|Bid||167.50 x 900|
|Ask||170.03 x 800|
|Day's Range||167.52 - 170.42|
|52 Week Range||150.37 - 236.62|
|Beta (3Y Monthly)||0.71|
|PE Ratio (TTM)||10.68|
|Earnings Date||Apr 4, 2019|
|Forward Dividend & Yield||2.96 (1.77%)|
|1y Target Est||210.22|
Constellation Brands (STZ) closed the most recent trading day at $169.18, moving -0.12% from the previous trading session.
Dual-class stocks to buy are in the news again. Lyft, the ride-hailing app, is looking to go public. On March 18, the company filed an amended preliminary prospectus with the SEC that suggests it will offer almost 31 million of its Class A shares between $62 and $68 a share, valuing it at $23 billion or more.It's very popular with investors, already oversubscribed with a week left until it officially starts trading. People can't get enough of Lyft stock. However, many institutional investors aren't happy about the company's dual-class share structure, sending a letter to Lyft asking that it include a sunset clause in its IPO regulatory filings. Under a sunset clause, the company would designate a future date at which time the dual-class share structure would convert into a one share, one vote scenario. InvestorPlace - Stock Market News, Stock Advice & Trading TipsThese institutional investors don't like the fact that the company's two founders will control 60% of the votes with just a 7% economic interest. They're especially frustrated because Lyft currently operates a one share, one vote structure as a private company. Love them or hate them, dual-class share structures will always be attractive to entrepreneurs who worry that the short-termism that's so prevalent in Wall Street companies is harmful to a company's long-term success. * 7 Beaten-Up Stocks to Buy as They Reverse Course I happen to believe that dual-class share structures, in the hands of good corporate stewards, can deliver above-average rewards, then companies without them.To demonstrate what I mean, here are seven dual-class stocks to buy now. Dual-Class Stocks to Buy: Brown-Forman (BF.B, BF.A)Source: Shutterstock George Garvin Brown IV is the chairman of Brown-Forman (NYSE:BF.A, NYSE:BF.B), the Louisville distiller behind Jack Daniel's and other whisky brands. The Brown family control more than 50% of the company's Class A shares. The Class B shares do not come with votes providing the family with a built-in succession plan. It's the ultimate family business. When George Garvin Brown became chairman in 2007, he went to work with former CEO Paul Varga -- Varga retired December 31, 2018, after 15 years in the top job -- to create a "family engagement" committee to keep all the Brown family members, most of whom didn't work at the company, engaged and informed, so that a dual-class share structure wasn't the only thing keeping it in the familial hands. "It's their biggest asset; it's what makes them unique," said Professor Lloyd Shefsky in 2015. "But there has to be something more for people to go through the extra effort, and sometimes trauma, of continuing family ownership of the business. … Families generally don't work on that enough."Since Brown IV has been chairman, Brown-Forman stock has appreciated by 493%, or 16.7% annualized. Not bad considering he took over at a time when the economy was ready to collapse, and nobody was drinking whisky. Boy, have times changed. Constellation Brands (STZ, STZ.B)Source: Shutterstock Lost in the excitement of Constellation Brands' (NYSE:STZ, NYSE:STZ.B) multi-billion-dollar cannabis investment is the fact that the company has a dual-class share structure, with Class A shares getting one vote per share while Class B shares get 10 votes each. Brothers Rob and Richard Sands control the company by owning almost all of its Class B shares. Overall, they have 59% of the all the votes, which translates into a 16% economic interest in Constellation Brands.Recently, Rob Sands stepped down as CEO, to become executive chairman, with the COO, Bill Newlands, stepping into the top role. Rob Sands was the driving force behind Constellation Brands making a $4 billion investment in Canopy Growth (NYSE:CGC). As executive chairman, he'll oversee the company's investment including its push into cannabis-infused drinks. Whether you're talking about its bold move to buy the Modelo beer business in the U.S. a few years ago or its efforts to add a platform for growth beyond beer, spirits, and wine, there's a good chance none of this happens if the Sands' brothers didn't have the ability to look well into the future. * 10 Stocks on the Rise Heading Into the Second Quarter Institutions might hate the idea that someone with 16% ownership, controls the business, but when you consider how much effort the family has put into the company -- father Marvin founded it in 1945 -- I wouldn't want anyone else other than the Sands calling the shots. They dream big, and shareholders will be rewarded over the long haul for allowing them to do so. Dual-Class Stocks to Buy: Brookfield Asset Management (BAM)Source: Shutterstock If you're not familiar with the alternative asset manager that recently acquired 62% of Los Angeles-based Oaktree Capital (NYSE:OAK) for more than $4 billion, Brookfield Asset Management (NYSE:BAM) is now about the same size as Blackstone (NYSE:BX) in terms of assets under management. Brookfield CEO Bruce Flatt got a new platform for growth in credit and distressed debt while adding to the company's bench -- Oaktree co-founder Howard Marks will remain at Oaktree for the foreseeable future -- and more importantly, making Brookfield a full-service asset manager. "Brookfield is a leading player in infrastructure, real assets and real estate," David Fann of TorreyCove Capital Partners said about the deal. "Oaktree is a dominant distressed debt player. After this deal, Brookfield will become a major global provider of alternative investments with offerings that work in both up and down markets."Again, I'll make my point. The dual-class share structure is only a problem in the absence of talent and vision. Bruce Flatt has plenty of both. Estee Lauder (EL)Source: Shutterstock 2018 wasn't a great year for long-time Estee Lauder (NYSE:EL) shareholders; its stock delivered an annual total return of 3.5%. That's okay. As bad as that might seem, it was still 787 basis points higher than the S&P 500. And besides, it's up 24.5% year to date, and if it can hold those gains this is the fifth year in the past decade with an annual total return more than 20%. If you invested $10,000 in Estee Lauder stock a decade ago, today you'd have more than $145,000.Led by CEO Fabrizio Freda, who has been in the top job since 2009, the executive chairman's role is held by William Lauder, who was CEO for a short time before Freda joined the company. The Lauders, who control the company with 87% of the votes, have four board seats out of a total of 16, ensuring that the business goes where they want it to go. I first recommended Estee Lauder stock in April 2013. Since then, I've suggested it on several occasions into 2019. * 5 Cloud Stocks to Help Your Portfolio Fly As consumer stocks go, I like it as long as the Lauder family has a control position in the company. They know how to exert influence without getting in the way. Nike (NKE)Source: Shutterstock Whenever you read about Nike (NYSE:NKE), it's rare that you see anything that talks about Phil Knight's baby having a dual-class share structure, but it surely does, although not in an obvious way. It has Class A and Class B shares, but there's no 10:1 ratio in terms of votes, or 20:1 in the case of Lyft. No, it uses a more subtle form of control. If you dig into the proxy, you'll see that Class A shareholders elect 75% of the board members and Class B shareholders to elect the rest. Currently, there are 12 directors with nine voted on by the Class A shareholders and three voted on by the Class B shareholders. Care to guess who one of the Class A shareholders is? None other than Travis Knight, Phil Knight's