15.40 +0.03 (0.20%)
Pre-Market: 4:01AM EDT
|Bid||0.00 x 1000|
|Ask||0.00 x 2200|
|Day's Range||14.55 - 15.43|
|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|
There are lot of marijuana stocks out there. There are the heavy-hitting headliners, including Canopy (NYSE:CGC), Aurora (NYSE:ACB), Tilray (NASDAQ:TLRY), and Cronos (NADSAQ:CRON). Most investors have heard of those Big Four. But then there are the under-the-radar pot stocks, such as Aphria (NASDAQ:APHA) and Akerna (NASDAQ:KERN).Source: Shutterstock One under-the-radar marijuana stock which has just recently shot onto the scene is HEXO (NYSEMKT:HEXO), in the wake of its recent NYSE listing. Some investors may be tempted to buy HEXO stock because of its novelty. It's a fresh face in the marijuana stock world. Indeed, there are some things to like about HEXO stock, such as its cheapness relative to other marijuana stocks. * 10 Stocks to Buy From This Superstar Fund But there's not enough to like about HEXO stock to make it worth buying. Instead, there's simply enough to make HEXO stock interesting to watch from the sidelines.InvestorPlace - Stock Market News, Stock Advice & Trading TipsAs a result, I think staying away from HEXO stock for the time being is the right move. There are much better marijuana stocks out there. Why HEXO Is InterestingThere are three main reasons why HEXO stock is interesting.First, HEXO is in the right market. Given that cannabis consumption is medically better than other forms of drug consumption, cannabis consumption has been on the rise, while alcohol and tobacco consumption have been on the decline. Meanwhile, around the world, cannabis is progressing towards legalization as negative stigmas about it are being eroded.Given these trends, the global cannabis market should one day be both fully legal and really huge. That means that over the next decade-plus, the cannabis market (and its most important players) will experience robust revenue and profit growth.Second, HEXO is clearly a legitimate Canadian cannabis producer. The company has large growing capacity, sold a bunch of cannabis last quarter, and has an experienced management team. Finally, it has a unique deal which positions it as the leader of the Quebec cannabis market for the foreseeable future.Third, HEXO stock is undervalued relative to its cannabis peers. Many other marijuana stocks trade well north of five times analysts' consensus 2020 sales estimates. For example, Canopy Growth and Aurora both trade at over ten times analysts' average 2020 sales estimates for them. HEXO stock, however, trades at just 4.6 times the consensus 2020 sales estimate, a sizable discount to most of its peers.Broadly, then, the combination of being in the right market, checking off all the right boxes, and being relatively undervalued makes HEXO stock an interesting option here and now. Why HEXO Isn't CompellingDespite being an interesting option in the cannabis space, HEXO stock isn't a compelling option, and that's mostly because, in all likelihood, this company won't meet its goals.Canada is the world's largest fully legal cannabis market. As the world's largest completely legal cannabis market, Canada is home to multiple cannabis producers. There are the headliners - Canopy, Aurora, Cronos, and Tilray - and the others. HEXO falls in "the others" category. All Canadian cannabis companies think that they will strike gold in the Canadian cannabis market, become a leader there, and then extend that leadership onto the global stage.But they can't all become major players in the global cannabis market. Think about the Dot Com Bubble in 2000. Everyone was right then that the internet was going to be the next big thing. But not every internet company grew alongside the internet. Instead, the internet market consolidated around a few titans like Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOG), while many of the other super-hyped Dot Com stocks went bust.The cannabis market will play out in a very similar fashion. Cannabis is the future. But, in that future, only a handful of today's cannabis companies will become major players. The rest will go bust.The problem with HEXO stock is that, right now, HEXO does not look poised to become one of the major players when the cannabis market peaks. HEXO has a small customer base relative to the market leaders. It also doesn't have the same growing capacity as the market leaders. Nor does it have the huge partnerships that Canopy and Cronos do, and it hasn't made much progress in the all-important U.S. market.All in all, given the low likelihood of the company becoming a global cannabis player, HEXO stock isn't all that compelling at its current levels. The Bottom Line on HEXO StockAs a relatively undervalued pot stock whose long-term growth outlook is uncertain, HEXO stock is interesting to watch, but not compelling to buy. For investors looking to play the cannabis boom, I continue to recommend the market leaders, Canopy and Aurora.As of this writing, Luke Lango was long CGC, ACB, AMZN, and GOOG. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Buy From This Superstar Fund * 7 Stocks to Buy This Summer Earnings Season * 7 Marijuana Penny Stocks to Consider for Those Who Can Handle Risk The post Why HEXO Stock Is Interesting, But Not Compelling appeared first on InvestorPlace.
Cannabis stocks were mostly lower on Tuesday, led by Curaleaf Holdings after the U.S. Food and Drug Administration sent a warning letter to the company for claiming CBD-based products could treat a range of serious diseases, including Alzheimer’s disease.
