Canadian marijuana stocks surged on Thursday, but lost those gains Friday. Bloomberg ReportThe U.S. Senate Democrats have announced that they will introduce a federal cannabis criminalization bill this month. Can Canadian marijuana stocks be bought now?
Sens. Chuck Schumer, Cory Booker, and Ron Wyden all support the bill. The legislation’s draft was unveiled in its first public appearance last year. However, the date of formal introduction was delayed earlier in the year.
However, the law would still allow states and territories to establish their own marijuana policies. It would also exonerate non-violent cannabis convictions and allow investors to invest in areas that have been disproportionately affected by the War on Drugs.
Another federal cannabis decriminalization bill, the MORE Act was also passed by the House. However, the Senate has yet to decide the exact path for both bills.
After a year of skepticism about the prospects of U.S. cannabis legislation, these legislative efforts would be a response to that year. This has led to marijuana stocks falling throughout this year. And even if the U.S. passes full federal legalization, the implications for Canada’s pot producers are unclear.
Canada’s marijuana sector continues to face cuts. Aurora Cannabis (ACB() In June, it stated that it would layoff around 12% its staff.
According to the company, the layoffs were part in an earlier effort to save approximately 70 million to 90 millions Canadian dollars “to support us on our path to profitability.”
Aurora and its competitors have had to deal with layoffs and facility closures as well as executive-team shakeups in the last few years. This was due to losses, competition, and overexpansion. For big Canadian marijuana stocks, like Aurora, market share continues to decline. Hexo (HEXO), Canopy Growth (CGC( Tilray (TLRY).
Below is a list of marijuana stocks that are traded on the major U.S. stock exchanges.
Marijuana Stocks & IBD
IBD does not have full ratings for stocks of marijuana in Canada that trade on large U.S. stock exchanges. However, it tracks stocks in the marijuana industry. Innovative Industrial Properties (IIPR), a U.S. cannabis-focused real-estate investment trust.
MarketSmith also provides limited ratings data on some U.S-based cannabis producers who operate in legal states like California. Curaleaf (CURLF), Green Thumb Industries (GTBIF) and Trulieve (TCNNF). These marijuana stocks can be purchased over-the-counter and in Canada.
Cronos Stock Chart
Cronos Group reported in May that it had lost nine cents per share in its first quarter. This was in line with our expectations. This was in line with expectations. Revenues of $25million were higher than estimates for $24million. Sales were helped by the sales of edibles and vapes in Canada, as well as gains in Israel’s medical markets.
In a research note by Owen Bennett, a Jefferies analyst, Owen Bennett stated that Cronos’ investment case was not based on its operations but rather its cash piles. Altria (MOCronos has a 45% stake owned by ),
He said that “this cash provides optionality, and potentially critically, optionality around U.S. exposure, and the ability to secure U.S. assets ahead of/or post any favorable U.S. legislative change — which we believe could come soon.”
Cronos has reached a deal that allows a subsidiary to acquire a 10.5% stake in PharmaCann (a U.S. multistate operator), subject to U.S. regulatory and federal approval.
Hexo Stock Chart
Hexo (HEXOThe stock has a weak Composite Rating of 3 It has the lowest possible EPS Rating.
Hexo tried to cut jobs and reduce its debt load. In April, the company appointed a new CEO as well as an acting CFO. Tilray recently agreed to buy up millions in Hexo’s convertible debt — potentially giving that company a big stake in Hexo down the road.
Canopy Growth Stock Chart
Canopy’s share loss was $1.14, which is worse than the expected 23cs when it reported earnings for May. Sales of $87.6million were lower than expected and below the year-ago quarter.
The revenue from cannabis fell. It lost revenue from cannabis.
Canopy also has a CBD company in the U.S. that includes brands such as Martha Stewart. It has agreements in place to purchase Acreage Holdings, Jetty Extracts of California, and Wana Brands, an edibles manufacturer in the U.S.
Canopy Growth stock holds a 2 Composite Rating, and a 50-EPS Rating.
Stock Chart for Tilray
Tilray reported mixed results for its third quarter earnings in April.
The company merged last year with Aphria. It also owns a hemp-granola maker, a craft brewer and a distiller — with hopes of selling THC cannabis products through at least some of those companies whenever federal legalization happens in the U.S. It also has a deal with Hexo that could allow it to acquire a stake in the struggling U.S. cannabis retailer MedMen.
Analysts have raised concerns about this approach for marijuana stocks. The stock has a Composite Rating (26) and an EPS Rating (70).
Aurora Cannabis Stock Chart
Aurora Cannabis (ACBWhen it released its quarterly results in May,, it lost 4.72 Canadian Dollars per share. This was well below the expectations of a loss of 23 cents per share. Sales fell short of expectations and were lower than the year-ago quarter.
In an effort to reduce costs, Aurora has recently sold its production facilities in Canada as well as abroad. In March, however, it announced that it had reached a deal with Thrive Cannabis. It stated that the move would help it “premiumize” its strategy.
The stock has a 2 Composite rating and an 18 EP Rating.
Innovative Industrial Properties Stock Chart
Innovative Industrial PropertiesThey lease out the properties that they have purchased from marijuana growers. This provides a boost of funds for cannabis companies that might not otherwise be able access traditional banking services.
After Blue Orca Capital, a short seller, stated it had taken a position within the company citing financial difficulties among its tenants, shares fell in April.
Blue Orca stated that the IIPR’s loan portfolio has declined significantly over the past 18 months as the sector became more competitive and IIPR sought out lower quality tenants to continue growth.
IIPR responded by saying that the report contained “numerous misleading and false statements” about the company. It also stated that the report was flawed and showed a fundamental lack of understanding about commercial real estate, the regulated cannabis market, and IIP’s simple, straightforward business model.
In May, the company reported mixed earnings for its first quarter. The shares have a Composite Rating of 56. Their EPS Rating of 96 indicates strong profit growth.
ETFs in the Marijuana Industry
ETFs can be used to mitigate stock-specific risks in spite of the volatility present in marijuana stocks. ETFMG Alternative Harvest (MJETF) is one option. AdvisorShares Pure CannabisYOLO) ETF and the Cambria Cannabis ETF (TOKEOther names for )
AdvisorShares Pure US Cannabis ETF (ETF) is another ETF.MSOS), offers investors exposure to U.S. multistate operators, which analysts say are on a sturdier path to profitability.
Are Marijuana Stocks Buys Right Now?
Are marijuana stocks worth buying right now? According to IBD’s analysis, there is no.
You can find many of these items in the IBD Stock Lists. The best stocks to invest in or watch.
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