|Bid||15.36 x 1300|
|Ask||15.38 x 1800|
|Day's Range||15.33 - 16.03|
|52 Week Range||5.61 - 25.10|
|Beta (3Y Monthly)||4.03|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||N/A|
Many who want to get marijuana legally turn to Weedmaps ($WEEDMAPS), a user-generated-content website "where businesses and consumers can search and discover cannabis products" among other services it offers. In layman's terms, it is the Google Maps of weed. It's the legitimate, web version of asking a friend who knows a guy who knows a guy's cousin who might sell marijuana. For the sake of breaking down the weed industry in our own backyard, let's take a deeper dive into how many places one could get marijuana by doing a quick search on this website.
Tilray (NASDAQ:TLRY) stock has been one of the few popular cannabis stocks to struggle this year. Tilray stock was thrust into the spotlight when the shares went from $22.50 in August to a 52-week high of $300 in September. Yeah, that'll get some attention!But just because TLRY stock price once reached $300 does not mean that, at $44 now, TLRY stock is a six-bagger waiting to happen. Of all the leading cannabis stocks to choose from, Tilray stock is the one I like the least. * 5 Safe Stocks to Buy This Summer Over the last three months and the last six months, it's the worst performer among a group of many marijuana stocks, including Tilray, Canopy Growth (NYSE:CGC), Aurora Cannabis (NYSE:ACB), New Age Beverages (NASDAQ:NBEV), Cronos Group (NASDAQ:CRON) and even the Alternative Harvest ETF (NYSEARCA:MJ).InvestorPlace - Stock Market News, Stock Advice & Trading TipsAre investors missing something important about Tilray stock, though? Why is it underperforming in the manner that it is?When it comes to cannabis stocks, other names seem more attractive. Many consider the most "blue chip" of the bunch to be CGC, which received a multi-billion dollar investment from Constellation Brands (NYSE:STZ). Similarly, Aurora is on the cusp of a potential breakout. After looking at TLRY, though, I believe it doesn't have the good fundamentals of a CGC and its charts lack any bullish momentum. Assessing the Valuation of Tilray StockSome parts of Tilray's income statement look good. For instance, analysts, on average, expect its revenue to surge 320% this year to $181 million. They forecast another surge in 2020, too, with their estimates, on average, calling for growth in excess of 100% to $360 million. To go from $43 million in sales in 2018 to $360 million in 2020 is no small feat. It doesn't matter if we're talking about tech companies or cannabis makers; that's incredible growth.Because of that growth, you can see why big businesses are so eager to get involved in cannabis. These players range from tobacco conglomerates to wine, beer and spirits companies. And many retail investors, of course, have been drawn to cannabis stocks.If TLRY can generate $350+ million in sales in fiscal 2020 and its operations break even, the owners of TLRY stock may see a payday. As of now, analysts' consensus estimates call for a loss of 67 cents per share this year, but a 2 cent per share profit in 2020.On the balance sheet, Tilray has $325.4 million in cash and short-term investments. That's down quarter-over-quarter and it will cause some to wonder whether TLRY can become sustainably cash-flow positive and whether it will have to raise or borrow more money. After all, many cannabis players are busy snapping up smaller companies right now. The company took on, ironically, $420.3 million in debt last quarter. That grew to $422.8 million last quarter, while its "other liabilities" increased to $92.7 million.These are not absurd levels of debt, considering that the market cap of Tilray stock is $4.5 billion. But what happens if TLRY stock price decreases? More importantly, will it? Let's look at the charts of Tilray stock. Trading TLRY StockWhen I look at the chart of TLRY stock, its massive downtrend isn't hard to spot. TLRY has made a few breakout attempts, but for the most part, it has continued to drop since its feverish rally in September. I recommended TLRY stock during its quick rally from $70 to $100 in January, but more or less, I have not been optimistic on Tilray stock since then.My sentiment towards TLRY isn't changing now. Before that can happen, this downtrend will have to end. Specifically, Tilray continues to make a series of lower lows and lower highs. Until it can start putting in higher lows and making higher highs, as well as turning its key moving averages into support instead of resistance, Tilray stock will not be attractive.It's encouraging to finally see Tilray fill the August gap that helped fuel the stock's 1,200% run. While maybe that will be enough to get momentum traders to flip the trend, I'm not betting on TLRY stock until I actually see the bulls regain momentum.Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 5 Safe Stocks to Buy This Summer * The 5 Best Telecom Stocks to Buy Now * 6 Innovative Stocks With Big Long-Term Growth Potential Compare Brokers The post Why Investors Shouldn't Buy Tilray Stock Right Now appeared first on InvestorPlace.
