Marijuana News Today
The marijuana news today sees another addition to the growing trend of Wall Street institutions accepting the pot sector. Meanwhile, the marijuana stock market has bounced back from yesterday’s disappointing performance.
The major news is that Wall Street investment bank Jefferies Financial Group Inc (NYSE:JEF) has begun coverage of seven marijuana stocks, including many of the favorites I often cover in this column.
While I may not agree with all of the bank’s recommendations—particularly its position on Hexo Corp (NYSEAMERICAN:HEXO)—this is ultimately great news for the marijuana industry. (Source: “A Wall Street bank just started covering 7 marijuana stocks. Here’s what it’s saying.,” Markets Insider, February 25, 2019.)
First, many of the recommendations coming from the bank are positive. It is particularly high on Aurora Cannabis Inc (NYSE:ACB).
When major institutions that investors know and trust begin throwing their weight behind pot stocks, that can only help fuel the industry by encouraging more investments.
Increasing the flow of capital into the market is going to help marijuana companies grow and keep up with the high levels of expansion they will need to maintain in the booming market.
But the most important aspect of Jefferies Financial Group’s coverage of marijuana stocks isn’t so much the direct implications but what the move means for the industry: marijuana is going mainstream.
With each new legacy institution that begins covering pot stocks, we come a little closer to a time when marijuana will be considered just like any other product.
That will go a long way toward pushing legalization forward around the world, increasing consumer-friendliness with the product and driving sales higher. Overall, it will help the industry get its legs without having to face a legislative battle at every turn.
The legal cannabis industry will continue to grow and gain prominence on Wall Street. That, in my mind, is a given. And with that clout comes the ability to influence lawmakers and discourse about pot. That will be huge in the coming years as the marijuana industry looks to make an overall global push for legalization, starting of course in the U.S.
Much like yesterday, the marijuana news today has OrganiGram Holdings Inc (OTCMKTS:OGRMF, CVE:OGI) on top with healthy gains. But unlike yesterday, OrganiGram stock is joined by the larger market.
We saw marijuana stocks across the board take a hit to start the week, with many falling several percentage points. In the marijuana news today, however, we’re seeing the exact opposite, with solid gains across a wide variety of pot stocks.
OGRMF stock, in particular, was up big again, with a gain of over 3.5% in early-morning trading today. Over the past five days, the stock has risen by more than seven percent.
Big news helped drive OrganiGram stock’s success as the company recently inked a letter of intent with the Société québécoise du cannabis. What that means is that the company will enter Canada’s second-largest market.
OrganiGram, despite being valued at less than $1.0 billion and being very much a marijuana penny stock, now has operations in every province of Canada. That’s what I call punching above your weight.
“Organigram’s growth strategy has always focused on establishing a strong national footprint and building our brand presence with the Edison Cannabis line nationally,” said CEO Greg Engel. (Source: “Organigram Will Now Supply All Canadian Provinces Following Quebec Agreement,” New Cannabis Ventures, February 26, 2019.)
The long view here is that OGRMF stock has very solid fundamentals and a strong path toward growth, whether that’s through a U.S. listing, a partnership, or even an acquisition.
Each one of those scenarios is not only possible, but at least one of them is highly likely to take place within a year—two at the most.
As a result, we have one of the more potential-filled pot stocks on the market flexing its muscles and showing investors why they should be excited about its future.
Another pot stock that has enjoyed success to start the day is Aurora Cannabis. ACB stock climbed three percent in early-morning trading and finds itself up by nine percent over the past five days.
Aurora Cannabis stock has started 2019 on a high, which is a much-needed change compared to 2018.
You’ll remember that ACB stock underperformed last year, especially compared to its direct competitors like Canopy Growth Corp (NYSE:CGC).
While Aurora Cannabis stock has relied on acquisitions to help fuel its stock growth, its partnerships and the big investments coming into the company have served to fuel growth.
ACB stock still hasn’t nailed down that big partnership. I have no doubt that it is hungry to find one, however, and much like OrganiGram, that makes Aurora stock one that holds a lot of promise.
As I mentioned earlier, the Jefferies Financial Group analysts are very big on ACB stock, with the company being among the top performers in their projections.
The analysts said:
We believe Aurora, along with Canopy, is best placed to dominate globally in the years ahead, yet the story is less appreciated…With infrastructure in place to strongly accelerate near-term Canadian sales as derivative products come on line, and US optionality to become more visible, we see further upside on a 12-month view. Shareholder dilution has been a risk in the past but we’d like to think this will now be more limited.
(Source: Markets Insider, op cit.)
While I largely agree with their assessment, they go wrong in one key area: I still believe that CGC stock is the superior pick to ACB.
The final top performer we’ll look at today is Cronos Group Inc (NASDAQ:CRON).
Cronos stock was—like many others—up this morning, gaining four percent. But over the past week, CRON stock has fallen by a point.
I chalk that up to it being on the Nasdaq, where marijuana stocks have always behaved a little differently compared to the majority of the pot stock market, which trades on the New York Stock Exchange (NYSE) or on Canadian listings.
CRON stock has been on a tear in 2019, however, and this is where Jefferies Financial Group and I finally agree: there is a certain amount of risk in this stock.
While I like the stock and think that gains are more than possible, it is still riding high after its massive Altria Group Inc (NYSE:MO) deal.
When the fuel from that move runs dry, I’d like to see how CRON stock is able to create more gains. I’m not skeptical about the stock—I believe that gains can still be made—I’m simply wary about being caught in the hype machine.
OGRMF, ACB, and CRON Stock Performances
The performances of OGRMF stock (black line), ACB stock (blue line), and CRON stock (red line) over the past week are seen on the chart below:
Chart courtesy of StockCharts.com
The marijuana news today features another victory. It seems that 2019 has been full of them.
Between gaining more recognition on Wall Street and strong pot stock gains, we’re seeing a lot of smiles on the faces of marijuana investors. Smiles, I might add, that I don’t see disappearing anytime soon.