Aphria Stock (TSX:APHA) (NYSE:APHA) Falls Back From highs: What to Expect Now?

April was not a particularly great month for many stocks and especially so for those who belong to the cannabis sector. However, Aphria Inc (TSX:APHA) (NYSE:APHA) proved to be one of the exceptions in this regard and went against the tide to record substantial gains.

Major Developments

Aphria stock managed to deliver gains of 25.5% for the month, and there are two significant factors behind the spike. In March, the stock had recorded significant declines as investors sold off their positions due to the impact of the coronavirus pandemic on supply chains and sales. However, those fears had not actually amounted to much, and many investors returned to pick up the stock in April.

That was one of the reasons behind the rally. In addition to that, the company’s announced its financial results for the fiscal third quarter on April 14, and the numbers were impressive. Its German arm CC Pharma managed to beat analysts’ estimates for both revenues and for earnings. Despite the company’s decision to withdraw its yearly guidance, investors seemed to be happy to buy into the Aphria stock.

The company possesses one of the strongest balance sheets in the industry, and if an investor believes in the long term prosperity of the cannabis sector, Aphria could well be one of the stocks to watch out for.

Aphria has been one of the more conservative companies in the industry and had avoided the pitfalls of heavy investments on acquisitions or infrastructure building. Hence, it is one of the better-positioned stocks at this point in time. This is a time when many other cannabis companies are struggling, and hence, Aphria has the chance to move away from the pack. At this point in time, the stock is trading at only 2.6 times its sales, and that is a significantly cheap valuation. In contrast, Canopy Growth, the biggest cannabis company by market cap, is trading at a price to sales ratio of 22.

Is Cresco Labs Inc (OTCQX:CRLBF) Stock a Good Buy After The News?

Due to the overall slowdown in the cannabis space, some companies had put off construction projects, but Cresco Labs Inc (CSE:CL) (OTCQX:CRLBF) is one of the exceptions in this regard. This past Friday it emerged that the company has completed the expansion of its facility located in Brookville in Pennsylvania.

Major Development

It is a major development for Cresco Labs considering the fact that the company will be able to cultivate marijuana and also produce associate products at the facility. Prior to the expansion, the facility only had 22000 square feet of cultivation space but now it stands at as much as 88000 square feet.

However, that is not all. It is important to keep in mind that the company has also made an effort to make the facility an effective manufacturing hub. Cresco has installed both integrated safety systems and new extraction booths in order to boost the manufacturing process. The facility has been earmarked by Cresco to produce marijuana and related products for the entirety of the Pennsylvania market. Investors ought to keep an eye on the development with regards to Cresco, since the expansion could chart a new course for the company.

While this is one of the major recent developments at Cresco, it needs to be remembered that the company had also released its financial results for the fourth quarter of 2019 back in April. The revenues for the period in question were $41.4 million, which reflected a year on year rise of 144% and a sequential rise of 14%. However, the company’s losses in the fourth quarter widened as much as 10 times year on year to hit $45.2 million.

The company did not provide a figure with regards to loss per share, but if the total outstanding shares count is taken into consideration then the loss per share could be around $0.15 per share. While the revenues recorded a considerable jump year on year, it should be noted that Cresco Labs fell short of analysts’ estimates of as much as $49.8 million for the quarter.

Cronos Stock (NASDAQ:CRON) Falls After Earnings: A Good Buying Opportunity?

The cannabis sector has been in trouble for many months now, and some of the biggest companies in the sector have experienced steep declines in their stock prices. Cronos Group (TSX:CRON) (NASDAQ:CRON) has not been able to escape either, and in 2020 so far, the stock has declined by as much as 27%.

Earnings Review

This past Friday, the company announced its financial results for the 1st quarter, and it could be worthwhile for investors to take a closer look at the performance. Here is a quick look at some of the highlights and takeaways from the company’s first-quarter results.

