6.90 -0.06 (-0.86%)
Pre-Market: 8:18AM EST
|Bid||6.88 x 800|
|Ask||6.90 x 1200|
|Day's Range||6.76 - 7.10|
|52 Week Range||6.04 - 25.10|
|Beta (3Y Monthly)||3.77|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||N/A|
The opioid crisis is one of the biggest and most controversial stories in the past decade. Over the years, the U.S. advocated for more legalization of marijuana and has seen strong growth from the cannabis market. Yahoo Finance’s The Final Round break down the impact of marijuana and assess the opioid crisis.
With stocks breaking out to new highs, many investors are wondering whether this rally can last through the end of the year. TG Watkins, the Director of Stocks at Simpler Trading, thinks small caps are even breaking out which is a clear sign that this rally has legs. Even more, one particular sector he likes is cannabis, which might be getting ready to finally reverse course as The MORE Act removes the marijuana plant from the federal Controlled Substances Act.
The FDA gave an update on "safety concerns" regarding CBD products, saying “it cannot conclude that CBD is generally recognized as safe for its use in human or animal food”. Yahoo Finance’s Heidi Chung, Kristin Myers and Scott Gamm break down how the FDA will regulate CBD products in the upcoming weeks.
The FDA is cracking down on the illegal sale of products containing CBD after warning 15 companies about their health claims. Yahoo Finance’s Zack Guzman, Heidi Chung and BigEyedWish Founder Ian Wishingrad discuss on YFi PM.
Marijuana stocks are trying to end on a high note this week. Alternative Harvest had its best day of 2019 on Thursday, closing up more than 8%. Yahoo Finance’s Adam Shapiro, Julie Hyman, Brian Cheung, and Pras Subramanian break down the strong week for the cannabis industry on On The Move.
You know about CBD, but have you heard of BHO? The cannabis industry is set for exponential growth, and anyone interested in taking part in new investment opportunities should be familiar with some of the most common cannabis industry terms.
Biotech investment is fraught with risk. Most biotech stocks are at the mercy of binary events, which serve as make-or-break catalysts. These binary events , however, provide an opportunity for making ...
The bull case for Canopy Growth (NYSE:CGC) stock at this point essentially is that the market has overreacted. Cannabis plays have been hammered this year amid disappointing revenue growth and fears of cannabis oversupply. Canopy Growth stock hasn't been spared: it's down 65% from its late April highs.Source: Jarretera / Shutterstock.com But there are reasons why its near-term results have disappointed investors. One of those reasons looks particularly key. Health Canada, that country's cannabis regulator, has been slow to approve retail licenses. Especially in Ontario, Canada's most populous province, the retail infrastructure is lagging the industry's production capacity.That should start to change in 2020. Meanwhile, Health Canada is starting to approve licenses for so-called "Cannabis 2.0" products like vapes and edibles. The hope is that more retail locations selling more products will ease the industry's overcapacity. That, in turn,will boost the revenue and margins of Canopy Growth and other cannabis producers.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIt's an intriguing theory, particularly with CGC stock near its lows. But there are still valid concerns about Canopy Growth stock, even after its 60%-plus decline. And if Cannabis 2.0 can't fix Canopy Growth stock, it's difficult to see what can. The Rollout of Cannabis 2.0Last week, Canopy Growth unveiled its extensive Cannabis 2.0 portfolio.Canopy Growth is launching a broad lineup of vaping products. In partnership with Hummingbird Chocolate, Canopy is unveiling multiple chocolate products under several brands. * 7 Retail Stocks to Buy That Dominated Thanksgiving Shopping The company will release several beverages, including the trademarked Distilled Cannabis, a clear liquid made from whole cannabis flower. Its Tweed RTD (ready to drink) flavored beverages contain THC (tetrahydrocannabinol) and CBD (cannabidiol). Canopy will also offer sparkling water under its Quatreau brand, THC-heavy Deep Space carbonated beverages, and unflavored mixers.The release of such a broad portfolio highlights one of the reasons why many cannabis bulls have chosen Canopy Growth stock. The multi-billion dollar investment by Constellation Brands (NYSE:STZ,NYSE:STZ.B) in CGC last year gave it enough capital to lead the industry. Canopy's plans for Cannabis 2.0 suggest it has a real chance to do so. The Case for CGC StockMeanwhile, CGC's rivals have very real financial concerns. Aurora Cannabis (NYSE:ACB) continues to dilute its shareholders, but it still has a significant balance sheet problem. Hexo (NYSE:HEXO) has focused on edibles from the start, but it, too, needs to conserve its cash.Canopy has no such problems. Thanks to the Constellation investment, it still has 2.7 billion CAD in cash and investments. Cash burn has been an issue in recent quarters -- its cash balance shrunk over 400 million CAD in Q3 alone -- but that problem should moderate going forward.That balance sheet gives Canopy plenty of options. It can be aggressive on pricing, hoping to outlast its rivals. It could pick up assets down the line, assuming distressed companies look to sell themselves before (or after) going bankrupt.More broadly, bulls can argue that the problem with the Canadian cannabis industry is not a long-term issue. The slow pace of regulatory action has caused many of the sector's problems, including oversupply and lower-than-expected revenue.Those problems will be fixed: Canopy Growth's management projected after Q3 that supply and demand would return to balance by the middle of next year. And once that happens, optimism towards the worldwide cannabis sector will return. Few, if any, companies will be better-positioned for that opportunity than Canopy Growth. The Risks to Canopy Growth StockI'm sympathetic to that bull case, particularly with Canopy Growth stock below $20. But there are risks to CGC stock that are worth noting.First, Canopy Growth stock might be cheaper than it was, but it's not cheap. Even backing out cash net of debt, the company is valued at about $5 billion. That's roughly eight times the mean Wall Street 2020 top=line estimate.Second, it's not yet clear that Cannabis 2.0 will be the blockbuster for which bulls hope. Cannabis derivatives are expected to