son. Another thing you'll notice is that Swoosh LLC holds 78% of the Class A shares ensuring that Nike's board is stacked with people the founder can trust. It's a slightly different take on the dual-class share structure, but it ultimately is intended to ensure that the company maintains the vision of its founder. As successful as Nike has been, what's not to like? Square (SQ)Source: Via SquareJack Dorsey is CEO of both Square (NYSE:SQ) and Twitter (NYSE:TWTR). Square went public in November 2015; Twitter IPO'd two years earlier in November 2013. Interestingly, Twitter chose to issue only one class of shares, but Square decided to issue two classes. Why is that?Well, a Wall Street Journal article in August 2015, before the company went public, used an interesting analogy with Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG), then known as Google, that might provide a clue. "From a governance perspective, investors could view 'Alphabet less as a public company than a public-private company hybrid,'" the Journal's Emily Chastan stated at the time, quoting corporate governance expert John Wilson. "Because the company has an unequal voting structure, the founders of Google are uniquely able to take risky bets on new technology, while simultaneously growing the company's mature search and advertising business."So, it's possible that Dorsey and company felt that Square needed greater oversight and control, protecting it from the short-term nature of most investors. We'll probably never know for sure. However, what we do know is that Dorsey has 45% of Square's voting power, but only 16% of its equity, whose shares are worth $4.9 billion. Over at Twitter, he has 2.4% of the equity, worth $586 million. Considering Square's market cap is 32% greater than Twitter's, it seems Dorsey made the right call. Dual-Class Stocks to Buy: Berkshire Hathaway (BRK.A, BRK.B)Source: Shutterstock If it weren't for unit investment trusts, you might not be able to buy Class B shares of Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B) today. Warren Buffett introduced a second class of shares in May 1996 in response to regular investors seeking a backdoor by buying units of these trusts to get a piece of the Class A shares, which were trading around $22,000 at the time. Baby B's would be worth 1/30th the value of the Class A shares and 1/10,000th the voting rights. "As I have told you before, we made this sale in response to the threatened creation of unit trusts that would have marketed themselves as Berkshire look-alikes. In the process, they would have used our past, and definitely nonrepeatable, record to entice naive small investors and would have charged these innocents high fees and commissions," Buffett wrote in the company's 1996 shareholder's letter. How about that, even back then, the Oracle of Omaha was railing against high fees in the mutual fund business. Almost 15 years after issuing the B shares, Berkshire Hathaway split them 50-to-1 so that Burlington Northern shareholders could share in the company's future success. Today, the B shares are worth 1/1,500th of a Class A share while the voting rights have stayed the same. If not for Warren Buffett's stand on fees a long time ago, a lot fewer people would likely own the company's stock. That would be a bad thing. 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 * 7 Retail Stocks That Will Continue to Rebound in 2019 * 5 Stocks To Buy for the Happiest Employees * 7 ETFs for a Millennial Portfolio Compare Brokers The post 7 Dual-Class Stocks That Will Outperform appeared first on InvestorPlace.
The ongoing wave of cannabis legalization is good for pot companies, but the trend could be a downer for alcohol stocks, warns DataTrek.
Cannabis stocks are climbing this year and Aurora Cannabis (NYSE:ACB) is among the leaders of that pack. Shares of ACB stock have nearly doubled year-to-date and are in the midst of a breathtaking March rally of more than 33%.Source: Shutterstock Returns like those, particularly in the short time frames, might give investors reasonable pause about Aurora Cannabis stock, or any other stock for that matter. Indeed, the risk/reward proposition on ACB stock looks a lot different today than it did at the start or 2019. In terms of upside potential, Aurora Cannabis stock would need to rally another 28% to reclaim its 52-week high.That is not an impossible climb for ACB stock, but the near- to medium-term issue is finding upside catalysts because plenty of good news is already baked into this marijuana stock. For example, ACB surged earlier this month on news activist investor Nelson Peltz is joining the company as an advisor. That sent ACB stock to a double-digit intraday gain and the shares are up more than 11% since then.InvestorPlace - Stock Market News, Stock Advice & Trading Tips What Analysts Say About ACB StockSell-side analysts are not correct about any stock 100% of the time. Investors that acknowledge that can help mitigate disappointments. That said, some analysts are bullish on ACB stock. * 10 Stocks on the Rise Heading Into the Second Quarter Earlier this month, Cowen's Vivien Azer -- one of the most respected analysts tracking marijuana equities -- initiated coverage of Aurora Cannabis with an Outperform rating and a price target that works out to the equivalent of about $10.50 in U.S. dollars."While establishing 20% market share has been an early success story in Canadian adult use cannabis, the company is uniquely positioned to drive leadership in both share and profitability," Azer wrote in a note, according to Barron's.The analyst "believes that Aurora will deliver positive earnings before interest, taxes, depreciation and amortization by its fiscal fourth quarter in June, making it one of the first of its peers to reach this milestone," reports Barron's.Some analysts also view valuations on ACB stock as favorable relative to other marijuana names. Consider this about the valuations assigned to some weed equities: Aurora Cannabis stock trades at a forward P/E ratio of 101 and a price-to-book ratio of 3, according to Morningstar data, and that's considered a value relative to its peer group. Peltz PowerAs was noted above, news of the activist investor Peltz getting involved with Aurora Cannabis is priced into the shares, but that does not diminish the importance of this news going forward. One of the biggest drags on Aurora Cannabis stock has been the company's inability to form partnerships with more mainstream companies as some of its rivals have.Think Constellation Brands (NYSE:STZ) taking a multi-billion stake in Canopy Growth (NYSE:CGC) or Altria (NYSE:MO) forming a partnership with Cronos Group (NASDAQ:CRON). Last year, it was rumored that Coca-Cola Co. (NYSE:KO), the world's largest soft drink company, held talks with Aurora to develop cannabidiol-infused beverages, but a deal did not materialize.Peltz has long tradition of working with management teams -- particularly at large consumer staples companies -- to streamline operations and bolster efficiencies to enhance profitability.Aurora Chairman Michael Singer mentioned the beverage, cosmetics, health and wellness and pharmaceutical industries as potential growth areas for his companies and Peltz could help the upstart cannabis company make inroads into those arenas. * 5 Stocks To Buy for the Happiest Employees The Bottom Line on ACB StockAurora Cannabis definitely shows promise in the marijuana space, and Nelson Peltz only adds to the pot stocks' legitimacy. For now, however, all of the good news looks priced into ACB stock -- even if a valuation of 100x forward earnings is a steal in the cannabis area.Todd Shriber does not own any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Specialty Retail ETFs to Buy the Industry's Disruption * 5 Stocks To Buy for the Happiest Employees * 3 Out-of-Favor Consumer Stocks to Buy Compare Brokers The post There's Smoke, But Is There Still Fire for ACB Stock? appeared first on InvestorPlace.
