Commodities and Gold

The ‘Boring’ Alternative

While the S&P 500 has recovered all but 1.8% of its 2020 losses, most of the Big Cannabis group remains deeply depressed. There just isn’t a lot of love for these stocks in a pandemic-spawned recession.

Aurora Cannabis Inc. (NYSE:ACB) and Tilray Inc. (NASDAQ:TLRY) are down roughly 60% year to date (YTD), with Aurora, in particular, suffering fresh double-digit-percentage losses this week.

Even group leader Canopy Growth Corp. (NYSE:CGC) is back in the bear market zone for the year. But, it’s worth noting that Aphria Inc. (NASDAQ:APHA) was a $5 stock back in January. It’s still a $5 stock now.

In the cannabis boom, people made fun of Aphria for focusing on the “boring” medicinal market. Prescriptions for really sick people simply weren’t as exciting a business as watching the recreational map turn green.

But with millions of people still sheltering in place, it no longer seems to matter what state regulators decide about non-prescription cannabis sales. Recreational consumption has stalled.

Prescriptions are still getting filled. Aphria is making money. It might be boring, but cash flow is what investing is all about.

We’re looking for Aphria’s revenue to double in this pandemic year. That’s big. And with the company within sight of breaking even whenever management decides to adjust the budget, there’s little danger of its stock melting down like its peers.

If you’re following cannabis for the thrills, there are better ways to throw your money away than buying some of these stocks. But if you want to put money to work, Aphria has been the best game in town.

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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).