|Bid||0.00 x 800|
|Ask||0.00 x 1300|
|Day's Range||52.17 - 52.88|
|52 Week Range||42.40 - 66.04|
|Beta (3Y Monthly)||0.22|
|PE Ratio (TTM)||16.10|
|Earnings Date||Jul 30, 2019|
|Forward Dividend & Yield||3.20 (5.89%)|
|1y Target Est||58.73|
Since February, cannabis maker Cronos Group (NASDAQ:CRON) has been on a downward slide. Note that CRON stock has gone from $22 to $15.30.Yet keep in mind that the poor performance of Cronos Group stock has not been an outlier. General bearishness towards marijuana stocks has become prevalent. Just look at companies like Tilray (NASDAQ:TLRY) and Aphria (NYSE:APHA). Among the reasons for the slide are that the sector has already had a big run-up, there are concerns about marijuana supply, and pricing has been showing some weakness.The weakness of CRON stock may be an opportunity, even though the valuation of Cronos Group stock is still not attractive. Even following the decline, CRON stock is still trading at nose-bleed levels. Consider that the market cap of CRON stock is at $5.2 billion, while its first-quarter sales came in at a mere CA$6.5 million. That kind of valuation is reminiscent of the wild dot-com boom of the 1990s.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 6 Stocks to Buy for This Decade's Massive Megatrend There are also some nagging issues with the fundamentals of CRON stock. Perhaps the most important problem is its production or lack thereof. In Q1, its production soared 122% year-over-year, but it still only made 1,111 kilos. That is relatively low, compared to other major cannabis players like Canopy Growth (NYSE:CGC).While this is worrisome, there are still notable bullish factors. In fact, in terms of production, CRON has been investing heavily in expanding its capacity. To this end, the company's Building 4 facility -- which is 286,000 square feet -- will soon come online.Next, another big advantages for CRON stock is its balance sheet. Tobacco powerhouse Altria (NYSE:MO) invested a hefty CA$2.4 billion in Cronos Group stock for a 45% stake in Cronos. In other words, CRON will have more than sufficient resources to bolster its production.But the MO deal will be more than just about capital. There will also be major synergies that should help to accelerate the growth of CRON and boost Cronos stock. Examples include: * MO brings deep capabilities of design, manufacturing, marketing, distribution and commercialization. * The company has expertise that can help with cannabis vape products. * It has a strong background in dealing with complex regulatory issues, including taxes, product registration, shipping, licensing and government affairs. The Bottom Line on CRON StockEven with the volatility of CRON stock, it's important to keep in mind that the growth prospects of the cannabis industry still look very promising. Based on research from the United Nations, about $150 billion is spent on cannabis across the globe, and there are roughly 180 million people who consume cannabis.There is also the quickly emerging category of cannabidiol (CBD) -- a compound found in the sativa plant that does not produce a high - which has shown medical efficacy. Congress' legalization of CBD is expected to turn it into a big market in the U.S. Brightfield Group forecasts that the market will be worth $22 billion by 2022.CRON stock is positioned nicely to benefit from these trends. But more importantly, the company has the scale, infrastructure, brands and resources to be a long-term winner.Tom Taulli is the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.Compare Brokers The post Can Cronos Stock Be a Long-Term Winner? appeared first on InvestorPlace.
[Editor's note: This story was previously published in March 2019. It has since been updated and republished.]Cannabidiol (CBD) is emerging as a red-hot category of the marijuana industry. CBD consists of compounds in the cannabis sativa plant that do not produce a high. In fact, over the years, CBDs have been shown to have powerful therapeutic effects.Now it looks like the U.S. market could open up in a big way for this type of cannabis and several CBD stocks are gaining traction. The reason: In December, Congress passed the 2018 Farm Bill, which declared that CBD would no longer be treated as an illegal substance.InvestorPlace - Stock Market News, Stock Advice & Trading TipsSo how big could this opportunity be? Well, according to research from the Brightfield Group, the market in the U.S. could hit $22 billion by 2022. * 6 Stocks to Buy for This Decade's Massive Megatrend No doubt, this could move the needle for marijuana stocks -- and here's a look at seven that stand out: Marijuana Stocks Poised to Benefit From CBD Legalization: Cronos Group (CRON)Cronos Group (NYSE:CRON) operates a vertically integrated cannabis platform, with a presence across five continents. In terms of the CBD opportunity, the company recently struck a strategic partnership with Gingko Bioworks, which has raised $430 million. The company's founder, Tom Knight, is known as the "father of synthetic biology" and his innovations -- such as with software to print DNA -- should allow for the creation of cannabinoids at a massive scale. This is critical because it can be difficult to produce pure forms that are cost-effective and precise.CRON also has the advantage of substantial financial resources to commercialize its cannabinoids. Last December, Altria (NYSE:MO) invested $1.8 billion into the company for a 45% stake. The deal is certainly a validation of CRON but it will also allow for much broader distribution and improved product development.Of course, a company like MO does engage in substantial due diligence before making an investment. In the company's Q4 earnings call, CEO Howard Willard said: "We believe the growth opportunities are significant and will extend across the globe as cannabis markets open. Selecting the right partner in this category was critical and we've done just that. Cronos strong management team has built unique capabilities to compete globally across the medicinal, recreational and nutraceutical categories." Marijuana Stocks Poised to Benefit From CBD Legalization: Aurora Cannabis (ACB)Aurora Cannabis (NYSE:ACB), a Canadian based cannabis producer, has been building up its CBD business. Part of this has