If you are interested in investing in marijuana stocks but don't know the best way to get started, you may want to take a closer look at the ETFMG Alternative Harvest ETF (NYSEARCA:MJ), a marijuana-themed exchange-traded fund (ETF) that has over a $1 billion in assets under management.Source: Shutterstock Investing in MJ may enable investors to take a long-term view on a growth industry that is likely to reach tens of billions globally in a decade or two. However, investors in the cannabis sector should also remember how choppy individual stock prices can be.Therefore, long-term investors should buy into an ETF like the MJ only if they are comfortable with the fundamental drivers behind the industry, as well as the short-term volatility that comes with the territory.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 10 Tech Stocks That Are Still Worth Your Time (And Money) Canadian Cannabis Stocks Have Been Hot Yet ChoppyOver the past 100 years, marijuana has been illegal in most of the world. Canada stepped into the spotlight in 2018 when it passed the Cannabis Act and became the first Group of Seven (G7) country to decriminalize the use of marijuana for medical and recreational purposes.Canada is also the second country in the world, after Uruguay, to legalize recreational marijuana at the federal level. Since then, a number of federally licensed Canadian cannabis producers have started trading on the Toronto Stock Exchange (TSE) as well as the New York Stock Exchange (NYSE).Several of the Canada-headquartered companies that are listed in the U.S. include Aurora Cannabis (NYSE:ACB), Canopy Growth (NYSE:CGC), Cronos Group (NASDAQ:CRON) and Tilray (NASDAQ:TLRY).The recent earnings reports from Canada-based cannabis stocks are important in gauging the health of the industry, as not everyone is convinced that Canadian recreational pot sales will remain strong. Many investors are concerned that the initial hype surrounding the industry could be decreasing.Since legalization in October 2018, Canadian sales numbers have been muted without any signs of increasing. In 2019, the total cannabis market in Canada, including both legal and illegal recreational and medical sales, is expected to be around C$7.2 billion. About half of it is likely to come from legal sales.The Canadian market may also be running the risk of being oversupplied. Is all this capacity truly needed, given that export volumes are not expected to meaningfully offset oversupply, either? If these marijuana companies harvest more than what they sell, there will be higher inventory balances.And simple economics tells us that a supply glut would eventually drive down the price of marijuana along with the margins of these companies.The developments in Canada over the past year has been reflected in the stock price of most of these Canada-based companies, moving investor sentiment from euphoria to greed to fear. Legal Status in the U.S.At the federal level, marijuana is illegal in the US. However, at the state level, its legal status depends on the laws of the individual state.State-wide legalization in the U.S. allows for both individual marijuana possession as well as the legal production and sale of the drug. Legalization can happen in two categories: the legalization of recreational marijuana or of medical cannabis.As both recreational and medicinal use is becoming more widely accepted, the number of U.S. states that have legalized it has increased. Medical cannabis is now legal in 33 states. Recreational marijuana is legal in 11 states, i.e., individuals require no prescription to use marijuana in these jurisdictions.In other words, the legalized marijuana industry is still in its infancy, even in Canada, and it is almost non-existent globally. None of the Canadian marijuana stocks have so far done any business in these pot-friendly U.S. states, as the listing requirements at the NYSE or NASDAQ as well as at the Toronto Stock Exchange (TSE) bar companies from engaging in commercial activities in countries where they would be breaking the law.On the other hand, in December 2018, the U.S. Congress passed the Farm Bill that President Trump later signed into law. The Bill legalized hemp and hemp-derived ingredient cannabidiol (CBD), especially popular among consumers seeking relief from physical pain. Because hemp is now an ordinary agricultural commodity in the U.S., farmers can apply for federal hemp cultivation permits.Hemp production, as well as products that contain CBD, are likely to be growth areas in the US in the coming years. Could Your Portfolio Benefit from the MJ ETF?At InvestorPlace, my colleagues often cover how various ETFs can help investors construct a diversified portfolio. An ETF is an index-tracking fund that trades on a major stock exchange. Similarly, MJ seeks to provide investment results that correspond to the total return performance of the Prime Alternative Harvest Index, which tracks the performance of U.S. and global companies that are engaged exclusively in legal activities involving cannabis for medical or non-medical purposes.In general, an ETF has an expense ratio -- a percentage of the fund's assets are used to cover management and other costs to run the fund. MJ's expense ratio is 0.75% per year or $75 annually per $10,000 invested.Depending on their brokerage accounts, investors can buy the MJ ETF on margin, trade options on it or even sell shares of it short. It currently pays dividends with a yield of 2.43%. In recent months, this marijuana ETF has become one of the most popular funds among millenial investors. Which Stocks Are in the MJ ETF?MJ ETF currently holds 38 stocks with about 70% allocation to pot companies and growers. Several of the major stocks in the MJ ETF include Aurora Cannabis, GW Pharmaceuticals (NASDAQ:GWPH), Cronos Group, Canopy Growth, Tilray and Green Organic Dutchman Holdings (OTCMKTS:TGODF) -- companies that are becoming increasingly mainstream. It also has an allocation of tobacco stocks and fertilizer companies.The top 10 holdings represent about 60% of holdings in the MJ ETF. One fundamental point that investors need to keep in mind is that most of these cannabis producer stocks are not profitable yet. Analysts value them mostly based on the expectation of high revenue growth, which would lead to future profits. Therefore, whenever Wall Street fears the given company is failing to meet growth or expectations, that pot stock will get penalized.Most of these Canada-based weed companies also have high operating expenses. And the red ink at the bottom of their income statements, quarter after quarter, is becoming a worry for shareholders. If the international cannabis market does not grow as expected, then MJ ETF's price could also experience selling pressure.From a fundamental perspective the next few years are likely to see important developments in the industry. There might be consolidation as well as partnerships between Canadian pot stocks and more established U.S. companies.For example, in August 2018, the alcoholic beverages giant Constellation Brands (NYSE:STZ) announced a $4 billion investment into CGC, and STZ now holds a 38% stake in the company. The two are currently developing cannabis-infused beverages for Canada, where experts believe they will be legal by 2020. Top Holding Stock to Note in the MJ ETFOur readers may know that a wide range of products are made from cannabis, including CBD oils, edibles, cannabis-infused beverages, concentrates used in vaping, creams, and lotions. Thus the industry includes companies that operate throughout the supply chain involved in making, marketing, and distributing these products.I'd like to highlight one stock in the MJ ETF that is quite different than the others which are mostly marijuana growers. This stock is GWPH, which tops the holding list with 8.87%.A 2018-report by the United Nations (UN) revealed that Britain is the biggest producer and exporter of legal cannabis in the world. In 2016, the UK produced 