|Bid||0.00 x 1400|
|Ask||0.00 x 1100|
|Day's Range||11.52 - 12.08|
|52 Week Range||6.50 - 25.10|
|Beta (3Y Monthly)||2.82|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||N/A|
Once heating up, cannabis stocks are beginning to lose their steam. Yahoo Finance talks to Hershel Gerson, ELLO Capital CEO & Managing Director who says since the Farm Bill passed "CBD is going to grow a little bit quicker cannabis generally."
Canopy Growth (NYSE:CGC) stock has taken a pounding. Shares are down nearly 25% in the past month, from $35.40 per share to $26.57 per share. The investor exodus from marijuana stocks has been brutal.Source: Shutterstock With excess supply outgunning demand, it's no wonder the bull case for pot stocks is tough to justify. But can investors expect a rebound in Canopy Growth stock? Let's take a closer look at the future of CGC shares. Recent Performance of CGC StockCGC released earnings on Aug. 14. For the quarter ending June 30, net revenue was C$90.5 million, down from C$94.1 million in the prior quarter. Overestimating demand for CBD oils and capsules, Canopy lost out while its peers such as Aurora Cannabis (NYSE:ACB) continued to grow revenue. As a result, CGC saw operating losses of C$123.1 million for the quarter.InvestorPlace - Stock Market News, Stock Advice & Trading TipsDespite oversupply in the market, CGC and the other Canadian cannabis names continue to ramp up production. Canopy harvested about 41,000 kg during the quarter. But sales were only 10,549 kg or kg equivalents. Like Aurora Cannabis, Canopy has gotten ahead of itself in its fast drive to scale operations.But is short-term thinking not the way to go with cannabis stocks? As InvestorPlace contributor Luke Lango wrote on Aug. 19, "there is still visibility for Canopy to one day be a $50 to 100 billion company." Investors buying in now may see tremendous gains over a long time frame. * 10 Marijuana Stocks That Could See 100% Gains, If Not More What about investors with a shorter time horizon? Is upside priced in, or can investors get a discount? Let's take a look at the valuation of Canopy Growth stock. Valuation: Canopy Growth Stock Still FrothyCanopy Growth stock currently trades at a Enterprise Value/Sales (EV/Sales) ratio of 32.2. This is a discount to the current EV/Sales valuation of Aurora Cannabis. ACB trades at an EV/Sales ratio of 48.2 In terms of other peers in the "cannabisphere," Cronos Group (NASDAQ:CRON) continues to trade at a high valuation (EV/Sales of 150.7). Tilray (NASDAQ:TLRY) trades at a discount to CGC, with an EV/Sales ratio of 31.4.With the recent beat-down of Canopy Growth stock, shares are now a bargain compared to Aurora Cannabis. But, as I wrote earlier this month, Aurora Cannabis seems to have a better growth playbook. By focusing on the medical marijuana space, Aurora is the safer cannabis stock play. But an overlooked risk factor in both cannabis stocks is dilution. The use of share issuance and warrants to finance unprofitable operations minimizes upside for investors. CGC Stock Dilution Risks ContinueThe company's partnership with Constellation Brands (NYSE:STZ) was initially seen as a boost for CGC stock. But as the partnership progresses, it is clear the deal is terrible for shareholders. Constellation's $5 billion dollar investment included the issuance of warrants. These warrants came with certain covenants to protect Constellation from dilution. CGC's proposed buyout of Acreage Holdings (OTCMKTS:ACRGF) triggered a renegotiation of warrants. Due to this revision, CGC was forced to reprice the Tranche B warrants, resulting in a C$1.2 billion non-cash charge.As I wrote on July 29, dilution continues to be a problem for Canopy Growth stock. This dilution risks goes beyond the Constellation partnership. $600 million in convertible debt comes due in 2023. The conversion price is set at $48.18 a share. If CGC stock continues to languish under this strike price, the company will likely need to raise more capital once the notes mature.Of course, Canopy Growth could be profitable by 2023, and would have an easier time refinancing the debt. But investors should take the dilution risk seriously. With much of Canopy's potential priced into shares, dilutive capital raises could cap the stock's upside potential. Bottom Line: The Canopy Sell-Off Isn't OverCanopy stock is down more than 50% from its 52-week high. But shares could go lower. With Canadian market growth nonexistent, Canopy needs U.S. legalization fast in order to move the needle. With federal legalization still years off, CGC will likely continue to burn cash as it scales up operations. The partnership with Constellation Brands provides plenty of capital to keep the lights on. But the terms of the partnership give Constellation an easy way to takeover the company at a discount.So what's the call on CGC stock? Investors should continue to wait on the sidelines until the situation improves. If Canopy Growth stock falls another 50% (or more), there could be a buying opportunity. I do not deny that we are the early stages of the marijuana legalization story. But investors need to wait until hype has dissipated to consider stocks such as CGC.As of this writing, Thomas Niel did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Marijuana Stocks That Could See 100% Gains, If Not More * 11 Stocks Under $10 to Buy Now * 6 China Stocks to Buy on the Dip The post Down 25% in a Month, CGC Stock Could Fall Further 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.]In financial markets, there are certain levels that are more important than others with regards to the amount of supply and demand that exists at them. In addition, in financial markets, prices are always doing one of three things. They are going up, going down or staying the same.When understood and applied correctly, technical analysis of the marijuana stocks should be an illustration of these dynamics in this sector.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBut technical analysis has a bad reputation and I can understand why. Most technical analysts don't seem to understand what they are supposed do. They mindlessly look at markets and try to identify patterns without understanding what they are supposed to mean.Even worse, some analysts are proponents of strange methods like Elliot waves and Gann theory. These methods are like Bigfoot. They are fun to talk about, but they aren't real. * 10 Marijuana Stocks That Could See 100% Gains, If Not More Knowing where the important levels are can help you profit. For example, suppose you want to buy a stock when it gets to $5 a share. If there is support at $6 and you don't realize it, the stock could drop to $6 and then rally. You would have missed a nice profit for one dollar because you didn't know about the support. Marijuana Stocks to Watch: Canopy Growth (CGC)Canopy Growth (NYSE:CGC) has been trending lower since the end of April. Since then, the CGC stock share price has dropped by 50%.Even getting rid of idealistic Co-CEO Bruce Linton didn't convince investors that things would turn around. The bottom line here is that Canopy loses a lot of money and shareholders are starting realize this. The latest earnings report showed them posting a loss of CA$257 million.After that earnings report, the stock dropped from $32 to $28 and it has been trending lower since then.If it trades down to the $25.50 level, it may rebound a bit. That is where it found support in December and it is currently oversold. Cronos Group (CRON)Cronos Group (NASDAQ:CRON) grows and sells marijuana.After failing to break resistance around the $14 level, CRON stock has dropped by about 15%. It may keep going lower, because I don't see any well-defined support levels.This stock shows how resistance levels become support and then support becomes resistance. This is an amazing phenomena that few consider.Clearly the $14 level is important here. Those who sold it at $14 in September and December were happy when it went lower. But then, when it went higher, these sellers believe that they have made a mistake. They tell themselves that if it comes back to $14, they will buy it back. This demand will create support. * 11 Stocks Under $10 to Buy Now Support becomes resistance because when the stock goes lower, those who bought it at the support level are now losing money. They tell themselves that if it trades back up to the level, they will sell it to break even. This supply of stock at the level creates resistance. Aurora Cannabis (ACB)Aurora Cannabis (NYSE:ACB) is a Canadian-based company that grows and sells medical cannabis.Since failing at resistance at the $7 level, ACB stock has trended lower. There is resistance around this level because it was support in June. It the stock rallies back to $7, that level will probably be resistance again.If it continues to trend lower, it may find support around the $5 level. This is because this level was support in November and December.I believe that this company will continue to have difficulties. A large part of the valuation is Goodwill and intangibles assets. This is an issue because these values are extremely hard to calculate, and companies tend to overestimate them. In my opinion that is the case here. CannTrust Holdings (CTST)CannTrust Holdings (NYSE:CTST) is involved in the production and distribution of medical cannabis.Over the past month, there has been support around the $2 level. However, this level seems to be breaking, and this company is facing the very real prospect of bankruptcy. It is currently undertaking a strategic review.This company is now known on Wall Street as Can't Trust Holdings. CTST was recently found to be growing cannabis in unlicensed grow rooms that were literally hidden behind fake walls.Even worse, not only was the senior management aware of this, they seemed to be encouraging it. We know this because they were stupid enough to put it