|Bid||12.10 x 800|
|Ask||12.16 x 3200|
|Day's Range||12.11 - 12.55|
|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|
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.
Piper Jaffray likes several U.S. cannabis stocks and one Canadian pot stock better than Aurora. Here are the analyst's picks -- and why they're good ones.
The largest licensed cannabis producers in Canada have recorded more than $4 billion in goodwill—the amount allocated to certain acquisitions beyond the value of their physical assets—risking large and potentially punishing write-downs in the future.
It seems like Tilray (NASDAQ:TLRY) has returned to normal. Heading into second-quarter earnings on Tuesday, Tilray news had been relatively quiet. Tilray stock had traded sideways.Source: Shutterstock Put another way, there hasn't been much in the way of fireworks. But that's not necessarily a bad thing. The first cannabis IPO on the NASDAQ (NASDAQ:NDAQ) exchange, TLRY very quickly turned into what looked like a bubble.The IPO priced at $17, and early trading was solid, if not spectacular. But after its first month of trading, TLRY suddenly took off: at one point, the stock touched $300.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 15 Growth Stocks to Buy for the Long Haul Since then, it's been a long, painful slide -- until the last few months. Tilray stock actually has held up reasonably well in a market that has been unkind to most pot plays, with leaders like Canopy Growth (NYSE:CGC) and Cronos (NASDAQ:CRON) well off their highs.Some disappointing Tilray news has changed that somewhat, as TLRY slid more than 10% in after-hours trading following earnings on Tuesday afternoon. But the report, from here, looks reasonably positive.More importantly, this is not a stock that necessarily should be judged on single quarters -- at least not yet. Tilray isn't looking to maximize near-term revenue or profits. It's taking the long view. And while there's a reasonable debate over whether that view is correct, Q2 earnings don't seem to change the case all that much. Tilray News Looks OKTilray seems to have been hit by a somewhat odd fact of cannabis investing at the moment: investors suddenly seem to be focusing on profitability over revenue. The fact that Aphria (NYSE:APHA) posted a blowout quarter last month, and guided for positive Adjusted EBITDA, may be a factor. So too may be waning patience with recreational legalization stalling out in Canada in and beyond.Whatever the cause, that focus doesn't seem to make a lot of sense. Tilray CEO Brendan Kennedy explained why on Tuesday's Q2 conference call:If your company is a small to midsize LP [licensed producer] in Canada, or an MSO [multi-state operator] in the United States that can export to other countries then I think those countries -- those companies should be focused on profitability.But you only see an opportunity like this once in your lifetime. And if you're trying to dominate a global industry, you'd be constraining yourself if you were focusing entirely on profitability at this point. Globally, it's very early in the emergence of a $200 billion industry. And globally, if now is not the time to invest, I don't know when is.Tilray's revenue of US$45.9 million was nicely ahead of consensus expectations for US$41.1 million. But Tilray news on the profit front was softer: an Adjusted EBITDA loss of US$17.9 million against an average estimate of -US$14.4 million. That profit miss seems to be one of the catalysts sending TLRY stock lower after-hours. The Sell-Off in Tilray StockTo be fair, there's another catalyst. TLRY shares gained over 8% in regular trading. Cannabis stocks on the whole did well: CGC gained 4%, and CRON 5%. But it's likely some traders were betting on a big earnings report as well, and felt Tilray didn't quite deliver.That said, Tilray did post a big revenue beat relative to expectations. Adult-use revenue almost doubled from Q1 levels. The acquisition of Manitoba Harvest for US$317 million in February added another $20 million in sales.As Kennedy argues, that's what should matter at this point in the development of the cannabis industry. There's not a lot of sense in cutting costs now ahead of what bulls expect will be a massive global opportunity. If an investor wants profits -- or doesn't think that opportunity is as big as optimists believe -- there are thousands of other stocks to buy. The Long-Term Case for TLRYThere's another aspect to the sell-off worth noting. Tilray isn't looking to maximize near-term revenue. Unlike many larger cannabis plays, it's not even looking to build out actual production. Rather, it's happy to simply buy cannabis from third-party producers.As I wrote in May, the reason for that strategy is that Tilray management believes cannabis prices are going to come down over the long term. Cannabis will be a commodity product, which means spending capital to build production is unlikely to be an investment that drives big returns.Instead, Tilray is focusing on hemp-based food products through the Manitoba Harvest, and derivatives such as cannabis oil. It has entered the U.S. CBD market. A partnership with Anheuser-Busch InBev (NYSE:BUD) will research drinks including either CBD or THC.It's a strategy that may not work. Vertically integrated producers like Canopy, Cronos, or Aurora Cannabis (NYSE:ACB) may be able to leverage their production to out-compete Tilray in cannabis derivatives.At the least, it's a strategy based on the thesis that those companies spending hundreds of millions of dollars to build production -- and drive near-term revenue -- are making a mistake. A single quarter's earnings don't really change the case all that much. In addition, TLRY's higher multiples based on revenue do make some sense; it's focusing on driving better, and more profitable, revenue over time.Again, that doesn't make TLRY a buy. In fact, I wouldn't recommend it yet even at after-hours levels. As I have written before, Tilray is being patient, and investors can do the same.But it does mean that 2019 earnings simply don't change the case all that much. That's important to keep in mind particularly if the sell-off in Tilray stock accelerates.As of this writing, Vince Martin has no positions in any securities mentioned. 