events
Performance Outlook
| Previous Close | 5.87 |
| Open | 5.92 |
| Bid | 0.00 x 1000 |
| Ask | 5.94 x 36100 |
| Day's Range | 5.60 - 5.93 |
| 52 Week Range | 4.00 - 14.03 |
| Volume | 5,987,917 |
| Avg. Volume | 5,877,658 |
| Market Cap | 1.966B |
| Beta (5Y Monthly) | N/A |
| PE Ratio (TTM) | 3.22 |
| EPS (TTM) | 1.75 |
| Earnings Date | N/A |
| Forward Dividend & Yield | N/A (N/A) |
| Ex-Dividend Date | N/A |
| 1y Target Est | N/A |
- InvestorPlace
The Long THC-Short CBD Cannabis Trade Is Paying Off
Back in December, I made a somewhat controversial marijuana stocks pair trade recommendation. Pair trades are a way for traders to make a long bet on a specific thesis while hedging against broader market or sector weakness.Source: Shutterstock I recommended traders go long three top Canadian legal cannabis producers (LPs) and short three cannabidiol (CBD) stocks. The trade was essentially going long tetrahydrocannabinol (THC) and short CBD.Roughly eight months since my recommendation, the pair trade has worked like a charm. The cannabis group has struggled. But the CBD group has performed even worse, allowing pair traders to generate a decent overall gain.InvestorPlace - Stock Market News, Stock Advice & Trading TipsHere's a look back at the original trade and an updated version looking forward. Pair Trading Marijuana StocksJust as a brief introduction, TCH and CBD are two of a long list of chemical compounds that occur naturally in cannabis. CBD produced from hemp was legalized in the US in December 2018. It didn't take long for CBD to pop up in thousands of products everywhere throughout the country.CBD enthusiasts claim it provides a wide range of health and wellness benefits. A quick Google search will reveal people claiming CBD treats treats cancer, diabetes, arthritis, menstrual cramps, anxiety, psychosis, dry skin, dementia, Alzheimer's, depression, anger, Crohn's, ADHD, PTSD, IBS, Parkinson's opiate addiction, migraines, and general pain. * 7 Travel Stocks to Buy Banking On Pent-Up DemandAt the same time, pretty much everyone agrees that THC gets you high.Consumer enthusiasm for CBD products exploded last year. Despite all the anecdotal evidence of health benefits, the U.S. Food and Drug Administration is clear about its stance on CBD. Here's what the FDA had to say in March of 2020:"The FDA has approved only one CBD product, a prescription drug product to treat two rare, severe forms of epilepsy… The FDA has seen only limited data about CBD safety and these data point to real risks that need to be considered before taking CBD for any reason."I'm not claiming that CBD doesn't have positive medical benefits. Clearly it can help with epileptic seizures. But I'd be willing to bet it does far less than companies marketing it say it does. And the more scientific testing is performed, the more likely it will be linked to negative side-effects as well. Marijuana Stocks: The Original TradeI've been a long-term bull on marijuana stocks. But to me the real long-term value in cannabis is THC, not CBD. CBD seems more like a fad. Experienced traders know fads rarely work out well for long-term investors.So my idea back in December was to go short CBD-focused marijuana stocks CV Sciences (OTCMKTS:CVSI), Charlotte's Web Holdings (OTCMKTS:CWBHF) and cbdMD Inc (NYSE:YCBD). At the same time, I recommended pairing that trade with long positions in Canadian LP's Canopy Growth (NYSE:CGC), Cronos (NASDAQ:CRON) and OrganiGram (NASDAQ:OGI).Since that trade idea was published, the short CBD group is down an average of 22.1%. The long THC group is down an average of 16.3%.This is exactly the result that a pair trader is hoping for. Going long those Canadian LPs would have resulted in a 16.3% loss. However, the pair trade resulted in a net gain of 5.8%. In that same time, the S&P 500 index gained just 3.1%.If constructed properly, pair trades are extremely low-risk trades because they are hedged in both directions. So traders are likely never going to get huge returns. But a proper pair trade also protects against significant downside as well. Updated Trade IdeaThe November 2020 U.S. election will likely be a huge catalyst for marijuana stocks. I still believe THC, not CBD, will be the big long-term winner.However, I want to slightly adjust the pair trade a bit. I'll stick with the three CBD shorts: CVSI, CWBHF and YCBD. I'll also stay long CGC and OGI. But I'm going to substitute U.S. multi-state cannabis operator Cresco Labs (OTCMKTS:CRLBF) for Cronos on the long side. Cresco is a U.S. business that would benefit directly from any election-related momentum. In addition, the company has major opportunities to expand capacity in Illinois and Pennsylvania in the second half of 2020.Wayne Duggan has been a U.S. News & World Report Investing contributor since 2016 and is a staff writer at Benzinga, where he has written more than 7,000 articles. Mr. Duggan is the author of the book Beating Wall Street With Common Sense, which focuses on investing psychology and practical strategies to outperform the stock market. As of this writing, Wayne Duggan was long CGC. More From InvestorPlace * Why Everyone Is Investing in 5G All WRONG * America's 1 Stock Picker Reveals His Next 1,000% Winner * Revolutionary Tech Behind 5G Rollout Is Being Pioneered By This 1 Company * Radical New Battery Could Dismantle Oil Markets The post The Long THC-Short CBD Cannabis Trade Is Paying Off appeared first on InvestorPlace.