95 tonnes of marijuana and exported 2.1 tonnes.Virtually all of that is through exporting one drug, Sativex, produced by UK-based GW Pharmaceuticals, a leading cannabinoid-focused biotech company. In 1998, the company obtained a unique domestic licence in the UK to cultivate cannabis seeds.GWPH now produces Sativex to treat spasms in multiple sclerosis patients. Last year the company obtained U.S. regulatory approval of its CBD drug Epidiolex for the treatment of epilepsy.GW Pharmaceutical's share price has gone from about $10 in 2013 to an all-time high of $196 in May 2019. Currently it is hovering around $163. In other words, a biotech company such as GWPH is a secondary way to invest in the CBD market.Another example would be the companies that provide ancillary products and services, such as Scotts Miracle-Gro (NYSE:SMG). known by many consumers for its fertilizer products.And the MJ ETF enables investors to invest in these businesses as well as several tobacco companies, too. Where is MJ ETF Price Now?In the past two years, marijuana stocks have been choppy and highly speculative. Their valuations can and do change suddenly and drastically, both as a result of event-driven company news or developments in the industry.And the value of this particular marijuana ETF reflects this volatility. Year-to-date, the MJ ETF is up 22%. After seeing an intraday low of $23.3 on Dec. 24, 2018, it has rallied to a high of $39.25 on March 19. Its 52-week high remains at $45.4, reached on Sep. 19, 2018.Those investors who pay attention to technical charts should note that due to the decline in price since April, MJ ETF has a not-so-pretty technical picture. In the long-run, MJ needs to build a base again before a long-term sustained leg up can occur.From a price and time cycle perspective, the high reached on March 19, 2019, which came six months after the 52-week high of Sept. 19, 2018, is likely to be the highest price to be seen in the near-term.And MJ price may see a new 52-week low in Sept. 2019, possibly around $22.5, about a year after the current 52-week high of $45.4.Within the next two months, I expect MJ to mostly range-trade between $27.5 and $32.55. However, in case of a broader market selloff, similar to the one we have witnessed in the last quarter of 2018, the fund may easily go toward the mid-$20's level. The Bottom Line on the MJ ETFInvestors will need to follow developments in the industry closely to evaluate the appropriateness for marijuana stocks for their portfolio. It is important to note that unless legalization at the federal level in the U.S. happens, cannabis market is, for the most part, limited to the growth in Canada. And a limited Canadian market is not likely to help most of these pot stocks become profitable on an operating basis, a fact makes marijuana stock valuations even more difficult to justify.Long-term investors should therefore have realistic expectation of the market fundamentals. They should also be ready for daily price fluctuations as well as high volatility around the earnings release dates of the marijuana stocks that mostly make up the MJ ETF.If you already own this marijuana ETF, you might want to hold your position. However, within the parameters of your portfolio allocation and risk/return profile, you may consider placing a stop loss at about 5-7% below the current price point.If you are an experienced investor in the options market, you may want to protect your portfolio or your recent gains in marijuana stocks with a covered call or possibly a put option spread with a three-month time horizon. If you do not yet hold a marijuana ETF like MJ, you may want to wait several weeks to buy into it at the next dip.As of this writing, Tezcan Gecgil did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Defense Stocks to Buy to Fortify Your Portfolio * 10 High-Flying, Overvalued Stocks in Danger of Crashing * 8 Stocks to Buy That Are Growing Faster Than Amazon The post What You Need to Know Before Jumping into the MJ ETF Market appeared first on InvestorPlace.
If I was a holder of Cronos Group (NASDAQ:CRON) stock, I would have serious anxiety about the much-hyped cannabis investment.Source: Shutterstock While CRON stock is up 46% this year, most of those gains occurred in January. Eventually, though, I believe that the company will be facing some tough times -- and in the not-so-distant future. Here are five things to consider: CRON Stock Is More Expensive Than Its PeersVarious metrics indicate that Cronos stock is more expensive than its peers. The company has an extremely high price-to-sales ratio of 336. To put that into perspective Tilray (NASDAQ:TLRY) has a PS ratio of 135, while Aurora Cannabis (NYSE:ACB) runs at 79. Moreover, the PS ratio for Aphria (NYSE:APHA) and Canopy Growth (NYSE:CGC) is 52 and 68, respectively.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Stocks Top Investors Are Buying Now In addition, Cronos is the only member of this group to have negative gross margins. Aurora's gross margin is 11%, while Tilray, Aphria and Canopy all feature double-digit margins. Cronos has a gross margin of -21%. Judged from these two metrics, CRON stock is clearly a much more expensive investment than its peers. The Coming Price WarFew people talk about it, but I believe a price war will erupt in this industry very soon. That is because investors are starting to realize that growing marijuana outside is significantly cheaper than growing in an indoor facility or a greenhouse.Admittedly, advantages exit to growing in indoor facilities, such as better security and better quality. However, the cost advantages of outside growing outweigh them.Still, Cronos seems to grow the vast majority of its cannabis indoors. If the company doesn't develop outdoor growing, it may not be able to compete with outdoor projects. Eventually, this will hurt the Cronos stock price. Potential Share DilutionOne thing that really stood out to me when I was reading Cronos' income statement: the massive amount of potential dilution.The company just reported earnings per share of $1.95. However, the diluted share earnings were only 48 cents. Regular earnings per share is the net income of the company divided by the number of outstanding shares. Diluted earnings per share is what the earnings would be if all of the company's bonds that can be turned into shares are converted.This potential share dilution is very concerning. Therefore, I don't want to buy Cronos Group stock because it exposes me to two risks.First, CRON stock trades in a volatile market. Second, management can potentially dilute shares at any time, presenting a hidden but serious threat to my portfolio. Wall Street Is Falling Out of Love with Cronos StockAt this time last year, it seemed like every analyst was extremely bullish on the cannabis industry. But as the sector consolidates, it seems to be losing its luster.For instances, analysts have issued some downgrades. Further, I noticed a rise in bearish sentiment seems. And on top of it all, The Street seems to favor CRON stock the least out of the large growers.The average rating for Cronos stock is a hold. In contrast, the other four -- Tilray, Canopy, Aurora and Aphria -- have average ratings of overweight.Finally, you don't need to be a market guru to see that the $14 level is important support for CRON stock. This level is support because it was resistance in September and December of last year.Resistance levels become support levels because the investors who sold or shorted Cronos Group stock at $14 profited from the decline. But then when Cronos stock rallied above $14, the shorts lost money, creating a panic.As of this writing, Mark Putrino did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Tech Stocks That Are Still Worth Your Time (And Money) * 7 Marijuana Stocks With Critical Levels to Watch * 7 of the Best Smart-Beta ETFs to Target Right Now The post I'm Glad I Don't Own Cronos Group Stock and Hereas Why appeared first on InvestorPlace.
