10.81 -0.15 (-1.37%)
Pre-Market: 8:40AM EDT
|Bid||10.81 x 1800|
|Ask||10.91 x 1200|
|Day's Range||10.78 - 11.27|
|52 Week Range||6.50 - 25.10|
|Beta (3Y Monthly)||3.13|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||N/A|
Cowen’s Vivien Azer came out with her top picks for new coverage of U.S. cannabis companies, and she is starting Green Thumb Industries at an outperform rating. Yahoo Finance's Zack Guzman and Heidi Chung are joined by Vera Gibbons, NonPoliticalNews.com Founder, to discuss.
MediPharm Labs Corp. (TSX:LABS) (MEDIF) (MLZ.F) (“MediPharm Labs” or the “Company”), a leader in specialized, research-driven cannabis extraction and cannabinoid isolation, is pleased to announce that it has signed a multi-year contract manufacturing agreement (“CMA”) for the filling and packaging of vaporizer devices, subject to approval by Health Canada, for Cronos Group Inc.’s (CRON.TO) (CRON.TO) (“Cronos Group”) adult-use brand, COVE™. MediPharm Labs Inc. (“MediPharm”), a wholly-owned subsidiary of the Company, and a wholly-owned subsidiary of Cronos Group, entered into a CMA where MediPharm, utilizing its proprietary expertise and equipment, will provide filling of high-quality formulated concentrate, labelling and packaging services to exacting specifications at scale for Cronos Group.
Tilray (NASDAQ:TLRY), like so many marijuana stocks, is having a terrible year. Yes, some traders like to make fun of anyone that bought Tilray stock near its $300/share peak. But don't forget that as recently as this January, Tilray stock still traded for as much as $100 per share. This year alone, shares have lost more than half their remaining value.Source: Jarretera / Shutterstock.com That shouldn't come as a surprise. As I explained in May, the company was doing better on earnings but the supply growth from other producers overwhelmed Tilray's progress. That's been a valid concern so far. TLRY stock has continued to sink as the oversupply in the Canadian marijuana market has further intensified.The worst may finally be over, however. Tilray stock has rebounded more than 20% from its 52-week low since the start of September.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Momentum Stocks to Buy On the Dip Is Tilray ready to rally again? Tilray's Growth Strategy Seems ReasonableDespite the punishing decline in Tilray's stock price, management hasn't panicked. As I explained in that previous article, Tilray CEO Brendan Kennedy has focused on disciplined supply growth at a reasonable price. Tilray's deals, such as buying Manitoba Harvest came at affordable prices rather than paying big bucks as firms like Canopy Growth (NYSE:CGC) have done with some of their acquisitions.Tilray has also wisely used convertible bonds to raise funds. The convert feature is now way out of the money, ensuring that shareholders won't be diluted unless Tilray shares go on a monster run. This was a savvy way to raise nearly half a billion in funds without hitting TLRY stock owners with much dilution.Finally, while the international market hasn't taken off that quickly, Tilray has a shot there as well. The company is building out its facilities in Portugal -- again at a reasonable build-out cost. Still Hasn't Reached Critical MassTilray stock bears, on the other hand, continue to question Tilray's prospects. While the company certainly has avoided some of the excesses of its rivals, at the end of the day you need revenues and profits to justify your share price.And Tilray simply doesn't have much of either. Tilray's market cap, even with the stock at just $30, is still almost $3 billion. That's a huge valuation for a company that has produced less than $100 million in revenues over the last year. If revenues reach $200 million over the next year or two and Tilray manages to maintain a still robust 10x price/sales ratio, that'd imply an additional 33% downside on TLRY stock to around $20/share.Also, despite the small revenue base, Tilray has a ton of product lines. With the addition of Manitoba Harvest, it now has foods and supplements in addition to the more standard fare. And Tilray has international operations in a variety of countries. Yet, it hasn't added up to a critical mass that can deliver sustainable profits just yet. Like with Aurora (NYSE:ACB), Tilray has a lot of irons in the fire, but there's no sign that any particular thing is heating up just yet. CannTrust Reminds Us Of Dangers In The Cannabis IndustryWhile Tilray stock has enjoyed a welcome rebound, the industry isn't out of the woods yet. The huge supply and demand imbalance continues to weigh painfully on the sector. And that's not all. Regulatory risk remains a major concern.Tuesday brought us a fresh reminder on that front. CannTrust (NYSE:CTST) stock plunged another 14% on the day. CannTrust hit new all-time lows after admitting that Health Canada had suspended the company's license to produce and sell marijuana. It's a suspension, rather than a full revocation of their operating license. Still, it was a huge blow to the company's already damaged credibility.The license suspension on its own shouldn't come as a huge surprise. As InvestorPlace's Josh Enomoto recently wrote, CannTrust suffered two major scandals. The first involved illegal growing operations hidden with false walls. CannTrust fired its CEO with cause, along with other top employees, as a result. The company also somehow had black market seeds get mixed into its inventory.Adding it all up, CannTrust stock is now down a shocking 90% from where it traded earlier in 2019. That's a nearly total wipeout for a New York Stock Exchange-listed company. While there's nothing that dramatic going on with Tilray from a scandal point of view, CannTrust's collapse serves as a fitting reminder that this is a new industry that will have tons of growing pains.Also, it's worth noting that marijuana companies have started getting more traction in mainstream stock indexes and associated ETFs. However, the index operators will now kick CannTrust stock out of the primary Canadian stock index and related ETFs, and other fund operators may be slower to include pot stocks like Tilray in their funds as a result of this incident. Tilray Stock VerdictTilray has much better management than CannTrust, thank goodness. But that doesn't mean that is time to get too excited about the recent rebound in the TLRY stock price.The cannabis industry is continuing to face massive growing pains. There will be winners eventually. But more companies will end up like CannTrust as well. The industry is young and a lot of competition has to fall by the wayside for the survivors to prosper. * 7 CBD Stocks to Buy That Are Still Worth Your Investment Dollars Tilray, without a major partner, hasn't yet proven that it will be able to be one of the industry's eventual winners. For now, Cronos (NASDAQ:CRON) and Canopy, with their major backers, might be a safer choice until the industry's slump ends.At the time of this writing, Ian Bezek had 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 * 7 CBD Stocks to Buy That Are Still Worth Your Investment Dollars * 5 Stocks to Buy With Great Charts * 5 Goldman Sachs Stocks to Buy with Over 20% Upside Potential The post Is Tilray Stock's Crushing Bear Market Finally Over? appeared first on InvestorPlace.