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 After Earnings, TLRY Stock Remains a Strategy Play appeared first on InvestorPlace.
The cannabis sector has been struggling -- that's no secret to those that follow along with the space. But with key companies like Tilray (NASDAQ:TLRY) and Canopy Growth (NYSE:CGC) reporting earnings this week, even more attention is being thrust onto the group.Source: Shutterstock We outlined a few of the key spots for TLRY stock ahead of earnings -- some upside targets should the post-earnings reaction be positive and some downside targets if the stock is under pressure. It's only fair to do the same thing for Canopy Growth stock, given the volatile nature of this industry.Because of the regulatory hurdles, speculative nature of M&A, incredible growth rates and high valuations, cannabis stocks are volatile bunch. That's not just TLRY and CGC either. That goes for names like Cronos Group (NASDAQ:CRON), Aphria (NYSE:APHA), Aurora Cannabis (NYSE:ACB) and others.InvestorPlace - Stock Market News, Stock Advice & Trading TipsLet's look at the charts. Trading CGC Stock Click to EnlargeJust over a month ago, we flagged the bearish price action in Canopy Growth stock price. Shares were setting up in a descending triangle, a bearish development where downtrend resistance is squeezing the stock price against a static level of support. For CGC, you can see that in the above chart.Downtrend resistance (blue line) has been squeezing CGC lower since May. However, $38 support (black line) continued to buoy the name.These setups are attractive in the sense that, once we get a break, we know which direction has the new path of least resistance. For the record, CGC wasn't the only cannabis stock tipping its bearish hand. * 15 Growth Stocks to Buy for the Long Haul In any regard, where does that leave us now?Shares rallied on Tuesday, but CGC was swiftly batted down from the 20-day moving average. It was rallying alongside TLRY ahead of the latter's quarterly results. Now back down toward $32, Canopy Growth stock is near a key level.When the markets were in "selloff mode" at the start of August, CGC found support at $31. Should CGC close below this mark, it puts the $28 level on the table, as well as the year-to-date low at $26.30.On the upside, CGC stock needs to clear the 20-day moving average and downtrend resistance (blue line). If it does, it can begin to work on a new uptrend line. It will also put the 50-day moving as its first upside target, with the 61.8% retracement at $37.75 as the second target.At the very least, staying north of $31 would give the bulls some reprieve and allow CGC to start working on a series of higher lows. Canopy Growth Stock Earnings PreviewWithout question, CGC is considered one of the "blue chips" of cannabis stocks. A big part of that came after a large investment from a well-known company. Constellation Brands (NYSE:STZ) poured some $4 billion into Canopy, forging its balance sheet as one of the strongest in the group.The cash infusion gave CGC a treasure chest to gobble up smaller, strategic entities in the space. But beyond that, it also put on a display of confidence. STZ is well-run outfit, and if it's investing billions into Canopy, management is obviously bullish on its prospects.That said, CGC is going through a bit of a rough patch at the moment. Will earnings turn its woes around?When the company reports its first quarter results for fiscal 2020, analysts expect sales of $84.2 million (CAD). For the year, estimates call for roughly $540 million in sales. They still expect CGC to lose 31 cents per share this quarter and $1.06 per share this year. In fiscal 2021, estimates call for almost $1 billion in sales. Progress toward this figure will be in close focus.If Canopy continues to make progress, then the post-earnings reaction may be favorable. If investors feel that that sales figure is less likely to be achieved, it may lead to selling. Adding volatility in the broader market may not help CGC -- or other cannabis plays -- in the short term.What matters is the trend and the strength of the balance sheet. Are more countries and states legalizing cannabis? Are they companies working toward positive free cash flow and have enough cash to comfortably cover their costs? Can revenue growth keep pace?That's what investors want answers to. Basically, they want to know that the long-term trends remain in place, helping to justify some of these huge valuations.Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 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 Canopy Needs Its Earnings to Answer These Key Questions appeared first on InvestorPlace.