been with its investments in industrial hemp production, such as with the Radient facility in Edmonton. It is expected to get as much as 10,000 kilos per day.Next, ACB has been focused on revving up its product offerings. On its Q2 earnings call, Chief Corporate Officer Cam Battley said the company is poised "to launch a broad line of CBD based wellness product in the near future."What's more, ACB has been aggressive with its dealmaking. For example, it has increased its equity position in Hempco and purchased Agropro, which is Europe's largest hemp producer. * 6 Stocks to Buy for This Decade's Massive Megatrend Something else to keep in mind: Legendary billionaire investor Nelson Peltz has joined the company as an advisor. This is certainly a major vote of confidence. He not only has deep access to investment capital but a strong network of potential partners, especially in the consumer goods industry. Some of his investments include stakes in PepsiCo (NASDAQ:PEP), Procter & Gamble (NYSE:PG) and Mondelez (NASDAQ:MDLZ). Marijuana Stocks Poised to Benefit From CBD Legalization: Charlotte's Web (CWBHF)The inspiration for the founding of Charlotte's Web (OTCMKTS:CWBHF) was a CNN documentary -- in 2013 -- about Charlotte Figi, whose health was significantly improved because of a hemp extract.Fast forward to today: The company is the No. 1 brand for the hemp-derived CBD market in the U.S. It definitely helps that it has distribution across more than 3,000 retail locations.And yes, growth has been strong. In Q3, revenues jumped by 57% to $17.7 million and adjusted EBITDA came to $5.4 million, up 31%.To better capitalize on the CBD opportunity, CWBHF issued $71.5 million in stock. This will be for cultivation and production to meet surging demand. Here's what the company's CEO, Hess Moallem, had to say: "In general, broader consumer awareness of the benefits of cannabinoids, namely cannabidiol (CBD), and whole plant hemp extract is driving increased uptake in both our retail channels and within our e-commerce platform."In other words, it seems like a pretty good bet that the growth will continue for some time. Marijuana Stocks Poised to Benefit From CBD Legalization: Zynerba Pharmaceuticals (ZYNE)Zynerba Pharmaceuticals (NASDAQ:ZYNE) is a clinical-stage biotech company that develops cannabinoid therapies for a variety of rare diseases. They include: * Fragile X Syndrome (FXS): This is a developmental disability that has been known to cause autism spectrum disorder. FXS impacts 71,000 people in the U.S. and there are no drug indications for it. * Developmental and Epileptic Encephalopathies (DEE): This is an epilepsy syndrome that involves severe cognitive impairment. About 45,000 children and adolescents have this in the U.S. * Autism Spectrum Disorder (ASD): This includes autism and Asperger's syndrome. ASD affects less than 1 million pediatric and adolescent patients. * 6 Stocks to Buy for This Decade's Massive Megatrend ZYNE's main candidate is Zygel, which is a CBD formulation gel for transdermal delivery. As for the FXS treatment, there is expected to be a pivotal data release in the second half of this year. And if the trial is positive, then the company will file a New Drug Application (NDA) for Zygel in the first half of 2020. Marijuana Stocks Poised to Benefit From CBD Legalization: Canopy Growth (CGC)Since 2016, Canopy Growth (NYSE:CGC) has been building its CBD business, with a focus on consumer packaged goods. The company has since created a vertically integrated platform for that includes a set of technologies that have pending patents. What's more, the hemp division is expected to yield 7,000 kilos of hemp-derived CBD on an annual basis. Granted, this cannot be used in the U.S. market. Yet CGC is likely to be a solid partner. For example, the company struck a deal with Martha Stewart's Sequential Brands Group, so as to develop CBD remedies for pets.It helps that CGC has substantial resources, which came from a mega $4 billion investment from Constellation Brands (NYSE:STZ). STZ has a strong global footprint -- with operations in the U.S., Mexico, New Zealand, Italy and Canada -- as well as a set of well-known consumer brands, such as Corona Extra, Corona Light, Modelo Especial, Modelo Negra and Pacifico. All in all, there is quite a bit of synergy for CGC.In the meantime, the company is growing at a staggering pace. In Q3, its revenues soared by 282% to $83 million. Marijuana Stocks Poised to Benefit From CBD Legalization:GW Pharmaceuticals (GWPH)The origins of GW Pharmaceuticals (NASDAQ:GWPH) go back to 1998. It was then that Dr. Geoffrey Guy and Dr. Brian Whittle co-founded the company to focus on developing therapies using cannabinoid formulations to target areas like epilepsy, glioma and schizophrenia.As of today, the lead product is a liquid formulation of a CBD, called Epidiolex, which received FDA approval in 2018 (the expectation is that there will be an approval in Europe in the second quarter). The drug targets the rare conditions of Lennox-Gastaut syndrome (LGS) or Dravet syndrome, which are variations of epilepsy. Furthermore, there are other indications for Epidiolex, such as Tuberous Sclerosis Complex and Rett Syndrome. * 6 Stocks to Buy for This Decade's Massive Megatrend But of course, the company has other treatments. Note that GWPH is looking to get approval in the U.S. for Sativex, which is an oromucosal spray for multiple sclerosis. It is currently available in 25 countries. Marijuana Stocks Poised to Benefit From CBD Legalization: Horizons Marijuana Life Sciences ETF (HMLSF)If you do not want to buy individual CBD stocks, then you can consider an exchange-traded fund, such as the Horizons Marijuana Life Sciences ETF (OTCMKTS:HMLSF). With this, you'll get exposure to companies like Canopy Growth, Aurora, GW Pharamceuticals, HEXO and Tilray (NASDAQ:TLRY).In all, there are 59 stocks in the portfolio and the net assets are about $890 million (in Canadian currency).Tom Taulli is the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 6 Stocks to Buy for This Decade's Massive Megatrend * The 7 Best Stocks to Buy From the IPO ETF * 7 Athletic Apparel Stocks With Marathon Pace Compare Brokers The post 7 Marijuana Stocks to Play the CBD Trend appeared first on InvestorPlace.