[Editor's note: This story will be updated each week with new stocks and analysis. Please check back often for Mark's latest take on marijuana stocks.]Yesterday I heard an investor say that technical analysis is like reading tea leaves. I am not surprised by this because most technical analysts do not seem to understand just what it is that they are supposed to be doing.These analysts look at charts and mindlessly identify patterns without understanding what they are supposed to mean. Some even promote esoteric methods like Gann Theory and Elliot waves that institutional traders do not use.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIn financial markets, some levels are more important than others. In addition, prices are always doing one of three things. They are going up, going down, or staying the same. If understood and used correctly, technical analysis should illustrate these levels and trends.Understanding these dynamics can help you profit. Short-term traders need to know which levels are important in order to be successful. Long-term investors can benefit by having a better understanding of where to place their buy and sell orders.For example, suppose that you buy a stock at $20. The market starts to go your way and you plan sell it when it gets to $30. A look at a chart may show that there is significant resistance at the $29 level. This means that your stock may never get to $30. It may rally and hit the resistance at $29 and then sell off and drop back to $20. If you were waiting for $30, you would have missed out on making a significant profit. * 7 Stocks Top Investors Are Buying Now Here are some interesting dynamics that are playing out in seven marijuana stocks. Technical Levels in Marijuana Stocks: Trulieve Cannabis (TCNNF)Trulieve Cannabis (OTCMKTS:TCNNF) develops medical cannabis products. The classic head & shoulders pattern continues to play out in TCNNF.Like most things in technical analysis, this pattern is widely misunderstood. Most of the alleged H&S patterns that I see in the financial media are not actually H&S patterns.First of all, the head and shoulders pattern is a reversal pattern. That means it needs to come at the end of a meaningful trend. There is no such thing as a head and shoulders continuation pattern, at least by a classic definition. The left shoulder here formed after a 50% move in two months. That is clearly a meaningful trend.Second, the volume needs to support the pattern. Most volume has to be in the left shoulder or head. This increasing volume means the smart money is selling their positions to the buyers that are late to the rally.Once we get to the right shoulder, the volume drops. This is because most buyers have completed their orders. Since there is not sufficient buy interest anymore, the stock price will eventually drop.The traditional way to determine a price target with a head-and-shoulders pattern is to take the distance from head to the neckline and subtract it from the neckline. In this case, that would suggest TCNNF will continue to decline. Cronos (CRON)Cronos (NASDAQ:CRON) grows and sell marijuana.Last week I discussed the importance of the $14 level to CRON stock. It has been a support level since May. On July 12 and July 15, that is almost exactly where the low trades were. Had you bought it, you would be looking at a nice profit as it is now trading above $15.The reason why the $14 level is support is because it was a resistance level during last September and December.How does a level that was resistance become a support level?There are two types of sellers. There are short-sellers and there are sellers who are selling stock that they hold. The people who sold at $14 were feeling pretty good after the stock went down. The short-sellers were looking at a profit and the long sellers think they made the right decision.Then the stock rallies above $14. Now the short-sellers are losing money and tell themselves that if it comes back to $14, they will by it back. Those who sold their shares now think that they made a mistake and tell themselves if they can, they will buy it again at $14. * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip Meanwhile, those who bought it at $14 wish they bought more. They tell themselves if it comes back to $14, they will add to their positions. Added to this are professional traders who see a clear level to trade off of.The buy interest of these four groups at $14 creates the support level. Canopy Growth (CGC)Canopy Growth (NYSE:CGC) grows and sells marijuana.The gap that I spoke about last week in CGC stock is refilling. The action here shows how what gaps up may gap down, and vice-versa.When a stock makes a big move in a short period of time, traders say "it gapped up" or "it gapped down". You can see that Canopy Growth stock gapped up in early January when it rallied from $30 to $40 in just a few days.Now that you know how support levels form, it is easy to understand why gaps refill. Those who sold a stock at a particular level buy it back if the stock rallies and then retreats to that level.When a stock gaps, it does not spend much time trading at the levels it gaps through. Because of this, there isn't enough time for buy interest to be created, so meaningful support does not form. This is why when a stock gaps up through a range, it may later gap down through it. That is what we have seen with CGC stock. Emerald Health Therapeutics (EMHTF)Emerald Health Therapeutics (OTCMKTS:EMHTF) is a pharmaceutical company that makes cannabis products.EMHTF is testing support at the $1.75 level. This level was also support in December. If you like the long-term prospects of the company, this is probably a good time to buy it.There is a story here that may be a very bullish dynamic for this company. Emerald Health just announced that it has received its cultivation license from the Canadian government for a large outdoor cultivation area.Investors are starting to realize that growing outside is substantially cheaper than indoor or greenhouse growing. There are advantages to these more expensive methods, such as enhanced security and better quality, but the cost advantages of outdoor growing more than offsets them. * 7 Dependable Dividend Stocks to Buy This move into outdoor growing may show that the company is positioning itself for the future. Curaleaf Holdings (CURLF)Curaleaf Holdings (OTCMKTS:CURLF) is a life sciences company that owns and manages licensed cannabis businesses. And CURLF stock shows us the concept of a trend.There is considerable confusion around trends and trendlines. In fact, I recently saw one well-known technical analyst say that trendlines are not valid. I have no idea what he is talking about.In financial markets, prices are either going up, down, or staying the same. When they are going down the forces of supply are in control. When they are rising the forces of demand are in control. When prices are not changing the forces are equal.If properly used and understood correctly, trendlines should simply be a graphical illustration of these dynamics. Of course, it takes some practice and experience but they are not "mathematical absurdities."Here we see that the