In financial markets, there are certain price levels that are more significant than others with regard to the amount of supply and demand that exists at them. In addition, prices are always doing one of three things. They are either going up, going down or going nowhere. When understood and applied correctly, technical analysis is an illustration of these dynamics. Being aware of, and understanding where these levels and trends are when investing in marijuana stocks can lead to massive profits.Yes, technical analysts get a bad rap and I can understand why. Most technical analysts do not seem to understand the fundamentals. To make matters worse, some analysts employ esoteric techniques, such as Gann Theory, Harmonic Patterns or Elliot Waves. In my opinion there is no validity to such methods. They are in the realm of the Bigfoot and UFOs … fun to talk about, but hardly credible. Professional institutional traders do not pay attention to them.As someone who traded in the hedge fund world for more than twenty years, I can tell you first hand what the pros do care about: Important support and resistance levels, trends, momentum, and risk management.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 10 Names That Are Screaming Stocks to Buy Let's take a look and some of the supply-and-demand dynamics that are occurring in marijuana stocks. Knowing where the important levels and trends are can help you develop trading ideas. It can also and help you decide at which levels to place your buy and sell orders, and whether you should use market or limit orders. Read on for advice on how and where to trade the most popular pot stocks in the market today: Marijuana Stocks to Buy 2019: Aphria (APHA) Click to Enlarge Aphria (NYSE:APHA) grows and sells marijuana. In additional to cannabis, their products include things like capsules and vaporizers.On Monday the company announced that its President Jakob Ripshtein resigned. There has been considerable employee turnover in the upper echelons of management recently at Aphria. In January, CEO Vic Neufeld and Co-founder Cole Cacciavillani announced their resignation. Time will tell if these changes are a good or bad thing.The APHA stock price has fallen about 30% in the past month, but it just broke its downtrend after becoming oversold.It has been consolidating around the $7 level. In this situation, if I had been waiting to buy, I would go ahead and pull the trigger. This is because the downtrend line has been broken, possibly due to the sellers decision to cancel their orders on account of Ripshtein's resignation.There is nothing mysterious about trendlines -- they are really just logic and common sense. If used correctly, trendlines should simply be graphical representations of the supply and demand dynamics that are occurring in markets. When the trend was headed lower it meant that the forces of supply were in control. Now that the downtrend has been broken, it illustrates that the forces of demand have equalized with the forces of supply. Canopy Growth (CGC) Click to Enlarge Canopy Growth (NYSE:CGC) is also a producer and distributer of marijuana. In terms of market capitalization, it is the largest Cannabis company in the world.You don't need to be a market guru to see that the levels between $65 and $70 have been an area of resistance. Since last September every time CGC traded up to these levels, the forces of supply stepped in and drove it down.An important thing to understand about this company is that it loses money and CGC seems to be headed in the wrong direction. Last year the loss was 40 cents per share. That's nearly three times greater than the loss of 14 cents in 2017. In 2016, the loss was 5 cents per share. * 10 Small-Cap Stocks That Look Like Bargains This is a situation where, if I was considering selling, I would pull the trigger. If I was a buyer I would wait. The reasons are simple: Canopy stock is starting to trend lower and there is resistance just overhead. The path of least resistance seems to be to the downside. Aurora Cannabis (ACB) Click to Enlarge Aurora Cannabis (NYSE:ACB) sells a lot of weed. ACB just reported its last quarter's earnings and its gross margins came in at a hefty 55%. Further, revenue grew 20% to 65 million CAD, or roughly $50 million U.S. dollars. That works out to be about nine tons of the green stuff!It is clear that over the past eighteen months, the $14 level has been where the sellers come alive. It was the top in early 2018, again in September, and, most recently, in April. If you are planning on selling Aurora Cannabis stock, knowing this level is important.For example, suppose your broker or friend told you that ACB stock was worth $15 per share, suggesting you place your sell order at that level. The fact that there is a lot of supply at the $14 level may prevent the stock from getting to $15. It may make a better decision to place the order at $14. Sure, it is a lower price but it is probably better than having your order at $15 not be executed because the stock once again got to $14 and then proceeded to head lower.It is currently oversold and testing support around the $10.30 level. There is support there because it was resistance in November and January. Cronos Group (CRON) Click to Enlarge Cronos Group (NASDAQ:CRON) produces and sells cannabis in Canada and Germany. You don't need to be a master trader to see that the $14 level is important to the CRON stock price. This level acted as resistance for Cronos stock in September and December, and now it is providing support.Support levels form when a stock trades at a certain level and vested interest develops. In September and December, some investors sold short their CRON stock at $14. For a while, they were happy because they were thinking that they would be taking some profits. But in January, CRON traded above that.The short sellers are now underwater and looking at taking losses. They tell themselves that if the stock trades back down to $14, they would close out their trades and break even. This means that now there will be buy interest and the $14 level will become support.This is a situation where I would act whether I was a buyer or a seller. That is because it is either going to break support and fall or rebound and rise. One thing is for certain: It won't stay at $14 forever. * 10 Baby Boomer Stocks to Buy You have to make a decision to act whether you are bullish or bearish. If you are correct and you wait too long, you may miss out on some profits. Cannabis Sativa (CBDS) Click to Enlarge Cannabis Sativa, Inc (OTCMKTS:CBDS) is engaged in all types of business related to cannabis, They develop, acquire and license various products including edibles, recipes and delivery systems. Maybe they do too many things because the company has been losing money for years. Over the past five years it has lost about $40 million.CBDS stock has found support at prior support levels, though. This illustrates the importance of being aware of where the previous lows are. If you were considering buying CBDS shares and realized that it was in a downtrend and approaching levels that had been support in the past, then it would make sense to wait for a better price.Recently, Cannabis Sativa stock has broken its downtrend and is consolidating. That means that the forces of supply have become equal with the forces of demand. While it was trending lower the forces of supply were in control. Now the forces of supply and demand have become equalized. This is what traders call sideways trading. Horizons Marijuana Life Sciences ETF (HMLSF) Click to Enlarge Horizons Marijuana Life Sciences ETF (OTCMKS:HMLSF) is a popular exchange-traded fund (ETF). You can see that it is testing support around the $15 level. This level was support on April 15. It is important because it was resistance in March and June of last year. It is also important psychologically.Why is there support at this level? One reason is because there were investors who were considering buying it in April but never entered the trade. When they missed it, they told themselves that if it ever got back to $15, they would buy it. These dynamics form support.This is one of the reasons why professional traders pay attention when stocks are approaching levels that were recent tops or bottoms. They understand these dynamics and use them to profit. * 7 Stocks to Buy that Lost 10% Last Week The long-term importance of the $20 level is obvious. It was resistance at the beginning of last year and again in September and October. This would be a logical area to place a Good-Til-Cancelled (GTC) sell order.As of this writing, Mark Putrino 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 6 Marijuana Stocks With Critical Levels to Watch appeared first on InvestorPlace.
