|Bid||16.02 x 800|
|Ask||16.02 x 800|
|Day's Range||15.62 - 16.17|
|52 Week Range||5.61 - 25.10|
|Beta (3Y Monthly)||4.15|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||N/A|
Akerna, a company that provides compliance software to the cannabis industry, headed to the Nasdaq today under the ticker KERN and the backing of an early Facebook investor. Yahoo Finance's Dan Roberts, Heidi Chung and Myles Udland speak to Akerna CEO Jessica Billingsley.
Actor & comedian Tommy Chong weighs in on CBD outlook. This coming as Texas legalizes hemp production. Yahoo Finance's Zack Guzman & Sibile Marcellus, along with 'BigEyedWish' founder Ian Wishingrad join in on the conversation.
The House of Representatives is expected to pass a bill making it legal for marijuana companies to use banks in states where weed is legal. Former U.S. Securities and Exchange Commission Attorney Ron Geffner warns it may go up in smoke in the Senate. He talks to Yahoo Finance's Adam Shapiro, Julie Hyman, and Entrepreneur Magazine Editor Jason Feifer.
[Editor's Note: This story was previously published in February 2019. It has since been updated and republished.]The 2018 midterm elections made clear that Americans preferred legalization over the continued prohibition of pot, which should bolster the case for the top marijuana penny stocks.When residents in California voted for full recreational weed, it boded well not just for marijuana penny stocks, but for electoral momentum in other states and the midterms emphatically proved this point.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIn conservative Utah and Missouri, voters approved medical cannabis. But Michigan stood above the rest, becoming the tenth state to legalize recreational marijuana. Significantly, it's also the first Midwestern state to approve such an initiative.Previously embattled marijuana stocks like Cronos Group (NASDAQ:CRON), Aurora Cannabis (NYSE:ACB) and Canopy Growth (NYSE:CGC) received a much-needed boost in the markets and really have capitalized on it.It's not difficult to understand why many investors believe in weed. Not only does legal marijuana open doors to a previously inaccessible sector, it has proven economic benefits. The commonly cited case study is Colorado. In 2015, one year after green lighting cannabis businesses, the botanical industry nearly hit $1 billion in revenue. In 2016, it breached the threshold, and growth remains strong. Considering that so many states suffer from budget shortfalls, a little green could go a long way.Plus, the sharp war of words and tariffs in U.S.-China trade relations amps up the case for marijuana penny stocks. Multiple industries, especially agriculture, are hurting. Full legalization provides an easy catalyst for economic activity and growth. * 7 High-Quality Cheap Stocks to Buy With $10 Under this backdrop, gambling on top marijuana penny stocks is more compelling than jumping on any other speculative venture. While risks abound, these four sector players offer considerable upside possibilities. Auxly Cannabis Group (CBWTF)A common difficulty in forecasting future price movements for top marijuana penny stocks is separating hype from reality. While almost every sector player advertises significant upside potential, most undercapitalized firms fail to deliver the goods.I had high hopes for Auxly Cannabis (OTCMKTS:CBWTF) last year due to its unique business structure. Auxly earned bragging rights for becoming the first cannabis streaming company.Energy and mining companies typically deploy the streaming model to gain full access to an industry's supply chain without incurring unnecessary risk. In theory, streaming is the way to go for marijuana-related organizations. Even with Canada's legalization initiative and U.S. electoral momentum, several legal and administrative hurdles exist. Streaming facilitates exposure to a lucrative industry, but with "stop gaps" should things go awry.Unfortunately, the markets have not been kind to Auxly stock. Since its January opener, shares have lost more than half their equity value.Nevertheless, I'm still hopeful that Auxly can pull it together. One of the major challenges for the company is that its streaming partners still encounter arguably unreasonable non-cannabis related obstacles. The biggest on the list is securing traditional financing, which stymies expansion efforts.However, the cannabis industry is making steady steps toward mainstream institutional acceptance. And especially with the U.S.-China trade war heating up, even conservative administrations can't afford overlooking a key revenue-maker. MPX Bioceutical (MPXEF)A common stereotype about legal-cannabis advocates is that they have ulterior motives for their product evangelism. Although that could be the case, one thing is undeniable: many, if not most top marijuana penny stocks focus on botany's medicinal aspect.This is especially true for MPX International (OTCMKTS:MPXOF). MPX operates three brands under its corporate umbrella: Salus BioPharma, Health for Life and its namesake MPX.The former two divisions specialize in medical-grade cannabis, while the latter caters to the green lifestyle. Salus is particularly intriguing as it represents a joint venture with Israeli pharmaceutical Panaxia to develop proprietary, smokeless cannabis products.Another compelling driver for MPXOF stock is its recent partnership with South Africa's First Growth Holdings. Primarily, this is an attractive deal because South Africa provides ample land and inexpensive labor. Moreover, the country recently legalized weed, so it provides MPX with global revenue synergies. Granted, management must make investments to ensure the higher-quality inventory which western connoisseurs desire. Nevertheless, the cost outlay should be very reasonable compared to other locales. * 7 Top-Rated Biotech Stocks to Invest In Today That's not to say you should jump on MPXOF stock without worries. The company isn't what you would consider fundamentally sound. Still, with relatively stable market performance and an impressive growth rate, speculators will want to keep close tabs on MPX. Supreme Cannabis Company (SPRWF)When Canada became the first G7 nation to approve recreational weed in October 2018, it actually forged the path forward for marijuana startups. As a result, the lion's share of marijuana penny stocks is based in Canada.A prime example is Supreme Cannabis Company (OTCMKTS:SPRWF). Supreme Cannabis, whose 7ACRES brand of medical-grade cannabis started life as a father seeking alternative therapies for his daughter.Eventually, 7ACRES grew to become a gold-standard cannabis facility, offering distinct, high-quality strains.What makes SPRWF stand out compared to other top marijuana penny stocks is that management is focused on a business-to-business (B2B) strategy. This enables the company to fine-tune its craft, rather than dilute its effectiveness through disparate supply-chain segments.Over the long run, I think this higher-end focus will distinguish SPRWF stock from the competition. For example, several mainstream retail stores, including Neiman Marcus and Vitamin Shoppe (NYSE:VSI), have pushed for cannabidiol, or CBD, products.Obviously, that's a big plus for the broader marijuana industry. But just selling bottom-shelf weed at large volume isn't going to cut it. Consumers want differentiation, which is what Supreme Cannabis offers. Therefore, SPRWF stock has a chance to positively surprise.That said, this is a very volatile market. SPRWF stock is a high-risk, high-reward venture, but a very tempting one due to positive industry-related developments. Cannabis Science (CBIS)Cannabis Science (OTCMKTS:CBIS) is easily one of the most speculative among top marijuana penny stocks. Immediately, you can tell that through either its ridiculously low share price, or its sub-$100 million market capitalization.Another giveaway is Cannabis Science's bold declaration to provide innovative therapies for unmet medical needs, including cancer. As the old saying goes, extraordinary claims require extraordinary evidence.But this is also where CBIS stock becomes interesting. Management claims that cannabis use dates back thousands of years, making it one of the most tried-and-true medicines. Plus, traditional pharmaceutical companies have become more a marketing machine than a therapy provider. Therefore, the medical-cannabis industry deserves at least some credibility.Also, I think it's fair to point out that the opioid crisis has caused mainstream pharmaceuticals to lose credibility. Despite best intentions, the pharmaceutical industry has left a wave of problems in its wake. This could negatively impact generations of Americans. Thus, marijuana penny stocks related to medical cannabis could benefit.That's the good news for CBIS stock. The not so great news is that shares continue to struggle. * 7 U.S. Stocks to Buy With Limited Trade War Exposure Conservative investors should probably stay away from Cannabis Science and marijuana penny stocks in general. But if you're a speculator, CBIS stock appears to have bottomed after a recent bout of volatility. It's no guarantee of upside, but it might be worth a shot with gambling money.As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 5 Red-Hot IPO Stocks to Buy for the Long Run * 5 Stocks to Buy for $20 or Less * 4 Dow Jones Stocks Ready to Rise Compare Brokers The post 4 Top Marijuana Penny Stocks to Take Seriously in 2019 appeared first on InvestorPlace.