Cronos Group (NASDAQ:CRON) is not alone as its shares have fallen more than 33% since April 5. Compliance issues and regulatory delays in Canada, have also weighed on Tilray (NASDAQ:TLRY), Canopy Growth (NYSE:CGC) and Aurora Cannabis (NYSE:ACB). CRON stock, though, has fared the best of that bunch. Yet, despite the problems, you'd be hard-pressed to find a faster-growing industry than cannabis. According to recent research, the global market size is expected to reach $66.3 billion by the end of 2025, though these estimates vary widely. InvestorPlace - Stock Market News, Stock Advice & Trading TipsBut Wall Street still has mixed reactions when it comes to Cronos Group stock. Out of the 14 analysts reviewing the stock, eight have given it a hold rating. Here are a few reasons why analysts aren't more bullish about CRON stock. Cronos Delivered Mixed Q2 ResultsCRON stock hit a new 52-week low in early August, thanks in part to a mixed earnings report. Initially, the company's shares rose due to better-than-expected sales. But Cronos Group also saw its operating losses widen. And on the earnings call, company executives said they expect these losses to increase during the second half of the year. This is due to Cronos' investments in sales and marketing and other growth initiatives. * 10 Battered Tech Stocks to Buy Now As well, Cronos Group lags behind other cannabis companies in terms of production. While it produced nearly 1,600 kilos during the second quarter, that's less than one-fifth of the the 29,000 kilos Aurora Cannabis produced. Vaping Concerns Could Affect CRON StockCanadian cannabis companies are currently waiting on the second wave of cannabis legalization, set for the middle of next month. This will include a limited supply of items like vapes, cannabis-infused beverages, and edibles.But there is a growing concern in the U.S. about the safety of vaping. More than 450 Americans dealt with vaping-related lung illnesses and five of these patients died. It's unclear what's causing the illnesses but there does seem to be a link between THC-infused products and vaping. (My InvestorPlace colleague Josh Enomoto has a contrarian take on this today.) * 7 Momentum Stocks to Buy On the Dip In March, Cronos Group received an equity investment from the tobacco giant Altria Group (NYSE:MO). Altria also owns a stake in the e-cigarette makers Juul, which gives Cronos access to additional vaping technology. However, this could pose a problem is the health-related concerns continue to gain traction. Expect More Supply Issues in CanadaCanada continues to deal with ongoing supply issues since legalizing cannabis in October 2018. The regulatory agency Health Canada is dealing with a backlog of licensing applications.Most likely, Canada will still be dealing with this issues when cannabis derivatives hit the shelves in December. And it will continue to slow the ability of companies like CRON to harvest, process, and sell cannabis.As of this writing, Jamie Johnson did not hold a position in any of the aforementioned stocks. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Recession-Resistant Services Stocks to Buy * 7 Hot Penny Stocks to Consider Now * 7 Tech Stocks You Should Avoid Now The post Cronos Group Stock Continues to Lag as Canada Headwinds Hold Back Sector appeared first on InvestorPlace.
Anyone who's been halfway paying attention to the action in cannabis stocks knows it hasn't been an easy ride. From the most well-known names to the most obscure, it's been a volatile and difficult ride. Aphria (NYSE:APHA) is no exception, with Aphria stock down big from its highs.Source: Shutterstock Shares have fallen roughly 40% from the February highs and almost 60% from its 52-week highs. To say that it's been a rough ride is putting it lightly and these two performance marks emphasizes as much.Earlier this week, we highlighted a silver lining in Aurora Cannabis (NYSE:ACB). After the company reported earnings, shares took a tumble. But so far at least, the stock has avoided a lower low. That's the positive take despite the revenue miss and bearish reaction in the stock price.InvestorPlace - Stock Market News, Stock Advice & Trading TipsHowever, APHA stock has its own silver lining: the stock is actually trending higher. Aphria Stock Is Stronger Than It SeemsComing into August, Aphria stock had been dragging hard. Shares were down almost 50% in just a few months and sentiment couldn't have been worse. Then better-than-expected earnings propelled shares higher, as the stock ran from a low of $5.02 to roughly $7.50 just a day later.The one-day ~50% rally set the tone for APHA, even though shares are now lower at this point. I think the stock is down from its post-earnings high as investors try to work through various resistance points and as they fight the bearish stigma attached to the industry right now. * 7 Tech Stocks You Should Avoid Now There's no reason to mince words about it: Cannabis stocks are out of favor right now. That's not likely to persist forever, which is why it's important to look for stocks showing relative strength. While Aphria stock is not showing strength relative to the market, it is showing strength relative to its peers.Identifying stocks with relative strength is because they're the ones that tend to outperform when the group comes back in favor.Even though shares have been under pressure lately, Aphria stock is still up 16.2% so far in 2019. That's better than Canopy Growth (NYSE:CGC), Aurora Cannabis and Cronos Group (NASDAQ:CRON). CRON, ACB and CGC are all positive on the year too, but lag APHA.The performance is also better than Tilray (NASDAQ:TLRY) and New Age Beverages (NASDAQ:NBEV), which are both down in 2019.Of the group, Aphria stock is the top performer over the last six, three and one month. For the last timeframe, APHA stock is up almost 11%. So this is certainly worth paying attention to. The Exact Breakout Point As you can see on the chart above, we have an ascending triangle formation developing in Aphria stock. That's where uptrend support (blue line) continues to squeeze a stock higher against a static level of resistance. It's a bullish trade development, as investors look for a breakout.In this case, recent resistance has been near $7.20. But that's not the big breakout point, in my view. Instead, I'm looking at the $7.60 level. This level has been notable resistance since the April breakdown. If Aphria stock can clear it, it will also mean that APHA has reclaimed its 200-day moving average.In this case, clearing $7.60 could trigger a big-time breakout. The first upside target is 61.8% retracement at $8.68. Above that and I'm looking for a gap-fill up to $9.85.There is risk, though.If uptrend support fails, it puts the ascending triangle formation at risk of failing. Below it and the 50-day moving average is the first downside target. Below that puts the $5.80 level on watch and below that, the $5 mark is possible. The Bottom Line on APHA StockThe bottom line here is simple: Aphria stock is the most well-behaved stock in the cannabis space showing the most relative strength among its peers. Its stock has a very clear setup on the charts, while its most recent earnings report was good enough to ignite the recent rally.A glance at the balance sheet reveals $422 million in cash and short-term equivalents. That's notable, given the stock's $1.67 billion market cap.Further, current assets of $577 million is more than five times its current liabilities of $102.5 million. Total assets also significantly outweigh total liabilities, total $1.8 billion vs. $524 million. * 7 Momentum Stocks to Buy On the Dip In other words, Aphria is more than capable of covering its short-term obligations as it focuses on growing its business. If there's a speculative cannabis stock worth monitoring right now, it's Aphria in my opinion.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 * 7 Momentum Stocks to Buy On the Dip * 7 Dow Titans Breaking Higher * 5 Growth Stocks to Sell as Rates Move Higher The post Aphria Stock Is the Most Well-Behaved Pot Stock on the Market appeared first on InvestorPlace.