[Editor's Note: This article was updated to correct the price-to-sales ratio.]Usually I don't like to invest in small-cap companies but New Age Beverages Corporation (NASDAQ:NBEV) is interesting to trade as a speculative bet for the next few months or maybe years.NBEV is a beverage provider, so I consider it as part of the consumer staples group, which includes great companies like Proctor and Gamble (NYSE:PG), Coke (NYSE:KO) and Pepsi (NASDAQ:PEP).InvestorPlace - Stock Market News, Stock Advice & Trading TipsAlthough it's in the same group as Coke and Pepsi, I do consider NBEV an alternative beverage provider. It's perfectly set up to pursue the cannabis opportunities, specifically the potables.The popularity of cannabis based or infused products has skyrocketed of late and the possibilities are endless. Evidence of this is the popularity of pot stocks like Canopy Growth (NYSE:CGC), Cronos (NASDAQ:CRON) and Tilray (NASDAQ:TLRY). These are intrepid companies trying to establish a new world of opportunities. So this can be a blank canvas for companies like NBEV and and I bet that they will partake in it. Looking at Marijuana Stocks and NBEV StockThe cannabis craze isn't just marijuana stocks -- it now includes CBD products and services. From what I hear, people call it the cure for just about every ailment on the planet. Although there is sarcasm here, I am reporting what I hear even from my friends and family. Everyone who uses it swears it did the trick and that's all that matters.Last year NBEV announced that they will serve potables infused with CBD. So they too will be on the band wagon. This is a trend that is not short term fad. The passion for cannabis from its fans is rare even stronger than Bitcoin. So the movement has legs and evidence is that the major mega cap companies are all rumored to be looking into this too. * 5 Safe Stocks to Buy This Summer On its own, New Age Beverages stock is not cheap. This is a company that loses money and sells at 5x sales. So clearly Wall Street gives it a lot of leeway for now. They just reported earnings and even though they missed expectations they grew sales 400%. But this stock draws enough shorting interest that I bet it could sport a short squeeze sometime this year.NBEV stock is now far from its high but still is popular among investors. It is still up 212% in a year while the S&P 500 is barely green. A fairer comparison is to the Consumer Staples Select Sector SPDR Fund (NYSEARCA:XLP) which is only up 15% for the same period.There is a good chance that NBEV stock entices shorts to bet against extreme moves up or down. So it's a matter of time before it catches fire.Today's thesis is that the overall market weakness we are getting here is an opportunity to bet long on NBEV stock to capture such spike. Once this wave of negative sentiment reverses investors will buy almost every stock up with vigor. But for the controversial stocks like this one they tend to buy them faster.Regardless of the magnitude, the bulls could cause it to breakout above $5.65 per share and that would be a trigger to target $6.70 where it last failed in April. There will be resistance around $6.1 along the way. Above the April fail would bring the sky as the limit.What also makes this possible is that for the last few months, New Age Beverage stock has established a zone of support just below current price. So the bulls have a strong platform from which to mount their efforts.This is not the same as saying that I like the fundamentals; I am agnostic on that front. I consider this a highly speculative and almost binary bet for profit. Since there is less science than hopium, it is important to properly size the gamble. And this is a gamble -- don't bet the farm, choose an amount that won't break your heart or your piggy bank.In addition to the intrinsic risks from the stock itself, I have to contend with the general market malaise from the tariff wars. It seems that the headlines are going to linger for at least another month.Scared markets don't usually buy frothy stocks like New Age. But when investors come to terms with the China risks, then they will buy the riskiest stocks the fastest. In other words, momentum stocks move faster in both directions, so I expect fireworks in NBEV stock soon after the markets stabilize from this tizzy.Nicolas Chahine is the managing director of SellSpreads.com. As of this writing, he did not hold a position in any of the aforementioned securities. You can follow him as @racernic on Twitter and Stocktwits. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 5 Safe Stocks to Buy This Summer * The 5 Best Telecom Stocks to Buy Now * 6 Innovative Stocks With Big Long-Term Growth Potential Compare Brokers The post New Age Beverages Stock Could Surge to $6.70 appeared first on InvestorPlace.