Hexo (NYSE:HEXO) reported third-quarter earnings Thursday before the bell. The Quebec-based cannabis company's revenues missed analysts' estimate by a wide margin and even declined versus Q2, causing HEXO stock to plunge on both Thursday and Friday.Still, while this report might have scared investors, it does not appear to have affected the overall trajectory of Hexo Corp. HEXO Fell on a Massive Revenue MissThe HEXO stock price fell by another 5% on Friday. That came on top of an 8.5% decline on Thursday, as the fallout from the sequential revenue decline sent HEXO stock price plunging.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 5 Stocks to Buy for $20 or Less For Q3, analysts, on average, had expected a loss of 5 cents per share. The company reported a loss of 4 cents per share, coming in ahead of estimates. However, its revenue of C$13 million was well short of the C$14.8 million analysts, on average, had expected.But HEXO's sales soared more than tenfold from the C$1.2 million of revenue it reported in the same quarter a year earlier. However, its $400,000 sequential revenue decline may have further dampened traders' view on HEXO stock. HEXO Is Still Poised for Robust GrowthUp to this point, HEXO had begun to develop a reputation as a sleeper play in this industry. It does not garner the attention that is devoted to Canopy Growth (NYSE:CGC), Aurora Cannabis (NYSE:ACB), Tilray (NASDAQ:TLRY), or Cronos Group (NASDAQ:CRON).However, its home province of Quebec is Canada's second-largest. In this province of about 8.4 million people, HEXO controls more than 30% of the cannabis market. It has been able to be so successful in large part because of a supply deal it made to bring 200,000 kg of cannabis to the province over five years.Meanwhile, HEXO recently agreed to buy Newstrike Brands (OTCMKTS:NWKRF). The deal increases HEXO's production space by 470,000 sf. That gives the company enough capacity to produce 150,000 kg of cannabis per year. HEXO also wants to enter the edibles and beverage markets. In the beverage space, it has partnered with Molson Coors (NYSE:TAP).On top of that, though analysts expect HEXO to post a 17 cent per share loss this year, they expect its EPS to rise to positive 11 cents next year. Also, notwithstanding the quarterly report, its revenues appear robust. The company only brought in C$4.93 million last year. However, for fiscal 2019, analysts' consensus revenue estimates rise to C$62.62 million. In 2020, analysts expect its revenue to reach C$319.4 million. This triple-digit growth may turn Thursday's results into an anomaly Wall Street will soon forget. Should Investors Buy HEXO Stock?In fairness, most of HEXO's marijuana stock peers also sold off on the news. Hexo's report could have left many with second thoughts about the industry's lofty valuations. Still, I see the decline of HEXO stock price as an overreaction. Its sequential revenue decline does nothing to undermine the longer-term case for HEXO stock.For this reason, I think investors should still be bullish on HEXO. Its revenue decline might have blindsided Wall Street. However, by focusing on that revenue number, investors apparently ignored an acquisition that will dramatically increase both the company's production capacity and its reach in its home country.Moreover, HEXO has attracted an ally in Molson Coors that can give the company the financial muscle and marketing knowledge it needs to launch cannabis-based beverages. Additionally, its lucrative supply agreement in its home province has bolstered its position in edibles and other markets. Given its growth potential, investors should add to their positions in HEXO, instead of selling HEXO stock.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 * 4 Top American Penny Pot Stocks (Buy Before June 21) * 5 Red-Hot IPO Stocks to Buy for the Long Run * 5 Stocks to Buy for $20 or Less * 4 Dow Jones Stocks Ready to Rise Compare Brokers The post Hexo Stock Remains Attractive Despite Revenue Miss appeared first on InvestorPlace.
Marijuana stocks seem a bit wobbly at the moment and Canopy Growth (NYSE:CGC) is no exception. The CGC stock price hasn't tanked, to be sure. Shares in fact still are up a healthy 53% in 2019. But the gains came early. Since late April, Canopy has dropped over 20%.Source: Shutterstock Canopy Growth earnings on Thursday will provide an opportunity to reverse the recent trend. That's true not just for Canopy Growth stock but for the marijuana sector as a whole.The trend in the CGC stock price mirrors that of other widely held pot plays. Investor patience seems a bit thin. Valuations, even with modest declines, remain sky-high. And sector-wide earnings of late haven't been close to good enough.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIf Canopy -- the industry's largest player -- can't deliver, investors are going to wonder who can. And that suggests that the rest of the sector could follow Canopy stock downward. Expectations for Canopy EarningsAnalysts are expecting Canopy Growth to post a reasonably large loss in its fiscal fourth quarter. The current consensus estimate is for a loss of 24 cents CAD per share. * 7 Top-Rated Biotech Stocks to Invest In Today That figure isn't all that meaningful for two reasons. First, the reported figure likely isn't going to be close to that average. Canopy's net income is impacted by changes in fair value of its convertible debt and warrants owned in smaller cannabis companies. In Q3, for instance, Canopy actually reported a large net profit thanks to those accounting effects.Secondly, investors aren't really going to care about profits. Canopy, adjusting for one-time and accounting effects, is going to lose more money than it did a year ago. Since last year's fourth quarter, Canopy has acquired retail chain Hiku, which is not yet profitable. It has invested heavily in production and processing capabilities.These are investments Canopy has to make, decisions that shareholders generally support. There's no point in raising roughly $4 billion from Constellation Brands (NYSE:STZ, NYSE:STZ.B) if the money isn't going to be spent. Canopy has a head start on the industry, and it needs to keep spending to maintain that lead. That's actually the bull case for CGC stock, as I've detailed previously.Rather, investors are going to focus on revenue, pure and simple. Analysts expect revenue to increase 314% year-over-year. There will be some help from Hiku and other acquisitions in that growth but Canopy sales are going to soar. The question for Canopy Growth stock and for the sector will be if they climb high enough. Bad Omens for Canopy Growth StockThe concern for owners of CGC stock heading into earnings is that big growth from other pot plays haven't been big enough. Hexo (NYSEAMERICAN:HEXO) increased revenue nine-fold in its fiscal Q3. HEXO stock fell 13% in the next two sessions after reporting those earnings last week.Cronos (NASDAQ:CRON) earnings last month looked disappointing, though CRON shares have mostly held up. In April, Aphria (NYSE:APHA) stock tanked on an earnings miss with sales up over 500% YOY. Tilray (NASDAQ:TLRY) did a little better, yet its earnings last month largely failed to arrest its equity's long decline. Admittedly, TLRY shares looked awfully bubbly last year.Among the most widely held marijuana stocks, there hasn't been a recent earnings report that investors have truly cheered. And so investors betting on an increase in the CGC stock price next week are betting against the trend. Not Just the CGC Stock PriceThat string of poorly (or at least coolly) received earnings reports is why Canopy earnings are so important to the sector. There simply hasn't been much good news. Sales in Canada aren't growing, though supply constraints are an issue. Movement in the U.S. has been essentially nonexistent since the farm bill was passed in December.From a short-term standpoint, then, Canopy earnings are the last major catalyst for the sector for some time. We're probably talking close to two months. In a broad market that seems a little prone to panic and subsequent profit-taking, that's a potential problem.Therefore, Canopy earnings need to be -- and will be -- watched closely by the entire industry. If Canopy Growth stock sells off on Friday after Thursday evening's report, it's unlikely to be the only one to do so.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * The 7 Best Tech Stocks to Buy for the Second Half of 2019 * 7 Top-Rated Biotech Stocks to Invest In Today * 4 Semiconductor Stocks to Sell Compare Brokers The post Earnings Will Be Huge for Canopy Growth and Marijuana Stocks appeared first on InvestorPlace.