Although not a pure cannabis play, New Age Beverages (NASDAQ:NBEV) has had to deal with the same volatility. Since January's opening price, NBEV stock has dropped a staggering 37%. However, the downfall isn't due to a lack of trying.Source: Shutterstock Early this year, NBEV announced an addition to its Marley-branded beverages called Marley+CBD. Infused with cannabidiol or CBD, the cannabis compound brought a therapeutic element to the artisanal beverage series. Plus, the positive notoriety associated with CBD gave New Age Beverages stock a nice lift following the announcement.This past summer, New Age CEO Brent Willis showcased the company's Nhanced CBD line of oils, creams and lotions. Launched in Hong Kong, NBEV intends to expand into Japan and China next.InvestorPlace - Stock Market News, Stock Advice & Trading TipsUnfortunately, NBEV stock peaked in early February. From then on, save for some smatterings of good news, it's been all downhill for shares.That said, New Age Beverages stock appears to have found a bottom around the psychologically significant $3 level. Granted, most conservative investors should ignore this technical phenomenon. But for the speculators among you, NBEV might be an interesting play.In a strange way, I say this because of the current vaping crisis. Federal health agencies are investigating a recent spike of acute lung illnesses which they believe are associated with vaping. However, evidence suggests that illicitly sourced THC-infused vaping liquids are the real culprit. * 10 Battered Tech Stocks to Buy Now In the context of companies like Cronos Group (NASDAQ:CRON), the vaping crisis is a distraction. For the time being, it's probably kept NBEV stock in check, too. But in the long run, this issue may benefit New Age Beverages. Here's why: A Platform Crisis Will Give Way to CuriosityOne of the challenges of cannabis-based companies is overcoming the stigma associated with the plant. Typically, the term "cannabis" conjures up images of stoners smoking, or in this case vaping a joint.As my InvestorPlace colleague Will Ashworth noted, vaping or smoking products will always be a tough sell, irrespective of alleged health benefits. But products like beverages, oils and creams? That is a much more palatable situation, one that clearly favors New Age Beverages stock.Recently, I had a chance to sit down with corporate representatives John Weston and Paul Dibrito of cbdMD (NYSEAMERICAN:YCBD). During our conversation, we discussed the wide-ranging product diversity of the CBD and hemp space. For instance, cbdMD features ample ways to enjoy hemp-based therapies beyond vaping. They also have a pet product division called Paw CBD.What does this have to do with NBEV stock and the vaping crisis? No matter what's going on right now, an increasing number of people are interested in CBD for therapeutic use. Sure, the vaping platform might take a hit (no pun intended) from the present crisis. But the core substance itself has substantial support.Therefore, it's much easier to evangelize the benefits of hemp-based products to your family and friends when using socially appropriate platforms. You might not be able to roll a fatty for grandma, no matter how much she complains of pain. But a capsule or a refreshing beverage? That's much easier to swallow (pun intended).Plus, not everyone is healthy enough to smoke or vape. For instance, more than 25 million Americans have asthma. Vaping might not be the best choice for them. But a CBD-infused beverage, as far as I'm aware, is consumable by nearly everyone. NBEV Stock and Long-Term AmbitionsInterestingly, NBEV CEO Willis was formerly a Coca-Cola (NYSE:KO) and Anheuser Busch Inbev (NYSE:BUD) executive. As you might imagine, he's now a strong advocate of legal cannabis.But Willis' push to drive into Asia strikes me as extremely ambitious. When he mentioned Japan, I rolled my eyes. This is the country that arrested and deported former Beatle Paul McCartney. * 7 Momentum Stocks to Buy On the Dip Moreover, when Canada legalized recreational marijuana, the Japanese government issued a stern warning to its citizens living abroad: don't touch the stuff or risk severe penalties.In my opinion, this was an empty threat. However, it does demonstrate Japanese society's highly conservative viewpoint toward the cannabis plant.Naturally, this is an uphill battle for New Age Beverages and NBEV stock. At the same time, if you're going to break into Asia, doing so with CBD-infused beverages probably gives you the best chance of success.But as I said earlier, that sentiment should apply to almost anyone. New Age Beverages stock is incredibly risky. Due to its palatable platform, though, it might have an outside chance of delivering the goods.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 Recession-Resistant Services Stocks to Buy * 7 Hot Penny Stocks to Consider Now * 7 Tech Stocks You Should Avoid Now The post Why the Vaping Crisis Might Benefit CBD-infused New Age Beverages Stock appeared first on InvestorPlace.
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Aurora Cannabis (NYSE:ACB) recently reported earnings and sales came up short. As such, Aurora Cannabis stock sold off. It's been a painful run for cannabis stocks over the past few months as they desperately lack a catalyst to send their share prices higher.Source: Shutterstock Earnings clearly won't be it for Aurora Cannabis stock at this point. However, there is one silver lining to the recent decline: no new lows.That's right. Sometimes good news can be found in bearish developments. Should ACB stock log a higher low, then it may be on the road to recovery. Let's explore:InvestorPlace - Stock Market News, Stock Advice & Trading Tips Revenue MissOn September 11, Aurora Cannabis reported revenue of 98.84 million CAD. That missed analysts' expectations by more than 4.5 million CAD. While that many not seem like a big deal, investors have to take the miss in context. * 7 Tech Stocks You Should Avoid Now It's the company's second straight revenue miss and its fifth miss out of the last six quarters. Further, Aurora Cannabis doesn't have the type of valuation that supports its stock price when it misses on top-line sales. That goes for most if not all of the cannabis industry, including Canopy Growth (NYSE:CGC), Aphria (NYSE:APHA), Tilray (NASDAQ:TLRY), Cronos Group (NASDAQ:CRON) and others.In other words, these companies have incredibly high valuations that are all banking on equally incredible growth. And while sales quintupled year-over-year in the most recent quarter for ACB, it came up short of expectations.It doesn't help that margins have been under pressure as well.It's not that Aurora Cannabis has a poor balance sheet or that the cannabis market is hitting a dead end. It's that sentiment is not bullish, and momentum is bearish for cannabis stock right now. ACB and others need some positive catalysts, and missing headline expectations isn't one of them. Trading Aurora Cannabis StockAhead of earnings, Aurora Cannabis stock had rallied through the 50-day moving average. However, it ran right into downtrend resistance (blue line). Had the results been strong, investors may have been in store for a strong finish to the week. Click to EnlargeNow, shares are down about 8.5% from Wednesday's close. With the fall, the ACB stock price is back below the 20-day and 50-day moving averages. When these two moving averages went from support to resistance is outlined very clearly on the chart via purple arrows.That was a prelude to failing support that ushered in a wave of selling. Luckily for InvestorPlace readers, they saw this break months ago and have been able to sidestep some of the pain.The post-earnings decline also solidified downtrend resistance. As we discussed at the top of the article though, the silver lining is that ACB stock has not made new 2019 lows -- at least, not yet.From here, bulls need to make sure Aurora Cannabis stock stays above $5.40. If this level gives way, a test of downtrend support becomes possible, as does a test of the $5 mark. Instead, if ACB stock can hold up and avoid a new low, it can start to work higher despite a lower-than-expected revenue result. Rallying on weaker-than-expected results can be viewed as a bullish development, as it may suggest all the bad news is priced in.The simple way to evaluate Aurora Cannabis stock from here? Note the $5.40 benchmark. Below it is bad, above it is constructive. Bottom Line on ACB StockLet's not mince words here: Aurora Cannabis is very much a speculative "prove-it" stock. That is, it's not a blue-chip name like Microsoft (NASDAQ:MSFT) or Apple (NASDAQ:AAPL). Nor is it a dependable staple going through a hard time like Boeing (NYSE:BA).While Aurora Cannabis is one of the notable names in a high-growth emerging industry, it's still a speculative name that needs to prove to investors that it can turn that revenue growth into cash flow and continue to expand with discipline. From CFO Glen Ibbott:We continue to see strong growth in cannabis revenues in both medical and consumer categories. Our cultivation execution continues to drive production costs lower and improve gross margins. Aurora's diversified product portfolio remains in demand with patients and consumers alike.Aurora has seen a significant increase in assets, climbing from $1.43 billion at year-end 2018 to $4.2 billion in its most recent quarter. In the same time frame, total liabilities have increased from $253 million to approximately $850 million. While liability growth outpaces asset growth, its assets far outweigh liabilities.ACB has staying power, at least in the short term. But what it and the recent of the cannabis space really need is a catalyst and better sentiment.Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Recession-Resistant Services Stocks to Buy * 7 Hot Penny Stocks to Consider Now * 7 Tech Stocks You Should Avoid Now The post Is Aurora Cannabis Stock a Buy Despite a Revenue Miss?Â appeared first on InvestorPlace.