Shares of Canopy Growth Corp (NYSE:CGC) remain volatile, which comes as little surprise for investors. While CGC may be one of the more tame names among cannabis stocks, the industry is no stranger to volatility. Optimism towards CGC stock has grown over the past month, although CGC stock price has dropped recently.Is the recent decline of CGC stock price a great buying opportunity or is the market sending a warning sign to the owners of Canopy Growth stock? * 5 Safe Stocks to Buy This Summer Recent CatalystsIn mid-April, CGC stock price rallied on several positive notes. First, Bank of America's analysts slapped a buy rating on Canopy Growth stock with a $52 price target. Later that day, reports began circulating that Canopy Growth may be working on a deal with Acreage Holdings (OTCMKTS:ACRGF). Such an agreement would give Canopy another foothold in the U.S. market. Remember, Constellation Brands (NYSE:STZ) is one of the major owners of CGC stock.InvestorPlace - Stock Market News, Stock Advice & Trading TipsA day later when the reports were confirmed, CGC stock price really started to fly. Investors were optimistic about the $3.4 billion Acreage deal. They believe that this is a great opportunity for Canopy, which now has inroads in the U.S. and a business in Canada with plenty of growth.Even though those catalysts sent CGC stock from $42 in mid-April to $52 by month's end -- a rally of about 25% -- those gains have since faded. As volatility has picked up in May, both market-wide and among cannabis stocks after Cronos Group (NASDAQ:CRON), Aurora Cannabis (NYSE:ACB) and other marijuana companies reported their earnings, CGC stock price has had trouble maintaining its bullish momentum.Canopy Growth stock fell to $43 earlier this week, but it is starting to perk up. The recent rally is connected to Mike Lee, the company's new CFO. Lee was previously with Constellation Brands, where he served as senior VP and CFO of the wine and spirits division. It's a good addition and adds more legitimacy to Canopy's c-suite.The rally of CGC stock is important, too. Trading CGC Stock Canopy Growth stock was trading in a long wedge for the first few months of the year. Eventually, its price resolved lower as Canopy Growth stock fell from $44 to sub-$40. However, after letting CGC stock digest the move, it's now setting up in a promising manner once again.The stock is in a downward channel now, but it's looking as if it's starting to rise above its resistance. I would love to see CGC stock price push through resistance -- which it already has to an extent -- and clear its major moving averages. That will happen after the stock rises about another $2. With an increase of just$1. 50, Canopy would reclaim its 50-day moving average.If it can, perhaps it will gather enough momentum to propel itself even higher.But I'm worried about the choppiness of the market. On a seemingly daily basis, the trade-war rhetoric changes, which sends ripples through the market. While cannabis stocks may not be directly impacted by the trade spat between the U.S. and China, the stock prices are susceptible to increased market-wide volatility. In that sense, this choppiness and risk-off mindset can hurt stocks like CGC and create false breakouts. Beware of that type of action in Canopy Growth stock.However, if it can gain momentum, a run back to its 2019 highs is certainly possible. Bottom Line on Canopy GrowthSo what's the bottom line on Canopy Growth stock? Look for a continuation over channel resistance and its 50-day moving average. If the shares rise above this mark, it's possible that CGC stock will show some positive follow-through. On a decline, bulls will want to see former channel resistance hold up as support now. A break back into the channel increases the odds that CGC will test the 200-day.CGC is considered the blue-chip leader of cannabis stocks, so if there's a marijuana stock to bank on, it may very well be Canopy. But remember that this group has a lofty valuation amid its torrent growth. CGC is a speculative holding and susceptible to volatile swings on both directions.Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 5 Safe Stocks to Buy This Summer * The 5 Best Telecom Stocks to Buy Now * 6 Innovative Stocks With Big Long-Term Growth Potential Compare Brokers The post Canopy Growth Stock Could Regain Its 2019 Highs appeared first on InvestorPlace.