Shares of Cronos Group (NASDAQ: CRON) are starting to stabilize. After its weak first-quarter revenue report reminded investors that Cronos stock was very expensive, speculators are buying the shares once again. Why?Cronos has a $7.9 billion market cap but with its quarterly revenue of CAD $6.5 million (USD ~ $5 million or $20 million annualized), the company trades at 154 times sales.InvestorPlace - Stock Market News, Stock Advice & Trading TipsCronos has no room to report any signs of slowing revenue growth in the near-term. It must continue winning supply deals to grow market share. And on May 14, it did just that. The company inked a $30 million multi-year supply deal with MediPharm Labs over 18 months.The deal could optionally extend to $60 million over 24 months. Cronos will secure MediPharm's private label supply of concentrates, after processing Cronos' dry cannabis.The supply deal validates Altria's (NYSE: MO) $1.8 billion investment in Cronos. By outsourcing the process to a secondary player, Cronos may put Altria's cash to better use. Altria outsources its own tobacco production to thousands of farmers and probably advised Cronos to do the same. * 7 Top-Rated Biotech Stocks to Invest In Today Instead of spending all of its resources on building up production facilities, it could land additional partnership deals while sharing risks with them. Cronos is bullish on its partnerships, especially with its work with Ginkgo.In the September 2018 press release, Cronos said, "The landmark partnership between Cronos Group and Ginkgo will leverage the expertise of both organizations to solve this challenge and make more accessible the benefits of cannabinoids in an economically sustainable way."Since then, Ginkgo met its targets, triggering milestone payments. Ginkgo is a leader in synthetic biology, giving Cronos an advantage over the competition as the science works eventually bring meaningful results. Mixed First-Quarter Results and Cronos StockIn the first quarter, ASP (average selling price) rose 7% to $5.73 due to higher revenue from CBD oil. Operating expenses also rose 12%, as Cronos incurred professional fees for services related to its strategic initiatives.Despite the mixed numbers in the period, Cronos enjoys massive cash levels on its balance sheet that negates any investor worry over quarterly results. Altria's backing puts Cronos in a better position to capture opportunities that arise and to accelerate its strategic initiatives.Cronos has four strategic goals. It is establishing a global production footprint, developing a diversified global sales and distribution network, creating disruptive intellectual property, and growing a portfolio of products that resonates with consumers.Since January 2019, Cronos secured listings with a number of private retailers in Canada and in the province of Ontario, British Columbia, Nova Scotia, and Prince Edward Island. Collectively, those five provinces represent 58% of the Canadian population. Cronos Putting Altria Cash to WorkCronos plans to increase its capital investments to support an increase in production. The company expects Peace Naturals ramping up production through the course of 2019. The company has partnerships with companies in Israel, where it is developing a vapor product.Cronos will have additional production capacity ready in the upcoming second half of the year. It had around 1000 kilos of capacity in the first quarter and aims to have 40,000 kilos next. Getting production to that level will depend on how regulations change. Cronos is scaling up output depending on product demand levels, and demand is a function of regulatory changes that open up the market opportunity. Cronos had over $2 billion on its balance sheet in Q1 but is demonstrating restraint in the way it spends that cash. The Bottom Line on Cronos StockCronos is not profitable yet and its market size is still unknown. Though the company is still losing money, its nearly $2 billion cash balance gives the company plenty of M&A opportunities. Analysts are bullish on the company and have an average price of $28.50 on Cronos stock.Disclosure: As of this writing, the author did not hold a position in any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * The 7 Best Tech Stocks to Buy for the Second Half of 2019 * 7 Top-Rated Biotech Stocks to Invest In Today * 4 Semiconductor Stocks to Sell Compare Brokers The post After a Bumpy Few Months, Cronos Stock Is Back on the Move appeared first on InvestorPlace.