Shares of Aurora Cannabis (NYSE:ACB) have been soaring lately, up 25% in just a few trading sessions. Because of this giant move, investors are wondering if now's the time to get in on ACB stock or if a 25% rally means they missed their chance.Source: Shutterstock What's the verdict?I wouldn't say there's no upside left, but the risk-reward profile has certainly muddied. Unfortunately, investors who are suffering a case of FOMO -- a "fear of missing out" -- have no reason to be. There was ample time to buy this name, even after the big rally.InvestorPlace - Stock Market News, Stock Advice & Trading TipsLet's look at the charts to see why. Trading ACB Stock Click to Enlarge There are so many choices in the investing world that I do not like to be a "told you so" person. Meaning that even studious followers of the stock market can't act on everything they see and read. In the case of ACB stock, though, perhaps investors can extract a lesson. * 7 Video Game Stocks on Steep Discount Notice how the stock gapped higher by about $1 per share last week, closing near $9 after previously closing near $8. Many would argue that this ~12.5% gain was simply too much of a rally and they'd have to move on to something else. I needed to see how ACB stock would trade over the next few days, too, as I don't want to chase a double-digit move.The next day ACB stock put in an "inside day." That's where a stock's daily range trades within the range of the prior day. Notice on the chart above how the second candle following the big gap-up candle is within its range? After a big rally like this, that's a great consolidation pattern that bulls want to see. It shows that longs aren't winning to sell and shorts don't have enough "oomph" to drive it down.The next day, ACB stock began what looked like another inside day, before rocketing higher. In other words, this price action allowed investors to hop on before an 11% move higher.So what now?Shares of Aurora Cannabis stock are stretching into overbought territory. However, that does not mean it cannot continue higher. I wouldn't mind seeing how ACB stock does over the next few sessions and if we get a slight pullback before moving higher again.Keep in mind, ACB stock has breached $12 more than once in the past 12 months. Perhaps it's on its way of doing it a third time. Valuing Aurora Cannabis StockSo what got Aurora Cannabis stock rallying so strongly anyway? The company brought activist investor Nelson Peltz on board to advise on partnerships and global expansion.They didn't pick a bad advisor, either. Peltz has a long list of contacts and the hedge fund manager is a master in the consumer packaged goods space. Whether this leads to a partnership with a well-known blue-chip company or not remains to be seen. But adding him in this role certainly doesn't hurt Aurora's chances.That said, we're still very much in the "land grab" phase of the cannabis market. While growth is impressive -- as ACB stock grew sales 339% year-over-year last quarter -- the valuations do not support these names. For instance, while revenues more than quadrupled last quarter, sales came up just short of $39 million. With a $10 billion valuation, that growth better continue for some time in order for it to be justified.But if there wasn't an opportunity here, we wouldn't have Constellation Brands (NYSE:STZ) taking a multi-billion stake in Canopy Growth (NYSE:CGC) or Altria (NYSE:MO) doing the same thing with Cronos Group (NASDAQ:CRON). There's money to be made and an opportunity to be had with states and countries legalizing marijuana, both for medical and recreational use.That said, it's not a short-term or risk-free endeavor for investors.Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long CGC. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Invincible Stocks Leading The Bull Market Higher * 5 Dow Jones Stocks Coming to Life * 7 of the Best High-Yield Funds for 2019 and Beyond Compare Brokers The post Did You Miss Your Chance to Buy Aurora Cannabis Stock? appeared first on InvestorPlace.
So far, 2019 has been good to Cronos Group (NASDAQ:CRON). Its share price has more than doubled this year. And the CRON stock gains make some sense.Indeed, as I wrote in December, the $1.8 billion investment in CRON stock by Altria (NYSE:MO) seems to be a game-changer. Among cannabis stocks, only Canopy Growth (NYSE:CGC), with $4 billion in hand from its deal with Constellation Brands (NYSE:STZ), looked to be in a stronger financial position. And yet, amid a market sell-off, investors largely shrugged at Cronos Group stock.That's changed in 2019, obviously, and perhaps it's changed a little too much. I still believe CRON stock needs to settle down. And I'm not alone. Wall Street has turned notably bearish on the shares in recent weeks. Ahead of Cronos Group earnings next week, those analysts might have a point.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Cautious Turn on CRON StockAs MarketWatch pointed out last week, the Street on the whole actually sees downside ahead for CRON shares. Some 11 analysts on average have a target price of $20.30, or 6.6% below current levels.And recent coverage hasn't been all that positive. Per MarketWatch, BMO Capital Markets downgraded CRON to underperform. Analyst Tamy Chen pointed out that CRON trades at 80x EBITDA estimates -- two times the multiple sported by Aurora Cannabis (NYSE:ACB) and higher than Canopy Growth.Chen isn't alone. GMP Securities cut Cronos to hold earlier this month. Cowen (NASDAQ:COWN) initiated at neutral. Jefferies Financial Group (NYSE:JEF) began its coverage of Cronos Group stock with an underperform in late February (though CRON stock rose anyway). * Top 7 Service Sector Stocks That Will Pay You to Own Them To be sure, the Street isn't as always right. And even bearish analysts -- including the team at Jefferies -- have pointed to a massive opportunity in both recreational and medicinal cannabis.But for investors looking for the best cannabis play, it's worth noting that the analysts aren't just focused on valuation. BMO has pointed out that Cronos is trailing other Canadian producers in building out capacity. According to Yahoo! Finance, Jefferies cited concerns about when, exactly, Cronos would spend the funds from Altria -- and how much support the tobacco giant would give the pot producer in the early going.While it's easy to dismiss analyst concerns -- and, again, it's far from guaranteed that the Street is correct -- the factors driving the downgrades should be given some consideration. This isn't a case of analysts simply hollering about near-term valuation metrics, or arguing that cannabis stocks represent some sort of bubble.The common thread in recent coverage isn't that Cronos Group is failing or that it has no opportunity. Rather, the worry is that the company isn't moving fast enough in an industry where being a first mover increasingly looks like a key advantage. Earnings and Cronos Group StockIt's not just analysts who are making that point. InvestorPlace contributor Luke Lango made the case last month that Canopy Growth, not Cronos, was the best play in cannabis. One reason: CGC stock is actually cheaper on a per-kilogram basis.That can change if Cronos ramps production and puts its Altria funds to work. So far, however, that hasn't quite been the case. In fact, the company earlier this month swapped its shares of privately held Whistler Medical Marijuana for shares in Aurora Cannabis. That deal highlights the difference between the two companies. * 15 Stocks That May Be Hurt by This Year's Big IPOs Aurora's strategy clearly is to take as many shots at as many opportunities as possible in the shortest amount of time. With that strategy, it's possible that Aurora is taking on too many projects. But in a fluid market (from both a competitive and regulatory perspective), and one with multiple products (recreational, medical, CBD, edibles, etc.), Aurora is trying to gain exposure to as many markets as possible.Cronos doesn't have to take the same path as Aurora. But with the stock near the highs -- and triple late November levels -- it's going to need to show something with earnings next week. That may be discussion of what exactly it plans to do with its $1.8 billion in newly received cash. It may be clarity on Altria's role. (Note that Altria's senior director of corporate strategy is joining Cronos as chief financial officer, perhaps a step in the right direction.) It may be talk of additional M&A, after a huge win on the Whistler deal. (Cronos appears to have invested CAD$4 million [$3 million] in the company - and received C$175 million in Aurora stock.)Whatever it is, with the highest valuation in the cannabis stock, the status quo isn't enough. Cronos needs to post an impressive earnings report next week -- and not just in the numbers. Rather, the company needs to convince investors that it can take advantage of its cash, and put that cash to work to drive growth. It won't be easy - and at these prices, expectations are going to be high.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Financial Stocks to Invest In Today * 7 Single-Digit P/E Stocks With Massive Upside * 5 Chip Stocks on the Rise Compare Brokers The post Who's Made The Right Call On Cronos Group Stock? Altria or Analysts? appeared first on InvestorPlace.