News that Martha Stuart invested in Canadian cannabis firm Canopy Growth (NYSE:CGC) did not move Canopy Growth stock by much but it does signal something positive. The public is gaining a greater awareness for the prospects of CBD (cannabis and cannabinol) products.Source: Shutterstock Even though Stuart's interest in CBD is for treating stressed animals, which is a small market, any positive mention for CBD will increase the addressable market. And the bigger the market gets, the higher the sales potential for companies like Canopy Growth. So, as an investor, should you follow Martha Stuart's CGC stock trade?In the United States, the CBD market could reach $20 billion by 2024. And at a market capitalization of $10.44 billion (based on Canopy Growth trading at $44.99 recently), markets are far too optimistic in projecting that Canopy would win much of that market.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 6 Stocks to Buy for This Decade's Massive Megatrend Martha Stuart's interest in CBD could lead to companies studying its potential benefits for animals. Still, the CBD market for animals is tiny. In 2017, just $7 million in cannabis-based products for pets were sold in California, Colorado, Oregon and Washington. The CBD market will need more companies dedicated to researching its potency in animals if the market is to expand. Canopy Growth Stock and AcquisitionsCGC stock bottomed at around $40 in April only to rebound when the TSX added it to the S&P/TSX 60 index on Apr. 12. Since then, Canopy said on April 16 that it invested in High Beauty. It bought $2.5 million worth of shares, giving the company an 18.4% in High Beauty. The investment suits Canopy because the beauty industry benefits from the anti-inflammatory aspects from CBD. Cannabinoids could help the health industry treat rosacea, eczema, redness of the skin, and aging.Canopy also said that it completed its acquisition of Spain-based licensed cannabis producer Cañamo y Fibras. Together with Constellation Brands (NYSE:STZ), the pair may continue its global expansion plans. With $4 billion of Constellation's investment, Canopy has plenty of cash available to acquire companies in new geographies like Europe.On April 18, Canopy announced an even bigger deal yet. It would acquire U.S. firm Acreage Holdings for $3.4 billion. Acreage Holdings has 87 dispensaries and 22 cultivation and processing sites across 20 States. This is a win-win deal for both firms as IP sharing and licensing brands will accelerate the growth for Canopy Growth.The Acreage deal is a potential risk for Canopy in the mid-term. If the U.S. Federal government does not legalize cannabis, realizing the production potential from Acreage and all the brand and IP value will get delayed.Canopy may wait for the U.S. market to look favorably to cannabis. It could still develop the product and expand the brand in markets outside the U.S. The only near-term downside is that the U.S. is a massive market whose growth potential is highest. Cronos Earnings and Canopy Growth StockOn May 9, Cronos (NASDAQ:CRON) reported first-quarter revenue that missed expectations. Though revenue grew an impressive CAD $6.5 million (USD $4.8 million), Cronos has a $2.8 billion market cap, based on its recent share price of $16.13.And because CRON stock is still a clear speculative play, weak quarterly reports may take the sine of CGC stock as well. Fundamentally, Altria's (NYSE:MO) CAD $2.4 billion (USD $1.8 billion) investment in Cronos will give the firm years of liquidity. It also gives Cronos the firepower to acquire companies that Canopy may be interested in. The Bottom Line on Canopy Growth StockOn Wall Street, 12 analysts covering Canopy Growth stock are very bullish. The average price target of $60 a share suggests that the stock could rise another 33%. Analysts do not have any fundamental numbers to back the stock's value.Still, Canopy needs to show investors that its acquisitions are leading to new product development that competitors cannot offer, too. The company is likely years away from profitability but with its cash on hand, it will not go away, either.Investors need not follow Martha Stewart on the Canopy trade and need only look at the company's positive prospects set for the long-term.Disclosure: As of this writing, the author did not hold a position in any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 6 Stocks to Buy for This Decade's Massive Megatrend * The 7 Best Stocks to Buy From the IPO ETF * 7 Athletic Apparel Stocks With Marathon Pace Compare Brokers The post There's No Question Canopy Growth Stock Wins in the Long Term appeared first on InvestorPlace.
In early 2019, all pot stocks were red hot, powered by a rebound in financial markets and improving fundamentals underlying the global-cannabis industry. And the hottest name in this scorching sector was Cronos Group (NASDAQ:CRON). Mostly, investors were excited about the $1.8 billion investment tobacco giant Altria (NYSE:MO) poured into the company. Subsequently, CRON stock went from $10 at the start of 2019 to $25 by February.Source: Shutterstock That huge rally has since faded. That should be no surprise. The writing was on the wall for a sizable drop. Cronos Group stock had simply come too far, too fast. It was way overvalued at $25, even for a hyper-growth pot stock.As such, the stock has come cratering back down to reality over the past few months. Today, shares of Cronos trade hands around $16, more than 35% off their February highs. Naturally, the question now is where does CRON stock go next?InvestorPlace - Stock Market News, Stock Advice & Trading TipsTough to say. Pot stocks are exceptionally volatile. But in the big picture, the bull thesis on Cronos stock still lacks conviction. Even after its 35% correction, the stock remains overvalued relative to its peers, even after you consider Altria's massive investment. To be sure, investors are hoping that the $1.8 billion influx will lead to huge gains in market share over the next several months. * 7 Safe Stocks to Buy for Anxious Investors But almost everyone else in this space also has a ton of cash to use. Therefore, taking that leap of faith for market-share gains seems unnecessarily risky.All in all, then, CRON stock still doesn't look great here. If you're looking for cannabis exposure, I continue to recommend Canopy Growth (NYSE:CGC) for highest-quality exposure, and Aurora (NYSE:ACB) for best value. As for Cronos, I'd stay away. Cronos Stock Remains OvervaluedThe biggest problem with Cronos stock is that the equity remains overvalued relative to peers, and for no good reason.Cronos grew revenues by 120% year-over-year in the early 2019 quarter, and by 15% sequentially. By Canadian cannabis standards, those numbers are pretty bad. Compatriot Tilray (NASDAQ:TLRY) grew early 2019 revenues by 195% YOY and nearly 50% sequentially. Aurora reported 300%-plus YOY revenue growth and 20% sequential growth.Meanwhile on the volume side, Cronos reported just 7% kilograms-sold growth sequentially. Both Aurora and Tilray reported 30%-plus sequential volume growth, and on much bigger bases too.In other words, Cronos reported relatively weak numbers in early 2019 which broadly imply that the company is losing share. Yet, CRON stock continues to trade at a premium against the competition.Cronos is being valued at $4.7 million per kilogram of cannabis sold last quarter. The average valuation across Canopy, Aurora and Tilray is roughly $1.3 million per kilogram of cannabis sold last quarter, with a range of $1 million to $1.5 million.Even after factoring cash and debt into the valuation (Cronos has a ton of cash), Cronos Group stock still trades at a huge premium. Last quarter, it carried a value of $3 million per kilogram of cannabis sold last quarter versus roughly $1.2 million across its peers. A Lot Has to Happen to Justify the ValuationClearly, CRON stock still trades at a huge premium to peers. The current growth trajectory doesn't warrant the premium -- it is actually sub-par. Instead, bulls argue that it's justified because of what the company could do with $1.8 billion from Altria.Indeed, as Canopy has shown us, having billions of dollars on the balance sheet is a game changer in the still-nascent global-cannabis industry.But it may be a little too late for Cronos stock. Canopy already has the early lead, and still has more cash on its balance sheet than Cronos. Meanwhile, Aurora is raising $750 million through a mixed-shelf offering. Finally, Tilray has some major partnerships which could turn into huge investments soon.Long story short, everyone in the cannabis industry has money now. Thus, $1.8 billion from Altria doesn't mean that much unless Cronos proves it can do something with it. From that perspective, a lot has to happen over the next few quarters in order to justify the current premium valuation for CRON stock. The company must gain exposure to the U.S. market, ramp revenue and volume growth, gain Canadian cannabis share on peers, and expand its global footprint.If all those things happen, Cronos stock could rally from here. But until that happens, the medium to long-term bull thesis lacks conviction. Bottom Line on CRON StockCannabis stocks are inherently speculative given the nascent nature of the market. Therefore, you want to be selective about your exposure to the industry. From that perspective, Cronos stock simply doesn't make the cut. It's not the highest quality option in the space; that title belongs to Canopy. Nor is it the best value or cheapest name in the space, with Aurora leading that category.Instead, Cronos is a mixed-quality option with a relatively expensive valuation. Because of this dynamic, the bull thesis on CRON stock fails to provide confidence.As of this writing, Luke Lango was long CGC and ACB. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Safe Stocks to Buy for Anxious Investors * 4 Tech Stocks Looking Vulnerable * Should You Buy, Sell, Or Hold These 7 Hot IPO Stocks? Compare Brokers The post The Bull Thesis for CRON Stock Still Lacks Conviction appeared first on InvestorPlace.