Cronos’ revenues soared by as much as 181% year on year to rise from $3 million in the prior-year period to $8.4 million. That being said, it fell short of analysts’ estimates of $10.7 million. The company’s international operations, which rose by 100% year on year, contributed as much as $6.3 million to the figure. The revenues in its domestic market in the United States came in at $2.2 million, and the disappointing performance has been blamed on coronavirus related drop in sales.

The most surprising bit from the performance was the $75.7 million worth of profits generated by Cronos Group in the quarter. However, it should be noted that the profit had been generated only because of the revaluation of derivative liabilities to the tune of as much as $113.4 million for the quarter. Operating loss stood at $45 million.

One of the most important things to look for in a business in these troubled times is the sort of cash balance it possesses, and in that regard, Cronos is in a strong position. The company reported that it had cash, short term investments and cash equivalents to the tune of $1.3 billion as of March 31 this year. If its rate of cash burn remains the same, Cronos would need to look for fresh capital at some point in late 2021.

The expected growth in the cannabis derivative market in Canada is expected to be a major boost for Cronos. On the other hand, the company’s facility in Israel is expected to produce revenues in the second half of the year, and that is another major positive. However, the second wave of coronavirus infections could prove to be highly damaging to the company.

Curaleaf Stock Gains Momentum At Lower Level

Curaleaf Holdings (CSE:CURA) (OTCQX:CURLF) is now firmly established the biggest multi-state cannabis operators in the United States, and it has expanded its footprint to 17 states in the country. As such, it is also one of the better-known stocks in the cannabis space. That being said, the coronavirus pandemic has come as a major blow.

Major Triggers

Several industries are now in crisis, and it is more pronounced for the cannabis industry since many companies were already struggling with the cash crunch. In such a situation, it could be worthwhile to figure out if Curaleaf is worth investing in.

The company posted its financial results for the fiscal year 2019. Revenues grew from $77.1 million to $221 million, and while the growth is impressive, it is Curaleaf’s widening losses that could a cause for worry. Net loss rose by 13% to hit $69.8 million, and SGA (selling, general and administrative) costs jumped to $121 million from $65.3 million.

Cash balance depleted to $42.3 million from $266.6 million in 2018. Investors could hope to get an updated idea of the situation later on in May when Curaleaf announces its Q1 2020 financial results. However, it is almost certain that 2020 is going to be a challenging year for the company.

Curaleaf may have grown at an impressive pace, and with 53 dispensaries under control, the company is now the biggest cannabis operator in the United States. However, such size can prove to be counterproductive in the current environment, and it is believed that leaner operations could well prove to be more efficient. The scale of the operations may have been impressive prior to the coronavirus crisis.

That being said, the company could well manage to become a major player in the long term, and if cannabis is legalized at the federal level in the United States, then the payoff could be huge. Yet, investors also need to keep in mind that Curaleaf is also suffering from a cash crunch, and in order to stay in the game long enough, it would need access to capital. Hence, it could be prudent for investors to stay away from the Curaleaf stock at this point.

Is Green Thumb Industries (OTCQX:GTBIF) a Solid Buy After The Recent Correction?

Cannabis stocks have been beaten down for quite a while, and some of the biggest names in the industry have seen their stocks record significant declines. That being said, there are still many promising companies in the sector, and one of those is Green Thumb Industries Inc. (CSE:GTII) (OTCQX:GTBIF).

Key Things to Watch

 The Chicago based company is primarily into cannabis retail and boasts of as many as five different brands that cater to different consumer tastes. In 2019, it generated sales of $219 million, but in 2020, the market conditions are a bit different owing to the coronavirus crisis. Here is a closer look at GTI in order to figure out if the stock is worth considering as an investment.

Considering the tough situation that is going to be in store for many companies in the coming months, a strong cash position is vitally important, and in that regard, GTI is well endowed. Despite making a $59.1 million loss last year, GTI has $46 million worth of cash and cash equivalents.