forces of supply controlled the CURLF market from May until this week, when the downtrend line was broken. This simply means that the forces of supply may be taking over, or at least equalizing with the forces of demand. Aphria (APHA)Aphria (NYSE:APHA) grows and sells cannabis, and APHA stock continues to trade between resistance at the $7.30 level and support around the $6.25 level. It looked like it was going to break recently, but then the stock became oversold and rebounded.If the support at $6.25 breaks, it will probably become a resistance level. This happens just as explained in the Canopy section, except going in the opposite direction. * The 10 Best Dividend Stocks to Buy for the Rest of 2019 and Beyond As multiple groups of sellers converge on one area in the chart, resistance forms. CURE Pharmaceutical Holding Corp (CURR)CURE Pharmaceutical Holding Corp (OTCMKTS:CURR) develops and manufactures drugs and drug delivery systems.The action here once again shows how a resistance level becomes a support level. We identified this level last week. If you bought it you would be up over 10%.I find support and resistance level to be amazing things. Few people appreciate them. Academics say they shouldn't exist but clearly, they do.Resistance and support levels are really illustrations of mass psychology. Some exchange-traded funds or stocks have literally millions of share holders. Each one of these holders has their own agenda, yet somehow their combined actions create clear levels in the markets.Even after studying the markets for over 20 years I still can't fully comprehend how or why this happens. It reminds me of how ant colonies move to find new nests. Every individual ant just does its own thing, yet somehow the combined actions of millions of ants moves the colony.Now there is something to think about the next time you use some of these companies' products.As of this writing, Mark Putrino did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Stocks Top Investors Are Buying Now * The 10 Best Cryptocurrencies to Keep on Your Radar * 7 Marijuana Penny Stocks That Could Triple (But You Won't Make Money) The post 7 Marijuana Stocks With Critical Levels to Watch appeared first on InvestorPlace.
I've always regarded publicly traded marijuana companies like Canopy Growth (NYSE:CGC) as transformative investments. Prior to the legalization movement, an equity like CGC stock would have been impossible to materialize. Therefore, an entire industry is enjoying revenue streams that simply didn't exist several years ago.Source: Shutterstock But as much as I continue to emphasize the description "transformative," the CGC stock price is unfortunately not cooperating. After getting off to a great start in January, shares had only extracted brief moments of upside. However, since late April, the trajectory is decidedly negative, with Canopy Growth stock shedding roughly 30%.So what explains this mismatch between longer-term fundamental potential and the current volatility in Canopy stock? First, the company's fiscal fourth quarter of 2019 earnings report wasn't great. Although Canopy beat its revenue target, it widened per-share earnings losses much more than analysts expected.InvestorPlace - Stock Market News, Stock Advice & Trading TipsHowever, the markets didn't appreciate certain details. For instance, Canopy's recreational marijuana sales were down from the year-ago quarter. So too was the volume of cannabis sold. Shortly after the disclosure, the CGC stock price tumbled badly.And we haven't recovered from the turmoil. For the month so far, Canopy Growth stock is down 14%. * 7 Stocks Top Investors Are Buying Now More bad news comes in the form of revised profitability expectations. According to an interview between Jefferies' covering analyst Andrew Bennett and Canopy's CFO Mike Lee, CGC stock won't be profitable in its fiscal 2020 (April 1, 2019 - March 31, 2020).Of course, the counterargument is that we should give Canopy stock some time. However, since marijuana stocks are inherently emotional investments, the profitability downgrade represents a serious distraction. Why You Can Still Trust CGC StockBefore you give up on Canopy Growth stock, though, you should know that its volatility is not isolated. Other major cannabis firms, such as Cronos Group (NASDAQ:CRON) and Tilray (NASDAQ:TLRY), have faltered as well this year.That's not to say you should feel good about this or any other portfolio loser. Certainly, other investments' losses have no bearing on your target asset's decline. However, the shared fallout demonstrates that the issue is systemic rather than individualized.And what's causing cannabis stocks to shed so many percentage points in the markets? Mostly, it's institutional traffic jams. Specifically, Health Canada, our northern neighbor's department of national public health, is inundated with cannabis-licensing applications.Unfortunately for most sector players, Health Canada will need substantial time to process all the paperwork. In the meantime, viable projects just sit, waiting for approval. Obviously, this presents a massive dark cloud on the CGC stock price.However, I don't expect this situation to continue without some kind of resolution. At worst, Health Canada will just roll up its sleeves and crank out the application approvals. This would mean that Canopy Growth stock would likely enjoy a delayed bull run.But at the same time, I can envision emergency support at Health Canada. As long as those licensing applications sit, the Canadian government is needlessly throwing away cannabis-related tax revenues. Essentially, this would void the entire economic case for going green.Moreover, the health agency's backlog is a known headwind. While I can't say this bearish factor has been completely priced into CGC stock, I believe we're getting close.If it's any comfort, I'm putting money where my mouth is, having recently picked up Hexo (NYSE:HEXO) stock. We've Seen This Before …Another reason why I'm not panicking on names like Canopy Growth is that we've seen this narrative before.Prior to Canada becoming the first G7 nation to legalize recreational marijuana, demand for cannabis stocks spiked dramatically. Again, the markets had that transformative investment idea in their heads.But as we all know from retrospect, the investment community couldn't support the wild valuations that cannabis firms received. As a result, marijuana stocks tumbled.I think we're seeing the sequel to this movie: speculators love the potential of marijuana stocks, but then they encounter an operational or other fundamental challenge (like Health Canada). Those same speculators panic out of the markets, wreaking havoc on the CGC stock price and similar investments.However, these outside challenges will eventually fade. The Health Canada backlog is an external pressure that has nothing inherently to do with cannabis demand. If you think cannabis stocks are wild, just wait until they have a clear road ahead.As of this writing, Josh Enomoto is long HEXO. 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 Why I Still Believe in Canopy Growth Stock and the Weed Market appeared first on InvestorPlace.