[Editor's Note: This article was updated on Aug. 15 to correct the location of Lift & Co.]Piper Jaffray analyst Michael Lavery initiated coverage of Aurora Cannabis (NYSE:ACB) stock with a "neutral" rating on Aug. 13. At the same time, the analyst gave a number of its Canadian competitors, including Cronos Group (NASDAQ:CRON), "buy" recommendations. Lavery's argument against Aurora Cannabis stock has to do with its rich valuation combined with the fact that the company has not invested much outside of Canada.InvestorPlace - Stock Market News, Stock Advice & Trading TipsHere are the pros and cons of Aurora's valuation and its geographic strategy. Profitability May Be Elusive for Aurora CannabisMost of the major cannabis companies aren't profitable. One could argue that many of them, including Aurora, might not be profitable for several more years. One reason is that Canada's recreational pot market may actually turn less profitable in the medium term. That's because of expectations that the supply shortages that existed in late 2018 and into 2019 are going to turn into surpluses in the longer term as more licensed producers ramp up their production capacity. * 15 Growth Stocks to Buy for the Long Haul "We're going to have a dramatic oversupply in two to three years," Nick Pateras, the vice president of strategy for Toronto-based Lift & Co., a website dedicated to reviewing Canadian cannabis products, stated in June at the Canadian Cannabis Summit in Calgary."1 million kilograms of cannabis is what the market needs right now and if every licensed producer (LP) executes on their business plan, you could have 3 million kilograms," he added. Of course, the gross margins for the producers of those 3 million kilograms.will go right down the toilet. Pateras points out that Oregon has stopped issuing new cannabis licenses because the supply there is double the demand. The same thing could happen in Canada. InvestorPlace columnist Luke Lango, pointed out in May that the market valued Aurora Cannabis at less than $1 million per kilogram of cannabis it sold in its latest reported quarter compared to as much as $4.5 million per kilogram sold for some of its competitors. Another InvestorPlace writer, Faisal Humayan, recently reminded readers that Aurora plans to go from a production capacity of 150,000 kilograms annually to 625,000 annually by the end of 2020, a four-fold increase.In a perfect world, having that much capacity would be tremendously valuable.But in any event, I would suggest that Aurora Cannabis stock is far more reasonably priced since its 33% correction that started in March,How Much Capacity is Too Much?In Aurora's Q3 report, the company said that its average selling price per gram of cannabis sold in the quarter came in at C$6.40 . If Aurora was to sell every kilogram of its planned cannabis capacity in 2020 at the same ASP, it would generate C$4 billion in sales. Based on this scenario, Aurora Cannabis' $6.7 billion market cap doesn't seem all that outrageous. However, it's highly unlikely that Aurora Cannabis is going to be able to sell even half of its capacity in 2020. Worse still, if the oversupply issues rear their ugly head, companies are going to begin writing down the cannabis they produced that can't be sold in some form. The Bottom Line on ACB StockACB's Germany, Denmark, and Latin American operations enable it to produce a significant amount of cannabis and hemp in overseas countries whose populations total more than 1 billion people. As a result, Aurora Cannabis' opportunity in Europe and Latin America is enormous. Aurora Cannabis continues to use its industry-leading size in both Canada and abroad to capture a big part of the global cannabis market. The fact that it doesn't have a U.S. business plan at the moment doesn't mean it won't enter the market in the future. Furthermore, while it doesn't have a huge strategic partner, if it continues to implement innovative ideas such as cultivating outside, I don't think it will have a problem attracting a huge strategic investor. In the meantime, I'd take advantage of any weakness in Aurora Cannabis stock caused by analysts' comments to buy the shares at cheap prices. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 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 Is Aurora Cannabis Stock Worth Buying? 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.]I heard someone say recently that technical analysis of marijuana stocks is like reading tea leaves. It is unfortunate that technical analysis has such a bad reputation, but I can totally understand why it does.The vast majority of technical analysts that I see seem to look at charts and mindlessly identify patterns without understanding what they are supposed to mean. Even worse, some analysts are proponents of bizarre methods like Elliot Waves and Gann theory. These techniques are like the Loch Ness Sea Monster, Bigfoot and UFOs. They may be fun to talk about, but they are not real.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIn 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 either going up, going down, or staying the same. When understood and applied correctly, technical analysis should be an illustration of these dynamics. * 15 Growth Stocks to Buy for the Long Haul Knowing where the important levels and trends are can help you profit. For example, suppose you want to buy a stock if it drops to $20. If there is support at the $21 level, the stock may never get to $20. It may get to $21 and rally. You would have missed out on a large profit because you didn't understand that the market dynamics made the stock getting to $20 unlikely. Marijuana Stocks: Aurora Cannabis (ACB)Aurora Cannabis (NYSE:ACB) is a Canadian-based company that grows are sells medical marijuana, indoor cultivation systems and hemp-related food products.ACB stock has been in a small downtrend since running into resistance at the $7 level. I would expect this level to continue to be resistance in the short term.There is resistance at the $7 level because it was a support level in February, May, and June. How does this happen? How does a support level become a resistance level? Few people consider this but I think that it is an amazing phenomenon. It is really a picture of mass psychology.Those who bought ACB at $7 were feeling pretty good when it went higher. But then when the stock broke that level, they were looking at a loss. They tell themselves that if it rallies back to $7 they will sell it and get out so they can break even.They shorts are happy that the stock went lower because they are looking at a profit. They tell themselves that if the stock gets back to $7, they will short more and add to their positions. Added to this are professional traders seeking to profit off of a clear level.You can see that there are now three different groups that are interested in selling stock at the $7 level. This supply creates resistance. Aphria (APHA) Aphria (NYSE:APHA) grows and sells cannabis.About a month ago, I pointed out that if the $6.30 level broke, this stock would probably trend lower. After the company reported earnings and rebounded, someone sent me a nasty email telling me I have no clue about Aphria.I must admit, I had to laugh. The stock lost 20% of its value in the two weeks after I talked about it. If this person could identify stocks that were about to move by 20% in two weeks I would most certainly subscribe to his or her newsletter. If I had a short position, I would have covered it the day before the earnings release. I never hold short positions going into an earnings releases because it is too risky.After the rally, APHA stock hit resistance at the $7.50 level. This level was also resistance in May and June. It will probably continue to be so in the near-term. * 7 Safe Dividend Stocks for Investors to Buy Right Now There is support at the $6.30 level. This level was support from May through July. It will probably continue to be support in the near-term. Cronos Group (CRON)Cronos Group (NASDAQ:CRON) grows and sell marijuana.You don't need to be a Market Guru to see that the $14 level is important for CRON stock. It was resistance in September and December of 2018. Then it became support from May through July before breaking and becoming resistance again over the past month.How does a resistance level become a support level? Those who