CANNABIS CORNER: RELIEF OR RALLY?
Big Cannabis had a great week, with most of the stocks on my screen rebounding 8-20%. But don’t get too excited yet. With the S&P 500 up 12% since March 3, those gains are really only in line with Wall Street as a whole.
These stocks are still battered. It has been a bad year for the industry as euphoric expectations have collided with the hard market reality.
I am reluctant to recommend the group until reality looks a little brighter. In the absence of a sudden increase in demand, that means resolving the lingering supply imbalance.
And that, in turn, means consolidation. We are going to need to see one or more of the weakest cannabis farmers suspend normal operations before the stronger names become interesting as long-term investments.
This week’s market activity tells me Hexo Corp. (NYSE:HEXO) might be the one that needs to go before Canopy Growth Corp. (NYSE:CGC) and the others get back to work.
It will happen. We simply need to remain disciplined and pick our positions carefully.