15.00 +0.06 (0.40%)
After hours: 7:26PM EDT
|Bid||14.94 x 1100|
|Ask||14.97 x 800|
|Day's Range||14.60 - 15.18|
|52 Week Range||5.61 - 25.10|
|Beta (3Y Monthly)||2.99|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||N/A|
In recent weeks, Cronos (NASDAQ:CRON) stock has been one of the strongest players in the struggling marijuana sector. Last Friday, however, CRON stock gave way as the pot stock sector plunged even farther. CRON stock dropped more than 6% and broke technical support.Source: Shutterstock Cronos stock has been one of the strongest in the industry in recent months. It hasn't collapsed like, say, CannTrust (NYSE:CTST) or Aphria (NYSE:APHA). But the overall weakness in pot stocks as a whole has caught up with CRON stock, even though it is arguably the best positioned for the current industry malaise. Cronos: Slow and Steady Wins the RaceIn my previous article about Cronos, I described how the company was interesting, but that patience was required. Canopy has been running a deliberate and gradual growth strategy. That's in contrast to many of its rivals that are spending money to boost their capacity and marketing as fast as possible.InvestorPlace - Stock Market News, Stock Advice & Trading TipsFor quite awhile, many investors viewed Crono's approach as a negative. Marijuana, like say dot-coms in the 1990s, was about having the first mover advantage. Cronos was seemingly allowing its rivals to get ahead by growing more quickly. * 5 STARS Stocks Smashing the Market (FANG Stocks, Too) What a difference a few months make, however. CRON stock has held up better than almost all its immediate marijuana peers. Why's that? Because Cronos hasn't been spending boatloads of money to pursue every revenue growth avenue possible. Instead, it has focused on its core business and is seemingly developing a sustainable and profitable business.It's interesting to note the contrast between Cronos and Canopy Growth (NYSE:CGC). Both have superstar backers. Cronos has its alliance with tobacco heavyweight Altria (NYSE:MO) while Canopy teamed up with Mexican beer giant Constellation Brands (NYSE:STZ). Altria has seemingly instilled Cronos with its methodical approach to business. Meanwhile, Canopy had an ugly falling out with its backer Constellation that resulted in Canopy's founder and co-CEO Bruce Linton getting ousted. Seemingly, Constellation grew tired of Canopy's business strategy which, so far, has led to massive losses. Cronos is One of the Only Pot Companies Making MoneyA recent Bloomberg article noted that the marijuana companies, as an industry, are running into big trouble. Instead of massive profits after legalization, instead inventory is piling up while prices plunge and losses mount. This had led analysts to suggest that a massive wave of writedowns is coming for the industry.Cronos seems to avoid the worst of it, however. The article notes that Cronos is the only one of the biggest five Canadian firms that is expected to make a profit this Q4. Cronos also made a huge profit in its most recent quarter. That comes with an asterisk as most of it came due to non-operating income. However, Cronos, unlike most pot firms, also turned an operating profit in at least some of its quarters in both 2017 and 2018.When the industry was booming, people were giving Cronos a hard time for not putting its cash to work faster. But that decision is looking more and more wise as the rest of the industry drowns in a massive flood of excess cannabis. Massive Marijuana Inventory Sinking ProducersAccording to data from Health Canada, the marijuana industry is facing a veritable deluge of cannabis inventories. In October 2018, when regulators permitted recreational use, Canada had 115,000 kilograms of dried marijuana inventory. As of April, that figure has skyrocketed to 215,000 kilograms.Meanwhile, actual consumer demand for dried marijuana only rose from 6,300 kilos a month to 8,900 kilos over the same period. When inventories nearly double but demand rises less than 50%, you know you have a major problem brewing. In fact, even if the marijuana producers stopped growing any more product tomorrow, there'd still be a massive glut. At a rate of 9,000 kilos a month of consumption, it'd take more than two years for Canadians to use up the already existing supply of dried marijuana.The situation, incredibly, is even worse yet for CBD oil. Since October, the inventory of CBD oil has spiked by 150%. Meanwhile, monthly consumer demand has risen less than 40%. This left the Canadian market with 120,000 liters of CBD oil inventory in April, against monthly demand of just 8,200 liters.How's this going to end? Like most speculative booms do: With most of the higher-cost and levered producers going bust. Tons of entrepreneurs started, and investors funded, marijuana businesses with the hopes of easy profits. Unfortunately, it wasn't to be. The supply of new marijuana is far exceeding actual consumer demand. The industry will have to cut supply and consolidate to improve pricing and achieve profitability. CRON Stock VerdictCronos is playing the long game. And that's the place to be. Many of its competitors bet the farm on sales growth spiking after legalization. Instead, it seems a lot of "medicinal" users simply transitioned to recreational use in Canada once full legalization occurred. The overall market is growing a bit, but not nearly enough to absorb the mountain of marijuana supply coming online. * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip Like with any speculative boom, there will be a massive shakeout ahead where the weaker players fold. Cronos, with its strong balance sheet and Altria backing, will be a survivor. In fact, it can probably do well. Oftentimes, industry leaders can buy their former rivals for pennies. But that doesn't mean you need to buy CRON stock today. Even the dot-com survivors, like Amazon (NASDAQ:AMZN) ultimately dropped 90% from their peak bubble prices. Cronos has a sound business strategy, but CRON stock will still slide with the rest of the industry until the marijuana supply glut improves.At the time of this writing, Ian Bezek owned MO stock. You can reach him on Twitter at @irbezek. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip * 7 Services Stocks to Buy for the Rest of 2019 * 6 Stocks to Buy and 1 to Sell Based on Insider Trading The post Even Cronos Isn't Safe From the Pot Stock Implosion appeared first on InvestorPlace.
Cannabis stocks need to fight their way out of their funk. That's true for names like Canopy Growth (NYSE:CGC) and New Age Beverages (NASDAQ:NBEV), but it's critical for Cronos Group (NASDAQ:CRON). CRON stock is not only down by a third since its March high, but is on the verge of breaking under a crucial technical support level.Source: Shutterstock Some -- perhaps most -- would argue that the shape of a chart is irrelevant. A chart's history shouldn't dictate its future. Rather, a company's results and prospects are reflected in its stock's movement.The fact is, however, the movement of a marijuana stock shapes the rhetoric about that company as much as it's shaped by the rhetoric. If Cronos stock slips any further, it would become alarmingly easy for the masses to view it as a liability.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Charting CRON StockIt's not difficult to see.After an overheated rally in January and February set the stage for significant profit-taking in March and April, the 200-day moving average line (plotted on the white line on the chart below) began to serve as a technical floor. It's not yet become a pushoff point, though, and it doesn't appear it's going to. Just within the past several days the sellers have tested the pivotal 200-day moving average line as support again, and it's failing to even modestly repel the effort.The 200-day moving average line is regarded by some as the most important of all the trend indicators. It's admittedly simplistic, but still has significant psychological implications because so many traders still see it as a make-or-break level. * 7 Retail Stocks to Buy for the Second Half of 2019 There's modest encouragement in the fact that the weakness since March's high has been on relatively low volume. That suggests there's not necessarily a great deal of conviction behind the selling; investors are just biding their time.Conversely, the fact that the other aforementioned names, like most marijuana stocks of late, are falling is a red flag. Group-wide movement tends to indicate longer-lived, philosophical doubt. Analysts Still in DoubtStill, Cronos Group stock is a standout for all the wrong reasons. Chief among them is the fact that among all cannabis stocks, CRON stock remains one of the analyst community's least favorite.As of the most recent look, analysts collectively rate Cronos at a little less than a Hold … tiptoeing into Sell territory. Rivals New Age Beverages and Canopy Growth, for perspective, are considered a Buy and something that's almost a full Buy, respectively. Hexo (NYSEAMERICAN:HEXO) is also closer to a Buy than a Hold. Click to EnlargeReasons for the pessimism range from lack of clear capital spending plans to a sheer lack of story in an environment where a company's story is a powerful marketing tool. Given that the $1.8 billion investment Altria Group (NYSE:MO) made in CRON stock has now been closed for weeks as well, one would have expected a more definitive direction for a partnership than we've seen yet.More than anything though, analysts still take issue with the stock's crazy valuation.Cronos sports a $4.8 billion market cap, and though revenue of $6.5 million was only a fraction of what the company could be driving in just a few quarters, even the most optimistic of plausible output levels will fall short of justifying that sort of price. It's a reality made even more amazing considering analysts have cared little about other similarly frothy valuations among cannabis stocks. Wait and See on CRON StockIt's certainly possible CRON stock could dig its way out of trouble and use its 200-day moving average line as a launchpad rather than a trigger for more trouble. The stock's yet to break below it. * 10 Stocks to Sell for an Economic Slowdown Those hopes are fading fast though, as the broader realities of the legal marijuana business sink in. The most overvalued names in the business also make for the most susceptible targets. That's Cronos, to be sure.Whatever's in the cards, it's certainly not a time to step into the pot name. Newcomers will want to wait for a little more clarity before doing anything.The world will get a big dose of that clarity in the first half of August, when Cronos will be reporting its Q2 numbers.As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about him at his website jamesbrumley.com, or follow him on Twitter, at @jbrumley. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Buy for Less Than Book * 7 Marijuana Stocks With Critical Levels to Watch * The 10 Best Dividend Stocks to Buy for the Rest of 2019 and Beyond The post Cronos Needs to Show the Market Something to Pull Stock Out of Funk appeared first on InvestorPlace.