Aurora Cannabis (NYSE:ACB) stock has steadily declined since late March. At a time when the S&P 500 continues to make new record highs, ACB stock and marijuana stocks in general have moved in the other direction. The industry has suffered after Canopy Growth (NYSE:CGC) fired its co-CEO and regulators caught CannTrust (NYSE:CTST) growing weed in unlicensed facilities.Source: Shutterstock The slow process of legalization in the U.S. has likely weighed on all marijuana stocks. However, triple-digit revenue growth by cannabis companies could foster a recovery. Also, despite a recent pullback, ACB stock and other cannabis equities trade at high valuations. While the cannabis industry should prosper, the actions of Aurora Cannabis could make it difficult for investors to benefit from this growth. * 7 Stocks Top Investors Are Buying Now Aurora Cannabis Versus ACB stockInvestors should not view Aurora Cannabis and ACB as identical entities. From a business standpoint, I think Aurora has made some wise acquisitions. These deals have made it the world's largest cannabis producer. Given the bubble-like valuations of marijuana stocks, I cannot blame Aurora for issuing massive amounts of ACB stock. I agree with my colleague ,James Brumley, that this dilution of Aurora stock will ultimately benefit the company.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBut the key question for investors is if it helps the owners of ACB stock. I have trouble seeing the benefits of the share dilution for these investors. As I pointed out in a previous article, the number of shares outstanding of Aurora stock rose from about 129 million in 2016 to 1.003 billion as of the end of the first quarter of 2019. ACB Remains an Expensive, High-Growth EquityThe dilution has helped to take the price of Aurora Cannabis stock down by almost 28% over the last four months, and by nearly 43% from its highs of last October. Despite that drop, ACB stock currently trades at about 56 times its sales. This lags Canopy Growth and other large Canadian peers such as Cronos Group (NASDAQ:CRON) and Tilray (NASDAQ:TLRY).In fairness, the anticipation of legalization has driven cannabis stocks higher in the past. The United States and several other countries continue to move toward legalization. That trend alone could reinflate marijuana stocks. Moreover, analysts, on average, expect revenue growth for Aurora of almost 385% this year and over 156% in 2020., Consequently, traders should not assume that the multiples of ACB stock will necessarily compress anytime soon. Aurora Is Financing Its Operations With ACB StockEven if Aurora stock price remains the same, it will still have an elevated price-sales (PS) ratio. Considering the recent behavior of the company, one has to assume acquisitions and dilution will continue. Those deals could make Aurora Cannabis' business bigger and better. Still, investors buy equities because they want returns on their investments. But instead of reaping profits from Aurora stock, they may finance the cost of the company's expansion.This growth could make ACB stock a buy some time in the future. However, by that time, marijuana stocks like ACB will probably resemble the equities of the large companies that are investing in them now. Emulating Constellation Brands (NYSE:STZ) and Altria (NYSE:MO), marijuana stocks will likely eventually trade at price-earnings (PE) ratios at or below the S&P 500 average. They may also pay significant dividends. Under these conditions, Aurora Cannabis stock may become a lucrative income play. Final Thoughts on ACB StockBut Aurora Cannabis will likely serve as the biggest obstacle to the growth of ACB stock for the foreseeable future. Aurora has solidified its position as the world's largest cannabis producer. However, the company has financed its growth by significantly diluting ACB stock. The number of shares outstanding has grown by about 800% over the last three years. While ACB probably invested the funds well, its actions have made it considerably harder for the owners of ACB stock to benefit from their investment.Someday, the hype that's lighting a fire under marijuana stocks will fade. At that point, they will probably become profitable, slower-growth, dividend-paying companies. ACB stock should become a solid investment at that time. However, given the recent dilution of Aurora stock, I would stay away from the shares for now.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 * 7 Stocks Top Investors Are Buying Now * The 10 Best Cryptocurrencies to Keep on Your Radar * 7 Marijuana Penny Stocks That Could Triple (But You Won't Make Money) The post The Growth of Aurora Has Largely Come at the Expense of ACB Stock appeared first on InvestorPlace.