in emails that the Canadian Authorities have seized. * The 10 Best Marijuana Stocks to Buy Now Since then, the company has had to accept product returns and will soon be facing a series of lawsuits by investors who were defrauded. My guess is that other companies are also engaged in this type of illicit activity, and if so we will soon be hearing about them as well. Aphria (APHA)Aphria (NYSE:APHA) produces and sell medical cannabis.Investors should watch for resistance around the $6.30 level. That is because is was a support level from May through July. Remember, those who bought it at $6.30 are losing money, so they decide to sell it if it gets back to the level.However, this level may not be too significant, because it was recently broken to the downside before ACB stock went rallying back up through it. Once a level is broken, it can lose its some of its importance.If it does rally, there will probably be resistance again around the $7.50 level. This level was support in May and June, and then again earlier this month when the stock rallied on what was considered a good earnings release. Supreme Cannabis (SPRWF)Supreme Cannabis (OTCMKTS:SPRWF) produces and sells medical cannabis.SPRWF stock recently found support around the 90-cent level. This level was also support at the end of December.I like this company because its cannabis is sun grown, as opposed to being grown with artificial lights. This method is cheaper and results in a higher-quality product.The company has rallied by over 30% since updating its guidance. The numbers were very impressive. Full year 2020 revenue should be $150 million-180 million CAD. Prior estimates were around $130 million CAD. * 15 Growth Stocks to Buy for the Long Haul For the fourth quarter, the company sees revenue of $19 million CAD versus $3.5 million CAD a year ago. The Street was looking for around $13 million CAD. CURE Pharmaceutical(CURR)CURE Pharmaceutical (OTCMKTS:CURR) develops and manufactures drug formulation and drug delivery technologies.You don't need to be a Market Guru or Master Trader to see that the $4.50 level is important for CURR stock. It was resistance a year ago in August and September, and then again in March.After breaking to the upside in July, it became a support level. Now that the stock has traded lower, it has become a resistance level again.Knowing that there is resistance at this level could help you with your trading decisions. For example, suppose you want to sell it at $5. You need to be aware that it may not get there.Watch how the stock trades around the $4.50 level over the next few days. If it looks like its breaking to the upside, then it could get to your level and it makes sense to be patient. Conversely, if it looks like it is going to fail at this level you may want to sell it because there is a good chance it could go much lower.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 Marijuana Stocks That Could See 100% Gains, If Not More * 11 Stocks Under $10 to Buy Now * 6 China Stocks to Buy on the Dip The post 7 Marijuana Stocks With Critical Levels to Watch appeared first on InvestorPlace.
The past several months haven't been particularly kind to cannabis stocks, as the hope (and hype) of the long-term potential collides with short-term reality. That is, most of these companies have spent heavily to take the lead in a highly contested race, but don't yet have the scale needed to drive actual profits.That day is still coming, at least for several of the names in the business. The question is, which ones will be left standing, picking up the pieces of an ever-growing industry?Nobody knows for sure; it's unlikely that even the companies' chiefs are entirely convinced themselves they're being built to last. But, with the marijuana industry having only scratched the surface of what it can be, and likely will be, there's little doubt that at least some of these names could double their current values.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * The 10 Best Marijuana Stocks to Buy Now Here's a rundown of the top ten cannabis stocks most likely to dish out a triple-digit gain, sooner or later. Canopy Growth (CGC)Source: Shutterstock It's arguably the name that started cannabis-mania, as Canopy Growth (NYSE:CGC) was the first name to attract a major partner's money. In October 2017, booze company Constellation Brands (NYSE:STZ) bought a 10% stake in Canopy Growth, then in August of last year an additional $4 billion investment in CGC stock made Constellation a near-40% stakeholder. The underlying plan was ultimately ensuring access to a supply for the time when a launch of a cannabis-infused beverage made sense.Since then, the relationship became so strained that a frustrated Constellation management team forced Canopy's CEO Bruce Linton out of the role. An aggressive acquisition spree chewed up more money well before it was ready to drive a return on the investment.Still, the dozen or so acquisitions Canopy Growth has made over the course of the past year gives the organization a wide array of horizontally and vertically minded ways to monetize cannabis at some point in the future. Charlotte's Web Holdings (CWBHF)Source: Shutterstock Don't let the OTC listing fool you. With a market cap of nearly $1 billion and $86 million worth of revenue for its past four reported quarters, Charlotte's Web Holdings (OTCMKTS:CWBHF) is a more legitimate company than many of its exchange-listed counterparts. An over-the-counter listing is just less of a hassle.Charlotte's Web Holdings is uniquely positioned. It's not waiting on legalization of recreational marijuana in the U.S. because it doesn't have to. It already offers CBD oil, and capsules, in the United States and can deliver their product -- legally -- in the mail to anywhere in the U.S. * The 10 Best Cheap Stocks to Buy Right Now Perhaps more compelling, Charlotte's Web Holdings is already turning a profit. Granted, it's not a jaw-dropping bottom line. Last quarter's net income was a modest $2.2 million. It's evidence that the business can be profitable though. Net margins should improve as the company scales up. Aurora Cannabis (ACB)Source: Shutterstock Canopy Growth may be best known, for better or worse, as a rapid-fire buyer of smaller cannabis outfits with the aim of building a large conglomerate. But, Aurora Cannabis (NYSE:ACB) is certainly no slouch on that front. It recently closed on the Hempco deal first announced in April, rounding outs rather robust portfolio too.It was self-serving to be sure, but Aurora CEO Terry Booth wasn't off-base when he said of the closed Hempco acquisition "we have assembled a world-class portfolio of high-quality hemp assets that together form the basis of a strong new operating division that will develop CBD-from-hemp around the world."Aurora Cannabis is also an interesting play simply because it's not trying to be all things to all people. Although it's not terribly easy to distinguish just yet, this company is focused more on medical marijuana, and less on recreational usage.It matters. Although it's more difficult, prices and therefore margins are stronger within the medical marijuana market, where Aurora is quickly demonstrating proficiency. GW Pharmaceuticals (GWPH)Source: Shutterstock It's a name that is often left out of the discussion because (1) it's not looking to capitalize on the ongoing legalization of recreational marijuana, and (2) it has been around for years. But GW Pharmaceuticals (NASDAQ:GWPH) has absolutely earned a spot on any list of cannabis stocks positioned to double in the foreseeable future.GW Pharmaceuticals is, as the name suggests, a pharmaceutical developer. It has worked diligently to extract the full health benefits of cannabidiol, or CBD, for prescription use. It convinced the Food and Drug Administration of that potential in June of last year, securing approval for CBD-based Epidiolex as a means of treating seizures … the first CBD-based drug permitted in the U.S. * 7 Unusual, Growth-Oriented REITs to Buy for Your Portfolio The response has been nothing short of incredible. Some observers were expecting Epidiolex to reach a total of $65 million, total, this year. By the end of the second quarter, GW Pharmaceuticals had actually sold $102 million worth of the drug. Hexo (HEXO)Source: Shutterstock It wasn't one of the names batted around a great deal when marijuana stocks were all the rage during the middle of last year. Since then, Hexo (NYSE:HEXO) has managed to make some noise for itself.Hexo, for the unfamiliar, is building itself from the ground up, specifically to cultivate partnerships with bigger players than can carve out market share better than it ever could on its own. It calls it a "hub and spoke" model, where it serves as the hub and supplies cannabis to various partners at the other end of the spoke. There's room for several.It already has one such partner: Molson Coors Brewing (NYSE:TAP) is looking to build a cannabis beverage brand with Hexo. Other partners with other focal points will be added in time.The hard part about the strategy is, Hexo doesn't appear to be in a hurry to execute it. That patience, however, may ultimately be to the company's advantage. Tilray (TLRY)Source: Shutterstock It's curious. The consensus rating on Tilray (NASDAQ:TLRY) shares is only a little better than a 'Hold.' But, the consensus target is a healthy $64.40 per share. That's more than twice the current price of TLRY stock.It's not an unusual nuance within the cannabis industry at this time. Analysts aren't quite sure how to value these names, most of which are startups, and all of which are being lifted at least a little by hype. It's not easy to see the line dividing what's likely, and what's possible.Still, the average target for Tilray shares marks one of the biggest upsides the professionals expect to see come to fruition. * 7 Fintech ETFs to Buy Now for Fabulous