Do you want to grow your trading account? Then it may be high time to look at cannabis leaders Canopy Growth Corp (NYSE:CGC) and Scotts Miracle-Gro (NYSE:SMG). Across "all lines" of business, a strong blend of growth opportunity is happening off and on the price charts of CGC stock and SMG stock, and these are worth putting on the radar for purchase. Let me explain.Source: Shutterstock They're not entirely two peas in a pod. Nevertheless, both Canopy Growth and Scotts are in the booming cannabis sector, or what used to be referred to as the business of grass back when VW buses and Cheech & Chong ruled the day. Did I just date myself?More important, Canopy Growth and Scotts are bonafide leaders within their area of expertise.InvestorPlace - Stock Market News, Stock Advice & Trading TipsAnd right now CGC stock and SMG stock are ripe for buying as those bottom, top and squiggly price lines are offering a nice blend of the right stuff off and on the price chart for investors to grow big profits in today's market. Cannabis Buy No. 1: CGC Stock Off the price chart, CGC stock is one of the marijuana space's undisputed leaders with its roots firmly planted in the medicinal side, but now also smartly growing its recreational-based business. Not unlike with other early stage industries such as the now-ubiquitous streaming video market such as market leader Netflix (NASDAQ:NFLX), quarterly corporate confessionals have been a mixed blend for Canopy Growth. Overall, though, the fundamental picture looks strong for CGC stock. * Top 7 Service Sector Stocks That Will Pay You to Own Them Most recently, February's earnings report delivered a Street-topping and eye-popping profit of 22 cents compared to forecasts calling for a loss of 17 cents. Those results are a manufactured blend of accounting allowances as CGC grows its business. As much, an eyebrow or two might be raised. Still, for investors familiar with buying growth stocks, budding sales are a reality and there's no denying Canopy's bountiful year-over-year revenue gain of 282%.There's also CGC's relationship with beverage giant Constellation Brands (NYSE:STZ). The strategic alliance puts Canopy at a sizable advantage, with working capital to grow its business, as well as distribution and marketing expertise.On the price chart, conditions for CGC stock is ripe for growing the color of money in investors' trading accounts. Taking a look at the annotated daily chart of Canopy Growth, what had been a forecasted handle consolidation by this strategist back in the second half of February has morphed into a larger symmetrical triangle pattern.Further supporting the price consolidation's bullish tendencies, CGC's triangle has successfully tested the 50% retracement level a couple times and is centered on either side of the 62% level. All told, a breakout through $48 and slightly above the recent pivot high, as well as angular resistance, looks like an attractive entry point to go long CGC stock.I would add the caveat that Canopy Growth has made a habit of forcing the question "what was I smoking?" from both bulls and bears, with a decent history of technical failures. That being said, to keep any positions from going up in smoke, I'd recommend a homegrown blend of the technical and the prudent, and use an initial stop-loss below $44.40. Cannabis Buy No. 2: SMG Stock SMG stock is our second buy recommendation inside field of cannabis. The company has been around forever and is a household name best known for its fertilizer products for growing one's garden or lawn. But in today's new grass market, Scotts is a major player in the field and the industry's largest hydroponics supplier.Combine SMG's solid "picks-and-shovels" positioning with the cannabis arena's penchant for outsized growth potential and old-school fundamentals like price-to-sales of 1.67 or a forward P/E of 17.6x which don't require an accounting degree and a price chart that's planting the seeds for a breakout -- and bulls have every reason to put Scotts on their radar.Taking a look at the weekly chart of SMG stock, shares have been quietly consolidating at the 50% retracement level for the past few weeks. The price action follows a two-month long rally out of a bear market and might beg the question whether, technically speaking, the glass is half-full or half-empty?With shares also comfortably above the 200-day simple moving average and stochastics having signaled and curling higher out of oversold territory on the daily chart (not shown); you don't have to be smoking anything to see higher prices ahead. And for like-minded investors looking to cash in on today's narrative, buying SMG stock on a breakout above $83.23 with an initial stop-loss beneath the pattern low of $79.94 is a smart way not to get smoked either.Investment accounts under Christopher Tyler's management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler's observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies, related musings or to ask a question, you can find and follow Chris on Twitter @Options_CAT and StockTwits. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Financial Stocks to Invest In Today * 7 Single-Digit P/E Stocks With Massive Upside * 5 Chip Stocks on the Rise Compare Brokers The post Profit from Cannabis with Canopy Growth and Scotts Miracle-Gro appeared first on InvestorPlace.
The ongoing cannabis stock craze will likely see another move after Monday's closing bell. That's when Canadian pot conglomerate Tilray (NASDAQ:TLRY) is slated to report its fourth-quarter numbers, perhaps pushing Tilray stock out of the sideways rut it's been in since December.Source: Shutterstock Which direction TLRY ends up moving (if it moves at all) remains in question. While investors will certainly be interested in seeing how much marijuana Tilray sold during the quarter -- recreational marijuana in particular, the real scrutiny will be on company has continued to evolve. For Tilray, Q4 was a period to form partnerships and make acquisitions. The rhetoric about that dealmaking will be the key to overcoming any valuation problems or worries about sustained losses for Tilray stock. Tilray Earnings PreviewFor the quarter ending on December 31st, analysts expect TLRY to report revenue of $15.9 million, although some outside estimates put the figure closer to $18.3 million.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 3 Earnings Reports to Watch Next Week That still won't be enough to pull the young, budding company out of the red though. Those same pros are also calling for a loss of 15 cents per share of Tilray stock -- a modest improvement on the loss of 20 cents per share booked during Q3 of last year.It is a work in progress, as is the case with all cannabis stocks at this time. Actual net profits may still be a distant goal.The industry is making progress to that end, however, with some help from much bigger friends. Pot-Laced PartnershipsConstellation Brands (NYSE:STZ) got the pot-partnership ball rolling in August of last year, via a $4 billion investment in Tilray rival Canopy Growth (NYSE:CGC). Altria Group (NYSE:MO) followed suit in December, making a $1.8 billion investment in Cronos Group (NASDAQ:CRON).Both deals were largely intended to secure a stake in the marijuana market, even without knowing exactly what the future may hold. Though marijuana is now legal in Canada and several U.S. states, it remains illegal at the Federal level in the U.S.The newly-formed partnerships are aiming to innovate new products. Tilray Is Moving SlowerTilray has thus far lagged the innovation and team-up movement. And although the Canadian government legalized cannabis in mid-October, Tilray didn't actually sell any recreational cannabis during the first two weeks it was allowed to do so.Tilray has been busy building its team though. Near the end of last year it acquired licensed producer Natura Naturals at a cost of $26.3 million. And, around that same time it inked distribution deals with the pharmaceutical industry, and has agreed to work with Anheuser Busch Inbev (NYSE:BUD) to create and market cannabis-based drinks. In December of last year, the company rounded out its network with a $317 million purchase of Manitoba Harvest.The Q4 report will be the first to include recreational sales, though it still won't reflect the full revenue potential of Tilray.In that light, investors may want to worry less about Q4 numbers and focus more on how it's piecing together its organization in an increasingly competitive environment. Looking Ahead for Tilray StockThe TLRY story is certainly an exciting one, and undoubtedly cannabis has a bright future. But, it remains to be seen if Tilray has a future that's bright enough to merit its $7.0 billion valuation.More than a few investors don't think it does. As of the most recent look, nearly 25% of the stock's float is held as a short position, meaning nearly four million shares of TLRY are held by traders betting Tilray stock will move lower before it moves higher. * 7 Small-Cap Stocks That Make the Grade Those bets could backfire in a big way though. Should the response to Monday's post-close earnings report be a bullish one, a sharp rise in the price of Tilray shares could cause those short-sellers to panic and buy shares to exit their trade, fanning the bullish flames.As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about James at his site, jamesbrumley.com, or follow him on Twitter, at @jbrumley. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 5 of the Best Stocks to Buy Under $10 * 7 Single-Digit P/E Stocks With Massive Upside * 7 Best Quantum Computing Stocks Trading Today Compare Brokers The post Why Tilray Stock's Q4 Report Shouldn't Be About Q4 Numbers appeared first on InvestorPlace.
