As we approach the end of the year, and the entire investing world seems to be worrying about interest rates and tariffs, the question in my mind is whether now is a good time to buy some more marijuana stocks.
Remember, the goal is to buy low and sell high, and by many measures, stocks are now low. But are they low enough?
Well, the Marijuana Index is now off 38% from its October high, so I say yes. Plus, most of the stocks in our portfolio—which I run through below—have decent basing patterns. Note: some of these patterns become clearer if you back up a bit and take a longer perspective; instead of just looking at daily charts, look at weekly charts.
(Fundamentally, of course, all these companies still have fabulous growth prospects.)
Lastly, there’s the year-end factor that says it’s likely that stocks that have been oversold in December will be targeted by bargain-hunters as the New Year unfolds. Investors grow naturally more optimistic—and thus more aggressive—as the calendar turns, and if there’s going to be a January bounce, I want to ride it.
So, I’m now going to add two new stocks to the portfolio.
But first I’m going to sell a third of CVSI, which has become a bit overweight. This will raise our cash position to about 26%.
And then I’m going to take half the cash and split it between the two new stocks, Cresco Labs (CRLBF) and Curaleaf (CURLF).
When all is done, then, the portfolio will be roughly 13% in cash.
Aphria (APHA 5.6) The short-sellers’ attack has passed and the stock is building a base between 5 and 6. It’s heavily damaged, and I don’t think it’s one of the better buys here, but it’s certainly a strong hold.
Aurora Cannabis (ACB 5.4) ACB has a very healthy long-term pattern, with support at 5 dating back more than a year, and I think it’s a great buy in this area.
Canopy Growth (CGC 28.8) The bigger they are, the harder they fall. Canopy is the biggest and best-known player in the industry, thanks in part to the investment of Constellation Brands, and its stock is now 50% off its October high—and still trending slowly downward. It’s not a favored buy yet, but a strong hold.
Cresco Labs (CRLBF 5.0) Based in Chicago, Cresco is a U.S. multi-state retail operator, with operations in seven states and approvals pending in two more. The stock came public on December 3 (fairly terrible timing), bottomed the next day near 4, peaked a week later at 6, and is now heading back down toward bottom again, but optimistically, I don’t think that bottom will be far from here. We will buy tomorrow.
Cronos Group (CRON 11.6) Cronos has grown to be the largest position in the portfolio, in part because of Altria’s investment (and the resulting pop higher in CRON), and I’d like to reduce the position size—but will try to do so at higher prices. The stock is trying to build a base between 11 and 12 but is at risk of pulling back to support under 10. It’s not a recommended buy here.
Curaleaf Holdings (CURLF 4.9) Massachusetts-based Curaleaf is another U.S. multi-state retail operator, with 35 dispensaries, 12 cultivation sites and 10 processing sites in 12 states. The stock came public on October 29, peaked a week later above 9 and may have bottomed two weeks ago under 4. We will buy tomorrow.
CV Sciences (CVSI 4.8) CVSI is not in the marijuana business; it’s in the CBD business. And it’s got a very healthy chart, which has been building a base around 5 since September. Technically, it could break to the upside or the downside from here, so I don’t recommend buying yet. And for the portfolio, I’m going to sell a third of our shares, because at 9%, the position has become overweighted.
HEXO Corp. (HYYDF 3.6) HEXO has been trying to find a bottom for weeks and the long-term chart says it may finally be getting close. If it can stabilize around 3.5 it could become an attractive buy, but there’s no hurry.
iAnthus Capital (ITHUF 4.1) iAnthus is also working to find a bottom, but its messy long-term chart gives me less confidence that it’s near. Patience.
Innovative Industrial Properties (IIPR 50.9) This low-risk REIT was heavily overbought in late November and is digesting that gain now, though there’s still risk of falling toward 46. On the other hand, if the market’s appetite for safety grows, we could see buyers push it higher again.
KushCo Holdings (KSHB 5.5) KushCo, another component of the portfolio that’s here for diversification away from the actual cannabis plant, has been trading in a wide-and-loose range centered on 5.5 since early September, and I think it’s a fine buy here if you, too, are looking for diversification.
MedMen (MMNFF 3.0) MedMen shot itself in the foot with a botched fund-raising that resulted in the firing of the CFO, and in my last update, I wrote, “at this point, the 3.0 area looks like the most likely basing area.” Well, here we are. If you don’t own it, you can buy around here, but there’s no hurry.
Organigram (OGRMF 3.5) Organigram released a fine earnings report last week, but the market didn’t react as positively as I would have liked; volume was low. The stock may have bottomed already, but it may need to touch 3.2 again. Wait.
Tilray (TLRY 73.8) Like Canopy, Tilray has the problem of having been too popular—so has been seeing some selling pressure from investors getting out before year-end. But a deal with Novartis announced yesterday sparked a surge of buying, so odds are better that the bottom has been seen.
Turning Point Brands (TPB 27.8) TPB is another diversification play, straddling both the tobacco and cannabis worlds. The stock got out of trend to the upside midyear and we sold a third of our position in August 34. But since early November the sellers have been in control and, much as I hate to say it, it looks like 22 is the next support level.