Cannabis stocks are still the big losers YTD but in the last week, the drop is either slowing or ending. Speculators will re-start long positions in the sector as tax-loss selling ends. They are betting that a few positive catalysts will put an end to the downtrend.
Aurora Cannabis (TSX:ACB), Cronos (TSX:CRON), Aphria (TSX:APHA) and Canopy Growth (NYSE:CGC) are the biggest plays in the sector. Tilray (NASDAQ:TLRY) and CannTrust (TSX:TRST) are the stocks investors should avoid.
Tilray reported sharply declining selling prices last quarter. Conversely, the stronger firms are looking ahead. Cannabis v.2.0 is the buzz word for edibles and oils. This widens the addressable markets for cannabis firms.
Canopy Growth posted an update on its 2.0 product rollout. It said the second wave of cannabis commercialization will rely on distribution channels. This will start on Dec. 16 but products will not reach store shelves until early January 2020.
This is somewhat unfortunate: the products will miss a positive push from holiday sales. Canopy will have THC-infused chocolate bars, ready-to-drink products, and vape pens and vape cartridges.
Your Takeaway
The euphoria for cannabis stocks will not likely return in the near-term. But fundamentals are improving because having more products to market will give sales a much-needed rebound.