Corona beer maker Constellation Brands Inc is in advanced talks to sell some of its low-end wines to privately held E.&J. Gallo Winery, CNBC reported on Friday, citing people familiar with the situation. In early February, Constellations said it was looking to sell some of its lower-end wine brands, as it doubles down on more profitable high-end segment and shift towards beer and cannabis products that target a younger demographic. Constellation said it doesn't respond to rumors or speculations.
Constellation Brands is in advanced talks to sell its some of its low-end wine brands to E. & J. Gallo Winery, people familiar with the situation tell CNBC. Constellation put its U.S. wine business, which includes brands like Clos du Bois, Mark West and Arbor Mist, up for sale last year as part of its move into cannabis. Sales of non-premium wine have slowed, as millennials focus increasingly on health and alternative indulgences like cannabis.
Phil Denning and Dan McDermott of ICR The disgrace of Purdue Pharma after allegedly pushing OxyContin on doctors is a lesson for fast-growing cannabis companies as they develop environmental, social, and governance standards. That’s according to a new paper published by Phil Denning and Dan McDermott of the Special Situations Group at communications and advisory […]
Credibility. Without it, a growing company in a competitive arena is lost. With it, it can be a steamroller.Not that Aurora Cannabis (NYSE:ACB) was lacking credibility, but now that it has activist investor Nelson Peltz on board as an advisor, the budding company has much more than it did. ACB stock jumped 14% on Wednesday, ultimately because the hedge fund manager will help Aurora speak with all the right people that can help take the organization to the proverbial next level.Other reasons were cited for the big jump in Aurora Cannabis stock, and those weren't necessarily wrong. But, it's the sudden jolt of Peltz-related credibility that fueled the move.InvestorPlace - Stock Market News, Stock Advice & Trading TipsAnd yes, for some investors who still weren't quite convinced, this could be enough of a reason take a shot on Aurora Cannabis stock. Missing PiecesACB been something of an outlier among its pot peers, actually. Canopy Growth (NYSE:CGC) last year attracted Constellation Brands (NYSE:STZ) as a major stakeholder. Cronos Group (NYSE:CRON) is in bed with Altria Group (NYSE:MO) which now owns 45%. Aurora doesn't have a major partner yet. * 7 Winning High-Yield Dividend Stocks With Payouts Over 5% The reasons why aren't exactly clear. The Canadian company has as much to offer an aspiring cannabis player as Cronos or Canopy Growth.Those reasons, however, are also now irrelevant. Peltz has already dropped hints that he intends -- as Aurora is tacitly hoping -- to set up deals."I look forward to working with Terry (CEO Terry Booth) and the extended Aurora team to evaluate its many operational and strategic opportunities," Peltz commented in the official statement, adding "including potential engagement with mature players in consumer and other market segments."Cowen analyst Vivien Azer agrees, writing of the news: "Peltz brings a network of relationships with large potential strategic companies that ACB could partner with across medical and consumer applications. In addition, we think ACB will be more patient in partnership selection than its peers, particularly regarding equity investment."Some investors are particularly celebrating the fact that Peltz brings a wealth of experience within the food and consumer goods segment.Trian [Peltz's hedge fund] has been involved with a number of consumer packaged goods companies such as PepsiCo (NASDAQ:PEP), Keurig Dr Pepper (NYSE:KDP), Procter & Gamble (NYSE:PG), Kraft Heinz (NYSE:KHC), Mondelez (NASDAQ:MDLZ), among others, noted GMP Securities consumer goods analyst Martin Landry, who upgraded ACB stock following the announcement. Landry goes on to explain: "We believe he could be instrumental in facilitating discussions with large consumer packaged goods companies."The two upsides are just the tangible manifestations of a much-bigger benefit Peltz brings to the table, however. Credibility (and Motivation)While Altria and Constellation are recognizable brand names, neither are established as dealmakers. They're interest in cannabis is largely self-serving, and their plans for their partnership are limited to the development of cannabis-based products.Not so for Nelson Peltz and Aurora Cannabis. He's a known dealmaker that some companies and many investors like to see get involved, especially when potential value has been locked up for too long.Peltz is also not limited to creating synergy between just two organizations. He's willing and able to establish as many partnership with as many entities as possible, without stirring up concerns that he may be building up his partners' competitors as well. He will be doing that, but at least all partners know where they stand, and that Aurora is looking to become a supplier to multiple customers. There's room for all of them, and Peltz will be able to make introductions ACB couldn't on its own. * 7 Top Stocks to Buy From Goldman Sachs' Secret Portfolio Perhaps more than anything else, however, Peltz wants the same thing existing Aurora Cannabis stock holders want -- for the share price to rise. He's being granted options for up to nearly 20 million shares of ACB stock at $7.74 a share, vested gradually over the next four years.So, Peltz doesn't make any real money unless the stock performs well. Bottom Line for ACB StockDon't misread the message. While this is certainly a big win for Aurora, the company remains a risky proposition for multiple reasons.One of them is that cannabis remains illegal at the federal level in the United States despite widespread state-level legalization. Pot's future, and the future of all its derivatives, is still a bit dazed and confused.There's also the not-so-small reality that cannabis and now cannabis-based products are quickly becoming a commodity, which could crimp margins for the debt-laden Aurora.Nevertheless, if Peltz can pull the right strings -- and he's certainly got strings to pull -- the bullish case for Aurora Cannabis stock is bolstered. It's not a reason in and of itself to buy the shares. But, for investors on the fence about stepping into a position, the hedge-fund player's news may be even bigger than the market realizes.As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about James at his site, jamesbrumley.com, or follow him on Twitter, at @jbrumley. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 15 Stocks Sitting on Huge Piles of Cash * The 10 Best Stocks to Buy for the Bull Market's Anniversary * 7 Dividend Stocks With Big Yields Compare Brokers The post Aurora Cannabis, Nelson Peltz Tie-Up is Ultimately About One Thing appeared first on InvestorPlace.