In a cannabis sector that has done well in 2019, Aphria (NYSE:APHA) looks like a disappointment. The Aphria stock price has risen so far this year, gaining about 18%. But it's been tough sledding for APHA stock since early February, when the stock briefly cleared $10.Source: Shutterstock Indeed, of the 13 cannabis stocks with market capitalizations above $1 billion, only one has underperformed APHA in the last three months: Tilray (NASDAQ:TLRY). Over that stretch, the Aphria stock price has slid by some 35%.Meanwhile, the ETFMG Alternative Harvest ETF (NYSEArca:MJ) is off 5.7% in the same period. Aphria stock is the fund's ninth-largest holding, comprising 3.96% of the the 39-pot stock portfolio.InvestorPlace - Stock Market News, Stock Advice & Trading TipsDisappointing earnings certainly are a factor, as I wrote in mid-April. But the declines have continued even after the report. Between a short seller report last year, slowing growth, and management upheaval, there's a sense that cannabis investors see easier ways to make money -- and that they perhaps don't truly trust Aphria anymore. For APHA stock to bounce back, that needs to change … and that might be tough. New Management for AphriaAs InvestorPlace contributor Will Ashworth detailed last week, Aphria has overhauled its management team. The most recent casualty was president Jakob Ripshtein, who will depart on June 7. Former CEO Vic Neufeld and co-founder Cole Cacciavillani left in January -- and APHA stock actually gained on the news.Chairman Irwin Simon seems to be putting his stamp on the company. He's taken the interim CEO spot, and added a new COO, Jim Meiers, who spent years working under Simon at organic and natural food producer Hain Celestial Group (NASDAQ:HAIN).Any lingering worries about the Latin American transactions highlighted by the short report should be assuaged -- at least somewhat. Aphria did write down those assets after the third quarter but had previously insisted (and still does insist) that the purchase price was acceptable. * 7 Stocks to Buy for Over 20% Upside Potential Still, the company admitted past executives failed to disclosed their conflicts of interest. Shareholders, particularly in an industry that is so heavily regulated, likely benefit from a fresh slate. Aphria, at least, has given them that. What Management Needs to DoThat said, the trading in APHA stock of late suggests investors don't entirely trust the new management team, either. Aphria executives framed the disappointing Q3 as largely driven by temporary factors. Supply shortages and packaging challenges, in particular, presented headwinds to revenue.Investors quite clearly didn't buy that explanation, however, given that the Aphria stock price fell almost 15%. It dropped another 10% two days later when Aphria raised $300 million in convertible debt. Those are not reactions that suggest investors are completely on board with management.And the same can be said of the declines since: the APHA stock price has fallen another 10%+. Multiples, at least relative to sales, look lower for APHA than for many pot peers. And the current valuation -- a bit under $2 billion fully diluted, including debt -- implies investors don't trust a key target Simon laid out after Q3. Is The Aphria Stock Price Really 2x Revenue?On the Q3 call, Simon said that Aphria's target was to hit $1 billion in annualized revenue by the end of calendar 2020. That would be about halfway through the company's fiscal 2021, meaning fiscal 2022 sales almost certainly would be well past that $1 billion figure.If Aphria is right, APHA stock right now is trading -- again, including debt -- at something like 1.8x FY22 sales. That is an absurdly low multiple for Canadian cannabis stocks space. Canopy Growth (NYSE:CGC) is valued at roughly 15x 2020 revenue, and probably at least 5x 2022 models. Other large marijuana stocks like Cronos Group (NASDAQ:CRON) and Aurora Cannabis (NYSE:ACB) similarly are receiving multiples of even out-year revenue estimates.It's important to remember, however, that this isn't an apples-to-apples comparison. Most of Aphria's seemingly stunning 600%+ year-over-year sales growth in Q3 came from an acquisition, as the company picked up German cannabis distributor CC Pharma.Distributors generally have high revenue, but very low margins. Investors are not going to pay up for those sales but distribution revenue accounted for over three-quarters of Q3 revenue. * 7 Safe Stocks to Buy for Anxious Investors Still, the $1 billion target, based on current run rates, likely only includes $400 million or so in distribution sales. More broadly, it seems highly unlikely, barring a crash in pot stocks, that any issue in the category will trade at less than 2x revenue. Management and APHA StockAnd so the APHA stock narrative seems relatively simple at the moment. If management is right, or close, Aphria stock is going to climb. Getting even close to the $1 billion target by the end of next year suggests upside.But is management right? Q3 results, excluding the acquisition, look concerning. The valuation assigned the Latin American assets invites skepticism. Aphria still hasn't really detailed why it needed to buy those assets or how they mesh with the broader strategy.There are real questions here, and real reasons why APHA has underperformed. If Aphria can answer those questions, however, the performance of APHA stock could change in a hurry.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) * 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 Any Aphria Stock Improvement Will Come Down to One Key Factor: Trust appeared first on InvestorPlace.
The cannabis space has been volatile lately, but that's not surprising to those who observe it. Shares like Aurora Cannabis (NYSE:ACB) go through periods of volatility as well as quiet lulls that catch investors off-guard. ACB stock is going through such a lull right now, but is it about it perk up?Source: Shutterstock Last week, the company missed on earnings and revenue estimates. Normally that's a pretty big no-no on Wall Street. But so far, Aurora stock isn't exactly paying the price. ACB stock is flat since the report while the 39-stock ETFMG Alternative Harvest ETF (NYSEArca:MJ) is off less than 1%. Aurora stock is the fund's second-largest holding, behind Cronos Group (NASDAQ:CRON). Sizing Up ACB StockInitially, ACB stock opened lower by ~3% on May 15 following fiscal third-quarter results. By the end of the day, shares were almost 10% higher. While total revenue of CAD $65 million ($48.3 million) missed estimates by CAD $2.35 million, sales surged more than 300% year-over-year. Cannabis-specific revenue grew more than 440% to CAD $58.7 million. A loss of CAD 16 cents per share also missed estimates by 6 cents per share.