Cannabis stocks were mixed on Thursday, a day after a landmark congressional hearing on reforming U.S. laws that found bipartisan agreement that the current setup is a mess and needs to change.
Canadian cannabis companies have leapt onto U.S. stock markets, dazzling investors. Here's a rundown of industry facts and how to invest in marijuana stocks.
Aurora Cannabis (NYSE:ACB) bulls are looking tired. ACB stock has now hit $10 on three occasions: January 2018, last fall, and most recently this March. Each time ACB stock has fallen sharply from that resistance level. If Aurora stock can't get back above $10 soon, the stock could be in deep trouble.The fundamental picture for ACB stock hardly looks better. Canadian marijuana companies continue to run big losses. We see management controversies developing. A scandal at a rival pot company has people worried.And the core problem in the Canadian market -- excess supply -- continues to mount. Even the Ontario market coming online has done little to fix this disturbing trend. Aurora in particular looks to have too much supply given the weak demand trends.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 10 Best Dividend Stocks to Buy for the Rest of 2019 and Beyond This plays into another mounting concern; companies like Aurora will have to take write-downs if their businesses don't start generating profits soon. All in all, ACB stock's recent 21% slide is well-founded and more room to go. CannTrust: A Big Warning for the SectorEarlier this week, shares of Canadian marijuana rival CannTrust (NYSE:CTST) plummeted. Investors dumped CannTrust stock on news that regulators had seized a large quantity of its pot inventory. Why would they do that? The government claims that CannTrust was growing marijuana in unlicensed facilities.CTST stock has gone into free fall. It dropped more than 20% immediately following the news, and has now lost 40% of its value in the past week alone. It's down 70% from where it traded in March, and has hit fresh two-year lows. It's a stunning reminder to the rest of the industry that even in generally tolerant countries, like Canada, regulators are still a big concern if companies get sloppy with their paperwork.Why is this so important to ACB stock in particular? Because Aurora is aiming to be the global leader in medicinal cannabis. As Aurora's latest corporate presentation notes, it is active on five continents and in 25 different countries. Aurora claims to be the industry leader in both the EU and Latin America.With such far-flung operations, what are the odds that Aurora will run into regulatory trouble with at least one of its operations? I'm not suggesting Aurora is doing anything incorrectly. But in the course of making so many acquisitions and entering so many markets, it can be hard to keep everything 100% up-to-date as far as licensing and paperwork go. The market, with CannTrust at least, has said that it will take a stock to the cleaners if they run into any government headaches. It's a big risk to monitor for ACB stock going forward with its unusually extensive global footprint. Industry Bracing for Write-DownsA Bloomberg article this week noted that the marijuana industry is facing rough times ahead. Of the big players, analysts expect only Cronos (NASDAQ:CRON) to make positive net income this year. That's not a favorable result, given that 2019 was supposed to be the big year. Marijuana companies were going to move from story and hype to becoming solid businesses with legalization in place and many other market opportunities opening up.But the stream of red ink hasn't let up. On top of that, producers have overwhelmed the Canadian market with way too much inventory. As a result, Bloomberg reported that:"Instead of profit, writedowns related to unfinished inventory may be in the offing for some Canadian companies. That has some investors voting with their feet, moving out of Canada and into the U.S., where the marijuana companies are generally performing better despite a patchwork of state-by-state regulations."Investors have been increasingly moving their funds into the American marijuana plays given the state of the Canadian industry. And we saw a big sign of industry unease when Canopy's (NYSE:CGC) former CEO was forced out of his position when, seemingly, major backer Constellation (NYSE:STZ) had a disagreement over business strategy going forward.As Canopy and others have failed to turn acquisitions into profits, this raises the possibility of asset write-downs. Companies like Aurora, Canopy, and Aphria (NYSE:APHA) have bought many other smaller pot firms. Bloomberg Intelligence analyst Kenneth Shea says these companies will have to take charges against earnings in coming quarters if those assets don't start producing profits. ACB Stock VerdictYes, the price of Aurora stock has gone down a lot recently. But that doesn't necessarily mean it is cheap yet. Just look at CannTrust's non-stop plunge from $10 to $3 since March. What looks cheap often gets a lot cheaper.Let's face it: The Canadian marijuana industry is suffering from a big shakeout at the moment. People dreamed of easy profits following legalization. But it isn't working out that way. Aurora has a unique pitch for investors with its focus on medicinal and international markets, but that brings its own share of risks. With sentiment turning downward -- with good reason -- ACB stock could have a good deal farther to fall.At the time of this writing, Ian Bezek held no positions in any of the aforementioned securities. You can reach him on Twitter at @irbezek. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Buy for Less Than Book * 7 Marijuana Stocks With Critical Levels to Watch * The 10 Best Dividend Stocks to Buy for the Rest of 2019 and Beyond The post Aurora Cannabis: Here's Why ACB Stock Continues to Sink appeared first on InvestorPlace.
Cramer said he still sees Canopy Growth Corp. as the leader in the sector and also still recommended Cronos Group . In this daily bar chart of CRON, below, I don't want to focus on the rally into the February high but rather the decline from that high. After the March peak, CRON turned lower and broke below the rising 50-day average line which quickly turned bearish.
[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.]Technical analysis is very misunderstood. This does not surprise me because most of the technical analysts that I see just don't get it. They mindlessly look at charts and try to identify patterns without understanding what they are supposed to mean. Even worse, some analysts promote dubious methods like harmonic charts and Elliot waves (these techniques are like Sasquatch and UFOs. They may be fun to talk about but they are not real. Institutional traders do not use them).In financial markets, prices are always doing one of three things. They are either going up, going down or staying the same.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIn addition, in financial markets certain price levels are more important than others with regards to the amount of supply and demand that exists at them. If understood and utilized correctly, technical analysis should be an illustration of these supply-and-demand dynamics.Having a knowledge of these dynamics can help you make money. Short-term traders need to know which levels are important in order to be successful. Long-term holders can benefit by having a better understanding of where to place their buy and sell orders.For example, say you buy a stock at $10 and plan on selling it when it gets to $20. You should look at the chart, because if there is significant resistance at $19, the stock may not get to $20. It may rally and hit the resistance at $19, and then reverse its trend and go back to $10. If you had a limit order at $20, it would not have been filled and you would have missed making a significant profit. * 10 Stocks to Sell for an Economic Slowdown Let's take a look at seven of the most popular marijuana stocks and some of the technical levels in each. A lesson can be learned from each of them. Marijuana Stocks: Cronos (CRON)Cronos (NASDAQ:CRON) grows and sells marijuana. It has been consolidating over the past month.You don't need to be a Market Guru to see that the $14 level is important. It was support in May and June. This is because in September and December it was resistance. How does this happen? How does resistance become support? Consider the following.Those who sold it at $14 were feeling pretty good after it went lower. The short-sellers are making money and the regular sellers are happy because they made the correct decision when they decided to sell.Then in January the stock rallied and went through $14 to higher levels. Now the short-sellers are losing money and they tell themselves that they will buy it if it gets back to $14 so they can break even. The regular sellers tell themselves that they made a mistake selling it. If it comes back to $14, they will buy it back. Those who bought it at $14 wish they bought more and tell themselves they will if it gets back to $14.Add to that professional traders who wish to profit off of a clear level, and we now have four groups of interested buyers at $14. This is how support forms. Canopy Growth (CGC)Canopy Growth (NYSE:CGC) grows and sells marijuana.You can see that the $40 level is important for CGC. It was support in April and early June. It is testing that level again now, and it appears to be breaking. If it does break, the stock could drop to $30 pretty quickly. This is because in January it gapped up from $30 to $40. Gaps tend to refill.When a stock gaps, up it doesn't spend much time trading at the levels that it gapped through. Because of this, meaningful support would not develop at these levels. * 7 Retail Stocks to Buy for the Second Half of 2019 As we have seen, support forms because those who sold at a particular level want to buy it back after it goes higher while those who bought it wish