In the latest trading session, Constellation Brands (STZ) closed at $170.61, marking a -0.03% move from the previous day.
CHICAGO, March 14, 2019 -- Modelo, the beer brewed for those with The Fighting Spirit™, announces its newest ready-to-drink chelada, Modelo Chelada Limón y Sal. The newest.
No doubt, IPOs can be quite volatile. But as for Tilray's (NASDAQ:TLRY) offering -- which hit the markets in July 2018 -- the moves have been much more extreme than a typical deal. TLRY stock hit a nosebleed $150 by October -- that's ignoring the crazy one-day run up to $300. But since then, there has has been a flood of selling. Now TLRY stock is at $73.Source: Shutterstock But those who got shares in the IPO are still in the money in a big way. Consider that the initial offering price of TLRY stock was $17. In a way, the cannabis market is similar to what happened with the dot-com boom in the late 1990s, as investors wanted to invest in the "next big thing." This means high levels of volatility because of it can be challenging to gauge a market in the early phases.So what does this mean for TLRY stock? Might the drop-off in the share price be an opportunity?InvestorPlace - Stock Market News, Stock Advice & Trading TipsWell, the company does have some notable positives. An essential part of the strategy is to develop a wide assortment of premium brands. Part of this has been due to a focus on creating medical cannabis products. * 7 Retail Stocks Winning in 2019 and Beyond Tilray has also been aggressive in putting deals together to license brands, such as from Authentic Brands Group. The company has more than 50 brands and over 4,500 freestanding stores and shop-in-shops.The focus on the premium side of the market should allow for sustainable margins. After all, as time goes by, the supply in the cannabis market could reach saturation levels -- which could drive down prices.But there are some other advantages for Tilray stock. For example, the company has a burgeoning global footprint. Consider that Tilray already has distributes products in 12 countries across five continents.Next, the company has been making smart acquisitions, such as for Manitoba Harvest (it is the world's largest hemp food maker). So yes, with the passage of the farm bill in the US -- which legalized CBD ingredients from cannabis -- the market could be poised for strong growth. True, there are still requirements with the FDA. But with Tilray's capabilities in the medical industry, this should not be a huge issue. The Risks of Tilray StockWall Street is fairly bullish on Tilray stock, with the average price target at $117. But there are some dissenters.Just look at the analysts at Jefferies & Co. They recently initiated coverage on TLRY stock with an "underperform" rating and a $61 price target. This assumes 16% downside from current levels.So why the pessimism? The Jefferies research note provided a laundry list of reasons: * The valuation is out-of-line of the peers for Tilray stock. * The IP (Intellectual Property) potential may not be as strong as assumed * Tilray's market share is not particularly strong in the Canadian recreational category. It's not even among the top four. * The partnership deals, such as with Anheuser Busch Inbev (NYSE:BUD), are relatively small and experimental. * The Authentic Brands Group deal may not be a good move and appears too expensive.Now all these should give investors in Tilray stock some pause. Although, I think the biggest risks include the market share size and the uncertainties regarding the IP. Both of these are critical for the growth story. Bottom Line on Tilray StockRegardless of the problems with Tilray, the company is still a top-notch player in the industry. But then again, I still think there are even better options for investors. The two that stand out for me include Cronos Group (NASDAQ:CRON) and Canopy Growth (NYSE:CGC). These companies have strong platforms, experienced management teams and large market shares. They have also raised billions of dollars from mega companies like Constellation Brands (NYSE:STZ) and Altria Group (NYSE:MO). * 15 Stocks Sitting on Huge Piles of Cash And I think a key for success in the cannabis market is having a massive balance sheet. But unfortunately, as for Tilray, it has yet to strike a major partnership -- which I think will limit the potential upside.Tom Taulli is an Enrolled Agent and also operates PathwayTax.com, which is a tax advisory and preparation firm. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 5 of the Best Stocks to Buy Under $10 * 7 Retail Stocks Winning in 2019 and Beyond * The 10 Best Stocks to Buy for the Bull Market's Anniversary Compare Brokers The post Tilray Stock: Time for Another Bull Run? appeared first on InvestorPlace.
It's official. Cigarette giant Altria Group (NYSE:MO) now owns 45% of cannabis company Cronos Group (NYSE:CRON), after MO paid $1.8 billion for the stake in a bid to offset waning interest in its tobacco-based products. Owners of Cronos Group stock can look forward to the launch of new products, even if neither company knows yet exactly what those new products might be.Source: Shutterstock InvestorPlace - Stock Market News, Stock Advice & Trading TipsAnnounced in December, the deal is materializing at a pivotal time for the so-called pot industry. Marijuana has recently been legalized in Canada, and the effort to legalize cannabis for medical and recreational purposes has been making slow and steady progress in the U.S. As of the latest tally, cannabis is legal for one or both purposes in 33 states, although it remains highly regulated. * 15 Stocks Sitting on Huge Piles of Cash Simultaneously, though smokeless e-cigarettes, also known as "vaping," were widely expected to be a headwind for the global anti-smoking movement, e-cigarettes have proven to be problematic. It remains unclear to what extent this alternative will replace traditional tobacco products.Still, legal cannabis is expected to become a $140 billion global market by 2027, and the deal speaks volumes about the potential that Altria sees in Cronos. The owners of Cronos Group stock have reasons to cheer. Wheeling and DealingIt's not the first major deal within the marijuana industry, nor is it the first big post-IPO fundraiser for CRON.Booze maker Constellation Brands (NYSE:STZ) woke up the world in 2018, investing another $4 billion in Canopy Growth (NYSE:CGC) in August after making a smaller investment in the Canadian company through a purchase of CGC stock in 2017. It appears as though the two companies initially made the deal to facilitate the creation of a hemp-based drink.CRON raised $131 million earlier this month via the sale of its 19% stake in privately-held Whistler Medical Marijuana to rival Aurora Cannabis (NYSE:ACB).The fresh round of funding from Altria, not unlike the proceeds from the sale of its stake in Whistler, will allow CRON to "quickly expand our global infrastructure and distribution footprint, while also increasing investments in R&D and brands that resonate with our consumer," explains Cronos CEO Mike Gorenstein.The two companies may already be thinking in more detailed terms than that, however.During Altria's fourth-quarter conference call, CEO Howard Willard commented on the then-impending partnership with CRON: "I think that both we and Cronos think there are opportunities really across the world in a variety of product categories, both recreational and medicinal, that would involve them entering new product forms and developing new products and new product brands," adding "I think it's early days there, and we have not restricted our thinking with regards to that."As the cannabis industry matures, smaller producers and dispensers realize they need funding and backing from much larger partners, while big names like Altria and Constellation recognize that cannabis can become a much-needed growth engine for them. The Downside of the Deals for CGC Stock and Cronos Group StockThough such partnerships have become the new norm in the nascent cannabis industry, all players in the business, as well as the owners of names like CGC stock and Cronos Group stock, continue to navigate uncharted waters.For example, Constellation has already suffered a paper, financial setback from its purchase of CGC stock. For fiscal Q3 of 2018 the beverage maker booked a one-time charge of $164 million related to the investment in CGC stock.Sheer uncertainty poses a risk to the M&A underway within the cannabis arena.In Canada, despite legalization, most consumers are still purchasing marijuana on the black market, circumventing highly-regulated dispensaries that add to the total cost of pot. Scotiabank believes that 71% of this year's spending on marijuana in Canada will occur outside of the government-regulated market. While that figure could be pared back to 37% by 2020, it's still relatively slow progress that may not be priced into pot stocks such as Cronos Group stock and CGC stock right now.In the United States, marijuana is still technically illegal at the federal level. While the DEA and other federal law enforcement agencies have chosen to avoid pursuing and prosecuting most modest, small cannabis operations, the government could decide to enforce cannabis laws more strictly in the future, posing a meaningful risk to Cronos Group stock and CGC stock. The Outlook of Cronos Group StockThe same deal that granted Altria a 45% stake in Cronos Group also allows MO to increase its stake to 55% for another $1.0 billion.In the meantime, the recently unveiled purchase of CRON stock has already allowed Altria to add four of its own picks to Cronos' board of directors, setting the stage for MO to ensure that CRON's new products will serve the cigarette company's best interests.The owners of Cronos Group stock are even bigger winners, however.Although the future of the pot business is bright, it's a highly-fragmented industry with lots of small players, most of which are debt-laden and unprofitable, and all of which lack scale and mainstream-distribution channels.While not even Altria or Cronos ultimately know where the partnership is headed, the deal is a big step in a more profitable direction, and points to Altria's incredible confidence in a particular company within an industry that has many participants.As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about James at his site, jamesbrumley.com, or follow him on Twitter, at @jbrumley. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 5 of the Best Stocks to Buy Under $10 * 7 Retail Stocks Winning in 2019 and Beyond * The 10 Best Stocks to Buy for the Bull Market's Anniversary Compare Brokers The post 1.8 Billion Votes of Confidence in Cronos Group Stock appeared first on InvestorPlace.