bring in new consumers, but consumers simply may not be interested in them.Meanwhile, CGC's competition will be intense, with the likes of Cronos (NASDAQ:CRON), Tilray (NASDAQ:TLRY), and many others similarly releasing edibles and vapes. There already are legitimate worries about Canopy's plans to be all things to all consumers, plans which so far haven't worked out. At the least, Canopy needs to execute much better than it has so far, and it has to do so without a permanent CEO in place. CGC's Margin ProblemFinally, Canopy Growth stock is significantly dependent on Cannabis 2.0 products at this point. If demand for pot derivatives doesn't materialize, the stock is in real trouble.The company's deal with Acreage Holdings (OTCMKTS:ACRGF) targets a U.S. recreational market that may not open up for years. The CBD opportunity in the U.S. looks less attractive after the struggles of the sector's leader, Charlotte's Web (OTCMKTS:CWBHF). International markets haven't changed much in the past 18 months.The long-running concern about CGC stock, and cannabis producers more broadly, is that production is going to be a low-margin, commoditized business. There's early evidence to suggest that indeed will be the case. If derivatives don't drive real revenue at high margins, the company's long-term profit outlook will drop even further.In other words, CGC stock remains a risky bet to make. And it's tough to make a compelling case as to why the bet should be made right now. CGC's execution has been weak. It has repeatedly missed its guidance. Stocks across the sector remain falling knives, and Canopy Growth stock is largely in that category.That said, I can see why cannabis bulls see CGC as attractive below $20. If its long-term opportunity is even close to what optimists believe it is, there's a path to a longer-term rally. That path requires the company's Cannabis 2.0 to be successful, meaning those products will likely define the performance of CGC stock next year.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Retail Stocks to Buy That Dominated Thanksgiving Shopping * 6 Manufacturing Stocks to Buy as the Economy Recovers * The 7 Best Cryptocurrencies to Buy as Blockchain Heats Up The post Cannabis 2.0 Highlights the Rewards a and Risks a of Canopy Growth Stock appeared first on InvestorPlace.
Not long ago, Akerna Corp. (NASDAQ:KERN) would have been a perfect mash-up of two industries - that is, cloud software and the cannabis sector. However, as seen in the past few months, the second half of the story has gone south. The cannabis industry has been in a grueling tailspin, as seen with the performance of operators like Tilray (NASDAQ:TLRY), Cronos Group (NASDAQ:CRON) and Canopy Growth (NYSE:CGC).Source: Shutterstock So as should be no surprise, Akerna stock has been quite volatile. The company went public in mid-June on the NASDAQ after an eight-month due diligence process with the exchange. On the first day of trading, KERN stock shot up above $15. However, as of today, the shares are trading at $9. * 9 Tech Stocks You Wish You'd Bought During 2019 Consider that becoming public was not through a traditional IPO. Rather, Akerna merged into a SPAC (special purpose acquisition company), called MTech Acquisition.InvestorPlace - Stock Market News, Stock Advice & Trading TipsYet regardless of all this, what are the prospects for the company? Could KERN stock be a good way to play the cannabis sector? Akerna Stock's BackgroundAkerna's origins go back to Jessica Billingsley, who saw how technology could transform the cannabis market. Prior to this, she had a successful career, having started her first company when she was only 22-years-old.There are several parts of the Akerna platform. First, there is the MJ Freeway application that provides a seed-to-sale management tracking system for state-licensed dispensaries, cultivators, manufacturers and distributors. Think of it as ERP (Enterprise Resource Planning) for inventory and legal compliance. True, there are many other management systems on the market, like from Oracle (NYSE:ORCL) and Workday (NYSE:WDAY), but they do not handle the intricacies of the cannabis business.Next, Akerna has Leaf Data Systems. This is focused on government agencies that need assistance with managing the complex regulations. The Leaf Data Systems application helps to effectively track plant, product and waste, allowing for maintaining quality standards.In the latest earnings call, Billingsley noted: "For nearly 10 years, we have refined a technology that pinpoints every aspect of every gram of cannabis trapped in our system. The plot of land that is grown on soil nutrients, water and light intake, additional ingredients for manufactured product, when it was shipped out and in what batch and finally, where and when the product was sold and to whom." Bottom Line On KERN StockEven though Akerna is targeting an interesting category, there are some issues to keep in mind. First of all, monetization could prove difficult in the coming months. With the shakeout in the cannabis market, there will be fewer resources to make investments in new technologies.Next, the government market is far from easy. The sales cycles can be long and the budgets are usually tight. What's more, as of June 30, about 39% of Akerna's revenues actually came from the government agencies of Pennsylvania and Washington. Akerna recently snagged Utah as a customer.According to a recent regulatory filing with the SEC: "Further, even if a contract is awarded, there are strict procedures that government agencies follow when it comes to reimbursement of the costs incurred in the course of fulfilling contracts. Accordingly, it is possible that some or all costs might not be reimbursed under a government contract as contemplated by us."And finally, the revenue base is fairly small for a public company. In the most recent quarter, the top line hit $3.2 million, up about 39%.Given the uncertainty in the cannabis market and the difficulties with government contracting, growth could be choppy. Thus for now, it's a good idea to be cautious on KERN stock.Tom Taulli is the author of the book, Artificial Intelligence Basics: A Non-Technical Introduction. 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 * 9 Tech Stocks You Wish You'd Bought During 2019 * 5 Under-the-Radar Marijuana Stocks With Over 100% Upside * Watch These 5 STARS Stocks as They Change the Future The post Is It Too Early to Play the Cannabis Sector With KERN Stock? appeared first on InvestorPlace.