they bought more.So ultimately, if CGC stock falls, it could fall a ways. Aphria (APHA)Aphria (NYSE:APHA) grows and sells marijuana.APHA has been trending lower over the past two weeks. Longer-term, there is support around the $6.25 level and resistance around the $7.30 level.Few think about it, but a clearly defined support or resistance level is an amazing thing. How is it that at different points in time, a stock can have the exact same valuation? Interest rates are different, the economy is different, and different news has come out.No academic or efficient market believer could ever explain why certain levels are more important than others. According to them, clear levels shouldn't exist. But as we can see here, they most certainly do.If APHA continues to trade lower, it will probably find support again around $6.25. If you like the company, that would be a logical place to buy it. If it rallies, I would look for resistance around the $7.30 level again. Tilray (TLRY)Tilray (NASDAQ:TLRY) grows and sells marijuana. And TLRY stock illustrates the concept of trends and trendlines quite nicely. These are not as mysterious as some seem to think. Drawing trendlines is an art and not a science, but with some experience and practice, it can help your investments.When prices are moving up in a market, the forces of demand are in control. When prices are falling, the forces of supply are in control. When markets are consolidating or trading sideways, the forces of supply and demand are equal.The break of a trendline could be a signal that the leadership of the market is about to change or equalize. * 10 Best Stocks for 2019: A Volatile First Half As we can see here, the forces of supply drove TLRY lower from February through June. Since then, the forces of supply and demand have equalized. The break of the downtrend line in June was an early indication that this was going to happen. CannTrust Holdings (CTST)CannTrust Holdings (NYSE:CTST) grows and sells medical marijuana.A valuable lesson about buying a stock can be learned here. $4.80 has been clear support, and each time that CTST traded down to that level over the past year a significant rally followed.As the stock once again approached this level, some traders would want to buy it hoping that it would rally again. Most would just buy it around $4.80. But there is a better strategy, and this is illustrated here. Instead of buying it at $4.80, wait until the downtrend line is broken before entering the position.In other words, buy it on the way up. You won't get the exact low price but the risk-reward ratio is better than just guessing that the selloff is over.In this case, this strategy would have saved investors a lot of money. After cutting through $4.80, the company got dinged with a non-compliance report from Health Canada that sent shares plummeting toward $3. Anyone who bought around $4.80 likely isn't too happy with that decision right about now. Cure Pharmaceutical Holding (CURR)Cure Pharmaceutical (OTCMKTS:CURR) develops and manufactures drugs and drug delivery systems. The $4.50 level is important here. It was resistance in August and September and then again in March.Over the past few weeks, CURR stock rallied through this level, but it became overextended and overbought. As expected, it reversed and found support at the $4.50 level.This is another example of how resistance becomes support. Those who sold it say they will buy it back if it gets down to their level. Those who bought it want to buy more. * 7 A-Rated Stocks to Buy for the Rest of 2019 If you like the long-term prospects of this company, this would probably be a good time to buy it. Innovative Industrial Properties (IIPR)Innovative Industrial Properties (NYSE:IIPR) acquires industrial properties and rents space to marijuana growers. This company is a great example of an ancillary business to the cannabis industry. It has also performed exceptionally well.We can see here what technicians call a "pennant" or "flag" pattern. This type of pattern is typically a continuation pattern.In other words, it shows that the buyers that drove up the price have decided to take a break and see if the stock will come down a little allowing them to buy it at better prices. Once these buyers reenter the market, they will drive it higher again.For example, a money manager may really want to own a stock. They buy it aggressively on Monday and Tuesday and drive up the price. Then on Wednesday, they take a break and the stock price doesn't move. On Thursday and Friday they decide to finish their buying and they take the price up again. This type of activity would look like a flag on a chart.At the time of this writing, Mark Putrino did not hold any positions in the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Sell for an Economic Slowdown * 7 Marijuana Penny Stocks That I May Buy * 7 of The Best Schwab ETFs for Low Fees The post 7 Marijuana Stocks With Critical Levels to Watch appeared first on InvestorPlace.