The organizations' letter to the firms cited a recent Reuters report https://www.reuters.com/article/us-philipmorris-ecigs-instagram-exclusiv/exclusive-philip-morris-suspends-social-media-campaign-after-reuters-exposes-young-influencers-idUSKCN1SH02K documenting how cigarette maker Philip Morris International Inc has used young personalities on Instagram to sell a new "heated tobacco" product called IQOS. The groups said social media firms are not doing enough to regulate "influencers" on their platforms who are hired by companies to promote nicotine products.
Cronos Group (NASDAQ:CRON) has established its own trend. Thanks to the $1.8 billion investment that CRON received from Altria (NYSE:MO) in December, Cronos is one of the few pot stocks whose 52-week high didn't come right before marijuana became legal in Canada in October.After that announcement, CRON stock began a bull move that peaked in March. Unfortunately, CRON stock has fallen since that time. Since there's no apparent upcoming catalyst that can break that downtrend, traders don't have an incentive to take a chance on Cronos Group stock. CRON Stock Can't Become a Market LeaderSince reaching a near-term peak of $24.37 per share on Mar. 6, CRON stock has steadily slid. Now many wonder when the decline will end.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Stocks to Buy for Over 20% Upside Potential Many people were bullish on CRON stock after U.S. tobacco giant Altria acquired a stake in the company. Because the cannabis and marijuana industries have certain similarities. I think this alliance will give Cronos some added expertise in the areas of production, distribution, and marketing. It also reminded many of Constellation Brands' (NYSE:STZ) investment in Canopy Growth (NYSE:CGC) that made CGC a market leader.However, for all of the talk about CRON stock, analysts only expect CRON to produce about 130,000 kg of pot this year. That trails smaller firms such as Aphria (NYSE:APHA) and The Green Organic Dutchman (OTCMKTS:TGODF). Valuation, Charts Show Little Reason to Buy Cronos StockMarijuana stocks remain highly speculative. For traders to take a chance on a marijuana stock, they need some reason to believe that they can sell it at a higher price later. Because CRON lags some smaller firms in production, it has little chance of leading the industry. Today Aurora Cannabis (NYSE:ACB) and Canopy Growth have emerged as industry leaders.The multiple of CRON stock also doesn't give investors a reason to buy the shares. Cronos stock currently trades at around 355 times CRON's sales. While that might appear elevated, it compares well to other cannabis equities in today's market.CRON does deserve credit for earning a profit. Cronos Group reported a first-quarter GAAP profit of 48 Canadian cents (36 cents) per share. CRON predicts that its 2019 EPS will come in at 52 Canadian cents (39 cents). That would gives CRON a price-earnings ratio of about 35.6. However, due to an expected decline in CRON's EPS to 7 Canadian cents (5.2 cents) in 2020, its forward PE comes in at 290.That valuation leaves investors with little incentive to buy Cronos stock. I have made successful short-term trades in the past in both Aphria and CannTrust Holdings (NYSE:CTST), due to their relatively low multiples. It is possible to find stocks with attractive valuations in the cannabis space. Unfortunately, that does not apply to CRON stock at this time.Finally, the recent price movements of Cronos Group stock also won't help traders much. From a technical perspective, InvestorPlace columnist Bret Kenwell thinks that Cronos stock has support in the $13-$14 per share range. However, if CRON falls below that level, it could return to the single digits. Over the last year, it has appeared to build a floor in the $6 per share range. Cronos stock would be attractive at that level. Still, it will probably not reach that price anytime soon. Final Thoughts on CRONThere's nothing attractive about Cronos Group stock for investors or speculators. I can see a lot to like about Cronos Group's business. Its alliance with Altria should help it with production, distribution, and marketing. Also, the fact that it earns a GAAP profit will place CRON in a strong position compared to many of its peers.Unfortunately, none of those advantages make Cronos Group stock attractive. Cronos' production levels lag those of market leaders such as Aurora and Canopy. The valuations of those names are also more favorable than that of CRON stock, closing off any chance that CRON could be seen as a relative bargain. Moreover, while Cronos stock could bounce off of key resistance points, the stock's floor is well below its current levels.I have stated on many occasions that marijuana equities like CRON stock will eventually become low-multiple, dividend-paying equities like the Altria of today. Until CRON develops those characteristics, or at least finds a more solid floor, I would look to own other equities in the cannabis space.As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can follow Will on Twitter at @HealyWriting. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Stocks to Buy for Over 20% Upside Potential * 5 Large-Cap Stocks Holding Steady Amid Trade War Concerns * 7 ETFs for Healthy Healthcare REITs Compare Brokers The post Cronos Stock Is Less Attractive Than Many Other Marijuana Names appeared first on InvestorPlace.
Altria Group stock has lagged both the market and big tobacco peer Philip Morris this year, but Wells Fargo argues that the stock has been oversold, creating a good entry point for investors.