Even though the cannabis industry is still in its infancy, investors looking for a marijuana stock with a dividend aren't completely out of luck. Income-seeking investors should look to Innovative Industrial Properties (NYSE:IIPR) as a possible pot play. IIPR is structured as a real estate investment trust (REIT) and to keep that favorable tax treatment, REITs must be out 90% of their operating income in the form of dividends.Source: Shutterstock Cannabis investing is still in its formative stages, but there are a few traits many marijuana stocks share in common. To be clear, we're talking about the industry's credible names that trade on major exchanges. Think Cronos Group Inc. (NASDAQ:CRON), Aphria (NYSE:APHA) and others.Essentially the entire universe of major cannabis stocks are considered growth names. It is merely a matter of whether they are mid- or small-cap growth stocks. As a result, investors searching for dividends in the marijuana space are not going to find a lot.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 5 Red-Hot IPO Stocks to Buy for the Long Run For the moment, the best way for investors in the U.S. to marry the concepts of dividends and cannabis stocks is with IIPR. IIPR Backstory Leads to a Wide MoatIIPR's backstory remains relevant today. Innovative Industrial Properties was able to procure its REIT status before President Trump won the White House. After Trump won, the company's rivals encountered difficulties securing the REIT treatment, essentially extending a competitive advantage to IIPR.Innovative Industrial Properties owns and operates industrial venues that are leased to legal medicinal cannabis firms. Moreover, IIPR fills an important void for many legitimate cannabis growers and operators: providing funding that is unobtainable at traditional banks.Business owners known getting a loan from a traditional bank is hard. When your business is considered illegal at the federal level and your bank is federally regulated -- as all banks are in the U.S. -- there is no avenue to financing at that bank.Innovative Industrial Properties' model is simple: it buys properties from growers that are regulated at the state level and leases those properties back to the growers. By selling to IIPR, the growers get much-needed capital without the hassle of being turned down by their local bank. The benefit to Innovative Industrial Properties is that the leases its tenants sign are usually long term, providing the company and its investors with revenue predictability and maybe down the road, low earnings variability.For those pondering how Innovative Industrial Properties is able to trade on a major U.S. exchange, the answer is twofold. First, the company does not actually touch marijuana plants or grow them. Second, Executive Chairman Alan Gold ran healthcare REIT BioMed Realty Trust prior to that company being sold in 2016, meaning he has a history of running a legitimate, NYSE-traded company. The Bottom Line on IIPRInnovative Industrial Properties has a lot going for it, including the aforementioned competitive advantage, which generates robust yields on its deals."Capital remains sufficiently scarce that IIP averages a 15% yield on its sale-leaseback deals," according to Barron's.However, positive traits do not always come cheap in financial markets. Due to their above-average dividend yields and defensive characteristics, REITs usually are not value stocks -- nor are price-to-earnings ratios generally useful metrics. You invest in REITs for the payouts, not necessarily price increases.However, Innovative Industrial Properties trades for nearly 106x times earnings, making it feel like an Internet stock dressed up as a REIT. Plus, the stock yields just 1.78%. That is less than what investors get on the S&P 500 and 10-year Treasuries, which are significantly less risky than shares of IIPR.However, many pot stocks don't have a P/E ratio at all -- because they don't yet have earnings. * 7 Top-Rated Biotech Stocks to Invest In Today Based on its steady funds from operations (FFO), Innovative Industrial Properties' valuation is not actually alarmingly high. Importantly, that FFO implies the company has adequate payout coverage and dividend growth potential.Todd Shriber does not own any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * The 7 Best Tech Stocks to Buy for the Second Half of 2019 * 7 Top-Rated Biotech Stocks to Invest In Today * 4 Semiconductor Stocks to Sell Compare Brokers The post Looking for a Pot Stock With a Wide Moat and a Dividend? Try IIPR appeared first on InvestorPlace.
A good rule of thumb in the stock market is to not buy stocks just because they are cheap or low. Cheap stocks, or stocks that trade at discounted valuation multiples, are often cheap for a reason. The same is true for low-price stocks, or stocks that trade in the under-$10 and under-$20 ranges.As such, when dealing with super cheap stocks or super low-price stocks, investors should exercise caution. These stocks are at these levels for a reason, and it's not usually a good reason.Having said that, this group of beaten up stocks does offer significant upside potential. These stocks are priced for death. Thus, if anything good happens, these stocks will rise by a lot, and quickly. But you need something good to happen first, and something good only materializes for a handful of these sub-$10 and sub-$20 stocks.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Top-Rated Biotech Stocks to Invest In Today With that in mind, I've put together a list of high quality stocks in the under $20 bucket which are supported by healthy fundamentals, and have a realistic opportunity to rally in a big way from their current prices. Which stocks made the list? Let's take a deeper look. Luckin Cofffe (LK)Source: Shutterstock Stock Price: $18The first stock on this list is freshly public Luckin Coffee (NYSE:LK), the hyper-growth China retail coffee chain which many dub the Starbucks (NASDAQ:SBUX) of China.The core growth narrative here is very favorable. Luckin is the fastest growing and second largest retail coffee operator in China, and is on track to soon become the largest player in the space. At the same time, the China economy is rapidly urbanizing and expanding, and the coffee market in that economy is surging higher, rising by over 30% last year. That makes Luckin the hyper-growth leader in a rapidly expanding market, a combination which ultimately implies tremendous long-term growth potential.The numbers underlying LK stock are equally favorable. Luckin Coffee has a market cap of about $4 billion. Starbucks has a $100 billion market cap. To be sure, Luckin Coffee will never be as big as Starbucks. But, if the company does become a leader in what projects to be a $25 billion-plus China retail coffee market, then today's $4 billion market cap looks like a steal.Starbucks has about 40% market share in the U.S. Luckin can maybe do 20% share in China. A 20% share in a $25 billion market implies $5 billion revenue potential. On 10% operating margins and after a 20% tax rate, that equates to $400 million in net profits. A market average 16 multiple on that implies a potential future valuation target of over $6 billion. That's way bigger than $4 billion. Aurora Cannabis (ACB)Source: Aurora Cannabis Stock Price: $7.50In the under $10 category, one of the more attractive stocks to buy is undervalued Canadian cannabis producer Aurora (NYSE:ACB).No matter which way you slice it, Aurora is one of the more undervalued pot stocks in the market. It's cheaper than most peers on a trailing sales basis, forward sales basis, volume basis, and on pretty much every other important operating metric. That relative cheapness in ACB stock comes despite Aurora having many strengths. Aurora is the second largest player in the Canadian cannabis market behind Canopy Growth (NYSE:CGC), is one of the fastest growers in the market, is behind some of the top selling products across Canada and has one of the largest production capacities.Why, then, is ACB stock cheap relative to peers? Balance sheet. Cronos (NASDAQ:CRON) and Canopy are loaded up with billion dollar investments from consumer staples giants, which simultaneously shore up their balance sheets and give those companies ample firepower to grow rapidly. * The 7 Best Tech Stocks to Buy for the Second Half of 2019 Aurora has no such investment. But if the stock stays this cheap for long, it's only a matter of time before they get a big investment. Also, the company is tapping into the debt markets to raise sufficient capital to compete, meaning that in the big picture, this valuation disconnect has no reason to exist. If it gets wiped out -- as it should -- ACB stock could fly higher. Vipshop (VIPS)Source: Shutterstock Stock Price: $7.75Another hidden gem in the under $10 category is Chinese e-retailer Vipshop (NASDAQ:VIPS).Although China's economy is slowing, it is still growing at a robust mid single digit rate. At the same time, the digital economy remains red hot, with e-retail sales projected to rise 30% this year. Vipshop is at the heart of this robust e-retail sales growth narrative. Further, Vipshop is a discount retailer, and if the U.S. retail landscape has shown us anything, it is that off-price retail is a winning strategy. See the stocks of Ross Stores (NASDAQ:ROST), TJX (NYSE:TJX), Walmart (NYSE:WMT) and Five Below (NASDAQ:FIVE), versus the