Financial Exposure Tilray offers a variety of products, including extracts and dried flower, for users seeking THC as well as CBD. It also sells products on five different continents, making it a geographically diverse player. Cara Therapeutics (CARA)Source: Shutterstock As was the case with GW Pharmaceuticals, Cara Therapeutics (NASDAQ:CARA) has largely been omitted from the discussion of cannabis stocks as a whole because it's not a newcomer catering mostly to recreational users. It's still a cannabis name though, or will be, eventually.Cara's claim to fame at this time is a developmental drug currently just referred to as CR845. It's a prospective alternative to opioids, which are effective painkillers, but also highly addictive. CR845 also has absolutely nothing to do with cannabis.Cara Therapeutics' CR701, however, is a prospective painkiller that specifically uses cannabinoid agonists to block the body's pain receptors. While still years away from commercialization, the clinical trial setting certainly legitimizes cannabis as real medicine. OrganiGram Holdings (OGI)Source: Shutterstock If nothing else, OrganiGram Holdings (NASDAQ:OGI) has earned a look because it's one of the few names in the cannabis business that's profitable. Indeed, with its numbers reported in July, it has been profitable for four straight quarters.The underpinnings for that unusual claim in the cannabis realm largely reflects the company's growing acumen. Even though last quarter's cash production costs grew from 65 cents per gram to 95 cents per gram, that's still less than the $1.42 per gram Aurora had to spend to supply itself, or the $1.48 Tilray laid out to grow its own supply. * The 10 Best Marijuana Stocks to Buy Now Still, the big cost jump last quarter? Don't read too much into it. The costs were associated with an experiment designed to further improve yield. It failed, so the company won't be attempting it again. Medipharm Labs (MEDIF)Source: Shutterstock As was the case with Charlotte's Web Holdings, don't be put off by the OTC listing of Medipharm Labs (OTCMKTS:MEDIF). This company is also on firmer footing than many of its exchange-listed rivals, even if most cannabis investors have never heard of it.Medipharm Labs specializes in one narrow sliver of the budding cannabis arena … extraction. Leveraging technology with experience, this company can turn raw marijuana into pure cannabis that meets the exacting standards most CBD suppliers expect in the current, scrutinizing environment.It's still bleeding money in a big way, here at the industry's infancy. Patience is merited though. This year's top line is projected to grow nearly 40%, followed by another 32% revenue leap next year.That still won't be enough to drag Medipharm out of the red, but scale should pay off soon enough. Cronos Group (CRON)Source: Shutterstock Finally, add Cronos Group (NASDAQ:CRON) to your list of cannabis stocks with the potential to double at some point in the future.Cronos Group does a little of everything, from cannabis research to product development consumer sales. It operates three brands: Peace Naturals, Cove and Spinach. And, like Tilray, it has a presence on five different continents.Perhaps the most bullish argument for CRON stock at this time, however, is the recently initiated coverage from Piper Jaffray. Analyst Michael Lavery notes "We expect Cronos to have modest near-term revenues from Canadian cannabis production, but believe it has significant potential growth opportunities with CBD products in the US, including through its pending acquisition of the Lord Jones brand." * 7 Marijuana Penny Stocks That I May Buy Its partnership with Altria Group (NYSE:MO) also bodes well, even if it has accomplished little so far.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 Marijuana Stocks to Ride High on the Farm Bill * 8 Biotech Stocks to Watch After the Q2 Earnings Season * 7 Unusual, Growth-Oriented REITs to Buy for Your Portfolio The post 10 Marijuana Stocks That Could See 100% Gains, If Not More appeared first on InvestorPlace.
On Tuesday, Jim Cramer stated that Cronos Group and Aphria passed Canopy Growth. Canopy Growth has lost 15.3% of its stock value since its Q1 earnings.
I'm going to be blunt straight off the bat. Although the topic of the day is Aurora Cannabis (NYSE:ACB), we can essentially lump all the major marijuana players together. That's what the markets are doing and for good reason. At the end of the day, ACB stock is a race against time.What do I mean by this? Simply, we know that virtually all marijuana-based investments, even top-shelf names like Aurora Cannabis stock, have challenged fundamentals. Most financial institutions won't touch the sector because technically and legally, it could all go belly up without much warning.InvestorPlace - Stock Market News, Stock Advice & Trading TipsFurther, even though some weed firms have forged lucrative partnerships -- look at Cronos Group (NASDAQ:CRON) and Altria Group (NYSE:MO) -- it's not enough to garner widespread credibility. One of the main criticisms of ACB stock and its ilk is that the underlying company is expanding aggressively.That's resulted in a cash burn problem that has weighed on Aurora Cannabis stock. * 10 Undervalued Stocks With Breakout Potential On the other hand, we know about the paradigm-shattering potential for this "agricultural" industry. For instance, I've routinely used the phrase -- to annoyance perhaps -- that marijuana represents a transformative investment. Primarily, I keep saying this because this industry made the hardest of shifts, from non-existence (legally speaking) to existence; in other words, from zero to something.And that's why I'm using the racing analogy for ACB stock. Aurora Cannabis and its big brethren are hoping that their flawed financials buy them enough time to actualize marijuana's potential. I believe that the top players and some smaller, promising outfits can. Here are three reasons why: Harvard Research Offers Groundbreaking Medical Potential for ACB StockPancreatic cancer is among the nastiest of all cancers, imposing a very low survival rate. Infamously and tragically, it took the life of Apple's (NASDAQ:AAPL) Steve Jobs. But now, new hope for a cannabis-related breakthrough should immediately intrigue anyone holding Aurora Cannabis stock.Researchers at Harvard University's Dana-Farber Cancer Institute released a report indicating that a cannabis compound offers "significant therapy potential" for treating pancreatic cancer. Specifically, the researchers isolated and extracted this compound, known as a flavonoid. Through genetic engineering, they ramped up production of this flavonoid, and applied it against malignant tumors.The study noted that the application resulted in metastatic tumor cell kills. Based on the researchers' enthusiasm for the outcome, this news has incredibly positive implications for ACB stock.I'm not suggesting that Aurora Cannabis stock will suddenly rise on this development. What I am saying is that mainstream interest toward at least medical-cannabis legalization will spike. And this really has the potential for sparking full federal legalization.It's also a political no-brainer. What dimwit would stand in the way of promising cancer therapies because they have moral or religious reservations? If many lives can be saved, the obviously ethical choice is full or otherwise unhindered federal legalization. A Prolonged Recession May Benefit Aurora Cannabis StockVery few companies or sectors have performed well in recent weeks, and that goes for marijuana companies. When you have the Dow Jones dropping 800 points in a single session, you know investors have serious concerns. Under such an environment, most stocks simply plummet in a panicked reaction.Unfortunately, many if not most of the names that recently experienced volatility will probably suffer more along the road. In this brave new world of globalization, our economy doesn't operate in a vacuum. Increasingly, we are more dependent on each other.And that's really the underlying pain of the U.S.-China trade war. Of course, when you're talking about China, you must engage delicately. As you know, President Trump hardly adopts tactful diplomacy.But when one of the reasons why I like Aurora Cannabis stock in this environment is that China is not in the picture. Indeed, it's never been in the picture. For instance, China has draconian drug laws, and that probably won't change in our lifetimes.Put another way, marijuana is one of those rare industries that is both vibrant and doesn't have a care in the world about China. This dynamic also incentivizes federal legalization, especially if people get laid off from trade-impacted industries. Technicals Support a ComebackAdmittedly, the volatility in the weed market is nothing short of scary. Even a top-shelf name like ACB stock isn't immune from extreme hemorrhaging. Since mid-March of this year, shares have lost a staggering 38%.However, I also feel that the sector is either at or approaching a bottom. Right now, we have no shortage of downright terrible news weighing on weed. Off the top of my head, we've had a slew of disappointing earnings results. We also witnessed credibility-damaging controversies, such as CannTrust's (NYSE:CTST) illegal growing.If that weren't bad enough, the FBI is actively courting whistleblowers for bad marijuana players. * The 10 Best Marijuana Stocks to Buy Now Yet despite the overwhelming negativity, ACB stock has slowed its descent. This, along with the other tailwinds I mentioned, gives me confidence that Aurora Cannabis can buy itself the required time.As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Cheap Dividend Stocks to Load Up On * The 10 Biggest Losers from Q2 Earnings * 5 Dependable Dividend Stocks to Buy The post 3 Compelling Catalysts for Aurora Cannabis Stock appeared first on InvestorPlace.