At least in the current, early stages of the legal marijuana sector, Canopy Growth (NYSE:CGC) is the clear leader. Canopy Growth stock has by far the highest market capitalization among marijuana stocks, and Canopy has the largest peak production capabilities.As a result, the CGC stock price is somewhat of a weather vane for investor sentiment towards the cannabis sector more broadly.That's good news, and bad news, for CGC stock. On the plus side, CGC is simple. The company's reach is broad and continues to grow. However the industry's growth plays out, Canopy Growth is going to play a significant role in it and generate significant profits. If the marijuana sector exceeds investors' expectations, the CGC stock price likely will do the same.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThe flip side is that it's unlikely that Canopy Growth stock will be the best marijuana stock over time. Smaller niche plays might have more room for growth and are more likely to become M&A targets. Canopy's wide reach guarantees at least a few wins, but some of its myriad initiatives will fail to bear fruit (or, more accurately in this case, flowers). * 7 Stocks to Buy for Over 20% Upside Potential Overall, the outlook of CGC stock is pretty simple. If an investor believes in cannabis, CGC stock remains the simplest play, as I've argued in the past. But with the CGC stock price still not too far from its highs, it's worth remembering that an awful lot of belief, and potential success, looks priced into Canopy Growth stock. Canopy Growth Expands Its ReachThe $4 billion-plus investment Canopy Growth received from Constellation Brands (NYSE:STZ,NYSE:STZ.B) gave the company an unparalleled war chest. Only Cronos Group (NASDAQ:CRON), which received $1.8 billion from tobacco giant Altria (NYSE:MO), comes close.Canopy is putting that cash to work. It negotiated a complicated deal with Acreage Holdings (OTCMKTS:ACRGF) to enter the U.S. market, including a $300 million upfront payment. (An activist Acreage shareholder could scuttle that purchase, however.) CGC is adding production capability. Canopy brought a German cannabinoid compounder into the fold earlier this month. Its smaller deals include a buyout of a U.S. hemp manufacturer and a stake in a '"cannabis beauty brand."Those acquisitions add to the company's already-strong portfolio. Canopy Growth sells marijuana under six different brands. Its existing production capabilities appear to exceed 500,000 kilograms annually. Canopy produces oil and softgels in addition to dried flower. The Constellation partnership should give the company an edge in cannabis-infused beverages and edibles.Canopy already has a reach that far exceeds that of any other cannabis company. Aurora Cannabis (NYSE:ACB) is probably its closest rival in terms of breadth of geographic and market exposure. But even Aurora doesn't reach Canopy's levels, and ACB doesn't have an extra few billion dollars on its balance sheet that it can use to take advantage of more opportunities along the way. CGC or an ETF?At this point in the market's evolution, one key argument for Canopy Growth stock is that it can function like an ETF. The point of an ETF is to capitalize on a trend without making the effort or taking the risk that investing in single stocks requires. There are, by one count, over 400 marijuana stocks at the moment. As is usually the case with a "hot" trend, many of those stocks will decline or go bust. (Think, for instance, of the dot-com bubble, or more recently, cryptocurrency/blockchain plays.)In fact, I'd rather own CGC stock than the largest marijuana ETF, the ETFMG Alternative Harvest ETF (NYSEARCA:MJ). Two marijuana pharmaceutical plays, GW Pharmaceuticals (NASDAQ:GWPH) and Corbus Pharmaceuticals (NASDAQ:CRBP), together make up more than 12% of Canopy's assets. And, again, Canopy's reach means it should have at least some success, no matter how the marijuana industry develops.If oversupply makes production less profitable, CGC's distribution and retail operations should benefit. If consumption moves towards edibles and away from flowers, it should be well-positioned for that shift. That's not the case for many smaller plays, including those that make up the MJ ETF. The Risks Facing CGC StockThere's one obvious catch for Canopy Growth stock, however. Even if Canopy can capture marijuana growth in myriad ways, that growth needs to support the current CGC stock price. And I've become increasingly cautious about that recently.At its December lows, CGC was available for less than the price that Constellation paid. (Constellation handed over roughly $35 per share, depending on how warrants Constellation received as part of the deal are valued). But now that CGC stock price has reached the mid-40s, that's no longer the case. As the Acreage activist noted, CGC trades at a stunning 178 times its estimated 2020 EBITDA.That multiple isn't out of line for the sector, but that's precisely the point. Current valuations in the industry, including that of Canopy Growth stock, suggest that massive industry growth is all but a foregone conclusion. And I'm skeptical about whether it will play out quite that way.For instance, recreational sales in Canada already are starting to flatten out., so the explosive rallies of marijuana stocks are going to end. Marijuana prices have plunged in the few regulated U.S. markets. And legalization, given the size of the existing black market (and the relative ease of using it for most consumers), won't necessarily lead to higher sales.Those trends suggest that the initial optimism toward marijuana, and the enormous valuations assigned to marijuana stocks, may have gone a bit too far. That, in turn ,suggests that the CGC stock price may have done the same. For marijuana bulls, there's no simpler play than CGC stock. But for CGC stock to rise further, those bulls must be right.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Stocks to Buy for Over 20% Upside Potential * 5 Large-Cap Stocks Holding Steady Amid Trade War Concerns * 7 ETFs for Healthy Healthcare REITs Compare Brokers The post Canopy Growth Stock Has to Overcome an Important Obstacle appeared first on InvestorPlace.
WASHINGTON (AP) — Senate Majority Leader Mitch McConnell, whose home state of Kentucky was long one of the nation's leading tobacco producers, introduced bipartisan legislation Monday to raise the minimum age for buying any tobacco products from 18 to 21.
Researchers analysed data collected in April 2018 on public followers of Juul’s Twitter account (@JUULvapor) with at least one public tweet. About 45 percent of those who followed Juul were 13 to 17 years old, according to the study published online in JAMA Pediatrics. Only 19 percent of Juul’s followers were at least 21.
Almost half of the people who followed Juul Labs Inc on Twitter were not old enough to legally purchase e-cigarettes in the United States, according a study published on Monday. Researchers analyzed data collected in April 2018 on all public followers of Juul’s Twitter account (@JUULvapor) with at least one public tweet. About 45 percent of the individuals who followed Juul were 13 to 17 years old, according to the study in JAMA Pediatrics, published online on Monday.