sold it at the level believe that they have made a mistake when the stock trades higher. They tell themselves that if it falls back to the level, they will buy it back. This demand for stock at the level is what creates support.On Aug. 8, Cronos reported earnings, and the action in the stock was very weak. It opened around $15.50, which was the day's high. It sold off over the course of the day and closed near its lows. This is probably a bearish dynamic and it could be the start of a new downtrend. Canopy Growth (CGC)Canopy Growth (NYSE:CGC) grows and sells marijuana.CGC stock may have broken its recent downtrend. This means that the forces of demand may be equalizing with or about to overcome the forces of supply.In financial markets, prices are always doing one of three things. They either are rising, falling or staying the same. When prices are going up the forces of demand are in control of the market. When prices are falling the forces of supply are in control. When prices are staying the same the forces are equal.The break of a properly drawn trendline means that the leadership may be about to change. It takes some practice, but if you understand what trendlines illustrate you can profit. * 7 Stocks Under $7 to Invest in Now CGC has broken the downtrend that began in July. This could be a sign that it may rally as the demand forces take over. At the very least, it is an indication that it has stopped declining. Hexo (HEXO)Hexo (NYSE:HEXO) grows and sells medical marijuana.From April through August, HEXO stock lost about 50% of its value. Then it became oversold and found support at the $4 level. It has recovered nicely since then. The most recent close was $4.94.This stock illustrates an important dynamic about trading. When markets get to important support and are oversold, they tend to rebound and rally. This was the case here.When they get to important support and are not oversold they tend to spend time consolidating before breaking the level and trending lower.What does oversold mean? It is a measurement of momentum. It is where the current price is versus where it was X many days ago. When it reaches extreme readings to the downside it is considered oversold.That was the case here. HEXO was extremely oversold when it reached the $4 level in July. KushCo Holdings (KSHB)KushCo Holdings (OTCMKTS:KSHB) produces and sells packaging materials for companies in the cannabis industry.KSHB stock is testing support around the $4.30 level. This level was support in June and again in late July. On each occasion a large rally followed.If you are tempted to buy this stock, you may want to wait to see if the level holds. A potential strategy is to wait until the downtrend line breaks before buying it. This could be a signal that the forces of demand are about to equalize with or overcome the forces of supply. * 8 Dividend Aristocrat Stocks to Buy Now No Matter What While you won't get the exact low price, this will decrease the chances of buying it and getting run over if the stock continues to trend lower. Scotts Miracle-Gro (SMG)Among other things, Scotts Miracle-Gro (NYSE:SMG) manufactures and sells equipment and accessories for hydroponic growing.Over the past two weeks, SMG has been testing resistance around the $110 level. There is resistance around these levels because it is where the top was in late December 2017 and January of 2018.This is a good example of how markets have memories. Certain levels can be important for years, and sometimes even decades.After failing at the resistance, the stock traded all the way down to $57 in December of 2018 before recovering and rallying all the way back to current levels.If you are bearish on the long-term prospects of this company and are considering selling SMG stock, this would be a logical place to do so.At the time of this writing Mark Putrino did not hold any positions in any of the aforementioned securities. 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 7 Marijuana Stocks With Critical Levels to Watch appeared first on InvestorPlace.
Canopy is the clear leader in the marijuana space with a vastly diversified portfolio of cannabis products along with its STZ partnership.