For a number of years now, I've witnessed the same scenario replay itself. Cannabis stocks sag during the summer and shake out the weak hands, only to stage a spectacular comeback later in the year. As the summer malaise comes to an end, I'm looking forward to watching the sector's revival -- and I'm viewing Cronos (NASDAQ:CRON) stock as a perfect representative of the cannabis market's incredible potential.Source: Shutterstock To be sure, not everybody shares my opinion on Cronos stock -- but then, as a lifelong contrarian I'm accustomed to holding unpopular opinions. In any case, if analyst bearishness drives the price down, I view this an opportunity to buy more CRON stock, not an excuse to panic, sell and end up regretting it after the irrational market fear passes. CBD Acquisition Will Drive Growth for CRON StockEven though Cronos is a Canadian company, they're making what I believe to be a very savvy move -- entering into the United States CBD market. In a $300 million headline-grabbing deal, Cronos agreed to acquire hemp producer Redwood Holding Group, a company with a firm foothold in the market and robust sales in body lotion, bath sales and other CBD-infused products. The deal is expected to close in the third quarter of this year and it's a bold, but smart move into the $1 billion American CBD market.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 10 Marijuana Stocks to Ride High on the Farm Bill When Cronos promised to enter into the CBD industry in the U.S., some analysts were skeptical. But the Redwood acquisition demonstrates that the company is prepared to put its money where its mouth is. Indeed, Cronos CEO Mike Gorenstein was effusive with praise for Redwood's founders, Robert Rosenheck and Cindy Capobianco:Rob and Cindy have built a differentiated, best-in-class platform with hemp-based CBD formulations that stand for quality and consistency. Our goal is to preserve the integrity of all Rob and Cindy have created, while also learning from them and leveraging Cronos Group's resources to capitalize on the significant demand for skincare and other consumer products derived from hemp.It's been said that the CBD market in the United States will be worth $16 billion by the year 2025. I, for one, don't believe that it will take that long for investors in CRON stock to see the company's foray into CBD bear fruit and positively impact the share price. Ignore the Analyst FUD and Check the FactsRyan Tomkins, an analyst with financial firm Jefferies, isn't particularly impressed with Cronos' move into American CBD. His FUD (fear, uncertainty and doubt) is driven by his belief that CRON stock is expensive compared to other stocks in the cannabis sector. Consequently, Tomkins has slapped CRON with an underperform rating and a price objective of $15 CAD for the stock's Canadian version. This suggests an approximate decline of 20% from the current share price.Personally, I almost find this assessment laughable. Looking over the 52-week price range for the U.S. version of Cronos Group stock, it has been as high as $25.10 and has corrected to about half of that price -- a similar scenario to what's happened to the Canadian cannabis sector as a whole. Tomkins himself admits that Cronos is acquiring a high-end brand in Redwood Holding Group. Besides, I have no doubt that the company will easily recoup their $300 million investment in Redwood and will soon start to see outstanding revenues as the broader CBD market grows in leaps and bounds throughout 2019 and 2020.Moreover, let us not forget that Cronos Group's second-quarter earnings report revealed a tripling of the company's net revenues compared to the same quarter in the previous year. To be specific, the reported amount for the second quarter of 2019 was $10.2 million CAD. It's yet another example of how a forward-thinking company can make the analysts look foolish by sticking to its vision and focusing on growth. My Takeaway on Cronos Group StockI'm a firm believer in the cannabis market and especially in the future of American CBD. Analyst FUD aside, CRON stock is a smart long-term bet on a market with truly explosive potential.As of this writing, David Moadel did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Marijuana Stocks to Ride High on the Farm Bill * 8 Biotech Stocks to Watch After the Q2 Earnings Season * 7 Unusual, Growth-Oriented REITs to Buy for Your Portfolio The post Watch Cronos Stock Continue to Grow Over the Coming Weeks appeared first on InvestorPlace.