The U.S. Food and Drug Administration updated its stance on CBD late Monday, saying that the cannabis derivative may have the potential to harm people.
Cannabis stocks were slammed anew on Tuesday, after the U.S. Food and Drug Administration issued new guidance on CBD that included a stark warning that it can cause liver injury and other damage to the human body.
One of the ironies of the long decline in Cronos Group (NASDAQ:CRON) is that management actually seems to have been mostly correct so far. Unfortunately, it's done little for Cronos stock so far, which is down 72% from its 52-week high.Source: Shutterstock Those declines have come amid a broad sell-off in cannabis stocks. That sell-off has been driven by significant oversupply, and plunging selling prices, in the Canadian market. That in turn suggests sharply lower earnings potential for companies that have aggressively built out their production capacity.But Cronos isn't one of those companies. As CEO Mike Gorenstein put it on his company's second-quarter conference call in August, "Our business model is not to be the farmer."InvestorPlace - Stock Market News, Stock Advice & Trading TipsCronos is following the example of Altria (NYSE:MO), which owns a large stake in the company. Altria doesn't grow tobacco but is the most profitable tobacco company in the world. * 7 Strong Buy Stocks That Are Bargains Right Now That strategy seems particularly wise at the moment. Meanwhile, Cronos is sitting on a cash hoard at a time when fears of bankruptcy are rising across the space. So far, investors haven't given Cronos any credit for those positive attributes, and that might not change any time soon. But it likely will at some point. The Oversupply ProblemIndustry-wide pricing pressure makes it obvious that Canadian cannabis companies have overbuilt production capacity. For Cronos, the average selling price in the third quarter declined 28% from second-quarter levels and was nearly halved from year-prior levels.Other cannabis producers saw similar pressure. Tilray (NASDAQ:TLRY) saw roughly the same trend, though Aurora Cannabis (NYSE:ACB) did manage to keep prices relatively stable. Canopy Growth (NYSE:CGC) said on its earnings call that it would cut prices on softgels and oils, while an analyst on that call pointed to licensed producers in Canada "becoming more aggressive" on flower pricing as well.This really shouldn't be a surprise. Legalized recreational markets in the U.S. have had their own oversupply problems, with Oregon a notable example. In Canada, meanwhile, the news is unlikely to get better.As Will Ashworth pointed out on this site back in August, the Canadian market is estimated to need roughly 1 million kilograms of cannabis. There is as many as 3 million kilograms' worth of supply online or on the way.This is a huge problem for large-scale producers who are going to see harvests potentially go to waste and lower prices on what they can sell. Put another way, marijuana in legalized markets is going to become a commodity, just as skeptics have argued. And selling a commodity usually is a highly competitive and low margin business. Cronos Stock and OversupplyBut, again, Cronos largely saw this coming. It's not a large producer of cannabis. It's already cutting back on production capacity, shifting cultivation assets at its Peace Naturals Campus to R&D and warehousing. Cronos will buy at least some of the cannabis it needs from third-party producers, instead of growing its own.Going forward, Cronos is focusing on derivatives. Thanks to its Redwood acquisition, Cronos can become a significant player in the U.S. CBD (cannabinoid oil) market. In Canada, the company is aiming to be a major player in the so-called "Cannabis 2.0" products like beverages, edibles, and vapes.And so Cronos Group may well benefit from plunging wholesale prices. It doesn't have massive grow rooms that require the company to either use those assets at inferior margins or leave them idle. Rather, it can buy flower cheap at wholesale prices and, at least in theory, convert that flower to higher-priced, higher-profit derivatives. The Balance Sheet Edge for Cronos StockThe decision not to build out production capacity has positioned Cronos well in another sense. The company's balance sheet is rock solid.Thanks to its Altria investment, Cronos closed its third quarter with roughly CAD$2 billion ($1.5 billion U.S.) in cash -- and no debt. And its cash burn rate is much lower than that of other cannabis companies; as an analyst noted on the Q3 call, Q3 numbers suggest the company has 41 quarters' worth of cash left.That's not the case for other producers. Aurora just diluted its shareholders once again, the only way it could manage a problematic convertible bond that was due in March. Hexo (NYSE:HEXO) has a cash burn problem. Many smaller cannabis companies no doubt will struggle to adjust to the new normal of lower pricing.As Gorenstein put it on the Q3 call, "the focus is going to quickly shift to survival" in the industry. And some companies simply may not survive.There are going to be assets available on the cheap, whether from companies trying to salvage some sort of value for their shareholders or via a restructuring process. Cronos, moreso than perhaps any other cannabis company save Canopy, is best-positioned to capture some of those assets, potentially at a sharp discount to their cost. The Story Behind Cronos Group StockAgain, it looks like Cronos' decision not to chase production was wise, though that decision has done nothing to help CRON stock so far.Part of the issue has been the narrative behind CRON. The stock never has had a compelling story. In fact, as I wrote earlier this year, the best argument for CRON stock was that it was the pot stock for investors who believed pot stocks were overvalued. Unsurprisingly, that hasn't been a case that has drawn many buyers.But plunging stock prices and plunging cannabis prices themselves are changing that fact. A narrative for Cronos Group stock is emerging. It's the cannabis company that isn't going