[Editor's note: This story was previously published in April 2019. It has since been updated and republished.]Marijuana stocks are all the rage these days as legalized cannabis has hit the scene. Analysts now project that the market for both medical and recreational cannabis use will reach a staggering $200 billion in global sales in just five years. As a result, stocks in the sector have surged on the wave of optimism.The problem is, marijuana stocks aren't exactly a slam dunk.InvestorPlace - Stock Market News, Stock Advice & Trading TipsMany are fraught with some big-time risks, hefty volatility, zero profits, etc. At this point, many marijuana stocks are just speculative bets. They could pay off or they could crash and burn. But one thing many of the top cannabis stocks do have is partners. Specifically, major corporate partners that are as far from speculative plays as you can get.It's here that more conservative investors can cash in on the marijuana stock mania and benefit from everything it has to offer. Sure, these stocks won't rise as much as some of the pure marijuana stocks. But, you know what? They won't fall as much either and they'll still be able to reap potential billions in revenues derived from cannabis. * 7 High-Yield REITs to Buy (Even When the Market Tanks) With that, here are the three top partners of the marijuana stocks and why they are good stocks to buy. Constellation Brands (STZ)Source: Shutterstock Seemingly overnight, Constellation Brands (NYSE:STZ) become one of the biggest marijuana stocks out there. That's thanks to its big partnership with Canopy Growth (NYSE:CGC). For a cool $4 billion, STZ purchased a 38% stake in Canopy last year. The firm now owns warrants that would allow it own a majority stake in 2021.The end game for STZ is pretty simple. Marijuana would be a perfect "fourth leg of a stool" to the company's beer, wine, and spirits operations. Constellation owns over 100 world class beverage brands including Corona beer, Svedka Vodka, and Robert Mondavi wines. These are highly regulated consumer products. The end goal is for STZ to do the same with cannabis. That is, apply its vast branding knowledge and distribution network to get various pot products into the hands of the masses.Constellation has already started working with Canopy on cannabis-infused drinks. At the same time, it's looking to parlay is vast marketing knowledge into other cannabis areas such as edibles and other consumable products. These can and will all be major sources of revenues once the switch is flipped and full legalization happens.In the meantime, STZ is no slouch with regards to what it already generates money on and its recently undergone some moves to shore up its balance sheet and pay for CGC purchase. This allows it to be a safer play than any of the marijuana stocks. Novartis (NVS)Source: Shutterstock One of the main reasons why marijuana stocks have surged so far has been the growing use of medical marijuana and cannabis treatments. Demand in that area has already begun to surge, and it could grow further as doctors look for alternatives to addictive opioids for pain relief.International drug giant Novartis (NYSE:NVS) saw the writing on the wall and decided that it needed to get into the cannabis game. This prompted it to partner with major grower Tilray (NASDAQ:TLRY).That partnership allows for NVS division Sandoz to develop and distribute TLRY's medical marijuana in legal jurisdictions around the world. With the deal, Tilray is able to tap into Novartis' vast distribution network and will allow TLRY to help commercialize its non-smokable/noncombustible medical cannabis products. For NVS, it's able to collect fees and revenues from sales. Moreover, the deal allows it to co-brand some products to help enhance sales further.For both partners, the deal seems like a win-win. NVS gets its hands-on fast-growing medical marijuana, while Tilray can actually sell its products to more consumers. Given how good the deal is, both firms decided to expand more on those partnerships and look into developing new cannabis-related drugs. * 7 High-Yield REITs to Buy (Even When the Market Tanks) The win for investors by choosing NVS over TLRY is that you get the backing of one of the largest drug manufacturers on the planet. Altria (MO)Source: Peyri Herrera via Flickr (Modified)Big Tobacco has been eyeballing legalized cannabis sales for what seems like decades, so it's no surprise that cigarette-king Altria (NYSE:MO) would be looking at the marijuana stocks for a partnership. That came from a $1.8 billion investment in pot grower Cronos Group (NASDAQ:CRON). MO now has a 45% stake in the firm.Traditional cigarette sales continue to fall and MO has been looking for ways to expand its portfolio and reduce potential revenue loss. This helps explain its major purchase of vaping specialist Juul Labs. Its CRON buy helps expand on that vaping tech.Speculation has already begun that Altria could fill Juul Pods with CBD once pot is legal everywhere or add it to its other vaping/e-cigarette brands. Meanwhile, MO's huge production facilities could instantly be flipped towards smokable marijuana products. The deal also allows for CRON to co-develop new products that could be sold on Altria's large network. Together, it gives Altria an instant foothold in a growing business.And that's important for the firm. Potentially, it gives Big Tobacco a way to really reduce its multi-year declines. Last quarter again, Altria managed to miss analysts' consensus sales estimates.Meanwhile, investors buying MO over other marijuana stocks getsplenty of stability, profits and a hefty 5.93% dividend yield.Disclosure: At the time of writing, Aaron Levitt did not hold a position in any of the marijuana stocks mentioned. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 High-Yield REITs to Buy (Even When the Market Tanks) * 5 Great Blue-Chip Stocks to Buy Today * 7 Tech Stocks to Buy That Are Also Perfect for Retirement Compare Brokers The post 3 Ways to Buy Into the Marijuana Boom Without the Risk appeared first on InvestorPlace.
Marijuana stocks like Cronos (NASDAQ:CRON) look a bit creaky at the moment, and CRON stock may be Exhibit A in the case that the group is stalling out. Cronos stock has dropped by over one-third just since early March, with the near-term question whether a recent bottom can hold.Source: Shutterstock I'm skeptical it will. Valuation is a bit more reasonable than it was earlier this year, when I thought Cronos Group stock was overvalued. But CRON is hardly cheap. Analysts have turned bearish. And that bearishness seems to coincide with the core problem here.Cronos simply hasn't driven the right kind of narrative for a marijuana stock at this valuation. Looking around the sector, there are concise, obvious bull cases for most of the well-covered stocks. Outside of the nearly $2 billion in cash coming in from Altria (NYSE:MO), Cronos lacks that case. And until that changes, Cronos is likely to struggle.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 6 Chinese Stocks That Could Pop On a Trade Deal The Need for a StoryInvesting in cannabis stocks at the moment isn't about the fundamentals. This is an industry at the very beginning of its growth. Price/earnings and even price/sales multiples are enormous and not necessarily comparable. The fundamental toolkit an investor might use to value a mature company simply doesn't apply in the sector at the moment.And so both the decision to invest in the sector at all, and which cannabis stock to choose, come down largely to long-term projections and even feel. Will the industry grow for years, as proponents argue? Is the oversupply already seen in legalized U.S. markets like Oregon a long-term risk? When does broader U.S. legalization arrive? Who of the myriad publicly traded cannabis plays wins and who loses?In that type of investing environment, a stock needs a succinct bull case, an elevator pitch so to speak. And most of the well-covered cannabis plays have that type of case. Canopy Growth (NYSE:CGC) is the early leader, and thanks to Constellation Brands (NYSE:STZ,NYSE:STZ.B) has the largest war chest. Aurora Cannabis (NYSE:ACB) is taking so many shots on goal that it's likely to score on at least one of them. Charlotte's Web (OTCMKTS:CWBHF) is the pure play on CBD (cannabidiol) oil. Even struggling Tilray (NASDAQ:TLRY) may have positioned itself to win if capacity gets overbuilt. And so on. What Is the Story Behind CRON Stock?What's the story behind CRON stock, however? The company has a ton of cash coming in, to be sure. But its production capabilities aren't particularly impressive: as The Motley Fool noted, Cronos isn't even in the top ten in terms of available capacity. Its Spinach retail brand doesn't appear as strong as those from Canopy or Hexo (NYSE:HEXO). Its positioning in the Canadian adult-use market seems behind that of many peers.Even analysts somewhat favorable to the stock aren't sure what to make of it, as James Brumley noted earlier this month. CIBC World Markets analyst John Zamparo wrote that the company hadn't given much colors on its plans for actually using that capital. Cannacord Genuity cited "a number of strategic initiatives that could eventually unlock longer-term value."Those aren't compelling points in favor of Cronos stock. Rather, they're something more akin to a "poke and hope" strategy. Cronos has a lot of cash, and the marijuana industry should grow, so the company will eventually figure something out. That kind of case might work in the middle of 2018, or the beginning of 2019, when marijuana stocks on the whole are soaring. As we've seen of late, however, it can't work forever. Cronos Group Stock Isn't CheapMeanwhile, Cronos remains priced in line with those peers who have better stories - and better growth. Cronos' Q1 report wasn't particularly impressive either fundamentally or in terms of management commentary. The company did turn a profit but only thanks to non-cash benefits, some of which related to the Altria deal. On an operating basis, Cronos continues to lose money.That's not a problem on its own: most stocks in the space are posting operating losses as they build out production, processing, and supply chain capabilities. But CRON, relative to revenue, continues to be valued roughly in line with the leaders of the space.That's not going to hold if Cronos can't prove that it will be a leader long-term. Right now, it's not making a good enough case - and until that changes, Cronos stock is going to underperform. And with marijuana stocks right now seeming to stall out, that in turn suggests that CRON is headed below $15.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Stocks to Buy that Lost 10% Last Week * Top 7 Dow Jones Stocks of 2019 -- So Far * 5 Service Stocks That Can Win the Trade War -- According to Goldman Sachs Compare Brokers The post Without a Better Story, Cronos Stock May Have Further to Fall appeared first on InvestorPlace.
