Canadian cannabis stocks have been on a very volatile roller coaster ride of late, with 2018 sparking new downside volatility which has not been seen in this sector in any meaningful way since cannabis stocks became publicly traded on the Toronto Stock Exchange. It appears traders are now attempting to find value within an industry which has been spurred forward by growth momentum and expectations of exponential growth in the years to come.
Certainly, Canadian investors have only a few companies to point to with the potential for such growth. Outside of technology darlings such as Shopify Inc. (TSX:SHOP)(NYSE:SHOP) and a few other high performers in recent years, finding a sector which has outperformed cannabis is nearly impossible (unless you’re counting CAD-denominated cryptocurrency in the mix).
A number of analysts have raised their target prices for large Canadian cannabis producers such as Canopy Growth Corp. (TSX:WEED), although it seems that analysts have lagged the market for some time now in predicting the upside potential of these companies (Canopy is current hovering right around the consensus target price for its equity, a case in point). With the industry still in its infancy, and little indication of who will come out ahead in the battle for global domination, questions remain as to which company should be the safest bet in a sea of uncertainty.
Long-term supply and demand concerns aside (and I have a few), near-term catalysts such as new NASDAQ listings could potentiall drive prices higher in the near-term. I, however, would caution investors to consider more fundamentally sound investments at this point in time, given the fact that we are now in the latter stages of a bull market which is approaching the longest bull market ever.
Invest wisely, my friends.