Cronos Group (NASDAQ:CRON) shares have struggled of late. Since early March highs, Cronos stock is down about 35%.Source: Shutterstock Cronos stock managed to put together a modest rally last month, but it has faded. CRON sits at a one-month low at the moment.To be sure, CRON stock isn't alone. Other cannabis majors are scuffling. Canopy Growth (NYSE:CGC) has dropped steadily since late April, losing about a quarter of its value.InvestorPlace - Stock Market News, Stock Advice & Trading TipsAurora Cannabis (NYSE:ACB) is off almost 30% since mid-March. Tilray (NASDAQ:TLRY) has stabilized, but after a long, steep decline. Hexo (NYSEAMERICAN:HEXO) has slid 41%. * 10 Best ETFs for 2019: The Race for 1 Intensifies For the biggest cannabis stocks, investor patience is drying up. Why that is remains unclear. Valuation could be a concern. It's likely that there's a "OK, what's next?" response after Canadian legalization in October.The problem for Cronos Group stock, however, is that even when sentiment returns, it's not clear what the company can do to spark investor enthusiasm.The near- to mid-term worry is that if cannabis stocks continue following, CRON stock will too. And if they rise, Cronos stock may well underperform peers until the wisdom of its plans become more clear - and Cronos starts showing real success. The Canada Problem for Cronos StockIt's become increasingly clear that the Canadian market isn't big enough and that there are real worries about too much supply in cannabis flower more broadly. As I've noted before, prices have crashed in U.S. regulated markets due to oversupply.In March, Tilray's CEO predicted similar issues in Canada as soon as next year. Aurora's strategy clearly is predicated on the idea that Canada alone isn't enough.Cronos seems to be operating on similar principles. Despite its US$1.8 billion investment from Altria (NYSE:MO), its production capacity might not even make the top ten in Canada, as the Motley Fool has noted. Even with that cash on the books, Cronos isn't racing to build out its production capabilities.That strategy makes some sense, particularly if as feared the Canadian market simply isn't big enough. Oversupply in dried flower is a real concern. But as far as CRON stock goes, it raises the question of what catalyst might arrive any time soon.Cronos might be right in playing the long game. Investors - and particularly cannabis stock investors - haven't shown that same patience in recent months. The StrategyAs CEO Mike Gorenstein put it on the Q1 conference call, "Like Altria, we believe that the best way to create value through the supply chain is by working with contract farmers and not being farmers ourselves."Cronos simply isn't all that interested in producing dried cannabis flower. It would rather let others spend the money to create that supply, assuming it can then buy flower at cheaper rates down the line.Instead, the company is focused on derivatives and R&D. It's working with Ginkgo Biosciences to create new strains of cannabis that can yield purer and easier-to-extract THC and CBD.Its new Cronos Device Labs in Israel will focus on fine-tuning vaporizers for varying customer demands. Production in Colombia is focusing on hemp over cannabis, with Gorenstein predicting on the Q1 call that CBD would outpace THC in terms of growth in the coming years.The Altria partnership should give Cronos an edge in these areas, given that tobacco company's long history with regulators. But there's risk here as well.The efforts with Ginkgo may not pan out. Even if they do, the new strains may not be all that valuable, if 'natural' strains are abundant and cheap as other companies build out capacity. Vaporizer demand may be lower than expected.There's certainly a risk that while Cronos plays around the edges of the market, rivals like Canopy and Aurora simply overpower the market. Canopy has more cash thanks to its deal with Constellation Brands (NYSE:STZ,NYSE:STZ.B).Aurora will give its stock to any company that will take it. If an investor believes that cannabis production will be big business globally, it's tough to believe that Cronos will be the big winner. The Long-Term Case for Cronos StockFrom a long-term standpoint, Cronos' strategy does seem wise. It's a good idea to keep US$1 billion or so in the bank in an industry in upheaval.Canadian suppliers are going to go bust; that's simply the nature of any growing market. Unexpected new markets may emerge elsewhere. Keeping capital on hand enhances