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Stocks to Buy for Over 20% Upside Potential Still, investors were willing to give ACB stock the benefit of the doubt when they saw that revenue growth. For the fourth quarter, analysts are looking for revenue growth of almost 500% to $88 million. This is some massive growth, which is why the cannabis space has generated so much interest among investors.It's not just Aurora Cannabis stock either. Canopy Growth (NYSE:CGC), Tilray (NASDAQ:TLRY), New Age Beverages (NASDAQ:NBEV) and Cronos Group stock have garnered plenty of attention, too. Is That Attention Warranted?The current year revenue may not warrant the valuations, but the attention is warranted by the price action alone. Plus, we all know that the cannabis space is lucrative from a long-term perspective assuming lawmakers continue forward with an open mind.Even ignoring the numerous potential regulatory risks, many investors (myself included) are struggling to come to terms with the valuations. ACB stock has an $8.8 billion market cap and just turned in a quarterly report with $65 million in sales. Even with 500% growth next quarter, $88 million in sales is pretty small time for a company this big.That hasn't stopped even larger players from getting in on the land grab, though. Altria (NYSE:MO) sank $1.8 billion in Cronos, while Constellation Brands (NYSE:STZ) has invested billions into Canopy. That warrants attention too.The appetite for the so-called pot stocks is obvious: Big companies are making billion-dollar investments and we surely haven't seen the last of them. They are thinking long term because, even though the valuations don't make sense today, many are banking on triple-digit growth rates bringing those valuation into a more reasonable level down the road. Trading Aurora Cannabis Stock Click to EnlargeWhat does that mean for cannabis stocks though? One would assume it greatly limits the upside. But so far, many of them continue to digest relatively well. Take ACB stock for example.The stock was in a rising wedge for the first few months of 2019, before exploding from $8 to $10.32 in a matter of days. ACB stock has since pulled back from those highs, mostly chopping around $9 for the past two months. In other words, the big volatile move up was followed by a period of lull, just as we discussed at the top of this article. * 7 Safe Stocks to Buy for Anxious Investors It brings up the obvious question though: Now what? Where ACB Stock Finds SupportSupport at $8.50 is holding steady for ACB stock. Worth pointing out is that the 50% retracement for the one-year range is at $8.55. Former uptrend support (blue line) gave way earlier this month, while downtrend resistance (purple line) continues to squeeze Aurora stock lower.For bulls, they need to see $8.50 hold as support and for ACB stock to breakout over downtrend resistance. This would require a move over $9 -- hurdling the 50-day in the process -- and allow a larger rally to occur. My upside targets would include the 61.8% retracement at $9.49 and then the 2019 highs near $10.30.Should downtrend resistance push ACB stock below support, look to see that $8 (this month's low) and ~$7.50 hold as support. Not only can the 200-day moving average be found near the latter mark, but the 38.2% retracement is at $7.61.Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Kenwell held no positions in any 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 Can Aurora Cannabis Stock Breakout Over $10? appeared first on InvestorPlace.
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.
Even among marijuana stocks. a volatile bunch, Tilray (NASDAQ:TLRY) has been the ultimate roller coaster. Tilray stock IPOed in the U.S. last August at $17 per share. \By the beginning of September, TLRY stock price was crossing $50 per share. Incredibly, over the next two weeks, it spiked to as much as $300 per share. Since then, it's been all downhill. TLRY stock fell back to $100 in October. It slid to around $75 by year-end. In April, Tilray stock crossed the $50 mark, and it's now fallen under $45.Can anything stop Tilray's slide? The main issue, at least at this point, has been that Tilray's business execution has been extremely lackluster. Sure, the $300 peak price for Tilray stock was crazy. But Tilray stock need not have crashed quite this far.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 6 Stocks to Buy for This Decade's Massive Megatrend Tilray's Earnings ReportSome TLRY stock bulls looked at its first-quarter earnings report as a positive. Tilray stock rose for a short time following the release.It's not hard to see why. Its revenues surged from $7.8 million in Q1 of 2018 to $23 million last quarter. That was well ahead of expectations; analysts, on average, were expecting closer to $20 million. On the income side, the company's losses widened, and they were not better than the consensus outlook. But like so many marijuana companies, TLRY's focus is on scaling up its revenues for the time being.But this report was underwhelming in other ways. The annualized revenue rate was around $100 million, which still leaves Tilray stock trading at an exorbitant price/sales ratio. And much of the revenue growth came from non-organic growth after Manitoba Harvest, which TLRY acquired in February, began contributing to Tilray's results. Further, it's worth looking at the company's whole business, as not everything is booming. Its medical marijuana sales, for example, were merely flat year over year. Losing Its Leadership PositionThe earnings report was hardly a home run. In fact, it shows just how far Tilray's star has fallen. The company now has low-to-mid-single-digit-percentage- market share in the Canadian recreational space. That puts it outside of Canada's top five players.Less than a year ago, TLRY was duking it out with Canopy Growth (NYSE:CGC) for the largest market cap among marijuana stocks. Now TLRY stock price has shriveled, and it has failed to turn last year's excitement into a leading position in the Canadian pot market.Importantly, Tilray failed to lock in a key partnership with a big backer from the alcohol or tobacco industries. This has given rivals like Canopy and Cronos (NASDAQ:CRON), which did make such deals, a big advantage compared with Tilray.TLRY did sign a deal with Novartis (NYSE:NVS) to collaborate globally on medical marijuana distribution. This partnership, signed late last year, is certainly better than nothing. But it's a far cry from the large equity cash infusions and distribution deals that other, bigger players have been able to obtain. Slower Progress by Design?Earlier this year, TLRY CEO Brendan Kennedy made some interesting comments. He said on the company's Q4 earnings conference call that: "We will not purchase or invest in what we believe to be overpriced supply assets in Canada, which we believe will erode in value in the medium to long term, as the market normalizes." That's a reasonable position. Supply has already exceeded demand in some legal markets in the United States. And in the long run, there's little to constrain the output of commodity marijuana producers.Still, however, the owners of Tilray stock are going to demand more progress. People need Tilray to grow rapidly before they can get excited about TLRY stock again. So far, the company hasn't done enough to stand out from the pack. The Verdict on Tilray StockTilray's major shareholder, Privateer Holdings, announced earlier this year that it wouldn't sell any TLRY stock in the first half of 2019. That was huge news, as Privateer holds 75 million shares of Tilray stock. Even with the bad performance of Tilray stock lately, that stake is still worth more than $3 billion. But it was worth more than $12 billion at one point.How long will Privateer, which owns the majority of Tilray, be willing to watch its stake keep shriveling away? It said it wouldn't sell any stock in the first half of 2019, but that limitation expires in less than two months. If Privateer starts selling shares, TLRY stock price could fall much lower.As it is, the company's last earnings report showed real progress. But it also showed just how far away Tilray is from being a leading marijuana company at the moment. The company has to do far more to justify even a $50 share price, let alone its former highs.At the time of this writing, Ian Bezek held no positions in any of the aforementioned securities. You can reach him on Twitter at @irbezek. 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 Tilray Stock Still Hasn't Bottomed 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.