The second full week of August 2019 might go down in the history books as a turning point. This was when the benchmark Dow Jones index absorbed an 800-point drop, the worst day so far this year. Naturally, the volatility impacted already beleaguered marijuana stocks.In my view, the cannabis market suffered from a two-pronged attack. First, it takes a brave soul to go against broader market bearishness. Obviously, there were few takers of the contrarian approach. Second, cannabis players delivered poor earnings results. That sent skeptical investors to run for the exits, turning marijuana stocks to buy into something else entirely.As a weed bull, I'm of course very disappointed. However, I think this presents an opportunity to consider the bigger picture for marijuana stocks.InvestorPlace - Stock Market News, Stock Advice & Trading TipsPrimarily, U.S. public attitudes toward the maligned plant have shifted dramatically, with a majority supporting legalization. Just maybe, risk-takers can profit handsomely by putting red-inked cannabis companies on their list of stocks to buy now. * 10 Cheap Dividend Stocks to Load Up On Furthermore, I'm very encouraged at the political situation as it pertains to marijuana stocks. Last year, the farm bill was one of the few pieces of legislation that earned consensus support. And if the Trump administration won't push for legalization, Democratic presidential candidates will.To the above point, because legalization is so popular, Trump might have to cede some ground here. If that's the case, you don't want to leave cannabis out of your stocks to buy list.Finally, marijuana stocks represent job creation. As the industry takes off, it'll create new, associated jobs, such as cannabis-testing services.So, don't give up on weed yet. Here are the ten best marijuana stocks to buy now: Aurora Cannabis (ACB)Aurora Cannabis (NYSE:ACB) is easily one of the top names among marijuana stocks. However, the recent price action for ACB stock belies its reputation. Things got even uglier for the company when it announced an expansion of its credit leverage, totaling approximately 360 million CAD.Why such a dour response toward ACB stock? A familiar theme has popped up regarding the sea of disappointing earnings reports of late. Investors no longer want to hear about a good narrative or potential opportunities. Instead, they want evidence of traction.Further, they'd like companies like Aurora Cannabis to shore up their operations and financials before taking on bigger risks. Thus, a combination of fear and a lack of credibility has hurt ACB stock.Granted, we're in an ugly state of affairs for marijuana stocks. That said, ACB stock does have a tremendous ace up its sleeve: dominance in international presence. As medical cannabis legalization takes hold in other parts of the world, Aurora is well-positioned to take advantage.Thus, this fallout provides a case to put ACB on your list of stocks to buy now. Canopy Growth (CGC)Source: Shutterstock As I mentioned above, investors have punished Canopy Growth (NYSE:CGC) and CGC stock due to a recurring theme: fundamentally, marijuana stocks have not been able to convincingly deliver the goods. More critically, the markets shined a spotlight on Canopy Growth for its fiscal first-quarter earnings report. The results weren't great.Canopy couldn't live up to consensus earnings expectations. Given broader weakness among marijuana stocks in this area, that's no surprise. However, what really concerned investors and industry observers was that Canopy may have lost their lead in the Canadian recreational cannabis market. That was one of the few fundamental strongholds that management claimed in prior reports. With that apparently gone, Wall Street dropped CGC stock like a bad habit.I don't think anyone - even the weed bulls - will claim that CGC stock is a compelling investment at this juncture. However, for risk-tolerant speculators, I believe Canopy still presents a viable opportunity. For instance, the company has been aggressively pushing into the U.S. market, investing in diverse products such as edible cannabis. * 10 Undervalued Stocks With Breakout Potential Admittedly, Canopy will require substantial patience. However, the believability of its narrative means it belongs on a speculative list of stocks to buy now. Cronos Group (CRON)Source: Shutterstock Among major marijuana stocks, many investors consider Cronos Group (NASDAQ:CRON) as the most credible investment. Certainly, the biggest factor in this positive reputation comes from tobacco giant Altria (NYSE:MO). Known worldwide for its Marlboro brand, Altria plunked $1.8 billion for a 45% stake in CRON stock.As our own Will Ashworth stated, CRON stock is still a "brilliant" buy for Altria. However, individual weed investors have a different sentiment. Like other marijuana stocks, Cronos has charted an ugly trend channel over the trailing half-year period.Again, a significant factor in the bearishness is credibility and fundamental justification. Currently, CRON stock sports a market capitalization of $4 billion. However, with recent quarterly revenue topping out at less than $8 million, investors don't see the rationale for the premium.It's a fair point. But it's worth noting that CRON stock has always been a play toward the ultimate U.S. marijuana market. And management is making huge strides toward this lucrative arena. A great example is their $300 million buyout of Lord Jones, a U.S.-based hemp and cannabidiol (CBD) beauty products manufacturer.Essentially, if legalization momentum continues in the American cannabis space - and that really looks to be the case - then Cronos should skyrocket. That's a good enough reason to consider placing CRON on your portfolio of stocks to buy now. Tilray (TLRY)Source: Shutterstock Analysts never expected medical cannabis specialist Tilray (NASDAQ:TLRY) to deliver a profit for its most recent earnings report. However, they didn't expect the kind of steep losses that management delivered. As a result, TLRY stock took a massive beating that shocked even weed advocates that are used to extreme swings.Even worse for TLRY stock, investors completely ignored some of the underlying company's positive news. For instance, Tilray's revenue came in much higher than consensus estimates. Unfortunately, the negative sentiment surrounding marijuana stocks was simply too much for the cannabis firm.The other reason why the markets adopted a dim view on TLRY stock is Tilray's home market. With disappointment being the key theme for marijuana stocks, it's becoming clear that the Canadian weed sector is reaching a saturation point.However, for interested speculators, I wouldn't extinguish TLRY from your stocks to buy radar. Ultimately, we all know that Canada is a limited market. The main goal here is the U.S., and Tilray has positioned itself for the very real possibility of legalization. * 15 Growth Stocks to Buy for the Long Haul For example, Tilray bought Manitoba Harvest for $317 million. Billed as the world's largest hemp-based foods manufacturer, Manitoba represents a viable platform for Tilray to expand into the CBD food and beverages market. Hexo (HEXO)Source: Shutterstock According to many observers, Hexo (NYSE:HEXO) delivered disappointing revenue for its fiscal Q3. I'd argue that the sales haul wasn't disappointing at all. However, Hexo released their earnings results at a time when investors were seeking substance from marijuana stocks. Unfortunately, they couldn't come through against these elevated expectations, and HEXO stock fell as a result.Technically, HEXO stock has another problem. Hexo is one of the smaller outfits among marijuana stocks. Currently, its market cap is just a little over $1 billion and generates quarterly sales of around $10 million. Yet the company is making heavy investments which worry onlookers.Obviously, HEXO stock isn't for the faint of heart. This is really a gamble that its expansionary efforts will pan out quicker than its cash burn will destroy it. Given the political momentum behind marijuana stocks, I like my chances. Hexo has many cogs in play, including a partnership with Molson Coors (NYSE:TAP) to develop CBD beverages. Green Organic Dutchman (TGODF)Source: Shutterstock Hands down, Green Organic Dutchman (OTCMKTS:TGODF) has the coolest name among marijuana stocks to buy now. Unfortunately, that hasn't helped its case in the markets. Like other players in this sector, TGODF stock has taken a dive since early spring of this year. That said, it has weathered the recent storm better than most.Is that a clear sign to jump onboard TGODF stock? As a speculator, I believe Green Organic Dutchman offers serious potential. However, those with a more conservative outlook should be careful. With a price tag of less than $3, TGODF is under the law of small numbers. Any downturn in this segment could exponentially hurt shares.Fundamentally, prospective buyers should note that Green Organic Dutchman is not yet profitable. Still, I do like the fact that for its Q2 report, it sequentially grew revenue 20% from Q1. Much of that growth spurt came from European demand for Green Organic's premium-label cannabis products. * 10 Stocks Under $5 to Buy for Fall Additionally, the company just hatched their "Grower's Circle" project aimed at capturing market share for Canadian medical marijuana. Of course, TGODF stock is highly speculative, but there's also justification for this risk. Charlotte's Web (CWBHF)Source: Shutterstock Charlotte's Web (OTCMKTS:CWBHF) is one of those rare names among marijuana stocks to buy now that has a broader positive trajectory in the markets. Year-to-date, CWBHF stock is up 96%. Shares have also recovered much of the losses incurred during the spring season.Despite this encouraging positive, Charlotte's Web couldn't avoid a recurring headwind in this segment: disappointing earnings results. For its Q2 report, the company missed on both profitability and revenue consensus estimates. Immediately, CWBHF stock took a dive.Still, let's look at some positives for the CBD specialist. Headquartered in