flexibility, which seems like a compelling attribute to have as cannabis legalization (both recreational and medical) expands.Similarly, focusing on higher-value-add and higher-margin products makes sense. One need only look at the difference in valuation between Altria and Pyxus International (NYSE:PYX), an Altria grower, to understand what that will be the case in cannabis as well.The issue over the next 1-3 years, however, is that the strategy appeals to those of us (myself included) who think cannabis stocks are too expensive to begin with.Again, Cronos is set up for a future where oversupply hits prices and/or the global cannabis market moves slower than bullish investors expect. In both scenarios, cannabis stocks come down - and it's unlikely, though not impossible, that CRON stock emerges unscathed.In a sense, Cronos stock is the pot stock for investors who question whether pot stocks have rallied too far. If those investors are right, they're betting off staying as patient as Cronos is willing to be. As such, even with CRON stock cheaper, there's seemingly little need to rush in.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Sell for an Economic Slowdown * 7 Marijuana Penny Stocks That I May Buy * 7 of The Best Schwab ETFs for Low Fees The post Cronos Isn't in a Rush. Investors in Cronos Stock Shouldn't Be Either appeared first on InvestorPlace.
Cronos Group (NASDAQ: CRON) (TSX:CRON) announced Thursday it entered into an agreement to acquire GMP compliant fermentation and manufacturing facility from Apotex Fermentation. The acquisition is expected to be completed during the third quarter, whereas Apotex Fermentation will continue to be in charge of a wind-down of the facility through Fall. Inside the facility are completely equipped laboratories, microbial fermentation production areas, and processing plants.
Canadian cannabis company Cronos Group Inc. said Thursday it has agreed to acquire an 84,000 square foot fermentation and manufacturing facility in Winnipeg from Apotex Fermentation Inc. for an undisclosed sum. The facility will allow the company to produce cultured cannabinoids at commercial scale as part of its partership with Ginkgo Bioworks Inc., Toronto-based Cronos said in a statement. The deal is expected to close in the third quarter and will be paid for using cash on hand, which is not expected to be material to Cronos's cash position. Shares rose 1.4% premarket, and have gained 47% in 2019, while the S&P 500 has gained 19%.
Cronos Group Inc. (CRON.TO) (CRON.TO) (“Cronos Group” or the “Company”) today announced that it has entered into an agreement to acquire an 84,000 square foot GMP compliant fermentation and manufacturing facility in Winnipeg, Canada from Apotex Fermentation Inc. (“AFI”). As previously announced, Cronos Group has entered into a partnership with Ginkgo Bioworks, Inc. (“Ginkgo”) to produce cultured cannabinoids.
Cronos shares were rising Thursday after the cannabis company announced that it has entered into an agreement to purchase an 84,000-square-foot fermentation and manufacturing facility in Winnipeg, Canada. The facility will operate as "Cronos Fermentation" and include fully equipped laboratories covering microbiology, organic and analytical chemistry, quality control and method development. "This acquisition will provide the fermentation and manufacturing capabilities we need to capitalize on the work underway with Ginkgo once the milestones under that partnership are achieved," said Mike Gorenstein, CEO of Cronos Group.
Health Canada issues a non-compliance report on CannTrust (CTST) regarding its greenhouse facility in Pelham, Ontario, which is used for growing cannabis. Shares take a hit.
This is the first of a two-part series on the history of Colombia and its route to cannabis legalization. Colombia is in an extraordinary position. It possesses the fourth largest economy in Latin America.
For the United States, recreational cannabis and medicinal cannabis have penetrated just 8% and 21% of their estimated markets, leading to our expectation for 25% and 15% compound annual growth rates through 2030, respectively. For Canada, despite recent recreational legalization, cannabis has penetrated just 12% of our estimated market, setting the stage for a 20% CAGR through 2030. For the international market (which excludes Canada and the United States), we forecast market potential of nearly $43 billion and a 23% CAGR through 2030 as more and more countries recognize the benefits of medical cannabis.