Cronos Group: Analysts' Ratings and Target Price Update(Continued from Prior Part)Cronos GroupCronos Group (CRON) has been trading at a significant premium to the peer average in May—a continuation of the trend over the past several months. The
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.
Cronos Group: Analysts' Ratings and Target Price UpdateCronos Group’s ratingsCronos Group (CRON) has experienced an increase in the number of analysts covering the stock. Six analysts covered the stock at the beginning of the year—compared to
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.
How Do Cannabis Stocks' Valuations Stack Up in May?(Continued from Prior Part)Cronos GroupCronos Group (CRON) saw a big spike in its forward EV-to-EBITDA valuation multiple compared to its historical average as shown in the chart below. The company
Jim Cramer turns to the charts to reveal that cannabis companies like GW Pharmaceuticals and Village Farms could be good additions to your portfolio.
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.
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.
Shares of Tilray (NASDAQ:TLRY) dropped in mid-May after the Canadian cannabis company reported first quarter numbers that didn't quite live up to expectations. Revenues topped estimates, but profits missed estimates. Despite the profit miss, all the growth trends moved in the right direction. Revenues rose big sequentially. So did cannabis sales volumes. Gross margins improved, too. Broadly, the numbers looked good, but Tilray stock still had people disappointed.Source: Shutterstock The big story for the past year is that Tilray has simply been priced for much more than just good. For context, TLRY has always been richly valued relative to peers for no reason outside of market hype. This is the pot stock that went extra parabolic during the mid-2018 cannabis craze. At one point in time, Tilray touched $300. It has since consistently retreated. Now, shares trade hands under $50. * 7 High-Yield REITs to Buy (Even When the Market Tanks) Naturally, the question following earnings is whether or not TLRY stock has finally bottomed. Ostensibly, the answer appears to be yes. The numbers missed expectations, but were pretty good. The stock dropped. But, not by much. The valuation now makes sense relative to peers.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIn other words, the numbers, the price action, and the valuation all imply that Tilray stock could indeed bottom here just below $50.But, will it? I'm not sure. As such, I think this is a wait-and-see situation. TLRY has been a falling knife for some time. Reversing the course of this falling knife will take some time, too. There's no rush to buy in just yet. Tilray's Numbers Were Pretty GoodDespite the headline profit miss, Tilray's first quarter numbers were actually pretty good, and broadly much better than most observers anticipated.Both revenues and kilograms of cannabis sold rose nearly 50% quarter-over-quarter. Relative to peers Cronos (NASDAQ:CRON) and Aurora (NYSE:ACB) (both of which have reported early 2019 numbers) that near 50% sequential revenue and volume growth rate is very impressive. The growth rates at Cronos were below 20%. Over at Aurora, they were between ~20% and ~40%.To be sure, Tilray is growing from a small base, but the takeaway nonetheless remains clear. Tilray gained share in the cannabis market in early 2019. On top of that market share expansion, gross margins also improved sequentially, so Tilray importantly gained share without sacrificing margins.Overall, then, Tilray's first quarter numbers actually underscore that this company is making material progress in the potentially enormous cannabis space. From that perspective, these numbers could help Tilray bottom here. Tilray Stock Could Bottom Here, but Will It?I've shied away from Tilray stock over the past several months for one reason: valuation. Quite simply, after this stock popped all the way to $300 on hype alone, it needed to do a lot of compressing before it became even somewhat reasonably valued. On top of that, Tilray reported number in late 2018 which implied that it was growing more slowly than peers, only adding to the stock's valuation concerns.But, as stated earlier, Tilray is now growing more quickly than many of its peers. Further, the valuation is now more reasonable, as each kilogram of cannabis produced at Tilray last quarter is being valued at roughly $1.5 million, which is in-line with the valuation for Canopy (NYSE:CGC).As such, there's reason to believe that TLRY stock could bottom here. The numbers are reversing course, and the stock is finally trading at arguably reasonable valuation levels.But, while there's reason to a believe a bottom is in, I'm not convinced. CGC and TLRY now feature similar valuations. But, Canopy has a $4 billion investment on its balance sheet from Constellation Brands (NYSE:STZ). Tilray has no such investment. They have a few partnerships, but no big money investment.Thus, one should ask: does TLRY deserve a CGC-like valuation? I don't think so. But, let's see what the market says. Bottom Line on Tilray StockIt has been a long fall from $300 for TLRY stock. Certain indicators suggest that this fall could be over. But, I'm not convinced. As such, I think this is a wait-and-see situation with Tilray.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 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 Even at These Prices, Tilray Stock Still Has Too Much Success Priced In appeared first on InvestorPlace.