bankrupt. It's the company with the most flexibility in adapting to the new normal.Cronos can try to ramp spending behind derivatives as it competes against rivals who may be watching every penny. It should benefit from oversupply in a way that few Canadian companies can. The combination of Altria's distribution capabilities plus the Lord Jones brand acquired in the Redwood deal, make the company a strong player in CBD in the U.S.And Cronos Group, backing out that cash, now has an enterprise value below $1 billion. Suddenly, if thanks only to the plunge across the sector, there is a story behind CRON stock. Increasingly, it looks like the stock for investors who believe in the long-term opportunity in cannabis -- and in a short-term disruption that may well benefit Cronos. The Bottom Line on Cronos StockAll that said, I'm not rushing in to buy Cronos stock just yet. There is an opportunity here, but Cronos still needs to capitalize. It has to win in a U.S. CBD market that already is quite crowded. I'm personally not sold on the long-term viability of the CBD market, either, given the lack of proof of efficacy and widespread questions about dosing. It has to spend its capital wisely.Meanwhile, $1 billion might sound cheap in a sector where multiple companies had much higher valuations just months ago. But Cronos still is a company that generated just 12 million CAD in revenue in its most recent quarter.Obviously, lower production leads to lower revenue relative to other publicly traded cannabis companies. Still, Cronos is years from profitability and trades at a sky-high multiple to even 2020 and 2021 revenue.More broadly, I'm not convinced that the sell-off in cannabis stocks, and Cronos stock, is over. Fundamentally and technically, there's still little evidence of a bottom, even with some signs of life in recent trading.All that said, CRON stock at the least is intriguing if for no other reason that it finally has a real narrative behind it. The current cannabis environment is not what investors believed it would be -- but it's roughly what Cronos management expected. If they're as correct going forward as they have been in 2019, CRON stock has big upside from current prices.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Strong Buy Stocks That Are Bargains Right Now * 7 Excellent Bank Stocks Worth an Investment * 4 Small-Cap, Big-Dividend Stocks The post Cronos Stock Gets Closer to Being a Buy, but It's Not There Yet appeared first on InvestorPlace.
The woes continue for Aurora Cannabis (NYSE:ACB). ACB stock continues to fall as concerns increase about the financial health of the company. The early bet the company made on capacity has deeply hurt the company as sales fall alarmingly short of production levels.Source: ElRoi / Shutterstock.com As a result, investors have begun to balk at the premium stock prices previously commanded by Aurora and other marijuana equities. This has led to a perfect storm that continues to hammer the sector.While I do not think investors should lose all hope for Aurora Cannabis, the pain will certainly continue for ACB stock.InvestorPlace - Stock Market News, Stock Advice & Trading TipsMany had considered Aurora stock a "top-tier" cannabis equity due to its production capacity. As cannabis stocks gained interest, it worked to make itself the world's largest marijuana producer. Admittedly, that may have looked like a smart strategy in the past. * 7 Strong Buy Stocks That Are Bargains Right Now However, Aurora missed out in other critical areas. It has not made a U.S. hemp deal like Canopy Growth (NYSE:CGC). Neither has the company secured key investors from related industries like Canopy with Constellation (NYSE:STZ) or Cronos Group (NASDAQ:CRON) with Altria (NYSE:MO).Now, a supply glut has turned Aurora's bet on production into a huge disadvantage. ACB stock saw a massive drop following earnings in mid-November. While the company beat on earnings, it fell short on revenue. The worsening supply glut likely explains why.The numbers explain the fallout from the supply glut well. Aurora Cannabis produced 41,436 kg of dried marijuana in its most-recent first quarter. Unfortunately, the company only sold 12,463 kg during the same period. In the quarter before, it sold 17,793 kg and produced 29,034 kg. The recent legalization of edibles and beverages will only offer limited help under such circumstances. Exports Will Not HelpSo too will exports. In the previous two quarters, it exported 4,553 kg and 4,481 kg, respectively.Also, do not count on U.S. legalization to stop the death spiral anytime soon. Despite the passage of a bill to deschedule cannabis in a U.S. House committee, legalization still faces a long road. Senate Majority Leader Mitch McConnell has long opposed marijuana reform, though he met with industry leaders and toured cannabis facilities in October.Other politicians have echoed these sentiments. Joe Biden still called it a "gateway drug" before walking the comment back. In my home state of Texas, the Lieutenant Governor blocked a decriminalization bill that likely would have passed otherwise.About 67% of Americans now support legalization, a massive turnabout from 20 years ago when 63% opposed legal status for weed. For this reason, I think the pro-cannabis forces will eventually win these battles. Still, victory will probably not come quickly. ACB Stock Is Set to Fall FurtherWhether Aurora has enough time remains unclear. Aurora stock has fallen 30% since I started my "two difficult truths about ACB stock" in early November. I argued that Aurora will continue to fall as the cannabis stock bubble has not yet wholly popped. I also said the massive dilution and the drop in Aurora Cannabis stock would lead to a reverse split.Unfortunately, both of these remain hard truths despite the equity's difficult November. I have long criticized their massive dilution strategy. Now, others have begun to take notice of the company's precarious finances.Our own Ian Bezek also goes after the dilution strategy on Aurora stock. He calls it not only an effective way