Aurora Cannabis (NYSE:ACB) joined companies like Tilray (NASDAQ:TLRY), Canopy Growth (NYSE:CGC) and Cronos (NASDAQ:CRON) when its recent earnings report sent ACB stock on a 9% tumble.Source: Shutterstock Because of this, there has been a wide-scale bear move. The fact is that investors have been too optimistic about the growth prospects from Canada. There have also been issues with supply chains in the country as well as black market activities.So when may things change? It may take a while.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBut even before this, the ACB stock price had been under increasing pressure. Since March, the shares have gone from $10 to $5.70.Now, as for the fiscal fourth-quarter earnings report for the company, there was still lots of growth. On a quarter-over-quarter basis, revenues jumped by 52%. There was also an annual 72% ramp. * 7 Tech Stocks You Should Avoid Now Yet Wall Street wanted much more. ACB reported C$98.9 million on the top-line while the consensus was calling for C$103 million. Note that before this the company had tempered its annual guidance.Something else about the earnings report that likely weighed on Aurora Cannabis stock was the softness in the global business. Consider that there was only a 12% increase in the medical segment in Europe to C$4.5 million.InvestorPlace.com's Josh Enomoto summed things up as follows:"The cannabis market has stepped out of the honeymoon phase and into the 'show me' phase. In other words, investors are tired of hearing bedtime stories. Instead, they want some evidence that these tales are based on facts." Bad News for ACB StockAurora Cannabis stock got hit again this week, off about 4%. The reason: negative commentary from Stifel Nicolaus analyst Andrew Carter. Primarily because of the earnings report, especially with the sluggishness in foreign markets, he slapped a "sell" rating on the shares. He lowered his price target from C$7 to C$5.He also thinks the terrible sentiment in the cannabis sector will make it more difficult for Aurora Cannabis to raise more money. No doubt, this could mean that any equity offering could see substantial dilution - which could mean even further deterioration of the stock price. An Upside for ACB StockDespite all the bad news, there remain silver linings. Aurora Cannabis has the advantage of scale and a global infrastructure (there are 15 production facilities, with sales and operations in 25 countries). For example, during the quarter the company produced over 29,000 kilograms, compared to 15,590 for the prior quarter.Another advantage for Aurora Cannabis stock is that it has Nelson Peltz as a strategic advisor. He is a top activist investor who has extensive experience with consumer goods companies like Procter & Gamble (NYSE:PG), Mondelez (NASDAQ:MDLZ), and Wendy's (NASDAQ:WEN). Peltz should be invaluable in providing high-level contacts and funding resources.And finally, there is the catalyst of "Legalization 2.0." This refers to when Canada will legalize the sale of cannabis edibles, beverages and vaping products. The law will require a 60-day permit process, after which sales will be allowed.This should help to boost revenues. However, in light of the concerns with cannabis companies right now, there may not much action with Aurora Cannabis stock until next year. So for now, there is probably no rush to make a buy.Tom Taulli is the author of the book, Artificial Intelligence Basics: A Non-Technical Introduction. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Recession-Resistant Services Stocks to Buy * 7 Hot Penny Stocks to Consider Now * 7 Tech Stocks You Should Avoid Now The post It Doesn't Look like ACB Stock Is Going Anywhere This Year appeared first on InvestorPlace.
The consensus target price for Cronos Group stock fell to 19.88 Canadian dollars from 20.3 Canadian dollars in August, which represents a fall of ~2.07%.
For the cannabis sector, there has been a grueling bear market since April or so. Even the tier-one companies have suffered major double-digit declines, such as Canopy Growth (NYSE:CGC), Cronos Group (NASDAQ:CRON) and Tilray (NASDAQ:TLRY).Source: Shutterstock Then again, the run-up that came before the downtrend was parabolic as the sentiment got excessive. Let's face it, there was too much optimism about the potential impact from the legalization of the Canadian market. It also did not help that there were problems with the supply chain as well as black market activity. So when things did not pan out as expected, a painful correction was inevitable.But I do think this is presenting some interesting opportunities in the space. For example, take a look at Hexo (NYSE:HEXO) stock, which has been cut in half during the past six months.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThe company is certainly well positioned to benefit from the long-term potential in the Canadian market. Keep in mind that Hexo dominates the Quebec market, with a 30% share.What's more, the company continues to make strides with production. Hexo has aggressively expanded its footprint to about 1.8 million square feet, with annual production of 150,00 kilograms. * 7 Discount Retail Stocks to Buy for a Recession M&A has also been critical. To this end, Hexo shelled out $197 million for Newstrike Brands Ltd, which added to annual capacity by about 150,000 kilograms.Yet the focus on production has not been about quantity over quality. Consider that the company has been a heavy investor in innovation and R&D, which has allowed for higher margin offerings.According to Hexo CEO Sebastien St-Louis, on the latest earnings call: "We now have 25 PhDs on staff. They're focused on developing new and innovative products for the market, best-in-class technology for our 'Powered by HEXO' experiences. Building on our innovative technology is critical in building brands." Strategic Alliance With Molson Coors BrewingI think a critical factor for Hexo stock is its partnership with Molson Coors Brewing (NYSE:TAP). No doubt, there are the benefits of leverage from the broad capabilities of global distribution, marketing expertise and logistics. Such factors will likely prove essential in breaking through the noise in the marketplace.The deal with TAP will also allow Hexo to benefit from the "Cannabis 2.0." This refers to October 17th, when it will be legal to sell cannabis extracts in Canada (although the selling will not be allowed until mid-December because of the requirement to get a permit). The market is likely to be significant, with the potential for $1 billion+ in spending next year.To prepare for this, Hexo and TAP have been jointly creating a variety of products, such as beverages, gummies and vapes. In other words, there could be a nice catalyst for revenue growth. For example, in regards to fiscal year 2020, Hexo is projecting that the top-line will hit a hefty $400 million and that there will be a doubling in fiscal Q4. Bottom Line On The Hexo Stock PriceGiven the consistent downtrend in Hexo stock, it's understandable that investors want to back off. There are legitimate fears that this could be the proverbial "falling knife."Yet it really does look like the sentiment for Hexo stock has gotten to overly negative levels. Besides, the growth story looks intact, especially with Cannabis 2.0, and the company has strong production and a solid position in the Canadian market. So for investors with a long-term perspective, I think Hexo stock looks like an interesting play at current levels.Tom Taulli is the author of the book, Artificial Intelligence Basics: A Non-Technical Introduction. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Big IPO Stocks From 2019 to Watch * 7 Discount Retail Stocks to Buy for a Recession * 7 Stocks to Buy Benefiting From Millennial Money The post The Molson Coors Deal Will Be a Game Changer for HEXO Stock appeared first on InvestorPlace.