The company’s operating costs had been $18 million in each of the last two years, and hence, if cash burn does not go through the roof, GTI is in a position to ride out the storm. The company is expected to spend less in light of the current restrictions as well.

On the other hand, the company has a wide variety of goods in both its retail and consumer packaged goods channels. In 2019, the company managed to boost its retail sales threefold to $137.8 million, and on the other hand, consumer packaged goods sales soared fourfold to $109.9 million. It is clear that the company has diversified effectively, and two high growth revenues channels could help the company in diversifying far more aggressively going forward.

The GTI stock is down by 27% in 2020 so far, but given its strong growth numbers, it could prove to be a prudent investment. That being said, it could be better if investors held off for now and waited until GTI announces its quarterly results towards the end of May.

Is HEXO Stock A Better Long-Term Investment Option Now?

The market has rebounded somewhat in recent days in the hopes of the reopening of the economy following the coronavirus pandemic induced lockdown. However, the situation has not been great with pot stocks, which have continued to remain depressed. That being said, it is also true that it could be the perfect opportunity for investors to make clever investments in some of the notable pot stocks in the market. One of the pot stocks that stand out at this point in time is the HEXO Corp (TSX:HEXO) (NYSE:HEXO). There are some factors that make it one of the more compelling stocks in the market.

Key Drivers

Hexo may have had its difficulties in recent times, but it is a company that has the wherewithal to eventually become one of the bigger players in the cannabis industry for years. It is not an attractive proposition merely because of the current rally but for generating potentially handsome returns for many years.

Hexo boasts of the second-highest number of patents among companies in the sector, and on top of that, it recently came up with Original Stash, its premium brand. Hexo has also created a research division and a food research laboratory in order to come up with more products.

However, that is not all. The company has managed to make a move into the potentially lucrative cannabis-infused beverage space and tied up with Molson Coors for the same. Hexo is collaborating with Molson Coors to launch a THC based beverage. According to studies, the cannabis-based beverage market could eventually grow into a $1.5 billion industry by 2026. If the company plays its cards right, then it could corner a significant portion of the market.

Hexo not only has a viable product in the pipeline in collaboration with a well-known brand, but it is also making progress in other avenues. Hence, the potential for growth is there, and investors could consider the stock.

IPPR Stock Remains An Impressive Pick in The Cannabis Sector

The cannabis industry has been struggling, especially in 2020, due to the market sell-off and the ever-persistent woes within the industry. The COVID-19, however, might be able to help the industry, as more and more states may legalize the substance. With the financial crisis due to the pandemic, states could legalize the industry in order to generate significant tax revenues from the same, gradually giving way to legalization at the federal level. In such a case, the cannabis stock of some companies might be worth a buy. Innovative Industrial Properties Inc (NYSE:IIPR) is one such stock.

What to Expect Now?

The company provides long-term triple-net lease to state-licensed operators in states where cannabis is already legal. As per 2019 Q4 reports, IIP owns 51 properties- spread across 15 states – of which 98.9% is under the lease (based on square footage). These properties are mostly industrial while some other retail. IIP continues to remain one of the very few companies delivering profits and even paying dividends to its shareholders.

The company 2019’s results were also very impressive, with its revenue up by 202% year-over-year to 44.7 million dollars. The major contributor to this increase was the acquisitions made by the company. The company’s net income amounted to 22.1 million dollars- up by 293%- while the EPS stood at 2.03 dollars per share, showing an increase of 171%. The company’s dividend yield was approximately 5%.

As per the regulations, a retail estate investment trust in return for getting special treatment in tax is required to pay at least 90% of the taxable income generated each year as dividends. This implies that till the time IIP remains profitable, investors would receive their dividends.

As cannabis remains illegal at the federal level, companies within the industry find it difficult to raise finance from the financial institutions. IIP’s lease-buyback transaction gives cannabis companies cash for their growth. Thus, federal legalization might bring down profits of IIP.  The analysts, however, expect the company to show a growth of over 44% in the next year.