Constellation Brands Inc NYSE:STZView full report here! Summary * Perception of the company's creditworthiness is negative * Bearish sentiment is low * Economic output in this company's sector is expanding Bearish sentimentShort interest | PositiveShort interest is low for STZ with fewer than 5% of shares on loan. The last change in the short interest score occurred more than 1 month ago and implies that there has been little change in sentiment among investors who seek to profit from falling equity prices. Money flowETF/Index ownership | NeutralETF activity is neutral. ETFs that hold STZ had net inflows of $4.76 billion over the last one-month. While these are not among the highest inflows of the last year, the rate of inflow is increasing. Economic sentimentPMI by IHS Markit | PositiveAccording to the latest IHS Markit Purchasing Managers' Index (PMI) data, output in the Consumer Goods sector is rising. The rate of growth is strong relative to the trend shown over the past year. Credit worthinessCredit default swap | NegativeThe current level displays a negative indicator. STZ credit default swap spreads are near their highest levels for the past 1 year, which indicates the market's more negative perception of the company's credit worthiness.Please send all inquiries related to the report to firstname.lastname@example.org.Charts and report PDFs will only be available for 30 days after publishing.This document has been produced for information purposes only and is not to be relied upon or as construed as investment advice. To the fullest extent permitted by law, IHS Markit disclaims any responsibility or liability, whether in contract, tort (including, without limitation, negligence), equity or otherwise, for any loss or damage arising from any reliance on or the use of this material in any way. Please view the full legal disclaimer and methodology information on pages 2-3 of the full report.
The company is finding willing buyers for its low-end wine business, and should be able to focus on its Corona beer operation and its investment in Canadian cannabis maker, Canopy Growth, says Wells Fargo. Higher margins should result.
Since becoming listed at the New York Stock Exchange (NYSE) in May 2018, the Canada-based cannabis company Canopy Growth (NYSE:CGC) has seen its stock price reach new highs almost every few months.Source: Shutterstock Following the record Christmas Eve decline in the broader markets, CGC stock has staged an impressive comeback and year-to-date it is up almost 69%.Now that the earnings season is behind us, let's look at what may be next for CGC stock, especially in light of the recent legal developments in the U.S.InvestorPlace - Stock Market News, Stock Advice & Trading Tips CGC Stock Is an Industry Leadership in CanadaAs a diversified cannabis and hemp company with a market cap of almost $16 billion, Canopy Growth is one of the leaders in the industry in Canada.It was the first federally regulated, licensed and publicly traded cannabis producer in Canada and started trading on the Toronto Stock Exchange (TSE) in Aug. 2016. In 2018, Canada legalized marijuana federally, a step that gave a big boost to CGC and its fellow competitors. Canada is the first G7 nation to legalize marijuana nationwide. * 7 Top Stocks to Buy From Goldman Sachs' Secret Portfolio In Aug. 2018, when the alcoholic beverages giant Constellation Brands (NYSE:STZ) announced a $4 billion investment into CGC, Wall Street took notice. STZ now holds a 38% stake in the company.Since being listed at the NYSE, the number of funds that own the stock has also been going up. Some of the institutional owners include The Vanguard Group, Bank of Montreal (NYSE:BMO), and Morgan Stanley (NYSE:MS).When CGC released Q4 earnings on Feb. 14, it beat revenue expectations and reported a 282% increase in quarterly revenue, mostly thanks to the growth in the recreational marijuana market in Canada.One of the most important takeaways from the earnings report is that sales from the black-market in Canada are now shifting to legal online sales, i.e., to the retail sites of CGC and other major companies in the industry.During the earnings call, investors also noted that the company has operations in 13 countries in five continents. The company's investments in these overseas markets are likely to give it a head start globally, too. However the details about the worldwide operations are somewhat sketchy as they not yet contributing to revenues.In other words, the legalized Marijuana Industry (MI) is still at its infancy in Canada and almost non-existent globally. Leaders like Canopy Growth are likely to become the first ones to be positively affected by major North American or global developments that may boost the sales and use of recreational or medicinal marijuana. The U.S. Farm Bill of 2018 Click to Enlarge In Dec. 2018, the U.S. Congress passed the 'Farm Bill,' which President Trump later signed into law. The Bill legalized hemp and hemp-derived ingredient cannabidiol (CBD), especially popular among consumers seeking relief from physical pain.The general public does not know the difference between cannabis, marijuana and hemp very well. Therefore people often use these three terms interchangeably.In short, "Cannabis Sativa" is the botanical name of the plant species. This plant has different strains, one of which is "Industrial Hemp" and the other which is "Marijuana." Therefore hemp and marijuana are sometimes referred to as 'cousins.'Industrial Hemp naturally has high levels of CBD and low levels of tetrahydrocannabinol (THC). THC is behind the "high" from smoking marijuana; in other words, hemp does not have the psychoactive properties of marijuana. Hemp cannot contain more than 0.3% of this psychoactive ingredient THC.Marijuana has high levels of THC and lower levels of CBD.Because hemp is now an ordinary agricultural commodity in the U.S., farmers can apply for federal hemp cultivation permits. And in January, Canopy Growth announced that it has obtained a license to process and produce hemp products in New York State. It will establish a hemp industrial park in the state for extraction and product manufacturing. CGC's operational investment will be between $100 million to $150 million.Although it is too soon to predict how the legal hemp production in the U.S. will affect CGC's bottom line, analysts believe that the partnership between Canopy Growth and Constellation Brands is the area to watch. The two are currently developing cannabis-infused beverages for Canada, where experts believe they will be legal by 2020.Canopy Growth may for example decide to enter the U.S. CBD-infused drinks market with a wellness shake or drink. Some industry watchers are expecting big developments as well as numbers in this niche market, such as reaching $260 million in a few years in the U.S. alone.Wall Street believes CGC and its peers will seize upon the market expansion opportunities that the legalized hemp provides. However, it will probably be several quarters before the investments would pay off and turn into profits. Will the U.S. Legalize Marijuana at the Federal Level?At the federal level, marijuana is still illegal in the United States and remains a Schedule I drug. However, at the state level, the legal status of marijuana depends on the laws of the individual state.Legalization allows for both individual marijuana possession as well as the legal