Cronos Group (NASDAQ:CRON) stock fell 5.2% on Sept. 9 as a result of investors' concerns about the cannabis company's focus on vaping products. Those offerings have come under severe scrutiny in recent weeks, due to the death of six people from lung disease related to their use. Source: Shutterstock InvestorPlace - Stock Market News, Stock Advice & Trading TipsCronos isn't the only cannabis company to have a vested interest in the success of vaping pens, but at the moment, it appears to be the biggest player taking it on the chin as a result of the recent health scare. If you own CRON stock, now is the time to be thankful that Altria (NYSE:MO) owns 45% of the cannabis company, with an option to buy an additional 10% in the future. Here are three reasons why that's the case. * 7 Discount Retail Stocks to Buy for a Recession Altria Understands Lungs Better Than MostWho would have more knowledge about how our lungs operate than a company whose products are directly responsible for harming them?Altria would not have made a $12.8 billion investment in Juul Labs or a $1.8 billion investment in CRON stock if it didn't understand the health risks associated with vaping. MO has been down this road many times with cigarettes. The fact that President Trump and his administration are trying to crack down on the sale of flavored e-cigarettes, while understandable, isn't really crucial for CRON stock. According to the Center for Disease Control and Prevention, 480,000 Americans die each year due to smoking. That's a staggering amount. However, we haven't seen cigarettes outlawed as a result of that sad situation. In fact, the FDA is currently trying to ban the sale of menthol cigarettes, but the tobacco companies will continue to fight the agency's legal efforts for years to come. Flavored e-cigarettes will likely take a long time to ban. The reality is that Altria understands what's at stake when it comes to vaping and e-cigarettes. They, along with the rest of the industry, are not going to go quietly into the night. Remember, the NRA isn't the only trade group in the U.S. with a powerful lobby. CRON Stock and a Potential MergerIn recent weeks, Altria's been negotiating with Philip Morris International (NYSE:PM), the owners of the Marlboro brand outside the U.S., to reunite after 11 years as separate companies. Last October, before Altria bought up a big chunk of CRON stock, I suggested that Philip Morris should make a play for one of Canada's big cannabis companies. "The tobacco companies were born to manufacture and sell the various by-products of the cannabis plant which includes marijuana and hemp," I wrote at the time. "The fact that only now are they considering a move -- after legalization in Canada -- suggests they've been irreparably scarred by years of tobacco litigation."Cowen & Co. analyst Vivien Azer recently suggested that the crackdown on vaping flavoring might be the nudge CRON and MO needed to officially tie the knot. After an acquisition, CRON would be controlled by a company with $54.7 billion pf annual revenue and $14.3 billion in free cash flow, providing it with plenty of capital to fight any potential opposition to cannabis vaping in the future. Altria Has a Beverage UnitCronos isn't the only cannabis company with a big focus on vaping. Aurora Cannabis (NYSE:ACB) is focusing on vape pens and edibles while ignoring cannabis beverages.I believe that's a mistake. Perhaps not a lethal one, but a mistake nonetheless. The older people get, the less they want to be messing with their lungs,. That's why I think cannabis-infused drinks will win in the end. Altria, although not nearly as involved in the alcoholic beverages industry as it once was, still owns premium wine producer Ste Michelle Wine Estates. In addition, as a result of Anheuser-Busch's (NYSE:BUD) $100-billion acquisition of SABMiller in 2016, Altria owns 10% of BUD stock.It's hard to imagine Budweiser turning down an opportunity to partner with Atria and Cronos to produce cannabis-infused drinks on a global basis. As long as Altria continues to own a big chunk of Cronos Group stock, I don't think investors need to overreact to the latest health concerns surrounding vaping. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Big IPO Stocks From 2019 to Watch * 7 Discount Retail Stocks to Buy for a Recession * 7 Stocks to Buy Benefiting From Millennial Money The post 3 Reasons Altriaas Investment in Cronos Group Stock Is Positive for CRON appeared first on InvestorPlace.
Among investment sectors, few have incurred the kind of volatility as legal marijuana. Major Canadian cannabis players like Tilray (NASDAQ:TLRY), Canopy Growth (NYSE:CGC) and Cronos (NASDAQ:CRON) forwarded disappointing earnings reports. Thus, with Aurora Cannabis (NYSE:ACB) set to launch its fiscal fourth-quarter results, many had hopeful eyes on Aurora Cannabis stock.Source: Shutterstock Unfortunately, those expectations were badly misplaced. Aurora disclosed its Q4 numbers after Wednesday's close, and Wall Street did not react kindly. On the top line, the medical-cannabis specialist rang up $98.9 million CAD, which represented a 52% lift from the prior quarter. However, Aurora management forecasted Q4 sales to come in between $100 million CAD to $107 million CAD. As a result of the revenue miss, the ACB stock price tanked in after-hours trading.After a night's rest to digest the news, the Street immediately hit the "sell" button. Due to the mini-panic, Aurora Cannabis stock closed Sept. 12 below the $6 level. From a technical perspective, this was an unfortunate development. ACB stock was finally looking interesting since the beginning of this month. Now, questions have sprouted about this once-vaunted cannabis player.InvestorPlace - Stock Market News, Stock Advice & Trading TipsAnother factor that has raised concerns among investors is Aurora's international business. One of the biggest investment arguments for Aurora Cannabis stock is its international footprint, the biggest in the sector. However, most of the company's financial performance comes from its local Canadian market. * 10 Battered Tech Stocks to Buy Now But in Europe, for example, the company generated $4.5 million CAD in medical-cannabis sales. That's up 12%, a very modest rate compared to its Canadian growth rate. With management continuing to make high-dollar investments, can ACB stock survive? Aurora Cannabis Stock Tanked for Understandable ReasonsHeading into the Q4 earnings report, the ACB stock price had robust technical momentum. At the same time, on a fundamental basis, the organization was going up against a wall of pressure.Primarily, every other major cannabis player had failed to impress the Street. Unlike in late 2017, Aurora Cannabis stock and its ilk did not benefit from the honeymoon effect. Cannabis investments no longer moved on compelling narratives, such as Canada legalizing recreational weed. Instead, prospective buyers were placing extra attention on the "boring" stuff, like fiscal sustainability.That created a major problem. Let me be blunt: There are two reasons why mainstream financial institutions take a pass on cannabis-related businesses. First, legal uncertainties -- and political controversies -- surround the sector. Second, the financials for most of these names are rough.And that's been the story for Aurora Cannabis stock and its peers throughout this year. Undoubtedly, Aurora and the rest of the marijuana market offer tremendous potential in their narratives. For example, if the U.S. legalizes marijuana, it changes the calculus for ACB stock.But before the narrative comes the reality. While Aurora's revenue growth has been impressive on a mathematical scale, so has its debt load. Sure, companies like Aurora have healthy cash balances, in part due to strategic partnerships. Yet the concern is this: Aurora cannot keep spending without turning at least some of its narrative potential into hard results.Ultimately, I think that's why the Street was so disappointed. The cannabis market has stepped out of the honeymoon phase and into the "show me" phase. In other words, investors are tired of hearing bedtime stories. Instead, they want some evidence that these tales are based on facts.If you looked at the Q4 results, you really didn't get that impression from Aurora Cannabis stock. Should You Dump ACB Stock?Part of being a good investor is knowing when to give up. Unlike sports, there's no such thing as a moral victory in the markets. Either you're making money or you're not.Under this framework, Aurora Cannabis stock looks like a candidate to sell. And I don't blame you if you decide to go that route.That said, here's the plain truth about ACB stock: No matter what anybody says about the financials, the play here has always been the narrative. When companies in established industries show the kind of quarterly results that Aurora does, you should jettison immediately -- we know approximately the upper boundaries of traditional industries.But we really don't know anything about marijuana. Maybe the segment peaked in Ottawa, and everybody else doesn't know it yet. Or, the U.S. and other regions will start opening the legalization door.Clearly, Aurora Cannabis is banking aggressively on this latter possibility. Whether you believe in the same will determine how you approach ACB stock.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 Battered Tech Stocks to Buy Now * 7 Strong-Buy Stocks Hedge Funds Are Buying Now * The 7 Best Penny Stocks to Buy The post Hereas Why Aurora Cannabis Stock Stumbled appeared first on InvestorPlace.
