Commodities and Gold

Small Is Beautiful

While we’ve talked a lot about a few of the biggest cannabis stocks, the real high-impact opportunities are off the beaten track. This week, Hexo Corp. (NYSE:HEXO) has proven that with a 7% rebound.

Granted, HEXO has a lot of heavy lifting to do down here at $0.76 to catch up with the giants. It has been a grim year for the industry, and this stock is down a harrowing 86% in the last 12 months.

But in the grand scheme of things, that performance isn’t much worse than what the giants have suffered. Tilray Inc. (NASDAQ:TLRY) is down 85% over the same period. Aurora Cannabis Inc. (NYSE:ACB) is down 86% as well.

When the pain is equally shared, the odds favor the disruptive little company over the entrenched leader. It’s just math: a small stock can double and redouble on progress that wouldn’t even budge a giant.

The potential returns simply stack up higher the lower you look. That’s why I have been a fan of tiny and obscure names, like Pharmacielo Ltd. (OTCMKTS:PCLOF), for the long win here.

After all, when giants fall as hard as upstarts, the risk profile is equalized. You need to look to the returns instead.

Of course, you might not want to get involved with recreational cannabis at all. In that case, Aphria Inc. (NASDAQ:APHA) has matched little HEXO point for point this week.

And unlike HEXO and the giants, the downside on APHA’s medicinal business has been substantially easier. This stock is down only 37% in the last year, which is a whole lot easier to recover when the bulls are back in control.

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Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street. The Financial Times describes Ms. Kramer as “A one-woman financial investment powerhouse” and The Economist distinguishes her as “one of the best-known investors in America”. Ms. Kramer is often quoted in publications such as the Wall Street Journal, New York Post, Bloomberg, and Reuters. She is a frequent guest commentator on CNBC, CBS, Fox News and Bloomberg, providing investment insight and economic analysis. Ms. Kramer was an analyst and investment banker at Morgan Stanley and Lehman Brothers. Ms. Kramer founded and ran a long-short hedge fund and has been chief investment officer overseeing debt and equity portfolios. Since 2010, Ms. Kramer’s financial publications have provided stock analysis and investment advice to her subscribers. Her products include GameChangers, Value Authority, High Octane Trader, Triple-Digit Trader, 2-Day Trader, IPO Edge and Inner Circle. Ms. Kramer, a Certified Fraud Examiner, has also testified as an expert in investment suitability, risk management, compliance, executive compensation, and corporate governance. Ms. Kramer received her MBA from the Wharton School at the University of Pennsylvania and her BA with honors from Wellesley College. Ms. Kramer has provided testimony regarding investment policy to the U.S. Senate and is a frequent speaker on the markets, portfolio management and securities fraud and compliance. Ms. Kramer is also the author of “Ahead of the Curve” (Simon & Schuster 2007) and “The Little Book of Big Profits from Small Stocks” (Wiley 2012).