production and sale of the drug. Legalization can happen in two categories: the legalization of recreational marijuana or the legalization of medical cannabis.As both the recreational and the medicinal use is becoming more widely accepted, the number of U.S. states that have legalized it has increased. Medical cannabis is now legal in 33 states. Recreational marijuana is legal in 10 states, i.e., individuals require no prescription to use marijuana in these jurisdictions.However, none of the Canadian cannabis stocks have so far done any business in these pot-friendly U.S. states, as the listing requirements at the NYSE as well as at the TSE bar companies from engaging in commercial activities in countries where they would be breaking the law.Therefore, it would not be wrong to assume that if and when the U.S. federal legalization of marijuana occurs, it may create a rush by Canadian firms that have been previously unable to enter the U.S. market.For example, U.S. marijuana sales could easily reach $75 billion by 2030 And investors are hoping that Canopy Growth would have a first-mover advantage in such a scenario. The Bottom Line for CGC StockIn 2018, the marijuana industry gained validation in Canada. However there is a lot of confusing hype surrounding the U.S. market potential for industry leaders like Canopy Growth. Long-term investors may want to wait for CGC's next earnings report to be released in May before they hit the 'buy' button.As of this writing, Tezcan Gecgil did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Dividend Stocks Already Rewarding Shareholders In 2019 * The 10 Best-Performing ETFs This Year * 7 Stocks That Should Be Worried About a Data Dividend Compare Brokers The post Will Legal Developments in the U.S. Benefit Canopy Growth? appeared first on InvestorPlace.
It has built one of the most diverse and far-reaching businesses in the legal marijuana space, but there are some missing pieces in its puzzle.
Everyone wants in on the pot stock boom, and with good reason. This is a $500 billion-plus global industry in the making, and the growth narrative is till in the top of the first inning. As such, it seems that a lot of investors are just rushing to buy any and all marijuana stocks. But when it comes to pot stocks, quality still matters. And, when it comes quality, Tilray (NASDAQ:TLRY) stock is lagging its peers.Source: Shutterstock Tilray stock is most famous for being the first stock to go parabolic in the pot stock boom. Following a multi-billion dollar investment from alcoholic beverage giant Constellation Brands (NYSE:STZ) into Canadian cannabis giant Canopy (NYSE:CGC) in 2018, all pot stocks jumped. But none jumped like TLRY, which went from $20 to $300 in a month on nothing more than speculation and hype. That speculation and hype has since calmed. And Tilray stock has dropped. Now, some investors are thinking that this drop is an opportunity to "buy the dip".But as Wall Street investment firm Jefferies pointed out recently, there are still some risks with buying Tilray stock here. Specifically, Jefferies just slapped an Underperform rating on Tilray stock, citing IP, valuation, share structure, capacity and expansion risks. I agree with that list of risks and would like to add that Tilray also lacks the financial resources of its peers.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 5 Warren Buffett Stocks You Can't Go Wrong With As such, when it comes to pot stocks, quality matters, and Tilray stock doesn't have that quality just yet. It may get there soon. But not today, meaning investors looking to play the pot stock boom are best sticking with CGC stock. The Growth Narrative Has RisksThe Tilray growth narrative is good. Broadly speaking, the company is well positioned in the global medical cannabis market and projects to one day be a big player in what management estimates will be a $150 billion global market. The management team is experienced. Growing capacity is large. The distribution footprint is global. Margins are healthy. And the company appears to be well on track to winning and growing share in Europe.But the narrative is far from great. There are multiple risks here. The biggest of those risks is a lack of financial resources to fund growth and compete at scale.Right now, most investors are playing the pot stock boom through the Big 4 Canadian cannabis companies: Tilray, Canopy, Cronos (NASDAQ:CRON), and Aurora (NYSE:ACB). Two of those Big 4 pot stocks have scored multi-billion dollar investments from global consumer staples giants. Tilray is not one of them.Specifically, Canopy and Cronos have scored multi-billion dollar investments from Constellation Brands and Altria (NYSE:MO), respectively. Those investments have shored up each company's balance sheet, as well as given them billions of dollars to fund growth-related initiatives, including R&D and operational expansion.As of last quarter, Tilray has a net cash balance of roughly $100 million. Thus, Tilray is at a significant disadvantage when it comes to funding growth-related initiatives. That's a big deal considering the cannabis market today is all about grabbing share, expanding reach, and developing IP. Canopy and Cronos have ample resources to do that. Tilray does not.As such, the long-term growth narrative underlying Tilray stock -- while good -- lacks clarity. So long as that narrative lacks clarity, Tilray stock will have a tough time staging sustainable rallies. TLRY Valuation Is Reasonable, But Not DiscountedThe biggest knock against Tilray stock over the past several months has been valuation. During that stretch, Tilray stock has been stubbornly overvalued relative to its pot stock peers, and as such, was never worth buying from a valuation standpoint alone.That has changed recently as Tilray stock has continued to drop. Today, Tilray stock actually trades at a relatively in-line cannabis valuation. Specifically, TLRY stock trades at around 20x one-year forward sales, which is roughly in-line with CRON stock, and slightly below CGC stock.That being said, the valuations in CRON and CGC stock deserve to be inflated given their enormous financial resources. TLRY stock doesn't have those resources. Instead, it's much more in the Aurora boat, and ACB stock trades at just 12x one year forward sales.Thus, one could make the argument that TLRY stock is still overvalued. If you think Tilray will score a big investment in 2019, then the stock is reasonably valued. But it's tough to say that the stock is undervalued relative to peers. The Bottom Line on TLRY StockThe cannabis industry will be huge, and it will birth multiple big winners. But investors should keep in mind that many of those future winners aren't public yet. Many of them probably haven't even been founded yet. Thus, even though 2018-19 has turned into a pot stock gold rush, investors should still be mindful of investing only in top quality pot stocks. * 7 Top Stocks to Buy From Goldman Sachs' Secret Portfolio Right now, the best quality pot stock is CGC. Until that changes, there's no reason to buy Tilray stock.As of this writing, Luke Lango was long CGC. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Growth Stocks Racing to All-Time Highs * 5 Warren Buffett Stocks You Can't Go Wrong With * Game On for These 3 Gaming Stocks Compare Brokers The post Why Tilray Still Isn't the Best Pot Stock to Buy appeared first on InvestorPlace.