If you've followed my work over the past year, you know that I'm a strong supporter of marijuana stocks. While the viability of individual names varies, overall, the lack of a defined upside excites me. In other words, the cannabis market could be the most transformative of our generation. Or it could crash and burn. For CannTrust Holdings (NYSE:CTST) and CannTrust stock, I'm referring to the latter.Source: Shutterstock In short, CTST stock could be the first of the major New York Stock Exchange-traded cannabis companies to implode. Granted, I'm not breaking new ground here. Since the beginning of July of this year, shares have cratered over 68%. It's a good thing that Stockcharts.com defaults to a logarithmic scale for their charts; otherwise, it'd be hard to fit that magnitude of a drop in nominal unit-based scale.Initially, the troubles for CannTrust stock began when Health Canada, the namesake country's federal health agency, discovered a shocking scandal: CannTrust was illegally growing cannabis. But it wasn't just the infraction against clearly defined rules and protocol that hemorrhaged CTST stock. Instead, it was the violation's deliberate nature.InvestorPlace - Stock Market News, Stock Advice & Trading TipsCannTrust employees, with the knowledge of executive leadership, created illegal grow rooms hidden behind false walls. Clearly, management premeditated their actions. Thus, it was no surprise that the company fired former CEO Peter Aceto with cause. * 10 Battered Tech Stocks to Buy Now If that wasn't bad enough for CannTrust stock, we have another scandal: black market cannabis seeds allegedly got mixed into CannTrust's inventory.While it's not as dramatic of a headline as the hidden grow rooms, this latest controversy could spell big trouble for CTST stock. Thus, I wouldn't even gamble on the name. CannTrust Stock Has Zero CredibilitySince its inception, virtually all marijuana companies sought one attribute: credibility.During the early stages of the green market, companies attempted to convince investors, potential partners and financial institutions that their underlying business was realistically viable. Right now, these same firms are attempting to show that they can convert some of these storylines into actual results.However, it's been a trying time. Established leaders, such as Cronos Group (NASDAQ:CRON), Canopy Growth (NYSE:CGC), Tilray (NASDAQ:TLRY) and most recently Aurora Cannabis (NYSE:ACB) have attempted to do this conversion through their earnings results. So far, they've failed spectacularly.But with CTST stock, you have the worst of both worlds. Obviously, if CannTrust knowingly created illegal grow rooms, investors can't trust their financials. And if the story about black-market seeds is true, the company can't even manage its own products. Thus, CTST has neither financial nor fundamental credibility.And that really means only one thing: CannTrust stock is a goner.Believe me: although the black-market seeds sound like a granular and perhaps inconsequential violation, it's actually an earth-shattering one.That's because we have a vaping crisis on our hands. Recently, President Donald Trump declared his intentions to ban all flavored e-liquids used in vaporizers. Citing an epidemic in underage vaping, Trump didn't appear open to negotiations.Now, if you dig into this story deeper, you'll recognize that the Food and Drug Administration is leaning toward illegally acquired THC-laden cannabis as a prime suspect for the surge in lung illnesses.I mention this because of the power of public perception. Tacitly, the FDA appears to suggest that proper, retail vaping products are fine to use. But with CannTrust's latest scandal, it proves that you can't even trust established, legitimate organizations.It's truly an ugly situation for CannTrust stock. Wall Street Has Lost Patience with CTST StockAlthough the vaping crisis has taken center stage, my opinion is this: the controversy will boil over eventually, leading to some reasonable concessions on both sides. For instance, many e-liquid companies need to take responsibility and stop using marketing that allures children.Anti-smoking advocates succeeded in eliminating Joe Camel, the Camel cigarette's once-popular brand face. Understandably, the cartoonish character attracted children, which of course is a big no-no. Anti-vaping advocates can do the same for donut-flavored e-liquids, for instance.But when it comes to CannTrust, I think the bad taste they created is simply too much. Seemingly everything about this company is a lie. Worse yet, their actions impugn the (hopefully) reputable behaviors of their peers. Since marijuana stocks tend to rise and fall in sympathy with each other, CannTrust stock will victimize many names.When the markets settle down, they'll give a second chance to the established leaders in this space. But for CTST stock, I think Wall Street has lost its patience. One massive scandal is already enough. But having two in a highly controversial market? Why bother with CannTrust when literally every other cannabis-based opportunity is better?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 Battered Tech Stocks to Buy Now * 7 Strong-Buy Stocks Hedge Funds Are Buying Now * The 7 Best Penny Stocks to Buy The post Hereas Why You Canat Trust CannTrust Stock appeared first on InvestorPlace.
Aurora Cannabis posted its fourth-quarter earnings after the market closed on Wednesday. The company posted revenues of 98.9 million Canadian dollars.
On Tuesday, Eight Capital removed its target price for CannTrust Holdings due to uncertainty about the risks involved in the company's future operations.
[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.]In financial markets certain levels are more important than others with respect to the amount of supply and demand that exists within them. In addition, financial market prices are always doing one of three things. They are either going up, going down or staying the same. When applied correctly, technical analysis of marijuana stocks should help you identify the important levels and trends in this sector.Understanding these dynamics will help you make money. For instance, suppose you want to buy a stock if it drops to the $10 level. Your plan may not work if you don't understand the current market dynamics. There may be significant support at the $11 level. The stock may fall but not get to $10. It may find support around $11 and then rally. Because you didn't know where the support was, you lost out on a chance to make money for one dollar.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThere was important news for the industry that no one seems to be talking about. The Office of the Attorney General said that it will begin processing applications to research cannabis. As of right now, the University of Mississippi is the only institution in the United States that is currently allowed to do so. The DEA said that it wants to improve access to marijuana research. This is a major step down the path toward legalization on a Federal Level. * 10 Battered Tech Stocks to Buy Now This news could be the reason why many of the stocks in this industry have broken their recent downtrends and have been consolidating. Aurora Cannabis Inc (ACB)Aurora Cannabis Inc (NYSE:ACB) is a Canadian-based company that grows and sells medical marijuana, indoor cultivation systems and hemp-related food products.ACB broke its downtrend after finding support around the $5.50 level. If this level breaks and it goes lower, look for support around the $5 level. This is where the lows were in December and January.If the stock trades higher, there is a good chance that it will hit resistance around the $7 level. This level was resistance in August. It was also support in June and July.Why would a prior level that was support become a resistance level? One of the reasons is because the people who bought it at $7 when it was support are now looking at losses. They tell themselves that if the stock trades back up to the $7 level, they will sell it to get out at breakeven. This supply of stock at the level creates resistance. Cronos Group Inc (CRON)Cronos Group Inc (NASDAQ:CRON) grows and sells marijuana.CRON stock has broken its recent downtrend and has been consolidating above support around the $10.75 level. If it rallies there will probably be resistance around the $14 level. It was a support level from May through late July.It seems to me like CRON stock will continue to consolidate in the short-term. It is in the middle of a range and the momentum is neutral.An interesting but largely ignored dynamic with this stock is that by consummating its deal with Altria (NYSE:MO) CRON effectively became a sin stock. These are stocks of companies that engage in what some would consider unethical behavior. Altria, AKA Phillip Morris, certainly fits the description. * The 7 Stocks Hedge Funds Are Buying Big Because of this certain institutional money managers that have ESG concerns will not be able to invest in the stock. This could put it at a disadvantage to its competitors. Canopy Growth Company (CGC)Canopy Growth (NYSE:CGC) grows and sells marijuana.CGC stock broke its recent downtrend and has been consolidating around the $27 level.If it heads lower, there is a good chance that it will find support around $23. This is where it recently found a low before rallying. The people who wanted to buy at $23 and didn't tell themselves that