RICHMOND, Va.-- -- Altria discusses evolved business platform and recent strategic investments. Altria announces Annual Meeting voting results. Altria reaffirms full-year 2019 earnings guidance. Altria declares regular quarterly dividend of $0.80 per share. Altria Group, Inc. held its 2019 Annual Meeting of Shareholders today. Howard Willard, Altria’s Chairman and Chief Executive Officer, summarized ...
Cannabis stocks are starting to lose their shine. Ever since Altria Group (NYSE: MO) took a $1.8 billion stake in Cronos Group (NASDAQ: CRON) in December 2018, Cronos, and stocks in this sector are trending lower. With reality setting in following an uninspiring quarterly earnings report, what will it take for Cronos stock to stop falling?Source: Shutterstock Altria's $1.8 billion investment in Cronos is frighteningly big relative to the current revenue generation. In the first quarter, Cronos reported revenue of just CAD $6.5 million (USD $4.8 million). Q1 GAAP earnings-per-share came in at CAD 48 cents (USD 36 cents). Still, Altria's large investment is a bet on the future potential revenue from Cronos.The tobacco giant is bringing its decades of experience in navigating through a complex regulatory landscape. As it handles government regulatory affairs, licensing and other legal issues, Cronos will need Altria's expertise in marketing and developing a scalable cannabis supply chain.InvestorPlace - Stock Market News, Stock Advice & Trading Tips First Quarter HighlightsCronos reported an EBITDA loss of $8.9 million, with losses up 13% sequentially from Q4 2018. Higher expenses were partially offset by the higher net revenue of $6.5 million. Revenue increased due to dry flower wholesale revenue, which faced no excise tax reduction for the year. Supply constraints limited the revenue growth but the company expects additional production capacity arriving in the second half of this year. * 7 Stocks to Buy that Lost 10% Last Week Looking ahead, the adjusted EBITDA will still decline throughout 2019. Cronos plans on increasing R&D spend; this will lead to accelerated growth in 2020. Favorable Product MixASP (average selling price) rose 7% to $5.73 sequentially, due primarily to higher revenue from CBD oil. This product does not carry an excise tax reduction, lifting revenue. The 42% increase in gross profit, to $3.5 million, is due to the cost of sales falling 11% sequentially to $2.69. Building Supply ChannelIn the first quarter, Cronos secured listings with private retailers in Saskatchewan. This adds to its established distribution in Ontario, British Columbia, Nova Scotia and Prince Edward Island. Together, the five provinces account for 58% of the Canadian population.Thanks to the additional liquidity provided from Altria's investment in the company, Cronos continued scaling its business. It plans on increasing its capital investments to the production related to the Peace Naturals facility expansion. It also plans to invest in automation equipment at GrowCo and at the Israel facilities. Increasing OutputInvestors have high expectations for Cronos ramping up output. Its output was around 1,000 kilos in the first quarter but it aims for 40,000 kilos next. In its next quarterly earnings report, investors will look for evidence that the supply chain and distribution model supports the higher output.Cronos is prioritizing hemp over marijuana, which should lower the regulatory risks investors face in holding the stock. CBD regulations may still limit the market size in the near term in places like Germany or in the E.U. Still, expanding the output of CBD-based products take priority over THC because the market for the former will expand more rapidly. * 10 Stocks to Sell Before They Tank Your Portfolio Cronos is bullish on its partnership with Ginkgo Bioworks. From the balance sheet, investors will notice the R&D spend, in which some of it is related to its payments to Ginkgo. Cronos reached its milestones with Ginkgo and the latter continues to make progress in the area of synthetic biology. Valuation and Your TakeawayAfter Cronos reported first-quarter results, only one of the nine analysts covering the company updated their rating to a "hold." Per Tipranks, the average price target on CRON stock is $21.50, which implies an upside of over 42%. Cronos stock traded recently at $15.15.From a charting perspective, CRON stock looks like it peaked at between $22 - $24 in February. Selling pressure continues to pull the stock lower. But with billions in cash on its balance sheet, Cronos has plenty of resources to build its business. If it gets ahead of its competitors in getting its supply chain at full capacity, it will grow market share quickly. For that reason, the long-term prospects for Cronos appear bright.As of this writing, Chris Lau did not hold a position in any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 10 Stocks to Sell Before They Tank Your Portfolio * Top 7 Dow Jones Stocks of 2019 -- So Far * 5 Low-Priced, High-Potential Tech Stocks to Buy Compare Brokers The post Cronos Stock Peaked But It Still Holds Promise appeared first on InvestorPlace.