The bumpy ride for Cronos (NASDAQ:CRON) stock investors continued this week when the cannabis stock got some more love from Wall Street. On Monday, Piper Jaffray analyst Micael Lavery initiated coverage of Cronos Group stock with an "outperform" rating and $18 price target.Lavery's initiation note was 29 pages long. However, the bull case for Cronos boils down to three main points.Source: ShutterstockInvestorPlace - Stock Market News, Stock Advice & Trading Tips CRON Stock Has a Big BrotherWhile other cannabis producers are out there trying to grow their business organically, Cronos has a perfect benefactor. In December 2018, tobacco giant Altria (NYSE:MO) invested $1.8 billion for a 45% stake in Cronos. In my opinion, the Altria partnership is the single biggest reason to consider CRON stock."We believe its partnership with Altria provides important capital ($1.8 billion cash) and access into 230,000 U.S. retail outlets, as well as regulatory and vapor product expertise," Lavery wrote. * 15 Growth Stocks to Buy for the Long Haul I would add two points to Lavery's case. U.S. (and potentially global) cigarette volumes are seemingly in secular decline. In other words, Altria needs Cronos as much as Cronos needs Altria. Tobacco companies are starving for growth. Cannabis could be a long-term lifeline.Second, Cronos Group stock investors hoping for U.S. cannabis legalization should realize one thing about their investment. They are investing in a tobacco company. As part of the terms of its 45% investment deal, Altria has the rights to take a full ownership stake at some point down the line.In my opinion, whether or not Altria exercises that option hinges on U.S. cannabis legalization. Without access to the U.S. market, Altria may not want to fully acquire Cronos. But if the U.S. ultimately legalizes weed on a federal level, I bet Altria's first move is a Cronos takeover.Progressive CRON stock investors may not like the idea of a tobacco takeover. But if the future of Altria is cannabis, at some point Altria is no longer a tobacco company at all. CBD Provides CRON Access to U.S. MarketAll cannabis stock investors know that U.S. federal marijuana legalization is the golden ticket. In the meantime, cannabidiol (CBD) may be the best way for Canadian producers like Cronos to get their foot in the U.S. door.CBD is a non-psychoactive, cannabis-derived chemical compound that was legalized in the U.S. in December 2018. The caveat is that only CBD produced from hemp, not marijuana, is legal. Lavery is expecting Cronos to use its $1.8 billion in Altria capital to launch a U.S. CBD strategy within the next year. In fact, he is projecting 60% of Cronos' 2020 revenue will come from CBD. Cronos Group's Brand AwarenessThe third big feather in Cronos Group's cap is its recent $300 million buyout of Redwood Holdings, parent company of early CBD brand leader Lord Jones.For millennial investors who are a fan of alternative data, Lavery included a cool statistic on Lord Jones in his note. Lord Jones alone has nearly 80,000 Instagram followers. That's more followers than the leading brands of popular cannabis stocks Tilray (NASDAQ:TLRY), Charlotte's Web Holdings (OTC:CWBHF) and Curaleaf Holdings (OTC:CURLF).It may seem like a trivial statistic, but social media popularity is an important measure of brand popularity. Marketing experts know brands are the key to success in untapped markets like the U.S. If Lord Jones becomes one of the gold standards in U.S. CBD, don't be surprised if Cronos/Altria markets its marijuana under the Lord Jones brand in the event of U.S. legalization. Understanding the Risks of CRON StockThe one thing I always try to include in my stories about cannabis stocks is a note about the risks involved in investing. There are so many uncertainties in the cannabis space right now. As if that weren't enough of a risk, cannabis stock valuations are sky-high, likely including at least some expected value from the U.S. marijuana market.Instead of rehashing points I've repeatedly made, here's Lavery's take:"We see a long runway of growth in the cannabis space, but valuation still has many speculative elements and can be very imprecise, given the early stages of the category and the myriad ways it could evolve," he wrote.Lavery makes some good points about buying CRON stock. However, any cannabis stock is a pure speculation at this time and these valuations. Don't invest any cash you wouldn't be comfortable losing in a worst-case scenario.As of this writing, Wayne Duggan did not hold a position in any of the aforementioned securities. 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 3 Reasons to Love Cronos Stock appeared first on InvestorPlace.
Investing.com – Tilray slumped Wednesday after more than tripling its cannabis sales in the second quarter, but at lower prices, prompting a wider-than-expected loss, leaving traders with little choice but to say "no" to weed stocks.
Canopy Growth (CGC) (WEED) is scheduled to announce its results for the first quarter of fiscal 2020 after the market closes on Wednesday.
Cannabis stocks are mostly higher as the broader market rallies back amid an easing of China trade fears, with Aurora Cannabis looking soft after Piper Jaffray initiated coverage with a neutral rating, citing its rich valuation.
It looks like cannabis stocks had a great day. Innovative Industrial Properties (IIPR), Cronos Group (CRON), and Tilray (TLRY) are all surging today.
Piper Jaffray has rated Cronos Group as “overweight.” The investment company has given Cronos Group a 12-month price target of $18.
