The stocks in the marijuana sector have pretty much traded in sync with the broad market since the March bottom, climbing strongly to late-May or early-June peaks and consolidating those gains since, with many stocks pulling back to sensible support levels.
And the Marijuana Index reflects that.
Marijuana Index
But some stocks are looking better than others, and given that there’s been very little fundamental news from the portfolio stocks since my issue last week, this week I’m going to devote my attention to the technical action of the stocks.
Back in late April, I produced a special report on all the publicly traded vertically integrated multi-state operators (there were 17) with a special focus on the fundamental differences among them, so in one way, this is a well-deserved look from another perspective.
Now, I know that not all readers are keen on charts, but the important thing to remember is that the charts tend to reflect all the knowledge and opinions of all investors who have an interest in these stocks—and thus they’re a great way to get a quick read on the relative attractiveness of these stocks.
And to simplify matters further, this week I’ve divided these stocks into four categories: Weak, Average, Strong and Strongest. For new buying, I suggest focusing on the Strong and Strongest. And if you own stocks in the other categories, at the moment, I don’t see any that deserve to be sold, but I am downgrading three to Hold.
Lastly, at the end I’ve added a short Watch List.
CHANGES THIS WEEK
Akerna (KERN) to Hold.
Cresco Labs (CRLBF) to Hold.
Tilray (TLRY) to Hold
Note: The table reflects the state of the portfolio holdings before acting on any new recommendations.
Akerna (KERN) KERN, as I’ve said before, is thinly traded even for this group, with average volume of just 140,000 shares a day, so it tends to be more volatile. The stock fell through its 50-day moving average in late June and for the past few days it’s been trading right on its 50-day moving average. Overall, I rate it Average. And given that it’s still in a losing position for us, I’m now going to downgrade it to Hold. HOLD.
Aphria (APHA) Unlike KERN, APHA quickly bounced off its 50-day moving average on Monday, so I put it in the Strong category, though just barely. The portfolio averaged up last week. BUY.
Canopy Growth (CGC) CGC is solidly lukewarm at this point, trading right on its slowly advancing 50-day moving average. I rate it Average. HOLD.
Cresco Labs (CRLBF) CRLBF has been trading below its 50-day moving average for the past week, and thus I’ve got to rate it Weak, one of the two Weak stocks in the portfolio. There’s support right here at 4, but if that support fails, I may sell more. As it is, I’ll now downgrade it to Hold. HOLD.
Cronos Group (CRON) CRON straddles the line between Average and Weak right now, as it’s trading just below its 50-day moving average. But all volume clues over the past month appear positive, so I’m going to lean optimistic and rate it Average. HOLD.
Curaleaf Holdings (CURLF) CURLF is definitely in the Strongest category; not only hasn’t it pulled back to the 50-day moving average, it came very close to breaking out above its May high today! And that’s good because it’s our largest position. We most recently averaged up three weeks ago. BUY.
Green Thumb Industries (GTBIF) GTBIF is also in the Strongest category, as it’s been holding up extremely well near its early-June highs, building a base while the moving averages catch up. BUY.
GrowGeneration (GRWG) GrowGeneration pulled back to its 50-day moving average early this week (on news of dilution) but bounced right back on big volume yesterday so it rates a solid Strong. BUY.
Innovative Industrial Properties (IIPR) This REIT lands in the Strong category, simply because it hasn’t pulled back to its 50-day moving average. HOLD.
Tilray (TLRY) TLRY, sadly, falls into the Weak category, as the stock fell below both its 50-day moving average and support at 8 last week and has fallen lower this week. I’m downgrading it to Hold. HOLD.
Trulieve (TCNNF) TCNNF is quite healthy, as it’s never come close to its 50-day moving average, but is it Strong or Strongest? The decision is tough, but given that it’s been more than five weeks since the stock’s peak, and the upside volume has not been impressive lately, I’ll go with Strong. BUY.
Turning Point Brands (TPB) TPB is slow-growing and pays a nice dividend so it’s unlikely to ever be the Strongest. But the uptrend is intact and the stock hasn’t touched its 50-day moving average, so I’m happy to rate it Strong. BUY.
WATCH LIST
4Front Ventures (FFNTF) – It’s priced well under a dollar, so risk and volatility are higher here, but the chart is encouraging.
Planet 13 Holdings (PLNHF) – We lost PLNHF in the crash, but it’s come back nicely, and is priced over a dollar, so we may try again.
Vireo Health International (VREOF) – Another one priced under a dollar, it’s been trending steadily higher since the March bottom and is very close to hitting recovery highs.