In states where recreational marijuana use has been legalized, teens are less likely to smoke it, says a new study published in JAMA Pediatrics. Other recent studies have come to similar conclusions.
An emerging data company has a unique solution to identify, manage and distribute cannabis products, but the potential of its technology could stretch beyond the booming marijuana markets
Over the last few months, Tilray (NASDAQ:TLRY) appears to have broken from its downward trend. With a large shareholder choosing to keep stock in lock-up, a lower than anticipated supply of shares helped to propel Tilray stock.Source: Shutterstock Unfortunately, with little else to provide a catalyst, the recent move higher looks like a temporary interruption in its decline from the bubble territory of last September. TLRY Began to Recover in JuneI have long urged investors to avoid Tilray stock. Back in April, when the stock traded at about $60 per share, I reiterated this advice as lockouts preventing insiders from selling had expired. By early June, TLRY had fallen into the mid $30s per share level.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 10 Best Stocks for 2019: A Volatile First Half Since then, it has seen a slight recovery and currently trades at around $47 per share. As our own Tom Taulli mentioned, TLRY seems to have traded on the overall supply of available shares.The Tilray news that probably helped it move up revolved around Privateer Holdings. Privateer, Tilray's largest shareholder, agreed to extend a lock-up provision on 75 million shares to two years.Despite this recent recovery, the stock still has fallen more than 84% since the $300 per share high of last September. Year-to-date, it has lost nearly one-third of its value. Even after that steep drop, TLRY still trades at about 80 times sales.This does not make Tilray stock unique among marijuana equities. Canopy Growth (NYSE:CGC) sells at about the same price-to-sales (PS) ratio. It might even look inexpensive compared to the approximate 338 PS ratio of Cronos Group (NASDAQ:CRON). Tilray's Multiple MattersHowever, despite the modest recovery, TLRY shows us one thing--even with hot stocks just as TLRY, fundamentals still matter. That does not mean that Tilray's PS ratio is going to the current S&P 500 average of about 2.2.Nor does it mean it will come close to the S&P's current price-to-earnings (PE) ratio of just above 22 when it becomes profitable. Assuming Tilray survives in its current form, I think TLRY is years away from either scenario.However, to continue to justify its higher multiple, it has to move on prospects not yet priced into TLRY stock. The decline in recent months hinges on the fact that it no longer sees those new markets and lines of business.The only near-term prospect I see involves the one mentioned by my colleague, James Brumley. He noted that Tilray has begun to export cannabidiol (CBD) to the U.K. Britain has legalized the sale, but not the production of CBD products.Still, while that could give TLRY a near-term boost, I would not count on that prohibition on production remaining in place long term. Partnerships with Novartis (NYSE:NVS) and Anheuser-Busch InBev (NYSE:BUD) in 2018. But that was 2018.Worse for Tilray stock, investors have more choices. More countries continue to legalize. The market price of marijuana continues to fall steadily in its home market.Given these factors, I see nothing on the horizon that can send TLRY higher. As gravity begins to take a stronger hold on the equity, it becomes increasingly likely it will mostly move in a downward direction. The Bottom Line on Tilray StockThe recent reprieve in the long decline in Tilray stock will likely not last. Over the last month, Tilray stock moved higher by almost 20% as its largest shareholder chose to keep more shares from hitting the open market.Unfortunately, fundamentals have begun to catch up to TLRY. With cannabis prices falling, competition increasing, and prospects for added growth diminishing, the 80-plus sales multiple has become more difficult to justify.Revenue growth remains robust, and Tilray should remain one of the larger companies in Canadian cannabis. However, with TLRY at its current valuation, investors should either look at market leader Canopy Growth or hold out for a lower price.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 * 2 Toxic Pot Stocks You Should Avoid * 10 Best Stocks for 2019: A Volatile First Half * 7 Simple Ways for Young Investors to Invest Their First $1,000 * 6 Stocks to Buy Based on Insider Buying The post The Fundamental Problems of Tilray Stock Are Just Getting Worse appeared first on InvestorPlace.