to raise money but also a "death spiral." Even though I think Aurora Cannabis may still survive, I also cannot disagree with his description. The Bottom Line on ACB StockOversupply means the pain will continue for Aurora stock. Analysts have considered Aurora a top marijuana stock due to its lead in production capacity. Unfortunately, this has turned into a liability as their ability to produce far surpasses market demand.With the lack of access to the U.S. market and further stock dilution likely coming, the company offers only reasons to bet against Aurora stock.Aurora's bet on supply could benefit the company eventually. However, first, it will have to find a way to survive the supply glut. Although it may do so, the company will have to sacrifice further value in ACB stock to achieve that end. Unless and until it can break the death spiral, investors should stay away.As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can follow Will on Twitter at @HealyWriting. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Strong Buy Stocks That Are Bargains Right Now * 7 Excellent Bank Stocks Worth an Investment * 4 Small-Cap, Big-Dividend Stocks The post An Early Bet on Capacity Will Continue to Haunt ACB Stock appeared first on InvestorPlace.
Are marijuana stocks on U.S. exchanges a good buy now? The marijuana industry gets a lot of hype, but look past the smoke and analyze pot stocks on their fundamentals and technicals.
Marijuana stocks fell after the FDA said it cannot conclude that CBD is "recognized as safe" in food, and that many unanswered questions remain about CBD.
In an interesting turn of events, cannabis stocks have been surging back from the dead. Among those rallying higher, Aurora Cannabis (NYSE:ACB) has enjoyed healthy gains lately. Despite rallying 18.2% on Nov. 21 and more than 45% from its low earlier that week, ACB stock still has a lot of overhead resistance.With the ACB stock price recently closing at $2.52, or down over 22% from the Nov. 21 high, you can appreciate how strong that resistance is.InvestorPlace - Stock Market News, Stock Advice & Trading TipsSetting that aside, if you were to give most stocks a 45% rally in three days -- even from its 52-week lows -- they would likely be in a pretty good technical position. The fact that ACB stock is not tells us how bad of a situation it's really in.It's incredible how fast this stock -- and many of its peers -- went from the high single digits and teens to sub-$5. Many investors won't invest in stocks trading for less than $5, let alone sub-$3. * 7 Top Stocks to Buy for 2020 Is Aurora Cannabis stock different though? Breaking Down Aurora Cannabis StockThe other day, I outlined why Tilray (NASDAQ:TLRY) stock is not one I would buy, despite the cannabis rally. Simply put, the stock does not have a strong enough balance sheet. Particularly when it's compared to other stocks, like Canopy Growth (NYSE:CGC) or Aphria (NYSE:APHA).Like CGC and APHA, I would also consider Cronos (NASDAQ:CRON) and ACB stock to be more attractive than Tilray. But there's one thing all of these names have in common and that's the valuation. Put another way, you can go ahead and throw valuation out the window when it comes to pot stocks.These companies garner billion-dollar valuations, with just tens of millions in sales, negative free cash flow and little or no profitability. ACB stock is not an exception to this observation.Instead, this group has achieved such lofty valuations due to high growth rates, a potentially large total addressable market (TAM) and big investments from larger companies. Specifically, Constellation Brands (NYSE:STZ) invested some $4 billion in CGC, while Cronos received a $1.8 billion investment from Altria (NYSE:MO).When sentiment is poor, the stock performance is poor and vice versa. The mood is shifting in bulls' favor but is far from euphoric at the moment. Let's see if these stocks can take a break, avoid making new lows, and then resume higher.Since the financials and valuations aren't catalysts for bulls to rally on, they need outside catalysts to do the heavy lifting. That is, regulatory achievements and positive news need to continue in order for these stocks to remain in demand. Trading ACB StockIf the chart shows investors anything, it's that risk/reward is an important measure. When support gave way and violated the long setup, bulls who stepped aside avoided a big haircut. Now, the setup in Aurora Cannabis stock is not exactly easy, but it is rather simple. Click to Enlarge Source: Chart courtesy of StockCharts.comAurora stock has two tasks at this time. One of those tasks is a reiteration of what we said in the previous section, which is that it must avoid closing at new lows. That would be a break of $2.14 (blue line on the chart above). A close below this mark signals that the technicals remain intensely stressed.The other task? Closing over the $3.50 mark. Just as it's key for bulls to keep ACB stock north of $2.14, it will be important for them to reclaim the $3.50 mark. This area was key support in October and early November before the floor gave way and shares plunged more than 20% in just a few days.Further observations include the 20-day moving average, which acted as resistance on ACB stock's latest rally. Therefore, reclaiming the 20-day moving average will be important too.The bottom line? Just because ACB stock put together a strong rally doesn't mean it's a must-buy stock at this moment. There are plenty of overhead resistance and downtrend resistance marks in the way. As of now, the charts are starting to improve, but still need to prove that the stock deserves investors' trust. That starts with reclaiming the 20-day moving average, then the $3.50 level.Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long APHA. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Sickly Healthcare Stocks to Avoid * 5 Lottery Stocks With Huge Upside -- And a Real Chance of $0 * 7 Top Stocks to Buy for 2020 The post Is Aurora Cannabis Stock Officially Back from the Dead? appeared first on InvestorPlace.