stocks of Nordstorm (NYSE:JWN) and Macy's (NYSE:M).Thus, Vipshop finds itself at the convergence of two favorable trends. On one end, you have robust growth through expansion of China's e-commerce landscape. On the other end, you have sustained popularity through an off-price retailing strategy.Net net, that means Vipshop projects as a sustained big grower for the foreseeable future. That sustained big growth should shoot VIPS stock materially higher from today's sub-$10 price. American Eagle Outfitters (AEO)Source: Mike Mozart via Flickr (Modified)Stock Price: $17A bunch of mall retailers trade in the under $20 range. But, only one retail stock is really worth buying at these levels and that stock is American Eagle Outfitters (NYSE:AEO).Put simply, American Eagle is a winning retailer. They are succeeding where others are not. American Eagle has transformed into the king of the denim category, and denim has made a strong comeback over the past several years. At the same time, American Eagle's Aerie brand has been one of the hottest stories in retail because the brand has aligned itself with body positivity tailwinds. Because of these favorable dynamics, American Eagle demand has remained resilient in the face of broader mall retail demand turbulence, which has allowed American Eagle to report far better than peer numbers over the past several quarters.The numbers speak for themselves here. American Eagle has rattled off 17 consecutive quarters of comparable sales growth, and 6 consecutive quarters of 5%plus comparable sales growth, including a 6% comp last quarter. In the overlapping period, peer mall retailers Nordstorm, J.C. Penney (NYSE:JCP), Gap (NYSE:GPS), Express (NYSE:EXPR) and many others pretty much all reported negative comps. The norm was also big gross margin compression. American Eagle's gross margins only fell back 30 basis points. * 5 Red-Hot IPO Stocks to Buy for the Long Run Broadly, American Eagle Outfitters is significantly outperforming its retail peers. This is nothing new. This has been the trend for a long time. It also projects to remain the trend for the foreseeable future. Consequently, if you're gonna buy a mall retail stock in the under $20 category, AEO should be your first choice. Ford (F)Source: Jens Mayer via Flickr (Modified)Stock Price: $10The last stock on this list is another stock in the sub-$10 category which has compelling upside in a medium to long term window.We all know Ford (NYSE:F), the U.S. automotive giant that makes great pick-up trucks and a variety of other good cars. Naturally, that sounds like a stable business, since auto demand is fairly stable, and Ford has been a relevant player in that space for what seems like forever. But the narrative supporting Ford stock has weakened over the past several years, mostly because the auto space is shrinking thanks to ride-sharing, and because Ford is losing share thanks to the emergence of electric vehicles.These headwinds are very real. But they are also overstated. Sure, some urban residents will chose to forego car ownership as a result of increased ride-sharing prevalence. But most won't, because no matter how good ride-sharing gets, it won't ever parallel the convenience of car ownership. Further, electric vehicles are ramping. But, Ford isn't just sitting on its hands while consumption pivots. They are pivoting into the EV space, too, and the company should be able to command respectable EV share at scale.Overall, then, the fears dominating the Ford narrative at present are overstated. Ultimately, they will pass, and when they do, Ford stock will rally from today's depressed levels.As of this writing, Luke Lango was long LK, ACB, CGC, TJX, WMT, FIVE, and JWN. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * The 7 Best Tech Stocks to Buy for the Second Half of 2019 * 7 Top-Rated Biotech Stocks to Invest In Today * 4 Semiconductor Stocks to Sell Compare Brokers The post 5 Stocks to Buy for $20 or Less appeared first on InvestorPlace.
Canopy Growth Corp (NYSE:CGC) closed down 2.29% on Thursday, with CGC stock at $41.86 -- nearly one dollar lower than its Monday open after spiking over $44 on Tuesday. What caused the latest slide in CGC stock price? Besides the usual cannabis industry volatility (more on that shortly), the world's largest cannabis company announced on Thursday that it will release its Q4 results on June 20. And that comes just two days after the company's CFO gave an interview where he said his company will continue to lose money "for the foreseeable future."Source: Canopy Growth Why the Latest Slide in CGC Stock Price?In its Q3 earnings, Canopy Growth reported a surprise net income of $74.8 million CAD, however the company also posted an operating loss of over $157 million. It turned that loss into a positive only because of a change in the fair value of assets and liabilities -- which added over $233 million to its bottom line for the quarter. Naturally, CGC stock got a nice boost based on those results. * 7 First-Half IPO Stocks That Will Falter in 2019's Second Half In Q4, the company is expected to once again show an operating loss, but it won't have a repeat of last quarter's accounting boost. On the contrary, Canopy Growth's CFO told Bloomberg that CGC will likely be generating negative income "for the foreseeable future." The question there is whether the operating loss is shrinking -- showing a move toward eventual profitability -- or growing.InvestorPlace - Stock Market News, Stock Advice & Trading TipsRevenue is also something investors are nervous about. The Canadian recreational cannabis market has not taken off as quickly as expected. Marijuana sales dropped early in the year as the legalization excitement wore off, and unsold inventory built up. And just last week, Canopy Growth's Tweed cannabis retail operation was forced to lay off 12% of staff in the province of Manitoba in what it described as "growing pains."The dip in CGC stock reflects uncertainty about what is going to be seen in those Q4 (and full-year fiscal 2019) financial reports. CGC Stock Also Reflects Volatility in the Cannabis IndustryInvestors in CGC stock may be happy to see this week come to a close, however other cannabis stocks have also had a bumpy ride. In particular, Cronos Group Inc (NASDAQ:CRON) dropped 4.33% on Thursday, while Aurora Cannabis Inc (NYSE:ACB) repeated its pattern of last week, starting off up and then losing ground through the week (it dropped another 2.26% on Thursday). While this week has been up and down for CGC stock price, it reflects a 12-month period that's been a veritable roller coaster ride: below $25 last August to nearly $57 by October, dropping to the $27 range in December, back over $50 in January, topping $52 in April, and now just under $42.The overall theme is that the cannabis industry is still a relatively new one with recreational marijuana in particular in the early stages of growth.That means cannabis companies are still dealing with large expenditures as they open new production facilities. Retail outlets and supporting supply chain operations are still ramping up in most markets, and actual consumer demand for the product can be tough to judge accurately. Regulations can vary wildly in the different markets cannabis companies operate in, adding a high level of complexity to their business.In addition, many recreational marijuana producers are still perfecting methods for growing, harvesting, packaging and distribution.And then there's the hype surrounding the cannabis industry. It's not just the prospect of legalization in another state or even at the federal level that get's investors excited and buying up Canopy Growth stock. Headlines about cannabis products like CBD and its potential health benefits can cause big spikes in cannabis stocks as investors stampede to get in early. * 10 Stocks to Buy That Wall Street Expects to Soar for the Rest of 2019 All of these factors mean costs and revenue can vary significantly from quarter to quarter. And until the industry matures, CGC stock and other cannabis stocks are best for patient investors who are willing to wait and ride out the rocky weeks and wild swings.As of this writing, Brad Moon did not hold a position in any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 10 Stocks to Buy That Wall Street Expects to Soar for the Rest of 2019 * 7 Value Stocks That Are Flying Under the Radar * 6 Mouth-Watering Fast Food Stocks for Growth Investors Compare Brokers The post CGC Stock Continues Week of Losses for Pot Stocks appeared first on InvestorPlace.
Cannabis stock traded broadly lower Friday, putting the sector on track for a fourth-straight loss, as Hexo Corp. shares extended losses toward a 3-month low in the wake of disappointing quarterly results. The ETFMG Alternative Harvest ETF dropped 2.1%, as 31 of 38 components sold off, and the Horizons U.S. Marijuana Index ETF shed 3.2%. The ETFMG ETF has now lost 5.2% over the past four sessions. Among the sector's more-active components, shares of Hexo Corp. dropped 4.1%, after losing 8.8% on Thursday, to put them on track for the lowest close since March 12. Elsewhere, shares of Aurora Cannabis Inc. inched up 0.1%, after losing 4.7% over the past three days; Cronos Group Inc. dropped 5.7%; Aphria Inc. shed 2.0%; and Canopy Growth Corp. declined 2.0%. The ETFMG ETF has now shed 15% over the past three months while the S&P 500 has gained 2.7%.