Cannabis stocks got a boost on Tuesday after a major Wall Street firm initiated bullish coverage of Cronos Group Inc (NASDAQ: CRON ). The Analyst Piper Jaffray analyst Michael Lavery initiated coverage ...
Shares of Tilray (NASDAQ:TLRY) stock will be in focus on Wednesday, after the company reports its quarterly results on Tuesday after the close. With cannabis stocks in focus lately, a strong quarter would go a long way to helping reverse the price action in TLRY stock and potentially turning the group around.Source: Shutterstock Cannabis stocks tend to be volatile, as there are a lot of considerations in play. There's the M&A factor to consider, as large companies plunk down lots of cash to get involved in cannabis. Take Constellation Brands (NYSE:STZ) investing $4 billion in Canopy Growth (NYSE:CGC) (which reports later this week) or Altria (NYSE:MO) dumping $1.8 billion in Cronos Group (NASDAQ:CRON).There are also regulatory wins and worries to consider, as part of the bullish thesis lies with various governments becoming more open-minded to the benefits of cannabis. There's also the fact that while many of these names boast incredible revenue growth, they also carry huge valuation risks.InvestorPlace - Stock Market News, Stock Advice & Trading TipsAdd it all together and you get a volatile group of up-and-coming growth stocks. Tilray's QuarterAnalysts expect Tilray to lose 25 cents per share this quarter, responsible for roughly one-quarter of the full-year loss of 99 cents per share they are forecasting for 2019. However, so long as the cash burn isn't too high and the losses are not too wide, the bottom line is not the focus at the moment. * 7 Safe Dividend Stocks for Investors to Buy Right Now Instead, the focus is sales. In that respect, analysts have some incredible forecasts. They expect revenue to jump ~322% this quarter to $41.1 million. That's slightly higher growth than their full-year forecasts for 308% growth, with estimates calling for $176.1 million in 2019 sales.The question is, what will it take for it to matter? Should TLRY beat on both earnings and revenue, will it be enough to entice investors?If the climate of the market turns more bullish, rather than remaining fearful, a beat could fuel Tilray higher. If the markets return to a risk-off approach in the next few weeks or months though, TLRY, CGC, and other cannabis players may find their stocks out of favor with investors.Remember, this is a stock that trades with a market cap value of $4.3 billion. At $176 million in sales, we're talking about 24 times this year's revenue. The entity doesn't turn a profit, and while the growth rate is still strong, that's a big valuation. Expectations call for another 103% growth in fiscal 2020, but you can see why there may be some concern.Before we do anything, we have to see the quarter from TLRY. Perhaps more importantly though, we have to see how the stock reacts to the quarter, which will tell us where investors stand on the name.To do that, let's look at the charts. Trading TLRY Stock Click to Enlarge Tilray stock has been in a painful downtrend since erupting higher in Q3 2018. Since then, a series of lower highs has continued to squeeze the stock lower and lower (purple line). However, that mood changed in June.Shares bottomed near $34.25, chopping near that mark for several consecutive sessions. TLRY then went on to reclaim its 20-day and 50-day moving averages, pushing through downtrend resistance in the process. It hasn't been completely smooth sailing during that time, with shares falling along that prior resistance level until hitting the $39 area. The good news though? Prior resistance is now acting as support, while the stock registered a higher low (blue line). That allows us to put in a short-term uptrend line.TLRY stock is not completely out of the woods here, but its chart is looking more constructive.Should we get positive Tilray news from its quarterly results, see that shares stay north of the 20-day and 50-day moving averages. With any luck, TLRY can reclaim the $47 to $50 area, and possibly begin a march back to its 200-day moving currently near $67.If the reaction is negative, I would love to see uptrend support hold. However, one "must-hold" spot for me is $39.31, to keep the trend of higher lows in play. If that fails, bulls need to make sure Tilray stock doesn't fall back below prior downtrend support.Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Real Estate Investments to Ride Out the Current Storm * 7 Marijuana Penny Stocks to Consider for Those Who Can Handle Risk * 7 Safe Dividend Stocks for Investors to Buy Right Now The post Tilray Stock Is Looking for a Turnaround appeared first on InvestorPlace.