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Cannabis Investor
Profit from the Best Cannabis Stocks

Cabot Marijuana Investor Update

In the broad market, all is well, as all trend-following indicators are positive, and the number of stocks hitting new lows has been minuscule in recent days.


In the broad market, all is well, as all trend-following indicators are positive, and the number of stocks hitting new lows has been minuscule in recent days.

In the cannabis sector, however, stocks remain weak, in part because of the scary headlines about vaping and in part because the cooling-off process from the big March high continues. Of course, fundamental growth continues, too, so eventually the sector as a whole will resume its uptrend. Until then, I’m still calling this a buying opportunity, but you’ve got to be selective. You’ll find brief updates on all our stocks below, and next week you’ll receive a full issue.

cmi table

Alcanna (LQSIF) Thinly traded Alcanna has pulled back normally over the past week. If you haven’t bought yet, you can buy anywhere between here and 3.7.

Aphria (APHA) Aphria, currently the largest producer in Canada, bottomed at 5 on the first day of August but gapped up the next day and since then has been building a base between 6 and 7, preparing to resume its uptrend. If you haven’t bought yet, you can buy here.

Aurora (ACB) The portfolio has been underweight ACB because the stock has been expensive and the chart remains quite weak—with the sellers still in control. Wait.

Canopy Growth (CGC) Canopy has rallied for three weeks (on decreasing volume) and now the question is whether the bottom has been established or whether the downtrend will resume. The stock remains expensive, but the business has great potential, so keep an eye on the chart.

Charlotte’s Web (CWBHF) Colorado-based Charlotte’s Web is America’s biggest seller of CBD, and the chart looks good, riding its uptrending 200-day moving average after a normal correction. If you haven’t bought yet, you can get in now.

Cresco Labs (CRLBF) The third-largest MSO in the U.S., Cresco has probably just completed its correction, bottoming at 7 in early August and then again this Monday as the company announced the acquisition of Tryke for roughly $282 million. Tryke generated $70.4 million in revenue in fiscal 2018, mainly from its six retail locations in Nevada and Arizona, including the iconic Reef Dispensary located adjacent to the Las Vegas Strip. Cresco CEO Charlie Bachtell noted that the company is working to lead in the middle two verticals of the value chain—brands and wholesale distribution. Tryke provides brands, in addition to Cresco’s Mindy’s Edibles and Sunnyside retail concept, and the upcoming acquisition of Origin House will provide distribution. If you haven’t bought yet, wait a little longer to ensure that the bottom has passed.

Cronos Group (CRON) Fundamentally and financially, Cronos seems to have a lot going for it. But the stock continues to sink—telling us that buying back in last week was premature. Still, the long-term chart pattern is very bullish.

Curaleaf Holdings (CURLF) Curaleaf is the largest position in our portfolio, as well as the strongest stock—as more and more investors come to see it as the king-of-the hill in the U.S. As a vertically integrated company, Curaleaf has control over its entire supply chain, from the raw material used to create its products all the way to the packaging. It’s geographically strong, with the acquisition of Grassroots (operating in Illinois, Ohio and Pennsylvania) set to give the company a complementary footprint with virtually no market overlap; the company will be in 19 states next year. Curaleaf has 49 dispensaries, and will have licenses to open 131 once Grassroots is consolidated. Curaleaf has a single brand that shares the company name, rather than multiple options, but it will soon have the Select brand, one of the top brands on the west coast, touching more than 900 stores. Assuming it can close its acquisitions before the end of the year, Curaleaf is projecting revenue of $1 billion to $1.2 billion for 2020. The stock is above all its moving averages and trending up. If you haven’t bought yet, wait for a pullback.

Innovative Industrial Properties (IIPR) IIPR has rallied nicely since hitting its 200-day moving average two weeks ago, but volume is fading, so I expect a pullback soon—and that might be a good time to put some money back into the stock. In the meantime, the company keeps growing. This week the company acquired a four-property portfolio in southern California, which comprises approximately 79,000 square feet, that will be leased to a subsidiary of Medical Investor Holdings (doing business as Vertical) for cannabis cultivation, extraction, manufacturing and distribution. As of September 12, the company owned 30 properties in Arizona, California, Colorado, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New York, Nevada, Ohio and Pennsylvania, totaling approximately 2.2 million rentable square feet, which were 100%, leased with a weighted-average remaining lease term of approximately 15.9 years. The company’s average current yield on invested capital is approximately 14.5% for these 30 properties.

MedMen (MMNFF) MedMen is the portfolio’s biggest loser and hanging by the skin of its teeth, partly because 30% is my general line in the sand for stocks in this portfolio and partly because the stock is testing its low of early August—and there are some buyers there. I’ll hold a little longer.

Organigram (OGI) OrganiGram is the portfolio’s biggest Canadian position, partly because we’ve done well buying low and selling high and partly because the financial prospects for the company are good; analysts are expecting a profit of $0.06 per share in 2019 and $0.16 in 2020. If you haven’t bought yet, wait to ensure that support at 4.0 holds here.

Turning Point Brands (TPB) Down, down, down it goes, as investors flee from vaping stocks; this week the stock fell through its December low! The portfolio has taken profits and is very underweight at this point, so will stand pat, but if you’re under water, don’t let your loss get too big. Trends can and often do go to extremes.

Village Farms International (VFF) Village Farms International is the Canadian greenhouse grower of tomatoes, cucumbers and peppers that’s diversifying into marijuana (in Canada) and hemp (in the U.S.). Last week I told you the stock was ripe for a small correction, and now it’s having it. Buying between 10 and 10.5 is recommended.