Over the next decade, investors would struggle to find a more arrive growth opportunity than legal marijuana. This is an industry that has the potential to see sales grow five-fold to 18-fold by 2030 from the $109billion in the worldwide sales record in 2018.
It is an industry that has a lot of growing up to Do. Between supply issues in Canada, high tax rates in select U.S. states, and the persistent black market throughout North America, pot stocks has gone up in smoke in recent months.
While some of these cannabis stocks may look like genuine bargains, others should still be avoided for the immediate future. Here are three marijuana Stocks that are best left on the shelf in November.
1. HEXO Corp.
Quebec-based cannabis grower HEXO (NYSE-HEXO) had an awful October and November isn’t shaping up to be any better.
The company’s shape price imploded following an update to its fourth-8operating results and fiscal 2020 outlook. Heading into the quarter, HEXO had previously been forecasting a rough doubling sequential quarterly revenue, as well as 400million Canadian dollars in 2020 sales. The update completely pulled the company’s forward sales guidance for next year, and it reduced fourth-quarter sales to a range of CA $14.5 million to CA $16.5 million. That implies 19% sequential quarterly growth at the midpoint, when 100% had been expected.
Recently the company announced that it would delay the release of its fourth-quarter operating the release of its fourth-quarter results an issue CA $70million in convertible debentures, all while cutting 200 jobs.this is a logical decision given the weaker near-term outlook for the Canadian cannabis landscape, but it is a wakeup call to the shareholders about just how serious this slowdown can be.
Lastly, HEXO also announced plans in October to introduce a valve line of Cannabis products under the original stash brand name. The problem is, this valve line, while more price competitive with the black market, could be a potential margin-killer.
2. Cronos Group
This is one of the most popular pot stocks, according to milinial-favorite online app Robinhood. Cronos Group (NASDAQ-CRON)
The lures of Cronos have long been its focus on high-margin cannabinoids and derivatives, and it’s bountiful cash position. In March Cronos closed a 1.8billion equity investment from Elyria Group (NYSE-MO) that gave the tabacco giant a 45% non diluted stake in the company. Presumably, this gives Cronos plenty of runway to see its strategy become reality.
Crono’ s stock has been plummeted as of late. For one, the company hasn’t done much on the earnings front to merit a premium valuation. It’s produced some hefty per-share profits in each of the past two quarters, but this was based on reevaluating derivative liabilities and had nothing to do with its actual business performance.
3. CannTrust holdings
Lastly, a regular on th “avoid” list of late makes yet another return. CannTrust holdings (NYSE-CTST)
October proved to be a pretty eventful month for CannTrust, which had it sales and cultivation licenses suspended by Health Canada in September, following the July admission that it grew unlicensed weed in five rooms for 6 months. In October, CannTrust announced that it would be destroying about $58million (U.S.) worth of marijuana that was in inventory or recouped from buyers.
Much like HEXO, CannTrust also recently announced that it’d be shedding up to 40 jobs on what it believes will be a temporary basis. The company isn’t propagating additional plants at the moment, and it’s unable to sell any product until it regains its licenses.