if it drops back to $23, they will buy it.Those who shorted it at $23 are now looking at a loss. They tell themselves that if the stock drops back and they can get out of it at breakeven, they will cover at $23. Added to this are professional traders that want to profit off of a clearly defined level and you can understand why a prior support level could be support again.If CGC heads higher there is a good chance that it will run into resistance around the $32 level. This level was support in the first half of August. KushCo Holdings, Inc. (KSHB)KushCo Holdings, Inc. (OTCMKTS:KSHB) sells packaging supplies.KSHB stock has broken its recent downtrend and has been consolidating around the $3.75 level.Consolidating or trading sideways are terms that refer to markets that are in equilibrium. In other words, the forces of supply are equal with the forces of demand.When stocks are in a downtrend, the forces of supply are stronger than the forces of demand. When markets are trending higher the forces of demand are overpowering the forces of supply. * The 10 Best Index Funds to Buy and Hold When trendlines are properly understood and drawn correctly, a trendline break could mean that the control of the market is about to change. In the situation here when the red downtrend line broke, it was an early indication that the selloff was about to come to an end. The stock has been trading sideways since then. HEXO Corp (HEXO)HEXO Corp (NYSE:HEXO) grows and sells medical marijuana.HEXO recently found support around the $3.80 level. This level will probably be support again if it heads lower. The stock may have formed a reversal pattern, which would mean that it is about to head lower.The stock rallied everyday from Aug. 30 through Sept. 6. Each day, the closing price was higher than the opening price. These days are blue on the chart. The days when the closing price was lower than the opening price are red.Then on Sept. 9 something happened which could mean that the forces of supply are about to take leadership over from the forces of demand.You can see that the stock opened at what was the high price of the day. Then it sold off over the course of the day and closed at its lows (this is represented by the big red line). This pattern could mean that the sellers are about to take control of the market. Innovative Industrial Properties (IIPR)Innovative Industrial Properties (NYSE:IIPR) manages industrial properties and leases them to licensed medical marijuana growers.IIPR is consolidating below the important $90 level. This level is important because it was a resistance level from last March through June. Then, when the market saw some dramatic selling two weeks ago, it is where the stock found a floor. Since then, it slowly traded through the level and has been consolidating below it.Why would a level that was prior resistance become support? Those who bought it there and those who wanted to buy it but didn't each told themselves they will acquire shares if it drops back to the level. * 7 Strong-Buy Stocks Hedge Funds Are Buying Now Those who are short were feeling pretty good when it went lower. But after the stock rallied and broke $90 to the upside they are losing money. They say to themselves that they will buy it back at $90 if they can, so they can close out of their position without losing money. This demand for the stock at the $90 level is what creates support. Medicine Man Technologies, Inc. (MDCL)Medicine Man Technologies, Inc. (OTCMKTS:MDCL) provides cultivation consulting services to cannabis growers.MDCL stock is overbought and it is approaching a level that has been resistance before. We will probably see some profit taking or consolidation.The levels around $3.90 were the top in April, and then again in May and June. In addition, MDCL stock is the most overbought that it has been since April.Overbought refers to the momentum. Momentum is where the price is today versus where it was X many days ago. When this number reaches an extreme to the upside, it is considered to be overbought.This is an important dynamic to understand about markets. When they are oversold and get to support, they tend to rebound. When markets are overbought and get to resistance, they tend to selloff.As of this writing, Mark Putrino did hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Battered Tech Stocks to Buy Now * 7 Strong-Buy Stocks Hedge Funds Are Buying Now * The 7 Best Penny Stocks to Buy The post 7 Marijuana Stocks With Critical Levels to Watch appeared first on InvestorPlace.
Aurora Cannabis (NYSE:ACB) stock dropped in after-hours trading on a weak earnings report. Shares fell from $6.49 at the close Sept. 11 to below the $6 level. With results failing to meet consensus, investor sentiment for ACB stock could become more negative. But is this recent stumble an opportunity to load up on Aurora Cannabis stock?Source: Jarretera / Shutterstock.com Shares continue to trade at a high valuation. But the long-term strategy for Aurora may still be in motion. Let's take a closer look and see if there's short-term upside for the ACB stock price. ACB Stock Earnings Fall Shy of ConsensusOn Sept. 11, Aurora released earnings for their fourth quarter which ended June 30. Net cannabis revenue grew 61% from the prior year's quarter, to $94.6 million CAD. The company's cash cost to produce per gram fell 20% to $1.14 CAD per gram. Gross margins grew to 58% from 55% in the prior year's quarter. Thanks to increased margins, the company's adjusted EBITDA losses shrunk from $36.6 million CAD in Q3 2019 to a $11.7 million CAD loss in Q4 2019.InvestorPlace - Stock Market News, Stock Advice & Trading TipsFor fiscal year 2019, sales were $247.9 million CAD. This is an 349% increase from the prior fiscal year. But despite this growth, Aurora fell short of consensus. Earlier in 2019, ACB anticipated positive adjusted EBITDA by the end of FY19. But the company revised this guidance in August. After yesterday's earnings, the company is no longer referencing "positive adjusted EBITDA." Instead, Aurora "expects adjusted EBITDA to improve." * 10 Battered Tech Stocks to Buy Now The analyst community also pared down their estimates after the August walk-back. According to FactSet (NYSE:FDS), prior to August, analysts estimated Q4 revenue of roughly $112 million CAD. This was cut to a range of $100 million CAD-$107 million CAD. With actual Q4 performance falling short of this revised consensus, there are new challenges to the growth story with ACB stock.Other cannabis stocks have posted weak results in the past few months. Weak numbers at Canopy Growth (NYSE:CGC) pushed shares down 25% since mid-August. Tilray (NASDAQ:TLRY) shares have fallen from $41.16 per share to near $30 per share since its August earnings release. Reality is bringing pot stock valuations back to earth. Does this mean it's time to buy on the dip? Let's take a look at the valuation of ACB stock relative to peers. Aurora Cannabis Stock Trades at a Premium to PeersACB stock trades at a premium to most of its peers. Aurora Cannabis stock trades at an enterprise value/sales ratio of 53. Compare this to Canopy Growth, which trades at an EV/Sales ratio of 40.5. Tilray trades at an EV/Sales of 36.2. Aphria (NYSE:APHA) trades at a low EV/Sales ratio of 9.7. The only major pot stock trading at a higher valuation is Cronos (NASDAQ:CRON). Cronos trades at a staggering EV/Sales ratio of 106.4.But does this make ACB stock overvalued? The cannabis sector in general continues to be richly priced. Despite stumbles, investors anticipate a bright future for the marijuana industry. But with top-line performance falling short of expectations, can investors expect a short-term rebound? The Canadian marijuana market continues to be over saturated. A fully open U.S. market continues to be out of reach. Congress has made little progress on federal marijuana legislation.A saving grace for Aurora Cannabis stock is the company's global diversification. As I have mentioned previously, Aurora's focus on European markets has been a strength. Aurora has also focused more on the stable medical segment. But other risks counter the bullish case. The company's heavy use of convertible debt could cause problems down the road. Additional issuance of shares could drive the ACB stock price down further. Stay on the Sidelines With AuroraIt's tough to stomach the current ACB stock price. While the company has many strengths, the path to profitability remains unclear. There needs to be a shakeout in the Canadian cannabis market before it can become profitable. Solid movement on the U.S. federal legalization front needs to happen. One of the major marijuana stocks needs to hit profitability. Even if said "profitability" is adjusted positive EBITDA.I believe marijuana stocks will fall further. Aurora Cannabis stock is no exception. The company's shares could rebound on a crumb of good news. But in the short term, all bets are off with regards to the ACB stock price. To play it safe, stay on the sidelines with Aurora. Wait for a more opportune moment. If valuations turn irrationally low, make your move. But otherwise do not enter a position.As of this writing, Thomas Niel did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Battered Tech Stocks to Buy Now * 7 Strong-Buy Stocks Hedge Funds Are Buying Now * The 7 Best Penny Stocks to Buy The post Weak Earnings Might Cause Aurora Cannabis Stock to Keep Falling appeared first on InvestorPlace.