- InvestorPlace
Aphria Is Still A High-Risk Cannabis Investment
Canadian cannabis stock Aphria (NASDAQ:APHA) is up more than 90% since the stock market bottomed in March. However, Aphria stock is down 19% since the company reported earnings in late July.Source: Shutterstock The market was certainly disappointed with Aphria's earnings report. However, I still believe the company has tremendous long-term potential.But while Aphria stock has plenty of good things going for it, it has plenty of risks as well.InvestorPlace - Stock Market News, Stock Advice & Trading Tips The Aphria Stock Bull CaseThere's a lot to like about Aphria stock, starting with some of the numbers from the fiscal fourth quarter. Recreational cannabis sales were up 27% from a year ago. That number looks even better compared to the 20% gains in the overall Canadian cannabis market. Aphria is gaining recreational market share from competitors. * 7 Travel Stocks to Buy Banking On Pent-Up DemandCannabis earnings before interest, taxes, depreciation and amortization margins also improved. Fourth-quarter cannabis EBITDA margins were 17%, up from 11% in the fiscal third quarter. Aphria has now reported five consecutive quarters of positive EBITDA.In addition, cash burn improved significantly in the most recent quarter. Aphria reported just $37 million in negative free cash flow last quarter, down from $91 million of cash burn in the third quarter. Following the company's most recent round of bond conversions and equity offerings, net cash at the end of the fourth quarter was $88 million.So, in one quarter Aphria went from having nearly three times as much cash burn as cash to nearly three times as much cash as cash burn.Finally, Aphria secured European Union Good Manufacturing Practices certification earlier this year. Cantor Fitzgerald analyst Pablo Zuanic says Aphria is set to launch its international business in Germany in the next six months."The German [medicinal marijuana] market remains small with only 0.07% of the population registered (60,000 patients enrolled), compared with 1.8% in FL, 3.3% in AZ, and 6% in OK, but it could see explosive growth as more MDs prescribe MJ," Zuanic says.Cantor Fitzgerald has an "overweight" rating and $9.35 price target for APHA stock. The Risks of APHA StockI generally agree with Zuanic's bullish take. But there are also plenty of reasons not to go all-in on Aphria stock.First of all, Aphria reported a larger-than-expected earnings per share loss in the fourth quarter of 14 cents. That loss dragged the company's full-year EPS down to an 8-cent loss as well. To make matters worse, the full-year EPS loss was slightly worse than the 7-cent loss it reported in 2019.One of the biggest reasons for the disappointing earnings number was a $47.9 million non-cash impairment related to Aphria's assets in Jamaica, Lesotho, Colombia, and Argentina. Bulls might like to dismiss that impairment as a one-off charge. However, former hedge fund manager Whitney Tilson has a more nefarious explanation.Back in 2018, Tilson said Aphria "appears to be engaging in massive fraud" related to properties in Argentina, Colombia, and Jamaica acquired from Scythian Biosciences at a premium valuation that benefited company insiders.In the fourth quarter, write-downs of those same properties were responsible for the lion's share of Aphria's net losses."Of course, Aphria claims that these write-downs are due to 'the effects of Covid-19 on the company's expected cash flows,' but that's just an excuse to cover up the fraud," Tilson says.Regardless of whether or not the fraud allegations are true, the accusations themselves may be enough to hold the stock back. The entire cannabis industry is fighting an uphill battle against its reputation on Wall Street. Past scandals at MedMen (OTCMKTS:MMNFF) and other companies have investors particularly sensitive to sketchy accounting. How To Play ItAt the end of the day, I see more to like than dislike about Aphria stock. However, there is simply too much risk to go all in on Aphria.Instead, cannabis investors should consider buying at least four or five Canadian producers and U.S. multi-state operators to reduce risk via diversification. In addition to Aphria, I recommend Cronos (NASDAQ:CRON), Canopy Growth (NYSE:CGC), Cresco Labs (OTCMKTS:CRLBF) and Trulieve Cannabis (OTCMKTS:TCNNF).Wayne Duggan has been a U.S. News & World Report Investing contributor since 2016 and is a staff writer at Benzinga, where he has written more than 7,000 articles. Mr. Duggan is the author of the book Beating Wall Street With Common Sense, which focuses on investing psychology and practical strategies to outperform the stock market. As of this writing, Wayne Duggan was long CGC. More From InvestorPlace * Why Everyone Is Investing in 5G All WRONG * America's 1 Stock Picker Reveals His Next 1,000% Winner * Revolutionary Tech Behind 5G Rollout Is Being Pioneered By This 1 Company * Radical New Battery Could Dismantle Oil Markets The post Aphria Is Still A High-Risk Cannabis Investment appeared first on InvestorPlace.
- Investor's Business Daily
Marijuana Stocks Fall As Low Weed Prices, Coronavirus Hit Cronos
Marijuana stocks fell after Canadian cannabis producer Cronos reported a steeper-than-expected Q2 loss.