Money flows are mostly negative or neutral in marijuana stocks, and the Food and Drug Administration’s warning is creating an overhang.
The U.S. Food and Drug Administration said late Monday that it cannot conclude that cannabidiol, or CBD, is generally recognized as safe among experts for its use in human or animal food. Weed stocks dipped in the extended session, with Tilray Inc. falling nearly 1%, and Aurora Cannabis Inc. falling 0.4%. Canopy Growth Corp. stock was up 0.3% and Cronos Group Inc. was flat. As a part of the announcement, the FDA said it had warned 15 companies around the U.S. that they were illegally selling products containing CBD, a nonintoxicating cannabinoid found in the cannabis plant. The revised consumer update issued late Monday discusses safety concerns around CBD use and potential liver injury, as well as side effects such as drowsiness, gastrointestinal distress, and changes in mood. The FDA said it plans to continue to issue updates as it learns more about CBD. The revised consumer update included the warning that it is currently illegal to market CBD by adding it to a food or labeling it as a dietary supplement. The ETFMG Alternative Harvest ETF , which tracks a basket of weed and consumer packaged goods stocks, gained 0.1% in the extended session.
Cannabis Countdown: Top 10 Marijuana Stock News Stories of the Week Welcome to the Cannabis Countdown . In this week’s rendition, we’ll recap and countdown the top 10 marijuana stock news stories for ...
When marijuana stocks like Canopy Growth (NYSE:CGC) first started trading, investors were enthusiastic about them. Responding to the paradigm-shifting potential of marijuana legalization, Canopy Growth stock hit fresh highs after Canada, its home market, legalized the drugSource: Shutterstock Unfortunately, the growing pains of the cannabis industry (no pun intended) began to stretch Wall Street's patience. While legalization sounded great in theory, in reality, Health Canada, the nation's drug regulator, suffered serious administrative backlogs. Because of this roadblock, cannabis firms were unable to operate to their fullest potential, invariably hurting names like CGC stock.Moreover, Canopy Growth and its peers like Cronos Group (NASDAQ:CRON) and Aurora Cannabis (NYSE:ACB) delivered disappointing earnings results. That only added to the worries of the Street, which started to nervously reevaluate the industry's financials.InvestorPlace - Stock Market News, Stock Advice & Trading TipsUnderstandably, many investors couldn't handle the heat, abandoning once-solid investments like Canopy Growth stock. * 7 Companies Using Artificial Intelligence to Outperform the Market But with marijuana stocks spilling so much red ink in the green market, does CGC stock provide an opportunity for contrarians? Admittedly, the sector remains the wild west of the stock market. However, I see three factors which may benefit Canopy Growth stock from here on out. CGC Stock Is GuttedFirst, let's point out the obvious: the Street has absolutely gutted Canopy Growth stock. CGC stock is down 32% in 2019. Moreover, between May 1 and Nov. 1 of this year, CGC shed just over 61% of its value.No matter how you cut it, that's a brutal performance. But it also points to an opportunity for those who have a "glass half-full mentality.That's one of the arguments that Bank of America Merrill Lynch's Christopher Carey made in his note upgrading CGC stock from "neutral" to "buy." Carey declared that the equity's valuation appears "more reasonable."Additionally, everyone else on Wall Street has now downgraded their expectations for Canopy Growth stock and its peers. Thus, CGC may climb if it simply meets its financial guidance. Finally Accepting the Bad NewsAccording to Healthline.com, there are five stages of the grieving process, which are denial, anger, bargaining, depression and acceptance. Although I may be embarrassingly wrong, I think CGC stock is near or at the acceptance phase. Here's my logic: * Denial: When cannabis stocks started tanking, proponents like me advocated looking at the tremendous opportunity for marijuana stocks. Unlike any other investment sector, legal marijuana was uncharted territory. * Anger: As marijuana stocks continued their near-vertical decline, advocates of marijuana stocks quickly became angry. We were upset that the market couldn't see the opportunity. We believed that cannabis skeptics were intellectually deficient. * Bargaining: If only the investing public would recognize that the bad news is baked into marijuana stocks, they would rebound more quickly. * Depression: This isn't getting any better. Let's jump ship to a stock we can trust, like General Electric (NYSE:GE). * Acceptance: We overstated the impact of Canadian legalization. It's time to adjust our expectations.Since late September, many analysts have downgraded CGC stock. But with a contrarian voice emerging amid the muck, I think we may be on the road to at least a recovery of sentiment. U.S. Legalization Would Be Huge for Canopy Growth StockSince the earliest days of marijuana stocks, the end goal has always been the U.S. market While Canada is no insignificant victory, it has fewer than 40 million people. On the other hand, America's population is approximately 330 million.However, despite many positive pieces of legislation, marijuana remains an illegal drug from the point of view of the federal government.To help bring the U.S. fully into the 21st century, the House Judiciary Committee passed the Marijuana Opportunity Reinvestment and Expungement (MORE) Act of 2019. According to The Hill's Marty Johnson, the legislation, if passed, would take marijuana off "the Controlled Substances Act, federally legalizing cannabis across the