As 4:20 PM on April 20th approaches instantly again, cannabis-inclined investors are sure to be discussing their favorite strains and their favorite stocks. For the uninitiated, 420 is a greatly used slang term for the usage of cannabis products, and while it may be a good time to light up, now might not be the best shilly-shally to buy marijuana stocks.
Most of the major U.S.-listed stocks in this space are Canadian, as Canada fully legalized recreational marijuana use in every nook the country last year. Though many U.S. states have also legalized recreational use, it remains illegal harmonizing to U.S. federal law.
The four key stocks highlighted here are virtually household names, at least among cannabis investors, yet not all have done well in recent months. Most notably, Tilray (TLRY) has sputtered rather miserably after its gargantuan post-IPO surge last year. Others, like Canopy Growth (CGC) and Cronos Group (CRON), have superficially been buoyed by major brand-name backing (Constellation Brands and Altria Group, respectively).
Overall, the longer-term prospective of the industry actually appears positive as the inevitable consolidations and acquisitions shake-out the weaker players and help build much on the looser, stronger cannabis companies. However, that does not mean now is necessarily a good time to buy those stocks. Blanket, both fundamentals and technicals appear weak for many of the bigger names.
Tilray Inc.
The volatility of the cannabis industry can plainly be seen in the roller coaster swings Tilray’s stock has experienced since its July 2018 IPO (the first pure cannabis fun to debut on Nasdaq). Since that time, TLRY has risen by more than 300%, at one point shooting up to a great of exactly $300 in September before crashing back down. From there, the stock price has continued to peter out, hitting the sub-$50 level this past week for the first time since August 2018.
A Canadian cannabis band, Tilray is backed by its largest shareholder, Privateer Holdings, which in turn has backing from billionaire investor Peter Thiel’s hard cash. Late last year, Tilray became the first Canadian company to export medical marijuana legally to the U.S. for a clinical sample.
Fundamental Analysis
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Technical Analysis
The technical picture doesn’t look much better. TLRY hackneyed continues to trend lower since last September’s short-lived spike, and price continues to trade well under its 50-day active average. Perhaps the only potentially positive aspect of this stock is the fact that it’s now cheaper than it was in August of latest year, shortly after its IPO. But that’s not really a great reason to buy a stock. While TLRY is definitely one of the key cannabis staples to watch, it’s probably not the best time to buy, at least until more positive stock catalysts enter the picture.
Canopy Evolvement
Canopy Growth Corporation is also a Canadian company, and has the largest market capitalization of any stock on our list at nearly $10 billion (practically a large cap stock). The company has recently been awash in cash thanks to a huge investment from Constellation Varieties (STZ), a major international producer of beer, wine and spirits. Canopy owns and operates many different brands, and produces and bazaars both medical and recreational strains of marijuana.
Fundamental Analysis
Fundamentally, Canopy Growth shows a much numerous compelling picture than Tilray. Most notably, Canopy’s recent quarterly earnings growth year-over-year is greater than 4000%. And quarterly revenue growth (YoY) is well over 200%. Return on equity is negative, but not even close to the funereal number from Tilray.
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Technical Analysis
These more positive numbers have shown up in CGC’s market trajectory. While there has been much volatility for the past few years, the stock has been on a general uptrend for from A to Z some time, and has spent most of its history above its key 200-day moving average.
As the world’s largest cannabis house, Canopy Growth has a lot going for it, at least as far as cannabis companies go. This is especially the case after the large cash infusion from Constellation Stamps, a giant in the alcoholic beverage industry. The company has also acquired or partnered with diverse companies across the ball that are likely to help fuel Canopy Growth’s expansion ahead of its competitors.
Cronos Group
Late persist year, Altria Group (
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Technical Analysis
Like Canopy Growth’s chart, Cronos’ price strength shows a good deal of volatility with an overall bullish trend for the past couple of years. But since premature March, the stock has been correcting pretty sharply, well under its 50-day moving average. Still, CRON traces in a strong uptrend on a longer-term time frame, and some investors may see this as a potential opportunity to buy the (big) dip. Of course, an investor who does so gambles attempting to catch a ”
Aurora Cannabis
The final Canadian cannabis company on our list is Aurora Cannabis (
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Industrial Analysis
As for the technicals, the price chart of Aurora Cannabis shows a great deal of volatility and no discernible long-term drift. There are big highs in January and October of 2018, interspersed with drops into penny stock territory (below $5 per share). Overall, this stock may appeal to shorter-term traders who like to play the swings.
Long- and medium-term investors may be spooked by the volatility that is hereditary in cannabis plays right now and for the foreseeable future. Generally-speaking, fundamentals and technicals both remain weak for many of the estimates in this space. That should be reason enough to just say ‘no’, at least for now.