Marijuana? Cannabis? Pot? Weed? Are These Stocks Worth Investing In?
The answer to the headline question is a resounding ‘yes.’ If, that is, you like roller coasters, bubbles, and possible crash landings. Of course, this is not to say that all marijuana- and cannabis-related stocks are doomed to fall. With legalizations happening all over the U.S. and the world, the opportunities for pot stocks have never been better.
Key Pot Stocks
That said, let’s take a look at the chart to see how some of the major companies in this industry are doing. We looked at the current year-to-date performance for five key companies in the space, as follows:
- TLRY: Tilray, Inc.
- CRON: Cronos Group Inc.
- CGC: Canopy Growth Corporation
- GWPH: GW Pharmaceuticals plc
- SMG: The Scotts Miracle-Gro Company
You may be thinking, The Scotts Miracle-Gro Company? Really? Don’t they make lawn products like the Roundup weed killer? Yes, but they also apparently have a hydroponics business that has been delving into marijuana growing.
As for the Cronos Group, we wrote about them recently when we talked about how Altria Group (MO), which makes Marlboro cigarettes, were considering investing in a major stake in Cronos. Well, Altria finally did announce that large investment, and Cronos’ stock got a big boost.
And Tilray? Trading in the stock has been extremely volatile, as you might have noticed from the chart. It’s up a whopping 320% year-to-date, but these gains haven’t been without some major pains. The company’s been in the news a lot in the past several months. A few months ago, the stock jumped sharply after the U.S. Drug Enforcement Administration (DEA) gave approval to the company to import marijuana into the U.S. for research purposes.
Rounding out the list, GW Pharmaceuticals makes anti-seizure drugs derived from cannabis. And Canopy Growth, which is one of the most prominent pure-play cannabis stocks trading on a major exchange (NYSE), is awash in cash thanks to a huge investment from Constellation Brands (STZ).
Cannabis Stock Performance
A quick glance at the chart above tells us that there’s not much consistency among the major pot stocks. Despite falling a great deal in the last couple of months, TLRY is still killing it year-to-date at 320% (as of Tuesday’s market close). CRON and CGC are also doing really well at 65% and 40% year-to-date, respectively. And both GWPH and SMG are losing pretty badly at -6% and -38% year-to-date, respectively.
So what’s the takeaway? There really is none. The pot stock space is still so young, undeveloped, and inconsistent, that there’s really no way to know what to expect at this point. Yes, this could be the time when fortunes are made (and they have been). But we could also be in the midst of what may shortly become a cannabis-stock bubble – much like the cryptocurrency bubble, real estate bubble, tech bubble, etc., that preceded it.
As always, we would caution all investors to tread cautiously, especially in this very volatile investment area.
IMPORTANT: The information above should not be construed as investment advice and should not be considered as a solicitation to buy or sell securities. Past performance is not indicative of future results. Trading and investing in the financial markets involves substantial risk of loss, and may not be suitable for all investors.
Disclosure: At the time of this article’s publication, we have no position in any security or trade/investment mentioned, nor do we have any business relationship with any company whose stock may be mentioned.
Senior Technical Analyst at The Technicals
As a momentum stock trader, Luke focuses mostly on strong market moves. Luke has been trading the markets since the early 2000s, but still gets excited by big movers. Whether a surging large-cap tech company or meteoric penny stock, Luke tracks and trades winners. A technical analysis purist, Luke authors many of our Top Stocks & ETFs reports. Contact Luke