[Editor's note: This story was previously published in March 2019. It has since been updated and republished.]Often, when analysts or bloggers talk up the potential of marijuana stocks, the focus is on the consumer side of the industry. But some of the best stocks in the pot sector may be medical marijuana stocks.Indeed, it's on the medical side where growth likely is to be largest in the near term. Canada did legalize recreational marijuana in October, but investors promptly sold the news in response. U.S. legalization is likely to be a long slog. Attitudes are mixed in Europe -- but even in legalized markets anywhere, black market (and untaxed) operators will be able to take share.InvestorPlace - Stock Market News, Stock Advice & Trading TipsMeanwhile, approval of medical marijuana (in the U.S. and elsewhere) seems to be moving at a faster pace. In such a highly regulated market, black market and even smaller producers likely will be shut out. Quality and consistency will be key. Here, scale will matter. And those companies that win early have the best chance of becoming market leaders -- and providing big gains for investors. * 10 Stocks to Buy That Wall Street Expects to Soar for the Rest of 2019 As always -- and particularly in this space -- investors need to mind the risks and size positions accordingly. But for investors who see medical marijuana stocks as the next big thing, these three are the best stocks to buy for investors enamored with weed.Source: Shutterstock Charlotte's Web (CWBHF)Charlotte's Web (OTCMKTS:CWBHF) has become one of the leading players in CBD oil (cannabidiol). And though Charlotte's Web products are made from hemp -- at least for now -- instead of marijuana, the stock still looks like one of the best plays in the sector.InvestorPlace's Matt McCall named CWBHF (the stock also trades on the Canadian Securities Exchange, ticker CWEB) as his pick for our list of the best stocks for 2019. And the case makes some sense. CBD oil sales are soaring, and Charlotte's Web is a market leader. As McCall pointed out, the federal farm bill in the U.S. provided a catalyst by legalizing hemp.With so many customers yet to try CBD oil -- and so many existing users attached -- market growth should be huge. And while CWBHF isn't cheap from a valuation standpoint, its position as a market leader should allow it to grow into its valuation.Source: Shutterstock Cronos (CRON)Of late, marijuana producer Cronos Group (NASDAQ:CRON) has made the headlines for its consumer business. Most recently, tobacco giant Altria (NYSE:MO) invested some $1.8 billion in the company. The combination of Altria's advertising and distribution reach and Cronos' production capabilities would seem to be the best fit for the consumer side of the business.But investors can't ignore that Cronos is a medical marijuana stock as well. In fact, it's that business that drives the majority of its revenue at the moment. And it also has given the company a beachhead in multiple markets around the world, from its home market of Canada to Germany, Israel and Poland. * 10 Stocks to Buy That Wall Street Expects to Soar for the Rest of 2019 I wrote after the Altria deal that investors should stay patient with CRON stock. And in this market, that might still be wise advice.Source: Shutterstock CannTrust (CTST)CannTrust (NYSE:CTST) has been one of the biggest victims of the post-legalization selloff. The stock lost more than half its value and touched a 52-week low in the process last year. And it's been in an almost continuous slump again since March.Unlike many peers, the company usually posts gross profits. And its established leadership in the Canadian medical marijuana industry should drive consistent growth and allow CannTrust to stay profitable. There is some retail exposure here as well, but unlike peers, CannTrust seems to have room to drive upside on the medical side alone.CannTrust also was able to get a listing on the New York Stock Exchange this year. Admittedly, uplisting hasn't helped pot stocks in and of itself (most notably Aurora Cannabis (NYSE:ACB) took a lot longer to take off than was expected), but it certainly didn't hurt.From a profitability standpoint, at least, CNNTF seems like one of the best stocks in the pot sector. And with valuation near the lows, at least some of the risks here likely are priced in.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 10 Stocks to Buy That Wall Street Expects to Soar for the Rest of 2019 * 7 Value Stocks That Are Flying Under the Radar * 6 Mouth-Watering Fast Food Stocks for Growth Investors Compare Brokers The post 3 Medical Marijuana Stocks to Buy appeared first on InvestorPlace.
Shares of Cronos Group Inc. (NASDAQ:CRON), the Canadian medical marijuana producer, have been on a roller coaster ride this year. In the first quarter, Cronos stock more than doubled, but as the quarter drew to a close, investors departed the name, sending the shares tumbling over the course of April and May.Source: Shutterstock This month, Cronos stock seems to have found round-number support at $14 and is rallying hard off that level. While the stock was pinched on June 11, to the tune of a 2.42% loss, it is still up 28% over just the past week.One of the obvious catalysts this month for Cronos stock was an upgrade by Bank of America analyst Christopher Carey coupled with an epic, upward price target revision by that analyst. Earlier this month, Carey lifted his rating on Cronos stock to "buy" from "underperform," the equivalent of a "double upgrade" because there is usually a rating in between "buy" and "underperform." Additionally, the analyst boosted his price target on Cronos stock to $20 from $13, implying a decent amount of upside from Tuesday's close of just under $17.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Cronos ControversyAs is the case with so many cannabis stocks, opinions differ on Cronos stock. While Cronos has its share of supporters, there are also skeptical voices. At least one analyst prefers Aphria (NYSE:APHA) to Cronos, though the former is about $1.3 billion smaller than the latter in terms of market value. * 7 Stocks to Buy for the Coming Recession Jefferies analyst Owen Bennett said Aphria's strengths in extraction, capacity and its international strategy are attractive qualities, while noting Cronos stock is richly valued relative to its cannabis equity peer group.Contributing to the debate on Cronos stock, Stifel analyst Andrew Carter recently initiated coverage of the name with a "tepid" hold rating. However, Carter notes a sector-wide pullback could enable financially sturdy marijuana companies, including Cronos, to possibly scoop up some rivals at discounted valuations.Cronos has $1.8 billion in cash, one of the more impressive cash hoards in the legalized marijuana industry and one that really stands out when considering the company's market capitalization is just over $3 billion. That $1.8 billion is the sum tobacco giant Altria Group (NYSE:MO) previously invested in Cronos, and Altria CEO Howard Willard has been open about his company making that investment in Cronos to help medicinal marijuana firm make the moves it needs to make to bolster market share. Bottom Line on Cronos Stock: Looking South of the BorderCronos is a Canadian company and while recreational marijuana is legal across that entire country, the real opportunity for the company may lie south of the border in the U.S., where the company is looking to enter the fast-growing cannabidiol (CBD) market.CBD is the most popular cannabis-based derivative.Currently, much of the enthusiasm for CBD revolves around hope and speculation. Supporters believe it can be elixir for various medical ailments and other uses, but there is not much in the way of empirical scientific evidence to support those claims. The good news for Cronos stock, assuming the company can effectively execute a foray into the U.S. market, is that the segment is expected to deliver exponential growth.A recent study by BDS Analytics and Arcview Market Research says the U.S. CBD market could swell to $20 billion by 2024."In fact, BDS Analytics is predicting an compound annual growth rate of 49 percent by 2024 across all distribution channels," reports Forbes. "Also, they expect that the CBD market, combined with THC products, will create a total market of $45 billion for cannabinoids by 2014." * 7 High-Quality Cheap Stocks to Buy With $10 Bolstering the long-term case for Cronos stock are the various distribution channels for CBD, many of which are mainstream. The ride will include some volatility -- that is just the name of the game with cannabis stocks -- but Cronos stock is a compelling long-term idea if management executes the CBD opportunity the right way.As of this writing, Todd Shriber did not own any of the aforementioned securities.Compare Brokers The post Cronos Stock Could Be Worth the Bumpy Ride appeared first on InvestorPlace.