Colorado, CWBHF stock levers a geographic advantage. Other, mostly Canadian weed firms are aggressively working their way in. Charlotte's Web is already here.More importantly, this isn't just a statistic. Charlotte's Web has made good on this advantage, securing retail deals with CVS Health (NYSE:CVS) and Kroger (NYSE:KR). In my opinion, this is one of the most impressive set of deals in the CBD space. Therefore, CWBHF stock deserves serious consideration for your portfolio of marijuana stocks to buy now. CV Sciences (CVSI)Source: Shutterstock Although a long shot among speculative marijuana stocks, CV Sciences (OTCMKTS:CVSI) brings a compelling narrative to the table. As a pharmaceutical company, CV Sciences could disrupt its industry by forwarding therapies based on natural formulations, not artificial concoctions.Unfortunately, the markets have not found this narrative convincing enough. Along with broader credibility questions impacting the cannabis market, CVSI stock has incurred a worrying amount of red ink. Logically, this is only a name that gamblers should consider.Further, CVSI stock has a current price tag just over $3. Any bearishness could plummet shares. At the same time, positive catalysts could spark a massive upswing.It's this latter point that attracts speculators. Plus, the political situation somewhat favors CVSI stock. Over the years, the opioid crisis has gutted several cities across America. And what was the cause of this crisis? Pharmaceutical products levering unintended consequences. * 10 Best Stocks to Buy and Hold Forever With a focus on natural CBD-based therapies, I think the general public will give a fair shot to the concept. After all, most Americans already support marijuana legalization. Aphria (APHA)Source: Shutterstock Weed player Aphria (NYSE:APHA) used to be one of the high-flying marijuana stocks to buy now. However, a short-seller's report accusing the company of being a shell game plummeted APHA stock. It also sent ripples throughout the industry. This wasn't the first time that critics have questioned the legitimacy of cannabis businesses, and it won't be the last.What was especially damaging was that some of the accusations stuck. In the aftermath, high-level executives, including the CEO, resigned from their posts. Moreover, Aphria promised a line-by-line rebuttal of the charges, but they never came to fruition. Even now, management is coy about the matter. Essentially, Aphria is doing everything it can not to address this incident, which hasn't helped APHA stock.Of course, this is one of the riskiest names among marijuana stocks. Still, I can't get something out of my mind: current CEO Irwin Simon, who came over from Hain Celestial (NASDAQ:HAIN), is taking a serious reputational risk with Aphria. That he's willing to initiate the recovery process leads me to have some confidence in APHA stock. Aleafia Health (ALEAF)Source: Shutterstock At the end of our list of marijuana stocks to buy now, I'm going to present my most speculative idea. A healthcare enterprise focusing on cannabis-based therapies, Aleafia Health (OTCMKTS:ALEAF) levers a vast network of clinics and patients. And these stats have jumped to 40 clinics and approximately 60,000 patients with its all-stock acquisition of Emblem. Thus, ALEAF stock offers a valid fundamental case.However, that hasn't panned out so well in the markets this year. ALEAF stock is down over 20% YTD. Additionally, this is a true penny stock, with shares trading hands under a buck. Naturally, with such a cheap asking price, you can expect tremendous volatility. For now, that volatility has shoved ALEAF deep down in the gutter, Pennywise style.However, I still see some positives. For one thing, volume is relatively robust for such an offering. Second, it appears that ALEAF stock has found support around the 80-cent level. Of course, this is no guarantee considering the share price. But the combination of a sound business and a supportive political environment makes ALEAF a compelling gamble.As of this writing, Josh Enomoto is long HEXO and ALEAF. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Cheap Dividend Stocks to Load Up On * The 10 Biggest Losers from Q2 Earnings * 5 Dependable Dividend Stocks to Buy The post The 10 Best Marijuana Stocks to Buy Now appeared first on InvestorPlace.
Cresco Labs is set to declare its second-quarter results after markets close tomorrow. As of yesterday, its stock had risen 29.6% year-to-date.
So far in 2019, cannabis stocks have been on a roller coaster ride. Investors are wondering which marijuana companies may be better investments for the long term. If you are interested in buying into marijuana shares, you may also want to take a closer look at the ETFMG Alternative Harvest ETF (NYSEARCA:MJ). The MJ ETF is a marijuana ETF that has about $1 billion in assets under management.Source: Shutterstock Investing in the MJ ETF 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 that make up the MJ ETF can be. Mechanics of Investing in the MJ ETFInvestors may be able to decrease the volatility of investing in individual stocks by holding more of them, or better yet, investing in an ETF. And at InvestorPlace, my colleagues often cover how various ETFs can help investors construct a diversified portfolio.InvestorPlace - Stock Market News, Stock Advice & Trading TipsSimilarly, MJ seeks to provide investment results that correspond to the total return performance of the Prime Alternative Harvest Index. This index tracks the performance of U.S. and global companies that are engaged exclusively in legal activities involving cannabis for medical or non-medical purposes. * 7 Great Small-Cap Stocks to Buy MJ's expense ratio is 0.75% per year or $75 annually per $10,000 invested. For many investors, the comfort in owning a basket of stocks might be worth the price.The MJ ETF also pays dividends with a yield of 2.8%. In recent months, this marijuana ETF has become one of the most popular funds among millennial investors.While the MJ ETF is still exposed to the industry risk, it may provide a good option for investors, as it is will likely be more stable than owning some of the individual stocks. Before investing in marijuana stocks, though, it is important to do your due diligence on the MJ ETF. Companies in the MJ ETFCanada is 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).The MJ ETF currently holds 38 stocks with about 70% allocation to pot companies and growers, many of which are Canada-based and that are becoming increasingly mainstream. Several of the major stocks in the MJ ETF include Aurora Cannabis (NYSE:ACB), Cronos Group (NASDAQ:CRON), GW Pharmaceuticals (NASDAQ:GWPH), Canopy Growth (NYSE:CGC), Tilray (NASDAQ:TLRY) and Green Organic Dutchman Holdings (OTCMKTS:TGODF) 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.While MJ can avoid some of the bad performances of most marijuana stocks, it would be difficult for it to outperform several of its large holdings, such as Cronos Group, Aurora Cannabis and Canopy Growth. Nonetheless, the level of diversification helps make the MJ ETF more robust than any individual stock in the sector, limiting volatility and downside while retaining the exposure to the market's potential upside. Cannabis Industry in Canada is Still in the Early InningsThe lure of higher-than-average returns may be tempting for many pot stock investors. After all, early investors in many of these stocks have been rewarded handsomely.But as the cannabis industry in Canada matures, will the fundamental forces allow for high double-digit returns any more?The recent earnings reports from Canada-based pot stocks are important in gauging the health of the industry. At present, 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 $7.2 billion CAD. About half of it is likely to come from legal sales. The Canadian market may also be running the risk of being oversupplied. * 15 Growth Stocks to Buy for the Long Haul 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.Marijuana is illegal in the U.S. at the federal level. However, at the state level, its legal status depends on the laws of the individual state. 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 bar companies from engaging in commercial activities in countries where they would be breaking the U.S. federal law. Where Is the 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.So far in 2019, with the exception of January, when many stocks did well, investors have witnessed considerable bearish activity in the industry. For most cannabis stocks as well as the MJ ETF, it hasn't exactly been such a "hot" summer. And the value of this particular marijuana ETF reflects this volatility. Year-to-date, the MJ ETF is up 5%. 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. Currently it is hovering around $26.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 month, I expect MJ to mostly range-trade between $27.5 and $25.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 low-$20's level. The Bottom Line on the MJ ETFFor most of the year, I have been bearish on most marijuana stocks. The hype that has led to high valuation levels, their mostly poor earnings and the dependency on the recreational aspects of cannabis make them risky and volatile investments.Given the risk involved with investing in cannabis, no ETF holding pot stocks is going to be completely safe in being able to avoid losses, but MJ offers investors some safety due to diversification.Now that the sentiment has swung negative, contrarian investors may find value in the MJ ETF. However, investors still 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. This fact makes marijuana stock valuations even more difficult to justify. * 10 Cheap Dividend Stocks to Load Up On Therefore, MJ investors should 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 ETF. 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.As of this writing, Tezcan Gecgil did not hold a position in any of the aforementioned securities.The post The MJ ETF Solves Some of the Problems of Pot Stocks -- But Not All of Them appeared first on InvestorPlace.