When the year started, Hexo (NYSEAMERICAN:HEXO) stock got off to a nice start. The shares went from $5 to $8 -- riding the cannabis bull wave spurred by the legalization in Canada. But unfortunately, the expectations were too exuberant. Since late April, the HEXO stock price has gone into reverse; right back to $5.Source: Shutterstock But the company is not alone. Various other cannabis stocks have also been in the downtrend, such as Canopy Growth (NYSE:CGC), Aurora Cannabis (NYSE:ACB) and Cronos Group (NASDAQ:CRON). For the most part, all have had challenges in scaling up for the enormous demand in the industry.Now in the case of Hexo Corp stock, the latest earnings report was particularly disappointing. The company reported revenues of 13.02 million CAD, compared to the Street estimate of 14.8 million CAD. In fact, there was a quarter-over-quarter drop of nearly 9%. There was also weakness in the average price of adult-use dried grams as well as the average gross selling price per gram.InvestorPlace - Stock Market News, Stock Advice & Trading TipsYet the choppiness should not be a surprise. The cannabis is still in the early stages and there will be growing pains. * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip But despite all this, I still think HEXO stock represents an interesting opportunity. And to see why let's take a look at the following catalysts: HEXO Stock: ScaleWhile at an investor conference, Tilray (NASDAQ:TLRY) CEO Brendan Kennedy and CFO Mark Castaneda provided some interesting insights about the cannabis opportunity. One of their main contentions was that there will ultimately be a handful of major winners in the market. After all, a company will need a global platform to realize economies of scale so as to provide competitive pricing.Granted, as for HEXO, the company has struggled to ramp up production. Yet this should prove temporary. The company already is the dominant player in the Quebec market (which is the second largest in Canada). What's more, HEXO has began construction of a 323,000 square-foot facility in Greece. The acquisition of Newstrike Brands should also be a boost.Keep in mind that Hexo's management has reiterated its aggressive growth for revenues. For fiscal 2020, the forecast is for 400 million CAD. HEXO Stock: Strategic PartnershipHEXO has entered a 50-50 strategic relationship with Molson Coors (NYSE:TAP). Both parties will develop drinks that are infused with cannabis. Consider that the goal is to begin selling in Canada on Dec. 17.Gauging the potential impact of this is tough. But having the expertise, marketing capacity and distribution of TAP will be significant.But this is likely to just be one of the major deals for HEXO. During the latest earnings conference call, CEO Sebastien St.-Louis noted that he is talking to over 60 potential partners - and that there should be another deal announced by the end of the year. HEXO Stock: Liquidity and ValuationHEXO stock will soon be listed on the venerable New York Stock Exchange. This will put the company in a rare group, with only two other cannabis operators (CGS and ACB). The new listing will provide more visibility for the company - helping to snag partnerships and deals. But it will also mean more liquidity for the shares.Oh, and the valuation on HEXO stock is at fairly reasonable levels, at least compared to its other large rivals. For example, Bank of America (NYSE:BAC) analyst Christopher Carey believes it is the most attractive within his coverage universe - and he has a juicy $10 price target on the stock.Tom Taulli is the author of the upcoming book, Artificial Intelligence Basics: A Non-Technical Introduction. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities. More From InvestorPlace * 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 3 Reasons Investors Should Be High on Hexo Stock appeared first on InvestorPlace.
What is going on with the cannabis space? Seemingly every stock in the group is getting sold lower, including Cronos Group (NASDAQ:CRON). In fact, what's even more interesting is the way that they're all selling off. CRON stock and others are positioning in a similar bearish setup.Source: Shutterstock It's drawing questions from observers as to why the industry is under such pressure. The inquiry becomes even more pressing as the Dow Jones, S&P 500 and Nasdaq are hitting new highs on a seemingly daily basis.How can equities be at a high while cannabis stocks are scraping multi-month lows?InvestorPlace - Stock Market News, Stock Advice & Trading Tips Breaking Down Cronos Group StockThere are dozens of cannabis stocks investors can consider -- that goes for almost any industry. And like any other sector, there are good companies and not-so-good companies to choose from. Luckily for Cronos stock, it is a good company. But that doesn't seem to matter right now, and that's because of the fundamentals.You see, even though CRON stock runs a good operation, this company has a $4.7 billion market capitalization and had just -- wait for it -- 6.5 million CAD in sales last quarter. This was up an impressive 120% year-over-year, but is a very small revenue number given its valuation. * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip The company turned a pretty strong profit for the quarter, earning more than 400 million CAD. How's that possible on 6.5 million CAD in sales? CRON generated a non-cash unrealized gain of 436.4 million CAD on the revaluation of derivative liabilities.The cannabis space is a land grab right now. And the ones with the cash get to grab the most assets. Canopy Growth's (NYSE:CGC) big bank account was infused by Constellation Brands (NYSE:STZ). But now CRON stock can throw its hat into the ring, after it closed a $2.4 billion investment from Altria (NYSE:MO) in the most recent quarter.Now its balance sheet is strong, even if its income statement remains unimpressive. This vault will be important down the road. Earlier this month, Stifel analysts said the cannabis market could hit $200 billion in the next decade. That's up from $8 billion in 2018.The bottom line: you might look at the revenue underlining Cronos stock and question all the hype. But with more than $2.4 billion sitting in cash and making up half the market cap, it commands some respect. Trading CRON StockSo, did CRON stock just become a big-time sell? Not yet, but it could be soon. Aurora Cannabis (NYSE:ACB) is breaking down, while Canopy plunged through support. Both stocks were setting up as a descending triangle, a bearish technical development.Cronos stock isn't looking healthy, either.After falling hard on Friday and closing below the 200-day moving average, shares rebounded 4.5% on Monday. The stock closed just above this key moving average on Monday, but only by a dime. It's not clear whether Cronos stock will reclaim this mark or find it as resistance. Click to EnlargeBut that doesn't really matter because we know two things now. One, $14 support is a must-hold level. Unlike ACB, CGC and other cannabis plays, CRON stock is still clinging to its support level. Below $14 puts the June lows of $13.51 on the table, as well as the 61.8% retracement for the one-year range at $13.06.Below that and there's no immediate support level to lean on.The other thing that's clear? In order for Cronos Group stock to look healthy on the long side, we need to see it clear the $15 to $15.50 area. Over the past few months, $15.50 has been a relevant level, while both the 20-day and 50-day moving averages are trading in this range.It's a bit early to say Cronos Group stock is doomed, but it's not looking healthy as the industry draws in sellers. I'd rather wait for CRON stock to have the wind at its back than buying now and hoping support holds up.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 * 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 Did Cronos Group Just Become a Big-Time Sell? appeared first on InvestorPlace.