Based on its peers' results, Canopy Growth could be in for a pretty good quarter.
Aurora Canncbabis (NYSE:ACB) stock traded higher in mid-May after the Canadian cannabis giant reported third-quarter numbers that, while short of expectations, broadly confirmed that ACB is benefiting from favorable underlying trends. Investors cheered the favorable results, and ACB stock traded slightly higher in response to the report.Context is important in this case. Many expected Aurora's third-quarter numbers to be pretty bad. There was an overwhelming amount of data which suggested that the Canadian cannabis market had flat-lined in the early parts of 2019. Consequently, expectations were low heading into the print. * 7 High-Yield REITs to Buy (Even When the Market Tanks) But Aurora didn't report bad third-quarter numbers. Instead, Aurora reported pretty good third -quarter results. Across the board, everything from revenues to volumes to margins improved sequentially, implying that while the Canadian cannabis market may have flat-lined in early 2019, Aurora did not.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThat's bullish for ACB stock. For a long time, Aurora stock has been the most undervalued big name Canadian pot stock. Two things have held it back. Specifically, concerns that its current leadership position in the Canadian cannabis market is slipping and the fact that the company doesn't have a big-time investment from a consumer-staples giant.The first of those concerns was addressed by the company's strong third-quarter numbers. The second concern should be addressed later this year. As a result, now seems like a good time to get bullish on ACB stock, since the relative valuation discount of Aurora Cannabis stock won't last forever. Aurora Reported Strong NumbersFrom head to toe, Aurora's third-quarter earnings report was pretty good. Despite the headline misses, every single metric rapidly moved in the right direction for Aurora. This confirms that Aurora is not only a leader in the Canadian cannabis market, but also that it's widening its lead.Its total revenues rose 21% sequentially, as its revenue from consumers surged 37% quarter-over-quarter and its medical revenue increased 8%. Meanwhile, the number of kilograms of cannabis that it produced rose nearly 100% quarter-over-quarter, while the number of kilograms it sold rose over 40%. Production cost per gram of cannabis dropped more than 25% quarter-over-quarter, and its gross margins rose four points sequentially.Across the board, Aurora's operations improved from late 2018 to early 2019. In the wake of murmurs that the Canadian cannabis market was flat during that stretch and the muted growth numbers Cronos (NASDAQ:CRON) reported not too long ago, it's clear that Aurora is accelerating its leadership position in the Canadian cannabis market.This acceleration of leadership, coupled with the large investment that the company should receive soon, pave the path for ACB stock to head way higher in 2019. Aurora Stock Can Rise MeaningfullyThe relative undervaluation of ACB stock, which won't last too long, creates a compelling opportunity for investors in 2019.The market currently values each kilogram of cannabis that Tilray (NASDAQ:TLRY) and Canopy (NYSE:CGC) sold last quarter at about $1.5 million. The market simultaneously values each kilogram of cannabis that Cronos sold last quarter at more than $4.5 million. But when it comes to Aurora, the market thinks each kilogram of cannabis sold last quarter is worth less than $1 million.The disparity has nothing to do with growth. Aurora's revenues, production capacity, and sales volumes are growing as quickly as anyone else's in the industry. It has nothing to do with size, either, as Aurora is the second-biggest player in the market behind Canopy. Nor does it have anything to do with profitability, as Aurora has one of the highest gross margins in the sector.Instead, it has everything to do with two things. First, investors question the longevity and sustainability of Aurora's current leadership position. Second, investors question how Aurora can compete with companies that have received billion-dollar investments from consumer-staples giants.The first concern was addressed by ACB's strong third-quarter numbers. The second concern will be addressed later this year. Aurora didn't receive a large investment like Canopy or Cronos, yet But, considering this company continues to expand its production footprint and leadership position, and that ACB stock trades at a huge discount to its peers, it's only a matter of time before some big consumer-staples giant steps in and pours in a few billion dollars.Once that happens, there will be no reason for ACB stock to trade at a lower valuation than other major marijuana stocks. The discrepancy will go away, and as it does, Aurora Cannabis stock will fly higher. The Bottom Line on ACB StockAurora's third-quarter numbers were actually much better than most expected, and imply that Aurora is extending its leadership position in the Canadian cannabis market. The longer its position in the market improves, the higher the odds that the company will receive a huge investment from a consumer-staples giant. The higher those odds go, the higher ACB stock will go.As of this writing, Luke Lango was long ACB and CGC. 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 Why Strong Q3 Numbers Make Aurora Stock Worth Buying appeared first on InvestorPlace.