Among marijuana equities, Hexo (NYSE:HEXO) stock continues to gain increased attention. An alliance with Molson Coors (NYSE:TAP) and a solid base of business in its home province of Quebec have bolstered its business. Also, it looks poised to establish another niche once Canada legalizes cannabis-infused beverages.Source: Shutterstock However, departures in top management and a possible violation of advertising regulations have hurt the company. Moreover, the overall industry has suffered as supply has increased and more investors have questioned inflated valuations.Hence, for the Hexo stock price to rise, investors need both a solid floor and a catalyst.InvestorPlace - Stock Market News, Stock Advice & Trading Tips HEXO Is Outside of the Top Tier, But CompellingOver the last year, it has become clear that Canopy Growth (NYSE:CGC), Aurora Cannabis (NYSE:ACB), Cronos Group (NASDAQ:CRON), and Tilray (NASDAQ:TLRY) have emerged as the market leaders in Canadian marijuana. However, many investors missed the run-up in these stocks and have sought a leader among the alternatives.Some see that as Hexo stock, but that strategy faces some challenges. Our own Luke Lango does not think Hexo will survive an inevitable industry shakeout. His prediction could easily come true. I also agree that most of the smaller marijuana stocks will disappear. * 10 Cheap Dividend Stocks to Load Up On However, investors can make money in such stocks. Strangely, my best returns in trading marijuana stocks came from charting the moves in the beleaguered CannTrust (NYSE:CTST). My caution in making sure a floor truly is a floor saved me from getting back in as their scandal came to light. Has Hexo Stock Bottomed?Still, Hexo stock may have established such a bottom. In a recent article, I told investors to stay away until "it found a floor," not fully realizing at the time that it might have bottomed in the $4 per share range. InvestorPlace contributor Mark Putrino outlines how HEXO stock has built support at that level. Since finding this bottom, HEXO has risen slightly to the $4.40 per share level.HEXO has now become my favorite among the aforementioned "other" marijuana stocks. Yes, they may have pushed the envelope by advertising on Snap's (NYSE:SNAP) platform. Also, departures in the C-suite have made some investors nervous. However, I like that it holds a 30% market share in Quebec, the province that is home to 20% of Canada's population.In this market, the catalyst that could boost the Hexo stock price has not yet become apparent. However, it has built a partnership with Molson Coors that could eventually bolster the stock.This alliance offers two key benefits. It could help to make Hexo a leader among cannabis-infused beverages once Canada legalizes those drinks. It also gives HEXO a segue into the U.S. This will offer benefits as both individual states and the federal government loosen restrictions. Should I Buy Shares?To profit from Hexo stock, investors need both a floor and a catalyst. For one, investors must become convinced that the floor truly is a floor. Nobody on the outside can credibly rule out a CannTrust-like scandal in any marijuana stock. However, barring that uncommon scenario, HEXO appears to have established that support at the $4 per share level.I should add that I also see the bottom holding in case more multiple compression occurs. For next year, analysts estimate that revenues will range between 185.7 million CAD ($139.8 million) and 398.3 million CAD ($299.9 million). This would mean a price-to-sales ratio of between 3.7 and 7.8 at the current $4.40 per-share price. That appears high by S&P 500 standards but comes in well under most marijuana stocks.I also think one problem with Hexo stock involves an industry factor outside of the company's control. After a shortage last fall, Canada now finds itself in a supply glut for dried flower. This challenges both Hexo and its peers to find a way to increase demand. That "way" could come later this year with cannabis-infused drinks.Some believe Hexo stock will not survive an industry shakeout. However, I think both the Molson Coors alliance and the market share in Quebec almost ensure such a scenario happens through a buyout instead of a bankruptcy. This gives investors yet another reason to look at HEXO.As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can follow Will on Twitter at @HealyWriting. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Cheap Dividend Stocks to Load Up On * The 10 Biggest Losers from Q2 Earnings * 5 Dependable Dividend Stocks to Buy The post Hexo Stock Needs Just Two Things to Move Higher appeared first on InvestorPlace.
Canopy Growth didn't impress investors with its earnings for the first quarter of 2020. The stock has fallen 12.4% since the company's earnings.
Despite Aurora Cannabis providing higher-than-expected guidance for fiscal 2019's fourth quarter early this year, its stock has fallen 25.6% this month.
A slew of recent earnings reports across the cannabis sector, from Canopy Growth (NYSE:CGC) to Tilray (NASDAQ:TLRY), have confirmed an overwhelmingly bearish reality for cannabis companies: these companies are going to lose hundreds of millions, if not billions, of dollars before they ever net a profit. Tilray stock still is less than half of what it was at the beginning of the year.Source: Shutterstock Investors are finally starting to grasp this reality, and it's making them second-guess the premium valuations they have been awarding pot stocks.As such, over the past few months, all pot stocks have been killed. Canopy, Tilray, Aurora (NYSE:ACB), and Cronos (NASDAQ:CRON) all presently trade more than 40% off their 2019 highs.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBut, this isn't the end of the road for pot stocks. Instead, this is just a road-bump. Long term investors should consider strategically adding on this weakness. When doing so, the names to buy are sector giants CGC and ACB, and also rising cannabis star TLRY.Here's why. Pot Stocks Will Bounce BackIn the big picture, the long term bull thesis underlying the cannabis sector and high-quality pot stocks remains intact. The cannabis sector promises to be huge one day. * 10 Stocks Under $5 to Buy for Fall Current consumption trends indicate that cannabis is nearly as widely used as alcohol, and far more widely used than tobacco and that recreational cannabis usage is on a secular uptrend, while alcohol and tobacco usage are on secular downtrends.The implication is that once legal, the global cannabis market will be nearly as big as the global alcohol and tobacco markets. Those are several hundred billion- to trillion-dollar markets. Most estimates from research firms and cannabis companies put the global cannabis market at roughly $200 billion in size within the next 10 to 15 years. Thus, the revenue growth potential here is tremendous.So is the profit growth potential. Sure, margins are getting killed across the whole industry today. But, that's just what happens when you are less than a year into a new growth market. Everyone is expanding. Everyone is trying to win market share, grow reach, produce more supply, so on and so forth.Essentially, that means no one is really concerned about margins today. Everyone is just investing big to position themselves optimally for long term growth.In the long run, all this aggressive investment will simmer down. As it does, this industry will consolidate around a few large players, and start to look very much like the global alcohol industry. In that industry, the big players operate at around 25%-plus operating margins. That's where cannabis companies will operate one day.The math here is simple then. A 5% player in a $200 billion market operating at 25% operating margins should produce around $2 billion in net profits (assuming a 20% tax rate). A market average 16 forward multiple on that implies a long term valuation target of over $30 billion.No pot stock today features a market cap above $10 billion. Thus, across the board, the long term upside potential in pot stocks from these depressed levels looks compelling. Tilray Stock Has Turned into a Rising StarOne pot stock which has caught my eye recently is TLRY.I've always written off Tilray stock as one that got way too hot back in late 2018 (it went from $20 to $300 seemingly overnight) and didn't have enough size, growth, or backing to warrant its premium valuation.That was true for a long time. Until recently when Tilray reported impressive second-quarter numbers that showed that this company is turning into a rising star in the Canadian cannabis market.Here are the numbers. The Canadian cannabis market became legal in the last few months of 2018. In that quarter, Canopy sold over 10,000 kilograms of cannabis and Tilray sold just over 2,000 kilograms of cannabis.Fast forward three quarters. Last quarter, Canopy sold just over 10,500 kilograms of cannabis, up a meager 4% from its late 2018 volume total. Tilray, on the other hand, sold over 5,500 kilograms of cannabis last quarter, up nearly three-fold from its late 2018 volume total.In other words, while Tilray still isn't the big fish in the Canadian cannabis market, its the fastest-growing fish. That alone makes Tilray stock interesting on this dip.At the same time, Tilray's gross margins have actually improved sequentially over the past three quarters, while gross margins at other cannabis companies have declined over the past three quarters. Thus, not only is Tilray the fastest-growing fish here, but it's growing quickly while simultaneously improving margins.Overall, then, Tilray stock is starting to look tasty on this dip. The stock is being sold off with the rest of the sector. But, the internals here are exceptionally favorable. That disconnect makes for a compelling "buy the dip" opportunity. Bottom Line on Tilray StockPot stocks will remain exceptionally volatile for the foreseeable future. But, in the long run, this volatility is ultimately just noise. Long term investors should look to strategically buy into major weakness.One pot stock that looks particularly attractive amid the recent sell-off is TLRY. While other cannabis companies are struggling with growth or margins, Tilray is firing on all cylinders on both fronts. Thus, the recent sell-off in TLRY stock doesn't make much sense relative to its internals. That disconnect is an opportunity.As of this writing, Luke Lango was long CGC, ACB, and TLRY. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks Under $5 to Buy for Fall * 5 Stocks to Avoid Amid the Ongoing Trade War * 7 5G Stocks to Buy Now for the Future The post After Sliding into Mediocrity, Tilray Stock May Be a Buy on This Dip appeared first on InvestorPlace.