Despite the market's hearty rally last week wasn't a good one for Aurora Cannabis (NYSE:ACB) because Aurora stock is stuck in a technical downtrend.Source: Shutterstock Even as a number of stocks in the cannabis industry were bouncing higher as well, the recent underperformance vs. the overall market has investors wondering if Aurora is set to breakout or breakdown.Late last week, Stifel analysts initiated Aurora Cannabis stock with less-than-enthusiastic coverage. They slapped a hold rating and a C$10 price target on ACB ($7.47 USD). From current levels, that implies a slight downside but not much. At the very least, some investors may read that as a positive note. After all, it could have been a sell rating with a target that implied a big downside.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Dark Horse Stocks Winning the Race in 2019 Still, it doesn't paint the most optimistic picture. The analysts argue that Aurora's "international medical-use growth opportunities are limited outside of Canada and Germany." They remain cautious as ACB due to execution concerns and the company's "lack of definitive strategy."So what do the charts say? Trading ACB Stock Click to EnlargeShares of Aurora stock are stuck in a tough downtrend (blue lines), with channel resistance squeezing it lower. Last month the 20-day and 50-day moving averages began acting as resistance, while Aurora is flirting with losing its 200-day moving average as well.Once ACB stock lost the $8.25 to $8.50 area last month, more selling pressure took hold. This area was resistance from October through March, but after turning to support it looked as if it would buoy the name going forward. Keep in mind, Aurora had just about doubled from the start of the year through mid-March.So what now?I'm watching a few key areas in the short term, starting with the 200-day. If this area turns from Q1 support to Q2 resistance, there will most likely be more downside to Aurora Cannabis stock. If ACB can reclaim this level, it will set up an important test with resistance. The only problem? Resistance sits between $8.10 and $8.60 and is trending lower. That's where investors will find the 20-day and 50-day moving averages, as well as channel resistance.Below the 200-day, and the 61.8% retracement at $7.29 will be an almost immediate focus. If it fails as to boost Aurora Cannabis, channel support will soon be called upon near $7.So is a breakout or breakdown coming for ACB stock? Until we first see how it handles some of these key levels, we won't have our answer, unfortunately. However, breaking out of this channel can trigger a big move in either direction. For that reason, these are must-watch zones for Aurora stock investors. Until they give way, ACB can remain channel bound. Bottom Line on Aurora StockI consider the cannabis space industry very interesting. On the one hand, it's moving impressively fast with regulation, public acceptance and corporate revenue. That's not to say there won't be bumps in the road, only that it's moving very quickly in the right direction. That said, despite this explosive growth, it's very much a long-term play. That's because the valuations are pretty large already.Take Aurora Cannabis for instance.ACB stock commands a market cap of almost $8 billion, while full-year estimates for fiscal 2019 revenue stand just under $200 million. That leaves Aurora trading at 40 times this year's revenue. Although on the more bullish side, estimates also call for $500 million in sales next year. That's a more palatable 16 times current sales but would also assume that the stock price stays flat over the next 12 months.So in a way, Stifel's coverage makes sense. The stock has upside provided a few things continue to play out. More states and countries need to continue down the regulatory approval path, while Aurora stock needs to execute on its opportunities. Lastly, it needs to show a path to profitability, while continuing its stunning revenue growth over the next few years.That really goes for more companies besides Aurora stock too. Almost all cannabis plays need to. That includes Canopy Growth (NYSE:CGC), Tilray (NASDAQ:TLRY), Aphria (NYSE:APHA), Cronos Group (NYSE:CRON), New Age Beverages (NASDAQ:NBEV) and others. Let's see if they can deliver.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 * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Dark Horse Stocks Winning the Race in 2019 * 6 Chinese Stocks to Sell That Are Suffering From a Digital Ad Slowdown * 4 Technology Stocks Blasting Higher Compare Brokers The post Here's What Needs to Happen for Aurora Stock to Break Out appeared first on InvestorPlace.
Though the bulk of cannabis stock-mania to date has focused on Canopy Growth (NYSE:CGC), Tilray (NASDAQ:TLRY), Aurora Cannabis (NYSE:ACB) and Cronos Group (NASDAQ:CRON),arguably the most compelling pick in the bunch, Hexo (NYSEAMERICAN:HEXO), has been habitually overlooked.That's changing though, and for good reason. As marijuana-stock mania continues to mature and investors are willing and able to start judging these companies on their individual merits, they're finding HEXO is about as well-positioned for growth as any other name in the business. Although the Hexo stock price feels frothy now, this quiet name may be one of the better options for newcomers looking for exposure to marijuana stocks. * 7 Stocks to Buy As They Hit 52-Week Lows Bank of America's Christopher Carey agrees.InvestorPlace - Stock Market News, Stock Advice & Trading Tips What Makes HEXO Different?At first glance, it's easy to assume all marijuana stocks are the same.Take a closer look, though, and it becomes clear they're not. Aurora, for instance, has made it clear it's first and foremost hoping to make a meaningful shift into the medicinal market, and is steering clear of beverages. Canopy Growth has mastered its appeal to recreational users. Each name in the business, in fact, is now cultivating one or more niche.So what makes HEXO different? A couple of things.One of them, oddly enough, is geography.Though recreational cannabis is now legal everywhere in Canada, one of the proverbial epicenters of the movement has been Quebec, where HEXO sells roughly one-third of all cannabis bought. Its long-term supply contract should keep it positioned as the market leader there for the foreseeable future.The overarching difference between HEXO and its peers, however, is its plans to penetrate the still-budding edibles and beverage market, in the U.S. and Canada, along with its giant partner and its history of innovation.It's a tricky and unproven arena, one of the reasons Aurora Cannabis has no current plans to produce a beverage line. But HEXO will have plenty of competition in that market. Constellation Brands (NYSE:STZ) and Canopy Growth are teaming up on beverages, and New Age Beverages (NASDAQ:NBEV) has already launched a cannabis-infused line, using the brand name Marley (as in Bob Marley).HEXO has something of an ace up its sleeve on this front, though. It's already working with alcohol giant Molson Coors Brewing (NYSE:TAP) to bring beverages to the Canadian market, a market that may be worth on the order of $3 billion, before the end of the year.Though Constellation and Canopy will provide formidable competition, Molson thinks HEXO was the better partner. It would know, too. It held discussions with Aurora Cannabis and Aphria (NYSE:APHA) along with two other unnamed outfits, but Frederic Landtmeters, the CEO of Molson Coors Canada, ultimately concluded it was Hexo's "track record of innovation" that would make it the highest-potential partner.Then there's the detail investors have likely overlooked; Hexo is arguably better prepared to get a foothold in the growing U.S. market than most cannabis companies.Hexo USA was only officially launched a couple of weeks ago, but its CEO, Sebastien