Marijuana News Today
The love story between Wall Street and marijuana stocks continues to grow in 2019, as the marijuana news today has Aurora Cannabis Inc (NYSE:ACB) and Cronos Group Inc (NASDAQ:CRON) up big following coverage by Cowen Inc (NASDAQ:COWN).
Cowen was the first major Wall Street bank to follow the marijuana industry. It has for some time now recommended Canopy Growth Corp (NYSE:CGC) and Tilray Inc (NASDAQ:TLRY), but has now also added ACB stock and CRON stock to its list.
While I see this as playing catch-up (we’ve been singing the praises of both those stocks for years now), it’s still better late than never.
Both of these top pot stocks saw big gains as a result of the coverage.
Cowen was positive overall on both stocks, although it did write that CRON stock will need to invest “to expand its global footprint [which] will likely prevent meaningful profitability over the next few years.” (Source: “The first Wall Street bank to follow marijuana stocks just added 2 major names to its coverage universe. Here’s what it’s saying.“ Business Insider, March 5, 2019.)
I’m not sure I entirely agree, considering how sales have gone since Canadian marijuana legalization. At the same time, I understand how Cowen came to that conclusion.
In any case, running a spending deficit in the early stages of an emergent industry in order to cement a company’s global standing is hardly a bad or unusual move; in fact, it’s a pretty common one. The tech sector offers a perfect road map to follow in this regard.
As for ACB stock, Cowen was much more bullish, writing:
As one of the largest manufacturers, ACB is well positioned to benefit from the growing medical and adult use cannabis industry in Canada (CAD $12 billion by 2025), particularly given its advantages in capacity and scale.
With the largest physical presence outside of Canada among the LPs, ACB is also well positioned to capture share in the $31 bn international medical market. Further, efficiencies from its large- scale production network and near-term operating leverage will allow ACB to be among the first Canadian cannabis companies to reach profitability.
That’s strong praise coming from the bank, and I do agree. Although, I also think there’s more to the picture.
In any case, whether or not I totally agree with the analyst, Vivien Azer, this is another big win for the marijuana industry.
Not only did this note spark gains for two of our favorite pot stocks in ACB stock and CRON stock, it also again proved just how mainstream marijuana is becoming.
In our next issue of Marijuana Millionaire (our monthly pot stock newsletter), I’ll explore in more depth why these types of gains are going to be huge for the market moving forward.
But the upshot to the marijuana news today is that more and more people are taking notice of the top pot stocks and realizing just how much potential they hold.
While the marijuana news today has us giddy about the future, the pot stock market was a little flat today, with little to no movement. Considering the massive gains that have taken place to start the year, that’s not such a bad thing. Consider it a consolidation period.
Since Aurora Cannabis stock has been in the news, we’re obligated to look at its recent performance.
ACB stock continued its gains with a two-percent jump in early-morning trading today. But yesterday’s note helped jump-start share prices, sending the company on a near-10% gain over the past five days, with much of that coming after the note.
Aurora Cannabis stock is returning to prominence after a year in the dumps in 2018, which is great. I had never lost faith in what was once probably my favorite pot stock. It has since lost that title, but I still value the company very highly.
It is among the most traded marijuana stocks on “Robinhood,” a trading app that’s popular among young people. CRON stock also finds itself popular among younger traders. (Source: “Millennials keep pouring money into marijuana stocks (ACB, TLRY, CRON, CGC, MJ),” Markets Insider, February 7, 2019.)
Aurora Cannabis still has one major problem facing it: it has yet to score a big partnership with an outside industry. Its competitors, meanwhile (including Cronos) have been able to outmaneuver it on that front.
In any case, ACB stock has risen in both Wall Street’s estimation and my own in 2019. While I’m still a little cautious about the company on a five-year outlook, things look very bright for the stock in 2019. Iit has the potential to impress for years to come, even if there is some risk that it won’t find an outside investment partner.
Of course we also have to look at CRON shares, the other stock featured in the Cowen note. While Cowen was decidedly more bullish on ACB stock versus CRON stock, I have the opposite stance.
While both are strong companies, I believe that Cronos stock is better situated to see higher, more solid gains in the next year or so.
The biggest difference between the two companies in my eyes is the outside partnership. Cronos inked a deal with Big Tobacco company Altria Group Inc (NYSE:MO).
This move sent shares soaring and helped CRON stock see over a 117% climb year-to-date. ACB stock, it’s worth noting, has had a great year as well—about a 60% jump year-to-date—but that still pales in comparison to Cronos.
While Aurora has been far more aggressive in its acquisition strategy, Cronos can afford to play things a bit slower due to the massive capital injection alongside its presence on the Nasdaq, a traditionally more risk-friendly stock exchange.
Cronos stock has impressed me greatly to start the year after finishing 2018 on a very strong note. While I wasn’t always on board with the company (especially in the early days when it appeared that its stock price was being driven by hype alone), I’ve since come to appreciate the company and believe that bigger gains lie ahead in 2019.
CRON stock jumped by 10% over the past five days (like Aurora, fueled by yesterday’s surge), but tumbled in early-morning trading today by over five percent.
ACB and CRON Stock Performances
The performances of ACB stock (black line) and CRON stock (blue line) over the past week are seen on the chart below.
Chart courtesy of StockCharts.com
The marijuana news today has us once again appreciating just how mainstream marijuana stocks are becoming.
It seems that every second headline in the financial press this year would have been highly improbable in years past.
Between Wall Street and Washington support, it’s looking like pot stocks are finally poised to be officially welcomed into the mainstream. With that, expect to see huge gains on the horizon.