country. Additionally, past federal cannabis convictions would be required to be expunged."Now the bill heads to the Republican-controlled Senate, where it will surely face tougher opposition. Will enough conservatives, some of whom actively support marijuana legalization, support the bill to pass it?Probably not. However, MORE is still an important victory for CGC stock over the longer term because the concept of legalization has been planted. After all, this is the first time that a Congressional committee has voted for legalization. And that means the narrative of marijuana stocks is finally getting exciting again.As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Killer Stocks No One Knows About * 7 Penny Stocks to Consider Buying Now * The 5 Best Marijuana ETFs for Conservative Portfolios The post 3 Reasons Why the Bottom Could Be in for Canopy Growth Stock appeared first on InvestorPlace.
Cronos Group (NASDAQ:CRON) and its peers have received a reprieve. A U.S. House committee passed a bill that could eventually bring legal status to marijuana, but that's not necessarily a reason to run out and buy Cronos stock.Source: Shutterstock Despite this promise, the bill must clear other votes and get a signature from the president. In the meantime, Cronos Group stock still maintains a high valuation.Moreover, oversupply continues to hamper revenue and earnings growth. These conditions still make CRON stock a sell until a path to profitability appears.InvestorPlace - Stock Market News, Stock Advice & Trading TipsCronos lost more than 75% of its value between early March and the middle of November. However, in recent days, it has rallied from the low of $6.04 per share to a CRON stock price of about $7.75 per share as of the time of this writing. * 7 Companies Using Artificial Intelligence to Outperform the Market Cronos's peers have seen similar rallies. The rally in this Canadian marijuana company is likely due to welcome news from south of the border. The U.S. House Judiciary approved a marijuana reform bill by a vote of 24-10. A Closer Look at CronosThis bill would remove marijuana from the DEA's Schedule I list of drugs. That would effectively make cannabis federally legal, leaving individual states to decide their own cannabis laws.Still, this is only one step. The bill must get approval by the full House, the Senate, then finally a signature from President Trump. Nor is it yet clear how much it will boost CRON stock or its peers. During this time, CRON has not yet rallied past its 10-day moving average (MA), let alone the 50-day or 200-day MA.Moreover, despite the massive drop, it still trades at more than 90 times sales. The latest quarterly revenue figure of CAD$12.7 million ($9.54 million) represented a year-over-year increase of 237.8%.For the year, the projected revenue of CAD$36.55 million ($27.46 million) does not seem to justify the current market cap of $2.36 billion. CRON stock can still rise under such circumstances, but despite a considerable decline, fundamentals cannot offer CRON any help. Canadian Regulations Remain an ObstacleNor will it receive help from Canada's marijuana market. Due to an oversupply, prices of dried cannabis continue to fall. Moreover, as our own Tezcan Gecgil points out, Cronos and peers such as Canopy Growth (NYSE:CGC), Aurora Cannabis (NYSE:ACB), and Tilray (NASDAQ:TLRY) must compete with the lower prices offered on the black market. Also, like InvestorPlace contributor Josh Enomoto states, ineptitude by the Canadian government at least contributed to an oversupply in weed.Like Enomoto and other colleagues, I believe the partnership with Altria (NYSE:MO) will eventually take CRON stock higher. However, as Luke Lango says, it must first find its way to profitability. I do not see it falling to $0 per share, but the fundamentals and the charts indicate that it can fall much further.Investors need to also remember that Cronos produces an agricultural commodity, one comparable to tobacco, cotton, or wheat. The only difference is that 80 years of prohibition and its psychoactive nature made it a sort of forbidden fruit.Once weed becomes commonplace, investors and the public will take it for granted. This will take CRON stock and its peers to valuations more in line with the S&P 500.When it reaches that point and begins paying dividends, it will become a rarely-discussed profit generator. Assuming Altria does not buy it out outright, I believe it will become the Altria the cannabis. It will then bring investor gains and dividends to a diverse group of stock investors. Final Thoughts on Cronos StockThe marijuana vote in the U.S. House will probably not help CRON stock for very long. Yes, Cronos and other Canadian marijuana companies need U.S. legalization to fuel expansion. In that sense, any hint that Schedule I restrictions will disappear may help boost Cronos stock for now.However, despite the massive drop in cannabis stocks, the bubble has not completely popped as valuations remain high. Moreover, legal marijuana companies must also compete with a black market that does not have to pay taxes or deal with onerous government regulations.The Altria investment will help CRON stock stay afloat. However, until it embraces its future as a firm that produces a mundane, profit-generating, commodity Cronos stock will not become a long-term growth story.As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can follow Will on Twitter at @HealyWriting. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Companies Using Artificial Intelligence to Outperform the Market * 7 Earnings Reports to Watch Next Week * 6 Retail Stocks Dropping Hard Ahead of Black Friday The post Don't Buy Cronos Stock on the U.S. House Committee Vote appeared first on InvestorPlace.