Since Aurora Cannabis (NYSE: ACB) stock surged in March, ACB stock has been stuck in a narrow trading range between $8.00 and $9.00. Had the markets not sold off due to U.S.-China trade tension worries, Aurora stock would probably not have fallen to $8.38 recently.But it was reported that cannabis sales in Canada had been unchanged over a three-month period. That should not sit well with the owners of ACB stock. * 7 Stocks to Buy that Lost 10% Last Week Cannabis Sales FlatStatistics Canada reported that cannabis sales in January and February were $79 million, flat from September and October 2018. And the 15,000 kilograms of production during that period, down from 22,000 kilograms in the December quarter, should dishearten those owners of ACB stock who expected growth of at least 10%.InvestorPlace - Stock Market News, Stock Advice & Trading TipsAurora Cannabis should get singled out because the company has announced that it will significantly increase its production capacity between now and mid-2020. Aurora expects its production to soon reach 150,000 kg/year, up from 150,000 kg/year in 2018. By mid -2020, it expects its output to surge five-fold to 500,000 kg/year. Low Production CostsAurora has touted its unique cultivation process that it says delivers mass scale, high quality and low production. Yet if cannabis demand is weak in Canada,the owners of ACB stock cannot be sure that global demand for cannabis is growing.In the second quarter, Aurora reported net revenue of $54.2 million. The company's revenue grew 83% quarter-over-quarter. But Aurora stock has an $8 billion market cap, and ACB stock has a price/sales ratio of around 20 times. To retain that high multiple, Aurora must continue reporting strong growth for several quarters. As long as Aurora keeps bringing new product to market, it should have no trouble growing sales and its patient base. (It had a patient base of 73,000 in Q2). $200 Billion Addressable MarketAurora believes the addressable market for medical and global adult-use cannabis is $200 billion. But some may worry that the weak Canadian data indicates that the targeted global market size may not materialize ever or at least for some time. Still, cannabis has the potential to disrupt many markets, including beverages, pharmaceuticals, and tobacco.It is not surprising that Altria (NYSE: MO) invested CAD $2.4 billion (USD $1.78 billion) in Cronos Group (NASDAQ: CRON) last December. That investment lifted the valuations of nearly all cannabis stocks, including ACB stock. So, as cannabis companies report their quarterly earnings, the owners of Aurora stock will look for proof that growth is still in the cards for the cannabis sector. High Expectations for AuroraAurora reported that its revenue had soared 260% in the second quarter, while its average selling price came in at $8.39. But it reported a net loss of CAD $158.3 million (USD $117 million).Though the number of the company's registered medical patients grew 69% to 77,136, the company still lost money. But as Aurora leverages its R&D efforts to develop high-margin products, it will be profitable sooner than most think. That should be a positive catalyst for ACB stock. The Bottom Line on ACB StockAurora Cannabis stock is at a crossroads. Aurora stock may drift lower if markets grow wary of cannabis stocks. Conversely, strong revenue growth could lift Aurora Cannabis stock back to the $9 - $10 range.As of this writing, the author did not hold a position in any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 10 Stocks to Sell Before They Tank Your Portfolio * Top 7 Dow Jones Stocks of 2019 -- So Far * 5 Low-Priced, High-Potential Tech Stocks to Buy Compare Brokers The post Why Aurora Cannabis Stock Could Break Out From Its Trading Range appeared first on InvestorPlace.
Altria shareholders grilled CEO Howard Willard on his $12.8 billion bet on e-cigarette giant Juul at the company's annual shareholder meeting Thursday.
Forget the marijuana stocks, as their partners are more of a sure thing, asserts Mark Leibovit, growth stock expert and editor of The VR Cannabis Letter.
Cronos (NASDAQ:CRON) stock dropped almost 10% on Thursday after the company's fiscal first-quarter results were released. For those who regularly trade CRON stock, the decline was not surprising. Nor was the bounce of CRON stock on Friday. CRON stock remains locked in a downtrend.Is now the time for long-term bulls to buy Cronos stock? Down over 50% from its highs, one would think the stock could rise above its current levels, while others may think it's the start of an even larger correction. On the plus side, the risk/reward scenario of Cronos Group stock could become favorable soon.Before we look at the charts though, remember that Cronos stock is a speculative investment. Personally, I prefer buying names like Canopy Growth (NYSE:CGC) and Aurora Cannabis (NYSE:ACB) on deep pullbacks. That said, some think that CRON stock has potential, so let's take a look.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Dividend Stocks to Buy as the Trade War Reignites Trading CRON StockIt's clear that $24-$25 is resistance on the chart, while CRON stock is locked in a violent downtrend. Even a rally up to $16 might just result in additional selling pressure. The 21-day moving average is around the same area as its downtrend resistance, so I would expect CRON stock to fail to hold that level.That said, the technical outlook of Cronos stock looks promising at its current levels. Throughout the third and fourth quarters of 2018, $13 -$14 was resistance for CRON stock. After breaking through this level in January, many investors will expect it to act as support.It helps that the downtrend support of Cronos Group stock is coming into the picture around current levels and that the 200-day moving average sits at $13.28. If CRON falls below the 200-day, the shares could reach $12 and single-digits after that.But let's not get ahead of our skis here. See if CRON stock can stay above its nearby support. A bounce could send it higher by more than 14% to its current resistance. If it breaks below the support level, investors should wait for a more favorable price. The Bottom Line on Cronos Group Stock(Note: the below figures are in Canadian dollars)In Q1, CRON churned out a GAAP profit of 42 cents on revenue that grew 120% year-over-year (YoY). Here's the thing though: it reported just $6.5 million of revenue. That's right; this company, with a $4.5 billion market cap, registered sales of just $6.5 million in Q1.Its top line more than doubled from the same period a year ago, but at what point is its valuation a bit ridiculous? Analysts do expect its rapid growth to continue for the rest of this year. In Q2, they, on average,are calling for $6.76 million of sales, up 160% YoY. In Q3 and Q4, the consensus estimates ramp dramatically to $13 million and $22.9 million, up 360% and 334% YoY, respectively.But based on those estimates, CRON stock is valued at roughly 90 times its 2019 sales. That's a tough pill to swallow.That said, there's demand for this stock and many others like it. Constellation Brands (NYSE:STZ) has taken a massive stake in CGC, while Aurora Cannabis has talked about a collaboration with Coca-Cola (NYSE:KO). Cronos Group stock received a $1.8 billion investment from Altria (NYSE:MO) in exchange for a 45% stake.The point is that many investors -- from retail to conglomerates in the tobacco and alcohol industry -- view the cannabis industry as a rising, long-term play. Getting in now is costly, but those who are patient are essentially guaranteed a seat at the table. The question is how valuable that seat will be worth and how long it will take to realize its potential. It's clear there is a non-cyclical trend toward cannabis and cannabis-related products and for that reason, a speculative position may make sense for some investors. But don't forget, it is speculative.Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Dividend Stocks to Buy as the Trade War Reignites * 10 Stocks That Could Squeeze Short Sellers, Including CGC * 5 Tech Stocks Getting Crushed Compare Brokers The post Charts Indicate That the Risk/Reward Ratio of Cronos Stock Is Reasonable appeared first on InvestorPlace.