Is OrganiGram Stock A Good Buy in the CBD Industry?

The coronavirus pandemic has had a massively negative impact on a range of industries, and the cannabis industry was not completely unscathed from it either. However, things could be changing soon. In a new development, it has emerged that Organigram Holdings (TSX:OGI) (NASDAQ:OGI) has decided to bring back its employees to work.

Major Analysis

The company published an update on Thursday last week with regards to this matter. The company stated that it is going to get its employees back to work in phases in light of the fact that the coronavirus crisis has eased in New Brunswick, its native province.

According to OrganiGram, a total of 50 employees are going to return to work at its offices in Moncton. Depending on the safety and general health guidelines provided by the authorities, the company is going to take a call on the next phases. Additionally, the company’s business needs are also going to be a factor in the entire process.

However, it goes without saying that the announcement from OrganiGram has come as a positive for the industry at large. It remains to be seen if other producers in Canada take such steps.

The provincial authorities in Canada have handled the coronavirus pandemic quite effectively, and that has apparently given OrganiGram the confidence to start bringing back its employees. The company, however, added that the standard safety precautions that have now become the norm throughout the world are going to be implemented. Measures like social distancing, regular cleaning, and sanitization of surfaces are going to be followed.

Many cannabis companies, including OrganiGram, had gone through difficulties in recent months despite the fact that cannabis dispensaries had stayed open during the crisis. The industry had been in trouble even before the crisis due to a range of issues starting from oversupply to a slow rollout of stores in Canada.

Cannabis penny stocks

Cannabis stocks have gained success in the United States and Canadian market. It is important for the investors to understand that the investment in cannabis is not limited to growing, retailing or distribution of the weed. There are many companies providing indirect services for real estate, pharma, biotechnology and other sectors associated with the cannabis segment. It is important to know whether the stocks you’re buying are good or bad cannabis stocks. The investors need to do their own research to make the decision to buy the marijuana stocks having less per share value. People need to get access to the resources to make an informed assessment of the company. There are companies investing in cannabis-related stocks having a diligent approach.

There are many Canadian cannabis stocks having overrated status in the market. It is required to start focusing on US cannabis stocks to get ahead in the investments related to marijuana. There are many US states have legalized recreational or medical uses. There are many businesses undergoing the biggest chances and getting positive chances for improvement in Canadian exchanges. Many publicly traded companies are not subjected to making their defined business statements in the major stock exchanges with SEC imposition.

There are many risks and challenges involved with the stocks present in the OTC exchanges. Some people are biased and don’t consider penny stocks at all. However, there are many beginner companies having a good scope in the market and could be considered for better returns.

Steps to investing in cannabis penny stocks

Research the Company: It is important to search for the company you’ll be investing in. There are many documents to be searched and thought about while making the right choice.

Investment Amount: Always keep the thumb rule active for the investment: ‘Never invest more than you can afford to lose’. Stocks are unpredictable and initiate a feeling of greed in the mind of investors. Hence, it is very essential to make the right move in terms of investment and keep an investment for which you could afford to lose.

Timeline decision: It is important to buy and sell at the right time. If the stock falls or rises to a certain level which is fixed by you, immediately make the decision in turning it off or getting it in your portfolio.

Select the right broker: Your middle person for buying cannabis stocks have to be very important. You can buy your stocks through an online brokerage company or sign up directly for an online platform. You’ll be able to trade your account once it is funded.

Buying the stock: This point is the major point and is complex in its own way. There are different types of stocks executing at the market price and a limit price gives the low-priced entry to the investor. It is not guaranteed in cannabis penny stocks that the limit order is executed. Hence, the decision has to be well informed.

Selling the stock: Once you feel that you’ve attained the expected results from the stock, just sell them. You can’t expect them to grow and grow, as there is a limit to everything. Selling at a right time is very important.