St. Louis, has already been in the United States for a while, speaking with investors, laying the groundwork for the company's future in the country.What that future has in store remains unclear, particularly given the fact that recreational cannabis and even medical marijuana remain illegal in much of the United States. But Oppenheimer analyst Rupesh Parikh noted in February, when he first started covering Hexo stock, that he expects HEXO to develop partnerships in non-beverage categories like cosmetics, edibles and vapes. That's important simply because, in the United States and Canada, consumers who are interested in trying cannabis for the first time are more likely to do so by eating or drinking it rather than smoking it.Others are already in the space, to be clear, but no cannabis company has yet entered into an edibles-oriented partnership from a major name. HEXO may be quietly mulling the industry's first such deal, if Parikh's instinct is on target. Looking Ahead for Hexo StockBank of America's Christopher Carey noted in April, "HEXO is our Top Pick in cannabis, screening compelling in our valuation framework vs peers (EV/sales and DCF), and with fundamentals grounded by the most de-risked cannabis supply in Canada (off-take with Quebec), an innovation-forward organization and potential for additional value-add partnerships (beyond that already developed with Molson Canada)."HEXO alluded to such value-added partnerships when Hexo USA was launched, bolstering comments already offered by Oppenheimer. And Molson has already noted how innovative the company has been.The assessments remain largely the same from one impartial observer to the next.Hexo stock may not be the absolute top pick in the cannabis space, as Carey suggests, but there's no denying HEXO is a marijuana stock that's been erroneously ignored.As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about James at his site, jamesbrumley.com, or follow him on Twitter, at @jbrumley. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Stocks to Buy As They Hit 52-Week Lows * 4 Antitrust Tech Stocks to Keep an Eye On * 5 Gold and Silver Stocks Touching Intraday Highs Compare Brokers The post Hexo Stock May Be the Cannabis Industry's Best-Kept Secret appeared first on InvestorPlace.
When it comes to the Canadian cannabis world, there are four big pot stocks that tend to hog the spotlight. That Big 4 includes Canopy Growth (NYSE:CGC), Aurora (NYSE:ACB), Tilray (NASDAQ:TLRY) and Cronos (NASDAQ:CRON). But those aren't the only four pot stocks playing in the Canadian cannabis market. Indeed, there are a handful of other pot stocks which, for various reasons, aren't followed as closely by Wall Street.Source: Shutterstock One such under-the-radar pot stock is Aphria (NYSE:APHA). For all intents and purposes, Aphria is just like Canopy, Aurora, Tilray and Cronos. The company is a Canadian cannabis producer which sells thousands of kilograms of cannabis into the legal Canadian market every quarter, and is looking to expand its reach into other countries, including the U.S. But, relative to the Big 4, APHA stock has a tiny market cap and is much, much cheaper on a fundamental basis.Does that mean APHA stock is the best pot stock to buy?InvestorPlace - Stock Market News, Stock Advice & Trading TipsNo. Far from it. Instead, Aphria stock is understandably smaller and cheaper than its peers. This company has a relatively small cannabis business. That cannabis business has reported tumultuous and shaky results over the past several months. The optics and news flow surrounding the company have been confusing, at best, and very worrisome, at worst. There's no big money investment. Nor is the balance sheet all that loaded up.In other words, there really isn't anything special about Aphria. Instead, there are few things which warrant concern.As a result, while APHA stock is cheaper than its peers, it is cheaper for a reason -- and that means investors are probably best served to wait on the sidelines until more clarity and stability are injected into this company's narrative and fundamentals. Cheapness Explained By Red FlagsOn its face, Aphria stock is considerably cheaper than any of the Big 4 pot stocks. * 7 Stocks to Buy As They Hit 52-Week Lows Canopy is the biggest player in this market, selling over 10,000 kilograms of cannabis last quarter. Aurora slots in at number two, with just under 10,000 kilograms of cannabis sold last quarter. Meanwhile, Tilray sold about 3,000 kilograms of cannabis. Aphria sold around 2,600 kilograms of cannabis. And Cronos is the smallest in this group, with just over 1,000 kilograms of cannabis sold last quarter.Given how much bigger they are, Canopy and Aurora reasonably have much larger market caps than Aphria. But, despite Aphria having a similarly sized cannabis business as Tilray and Cronos, APHA stock has a significantly lower market cap. TLRY stock has a $3.5 billion market cap. CRON stock is up above $5 billion. APHA stock is down near $1.5 billion.Indeed, on a market cap per kilogram of cannabis sold last quarter basis, Aphria stock is much cheaper than its peers. The median valuation across the Big 4? Roughly $1.3 million in market cap per kilogram of cannabis sold last quarter. Aphria stock's market cap per kilogram of cannabis sold last quarter? Below $650,000.But, this cheapness in APHA stock is easily explained by the company's tumultuous fundamentals and narrative.First, and foremost, Aphria's cannabis business actually declined in terms of both quarter-over-quarter revenue and volume last quarter, due to supply shortages. Second, there have been some notable C-suite departures which have created confusing turnover at the head of the company. Third, there was a hostile takeover offer that didn't pan out… and was very odd from the onset. Fourth, this company hasn't attracted any big-money interest or offers, despite its cheap valuation.Net net, there are reasons why APHA stock is cheaper than its peers, and those reasons should keep investors sidelined for the time being. No Need to Buy Aphria Stock YetMaybe the current cheapness in Aphria stock isn't warranted in the long run. Maybe the cannabis business will stabilize, all the external noise will pass, and the stock will roar higher.All this could happen. But, if it does happen, it will take several months to play out -- meaning there's no reason to buy in just yet while the story is still troubled.The first thing that needs to happen here is the cannabis business needs to stabilize. Next quarter's numbers need to represent growth from this quarter's numbers. Until that happens, investors likely won't buy in.The second thing that needs to happen is all the optical noise needs to pass. The C-suite needs to see some stabilization. Attacks against the company's credentials need to stop. The hangover from the hostile takeover bid needs to pass. * 10 Stocks to Buy That Could Be Takeover Targets If all that happens, then APHA stock will rally in a big way from here. But, until then, this stock will remain understandably cheaper than peers. Bottom Line on APHA StockPot stocks are inherently volatile, and APHA stock is volatile even for a pot stock. This volatility in the stock is the result of volatility in the company's fundamentals and narrative. So long as this fundamental and narrative volatility persists, investors will remain hesitant to buy into APHA.As of this writing, Luke Lango was long CGC and ACB. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Stocks to Buy As They Hit 52-Week Lows * 4 Antitrust Tech Stocks to Keep an Eye On * 5 Gold and Silver Stocks Touching Intraday Highs Compare Brokers The post Aphria Is an Understandably Cheap Pot Stock appeared first on InvestorPlace.
Bank of America sees 39% upside in this marijuana stock, but a lot would need to go right for that to happen.