It goes without saying that Canopy Growth (NYSE:CGC) has endured a rough summer. Market leadership could not compensate for falling multiples, earnings and revenue misses, and a CEO firing. Canopy Growth has bounced back from near-term lows. Still, it remains too early to tell whether that bounce represents a pause in the decline or a genuine turnaround. Until investors can get a clear direction on CGC stock, I recommend staying away for now.Source: Jarretera / Shutterstock.com Investors Should Prepare for a FallCanopy Growth, and the marijuana industry overall, wants to put this summer behind them. Since the end of April, CGC stock has lost nearly half of its value. Differences with investor Constellation Brands (NYSE:STZ) cost CEO Bruce Linton his job. Moreover, a massive revenue and earnings miss for the second quarter only added to the pain.Unfortunately, the fall could bring a further fall. The price of dried cannabis has failed to gain traction as inventories rise. Further, the cash position of CGC continues to fall as it fell by 36% over the previous two quarters.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 10 Healthcare Stocks to Buy Despite the Headlines Furthermore, despite the decline, CGC remains expensive. It currently trades at about 37.2 times sales. In the recent past, such a multiple did not phase investors. However, we have dealt with a market where peers such as Aurora Cannabis (NYSE:ACB), Tilray (NASDAQ:TLRY), and Cronos Group (NASDAQ:CRON) have also seen their stocks drop.Moreover, the profit picture looks increasingly bleak. For the next fiscal year, analysts had predicted a profit of 31 Canadian cents (24 cents) per share 90 days ago. Now, that estimate has become a loss of 75 Canadian cents per share. That will place further pressure on its cash and could lead to more debt or more stock issuance in a climate of falling prices. Don't Bet on Quick LegalizationSo what would revive Canopy Growth stock? InvestorPlace contributor Will Ashworth argued that Trump legalizing weed across the country would boost both his re-election chances and CGC.I happen to agree in principle. I also like that CGC positioned itself to jump into the U.S. with the Acreage Holdings (OTCMKTS:ACRGF) purchase once weed becomes legalized. However, we have to operate in the environment we have, not the one we want. Hence, I do not recommend investing based on that piece unless the political winds change direction. While sudden legalization, especially in the U.S., would help Canopy Growth, investors should instead assume legal status comes to the developed world at a slower pace. How Should I Trade CGC?In my view, investors should exit their positions in CGC for now. In the near term, the industry probably faces multiple compression. Investors should not expect the market to grant Canopy Growth stock any type of immunity. Even though fall will arrive soon, investors need to prepare for winter and probably a more permanent climate of lower valuations.Still, once the market stops selling off CGC, I see the equity as a lucrative long-term investment. First, I believe this industry downturn will ultimately benefit CGC stock. Countries across the world continue to march toward legalization.Canada's strict regulatory structure on the marijuana industry has generally not done its companies any favors. However, they helped hugely by seeing the trend toward legalization early and moving first to embrace it. Now, Canopy Growth can use its dominant position in Canada to achieve early mover status in places such as Europe. This process will only speed up should the U.S. move toward legal status more quickly than anticipated.Moreover, the downturn will lead to an industry shakeout. In this downturn, the more financially-troubled firms will have to sell out to larger firms such as Canopy Growth, in many cases on the cheap. Others will simply close their doors. Either way, over the next few years, CGC will face much fewer competitors at home. * 10 Stocks to Sell in Market-Cursed September Canopy Growth stock has become dead money in the near term. However, once it endures a harsh winter, I think it will spring forward to massive long-term gains.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 Stocks to Sell in Market-Cursed September * 7 of the Worst IPO Stocks in 2019 * 7 Best Stocks That Crushed It This Earnings Season The post Time to Write Off Canopy Growth Stock in the Short Term appeared first on InvestorPlace.
Cannabis ETFs the ETFMG Alternative Harvest ETF and the Horizons Marijuana Life Sciences Index ETF were up 0.7% and 0.4%, respectively, at 2:15 PM today.
Cronos Group (NASDAQ:CRON) stock remains overvalued. Despite cannabis sector's summer selloff, CRON stock still trades at a premium to peers. But with recent acquisitions, the company's future prospect may start to meet expectations. Last month's acquisition of several U.S.-based CBD businesses could help bolster the company's growth strategy.Source: Shutterstock But what makes CRON stock a better pick than the rest? Peers such as Aurora Cannabis (NYSE:ACB) and Canopy Growth (NYSE:CGC) are not without their flaws. But both sell at more reasonable valuations.Is there opportunity with Altria Group (NYSE:MO) backed Cronos? Or should investors seek cannabis plays elsewhere? Let's take a closer look at Cronos Group stock.InvestorPlace - Stock Market News, Stock Advice & Trading Tips What's The Latest at CRON?In August, Cronos Group purchased 4 U.S.-based CBD businesses from Redwood Holding Group. The most notable asset purchased in this deal was the Lord Jones brand of CBD-infused skincare products. In the U.S., marijuana has yet to be legalized on the federal level. But CBD is fully legal. Gaining a toehold in the American market via CBD is just the first step. * Take Buffett's Advice: 5 Vanguard Funds to Buy But Capitol Hill is moving slow on legalization. Without access to banking services, "Big Pot" in the United States remains a pipe dream (for now). This didn't stop Altria Group from making a big bet on Cronos. Altria (parent of Phillip Morris USA and a major investor in vaping giant Juul) made a $1.8 billion investment. This gave the tobacco giant a big seat at the table.The relationship with Altria helps Cronos with their vaping product strategy. But the health effects of vaping have dominated the headlines. However, as InvestorPlace contributor Josh Enomoto wrote on September 10, the "vaping crisis" could cool down over time. But with these challenges, its tough to see a clear path to profitability. With the stock trading at such a high enterprise value/sales ratio, Cronos needs to hit it out of the park to "grow into its valuation". Cronos Remains Extremely OvervaluedCRON stock continues to trade at a premium. The company's enterprise value/sales (EV/Sales) ratio is a staggering 109.9. For comparison, Aurora Cannabis trades at an EV/sales ratio of 51.6. Canopy Growth shares change hands at a EV/sales ratio of 40.1. Tilray (NASDAQ:TLRY) has an EV/sales ratio of 32.9. Aphria (NYSE:APHA) sells at a relatively reasonable EV/sales ratio of 9.8.Is Crono's premium valuation all thanks to Altria? Having America's biggest tobacco company on your side is a plus. But it is no guarantee of U.S. market domination. The deal was highly dilutive for Cronos shareholders. Altria received a slug of warrants along with their investment. These warrants have a strike price of $19/share. This is well above Crono's current price of $11.73/share. But the high amount of warrants outstanding minimizes upside.But this deal gave Cronos plenty of capital. As of June 30, 2019, CRON had CAD $1.6 billion in cash, and CAD $745 million in short-term investments. Even after the recent asset purchases, the company has plenty of money to fuel growth. Additional capital raises are unlikely. The company is operating at a loss. But it is not hemorrhaging money as quickly as its peers. This means downside is limited. But with upside challenges, it is tough to see the value in CRON stock. Look Elsewhere For a Pot PlayI am still waiting for pot stocks to reach lower valuations. But you may be more keen on placing a bet on the cannabis sector. If you are looking for a pot play, look at any other stock but Cronos. The company continues to trade at a mind-boggling valuation. It has a logical strategic partner (a tobacco company). But it remains unclear how this will translate into a market edge.I have been bearish on both Aurora Cannabis and Canopy Growth. But at least both of these companies offer a clearer path to success. Among the other major marijuana stocks, companies like Aphria stand out for their reasonable valuation. * 10 Stocks to Sell in Market-Cursed September It may pay to take your time with marijuana stocks. Valuations could reach more reasonable valuations down the road. But if you are looking for a pot play today, look at anything else but Cronos Group stock.As of this writing, Thomas Niel did not hold a position in any of the aforementioned securities More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Sell in Market-Cursed September * 7 of the Worst IPO Stocks in 2019 * 7 Best Stocks That Crushed It This Earnings Season The post Stay Far Away From CRON Stock Until Its Valuation Comes Down appeared first on InvestorPlace.
After a weak couple of months, cannabis stocks rallied in the first week of September . That rally seems to have stalled so far in the second week of the month. S3 Partners analyst Ihor Dusaniwsy said ...
Cronos Group and Aphria are Jim Cramer's top picks in the cannabis sector. Aphria’s upbeat earnings results restored investors' faith in the sector.
Aurora Cannabis (ACB) stock has been rising before its fourth-quarter earnings on Thursday. The stock has risen 12.4% this month.