Aurora Cannabis (ACB) announced that it's increasing its secured credit facility to 360 million Canadian dollars from $200 million Canadian dollars.
Altria (MO) stock has dipped roughly 5% so far in 2019, underperforming the broader market. MO stock is trading about 10% above its 52-week low price.
As marijuana stocks have struggled in recent months, much of the attention has revolved around Aurora Cannabis (NYSE:ACB). The company has made several key acquisitions to make itself the world's largest producer of dried marijuana. This should help ensure its future as competition forces the takeovers and bankruptcies of smaller players.Source: Shutterstock However, Aurora Cannabis is not Aurora Cannabis stock. The company's expansion has cost shareholders in share price declines and dilution of the equity. Until Aurora can fund growth through profit, investors should avoid ACB stock. Aurora Cannabis Should Remain a Top Canadian Marijuana CompanyAurora remains one of the more robust companies in this sector. As mentioned earlier, it leads in production, cultivating larger quantities of dried cannabis than even Canopy Growth (NYSE:CGC). Aurora Cannabis also operates in 25 countries.InvestorPlace - Stock Market News, Stock Advice & Trading TipsDue to the oversupply of dried cannabis, it has rightly decided to turn its focus away from Canada and the U.S. The recent deal to provide 400 kilograms of medical marijuana to the Italian government pales in comparison to 25,000 kilograms of quarterly production. However, it constitutes a start to pare down the supply glut. * 15 Growth Stocks to Buy for the Long Haul Aurora gave investors a preview of the report to come as it issued fourth-quarter guidance. The company estimated quarterly production would come in between 25,000 and 30,000 kilograms. Analysts had expected 25,000 kilograms. Revenue guidance of between 100 million CAD ($75.15 million) and 107 million CAD fell short of the consensus 112 million CAD. Still, it represents massive growth from the 19.1 million CAD reported in the same quarter last year. Aurora's Growth Comes at the Expense of ACB StockHowever, what is suitable for a company may not benefit their stock. That seems especially true for Aurora Cannabis. I have long expressed concerns about high valuations. In a bull market, investors may tolerate high multiples in emerging sectors.However, the valuation faces pressure on more than one front. Turmoil related to the U.S.-China trade war and the protests in Hong Kong has brought the overall market down in recent days. With ACB stock trading at more than 53-times sales, both Aurora Cannabis and its high-value peers could face a steep drop on that factor alone.Analysts have also begun to notice. Piper Jaffray just initiated coverage. Despite speaking favorably about its "industry-leading capacity" and higher gross margins compared with its Canadian peers, it handed Aurora Cannabis with a "neutral" rating. It also thinks ACB stock trades at a premium compared to Canopy, Cronos Group (NASDAQ:CRON), and Tilray (NASDAQ:TLRY).Secondly, I have criticized Aurora Cannabis stock in past articles due to the massive dilution. There I cited the growth in shares outstanding from 129 million in 2016 to over one billion today.Our own Vince Martin believes the company will dilute Aurora Cannabis stock further. Barring a massive rise in the stock price, Aurora will have to pay back 230 million CAD ($172.9 million) of debt on March 9, 2020. ACB will likely have to issue more shares to pay this debt. As long as Aurora Cannabis stock bulls have to contend with significant amounts of dilution, they will find it difficult to profit from ACB. Final ThoughtsInvestors should avoid ACB stock until the company earns quarterly profits. Investors need to remain aware of the differences between Aurora Cannabis the company and its stock. With the number of shares growing by about eight-fold in three years, gaining traction with shares has become difficult.However, the dilution has benefitted Aurora Cannabis. The cash raised helped to fund 15 acquisitions, including the 3.2 billion CAD ($2.4 billion) MedReleaf deal. This has made Aurora a world leader in weed production and has given the company a presence in several countries.One day, after the hype around marijuana stocks has abated, I think ACB stock will become a profitable investment. Once it earns profits and pays dividends, it could even become the Altria (NYSE:MO) of weed. However, at this price level and under these conditions, investors should stay away from Aurora Cannabis.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 * 15 Growth Stocks to Buy for the Long Haul * 5 More Cloud Stocks With Plenty of Potential * 5 Clean Energy ETFs to Buy for 2019 The post ACB Will Not Benefit From The Growth of Aurora Cannabis, Yet appeared first on InvestorPlace.
Aurora Cannabis (NASDAQ:ACB) is one of the most popular cannabis stocks on the market right now. Analysts are pretty evenly split when it comes to the stock. About half are in favor of ACB stock while the rest are more hesitant to jump on board. This week, the company's shares fell after a Piper Jaffray's analyst shared a more bearish view on the company. The analyst initiated Aurora Cannabis stock with a neutral rating. In comparison, the same analyst gave buy or outperform ratings to five other cannabis stocks. InvestorPlace - Stock Market News, Stock Advice & Trading TipsIn a previous article, I wrote that ACB stock has potential but is a risky stock to invest in due to a number of headwinds. Listed below are three reasons I still stand by that assertion. Aurora Can't Justify Its High ValuationAurora Cannabis leads the market when it comes to production and capacity. The company has more facilities than any other cannabis company. According to recent projections, the company should produce between 25,000 and 30,000 kilos during the fourth quarter. * 10 Stocks Under $5 to Buy for Fall But there are still too many unknowns when it comes to Aurora. The odds are likely that cannabis will be in oversupply in Canada and the company's plans to enter new markets are tenuous at best. Last January, the company stated that it has "extensive" plans for entering the U.S. market with its hemp-derived CBD products. But Aurora has yet to reveal these plans or take any concrete steps toward entering the U.S. or Europe. The Cannabis Industry Is Still in Its InfancyLast month, shares of Aurora, Canopy Growth (NASDAQ:CGC), and Cronos Group (NASDAQ:CRON) fell substantially. This is due to a regulatory scandal involving CannTrust Holdings (NASDAQ:CTST). The company illegally grew cannabis in unlicensed rooms.The company is currently being regulated and will likely face disciplinary measures from Health Canada. And earlier this week, Bloomberg reported that a second CannTrust facility was found non-compliant. Of course, this doesn't directly involve ACB stock. But it reflects on the newness of the cannabis market and the growing pains it will continue to go through. Aurora Cannabis Continues to Lose MoneyEarlier this month, the company released preliminary fourth-quarter revenue figures. These anticipated results showed the company's fourth-quarter net revenue falling between CA$100 million and CA$107 million, the majority from cannabis sales. Aurora Cannabis reported revenue of CA$65 million during the third quarter, so if these numbers come to fruition, it will be a substantial improvement for the company. It may still end up falling short of analyst estimates, but these projections have been all over the place. It's good to see that the company's margins are improving but odds are, Aurora Cannabis still lost money during the fiscal fourth quarter. The company still doesn't have a clear path toward profitability and that will continue to hold it back. As of this writing, Jamie Johnson did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks Under $5 to Buy for Fall * 5 Stocks to Avoid Amid the Ongoing Trade War * 7 5G Stocks to Buy Now for the Future The post Aurora Cannabis Stock: 3 Reasons Not to Buy Into the Hype appeared first on InvestorPlace.