All pot stocks have been on a roller coaster ride over the past year. But, none have been quite as volatile as Tilray (NASDAQ:TLRY) stock. Over the past twelve months, Tilray stock has gone from $20, to $300, to $100, to $150, to $35.Source: Shutterstock That's a wild ride. Investors should expect it to continue. At their core, almost all pot stocks are high-risk, high-reward investments, given the speculative nature of the cannabis market and its long term growth prospects.TLRY, though, has more risk and more potential reward than peer pot stocks. As such, while all pot stocks project to undergo volatile swings for the foreseeable future, the swings in TLRY stock should continue to be more pronounced.InvestorPlace - Stock Market News, Stock Advice & Trading TipsWhat's the investment implication? Stay away from Tilray stock. For now. If you're looking to invest in the cannabis market for the long haul, there are safer and more reasonable ways to do so -- see market leader Canopy Growth (NYSE:CGC). * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip But, there is a scenario in the foreseeable future where TLRY stock does become a buy. Consequently, while I'm staying away from Tilray for now, I'm also keeping a close eye on it, and am ready to pull the trigger if the stars align for this stock. The Current Dynamics Imply High Risk, High RewardThe present situation surrounding TLRY is defined by a few critical characteristics, all of which imply that TLRY stock's inherent high risk, high reward trading nature will persist for the foreseeable future. Those characteristics are as follows. * One entity holds most of the outstanding stock. Perhaps the most important element of Tilray stock is that one investor (Privateer Holdings) holds nearly 80% of the outstanding stock. To be sure, this one investor has agreed not to unload all of the shares at once, and instead will gradually unload them over the next two years. Still, in the meantime, the trading float here is relatively constrained, and a big portion of that float is short. A small float plus a big short interest implies sustained big volatility over the next few quarters. * No consumer staples giant has invested in Tilray, yet. Another important element of Tilray stock is that, while peers Canopy and Cronos (NASDAQ:CRON) have scored multi-billion dollar investments from global consumer staples giants, Tilray has not. There are two ways to interpret this. Either no one wants to invest in Tilray, or someone will invest in Tilray. There are reasonable investors in both camps. So long as both those competing theories have supporters, TLRY stock will remain volatile. * Tilray is much smaller than the cannabis market leaders. Both Canopy and Aurora (NYSE:ACB) sold over 9,000 kilograms of cannabis last quarter and reported revenues of roughly $50 million or greater. Tilray sold just 3,000 kilograms of cannabis last quarter, with revenues of $23 million. This relative "smallness" means that Tilray could one day gain on its bigger peers, or be eaten alive by its bigger peers. So long as both of those outcomes are possible, TLRY stock will remain volatile.Broadly, so long as the float remains constrained, no consumer staples company has invested in the company, and Tilray remains substantially smaller than the cannabis market leaders, TLRY stock will remain volatile. Tilray Stock Could Become a BuyGiven the enormous volatility inherent to the stock, I think TLRY is best avoided at the current moment. Having said that, there is one thing which could dramatically reduce the volatility and make TLRY stock a buy. That one thing would be a multi-billion dollar investment from a consumer staples giant.Here's the bull scenario. Privateer Holdings is just now starting to offload some of its shares to strategic and institutional investors. In so doing, they are paving the path for a consumer staples giant to inject capital into the business. Consequently, a consumer staples giant that was formerly unable to invest in Tilray because of Privateer's near 80% holding, may now pull the trigger on a big investment.If such a big investment does materialize, Tilray stock will pop, because such an investment will mitigate present stock volatility, shore up the balance sheet, equip the company with the necessary firepower to compete at scale, and add clarity to the long term growth potential of the business.How big will such a pop be? Pretty big. Cronos is much smaller than Tilray in terms of sales and volume. Yet, because Cronos has a multi-billion dollar consumer staples investment and Tilray does not, Cronos has a $5 billion market cap, while Tilray has a $4.4 billion market cap. Thus, if Tilray scores a similar investment, you could reasonably see TLRY's market cap rise to well over $5 billion. Bottom Line on TLRY StockTilray stock has been, still is, and will remain the most volatile pot stock in the market. Because of all this volatility, TLRY stock isn't a buy at the current moment. However, that volatility could subside in the not-so-unlikely event that Tilray scores a big consumer staples investment in the foreseeable future.If that happens, TLRY stock will become a buy, given its undervaluation relative to other pot stocks with similar consumer staples investments.Until then, though, it's best to wait on the sidelines.As of this writing, Luke Lango was long CGC and ACB. 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 Here's Why Tilray Stock Is a High-Risk, High-Reward Situation appeared first on InvestorPlace.
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.
Cronos (CRON) inks deal to acquire fermentation and manufacturing facility in Winnipeg, Canada, from Apotex Fermentation Inc.