Cannabis stocks have been crushed, but are they now coming back to life? Down 68% year-to-date but up some 20% over the past few days, Tilray (NASDAQ:TLRY) seems to fit that description. However, Tilray stock isn't necessarily the one that investors should be banking on.Source: Jarretera / Shutterstock.com Earlier this week, there was some chatter about a potential capitulation for the group. Given that we're only a few days removed from a possible bottom, it's impossible to say at this point if the decline has hit its maximum pain point.That said, it's been a horrendous ride -- for all the pot stocks -- and the recent rebound is relieving some of that pain.InvestorPlace - Stock Market News, Stock Advice & Trading Tips The Problem with Cannabis StocksHave you ever heard the saying, "good company, bad stock?" It means that the fundamentals of the company are good -- whether that's the balance sheet, underlying business, etc. -- but the stock acts like crap. It means even though the company is reporting solid results and good news, the stock just refuses to rally or recognize any of the positives. * 7 Marijuana Penny Stocks That Have Ridiculous Possibilities If you take a second and think about some of your past or maybe even current holdings, I'm sure you can think of a few names that fit this description.The problem with cannabis stocks though? They're not good companies. And right now, they're not good stocks either. Think of it this way:When the technicals are bad, many stocks with strong underlying fundamentals can weather the storm better than the weak stocks. That is, those with dividends, strong balance sheets, a low valuation, and continued growth (and usually some combination of these attributes) are go-to picks for investors.On the flip side, investors can overlook less-than-ideal fundamentals when the technicals are behaving well. Bad news gets shrugged off and the stock price continues higher. This was the cannabis space when these stocks were doubling and tripling.However, when the fundamentals and the technicals turn south -- like cannabis stocks over the past few quarters -- that's when stocks get obliterated.When there are no fundamental attributes to support a stock, there's no telling when it's a buy. With traditional, established stocks, we have valuations, yields and other metrics to measure. With high-valuation cannabis stocks, we just have the technicals. And when they're bearish, it's hard to be bullish. Don't Go with Tilray StockSo, what are investors supposed to do? When the tides do finally turn, investors will want to be established in those with the best balance sheets and fundamentals. In my view, those are names like Canopy Growth (NYSE:CGC) or Aphria (NYSE:APHA).To another extent, Aurora Cannabis (NYSE:ACB) and Cronos (NASDAQ:CRON) are other possible choices. But TLRY stock just doesn't have as strong of fundamentals. Others have received sizable investments from larger companies and/or have more stable businesses.For Tilray stock, it's just not there. The company has total cash of $122.3 million. That's down more than 44% sequentially, although it is up slightly year-over-year.However, current assets total just $330.6 million versus current liabilities of $130.2 million, while total assets of $1.04 billion outweigh total liabilities of $624.4 million. That may work for a company that is generating positive free cash flow and net income, but that is not the case with Tilray stock.Analysts predict 304% revenue growth this year to $174 million and 78% growth in 2020 to more than $310 million. If achieved, that's great news! But it will also mean that other cannabis companies will bask in the sun, and with their stronger balance sheets, they are in better position to survive. Trading TLRY StockIt's great to see Tilray stock start to make a comeback -- it's great to see all of the cannabis space rebound. But that doesn't make TLRY stock a buy. Click to Enlarge Source: Chart courtesy of StockCharts.comThis name has so much overhead resistance and various downtrends to push through, it's not even funny. It's poking through its first downtrend resistance mark (blue line) on Thursday, but still has the declining 50-day moving average to push through, as well as the $25 level.I would feel more comfortable in some of the other cannabis stocks with stronger balance sheets. While the technicals are sloppy in these names as well, at least their fundamentals are a little better.Admittedly, a close over $25 could ignite a rally up to the declining 100-day moving average for TLRY. However, a move below the $20 mark and/or downtrend support (purple line), and bulls need to use extreme caution.Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long APHA. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Marijuana Penny Stocks That Have Ridiculous Possibilities * 7 High-Yield ETFs to Buy Now * 4 Dow Jones Industrial Average Stocks to Sell The post Donat Buy Tilray Stock Despite the Cannabis Rebound appeared first on InvestorPlace.