Selling Lamps to the Growers

Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street.

Once again, Big Cannabis is swinging wide in the absence of compelling negative news. People are simply hungry to short stocks like Aurora Cannabis Inc. (NASDAQ:ACB) and Canopy Growth Corp (NASDAQ:CGC). They say it’s too easy.

I agree. Any time Wall Street gives you a trade opportunity that looks too good to be true, you should probably treat it with special care.

Big Cannabis has had a rough couple of years and ACB and CGC are lagging the market as a whole year to date. But concocting a reason for the entire cannabis group to follow in their wake will only leave you tangled in your own logic.

Yes, the big growers have serious economic challenges that simply issuing more stock to buy out smaller competitors will not solve. We saw this play out today after Tilray Inc. (NASDAQ:TLRY) hinted at that exact same tactic and fell 3% in response.

Cannabis is more than the growers, however. The industry has come a long way. And if you’re shorting the group, you’ll lose money going against GrowGeneration Corp. (NASDAQ:GRWG), which sells the hydroponic equipment the growers need.

That’s a great business. They get paid no matter how much the growers get per ounce of raw plant product. It’s no surprise that GRWG is already profitable and raising the bottom line by a spectacular amount, year after year.

The stock is up 13% this week and 21% year to date. It’s in my Triple-Digit Trader portfolio for a reason.

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