Stocks in the marijuana sector are off to a flying start this year. Our portfolio is already up more than 7% since the close of 2018—after being up 15% last year—and one of our latest buys, Cresco Labs, is up 32% since our late December purchase.
Of course, December was a terrible month overall, so the bounce is not unsurprising. But the strength in this sector has been impressive, while the broad market, despite a few big up days, is still in a bottoming pattern, and will likely need more months before a real uptrend develops.
Our strategy remains unchanged: accumulate a diversified portfolio of the stocks that will be the leaders in the sector years from now, while using shorter-term timing to buy low and sell high.
Which brings me to the one change I recommend today. As I have mentioned previously, our position in Cronos (CRON) was overweight and I’ve been looking to sell at a higher point—and I think this is it. So we’ll sell half our CRON today and hold the cash, which will bring our portfolio cash level to nearly 20%.
Brief summaries for all stocks follow.
Aphria (APHA)—APHA has been building a bottom since the late November short-sellers’ attack, and there was a bit of hopeful news last week when an unsolicited takeover offer appeared—which the board will likely fight off—but overall it’s a solid hold.
Aurora Cannabis (ACB)—Like APHA, ACB was one of the leaders of last year’s advance, so became over-owned at the top, and it’s still shedding some of those shareholders, working on building a base at 5. It’s buyable here.
Canopy Growth (CGC)—Still the top dog, CGC, like the first two stocks, is working on building a bottom. Hold.
Cresco Labs (CRLBF)—Having come public on December 3, Cresco is still being discovered, which is one reason that buyers have overwhelmed sellers lately. But it seems to have hit resistance here, so traders could take partial profits now—but I’ll just hold. If you don’t own it, wait for a pullback.
Cronos Group (CRON)—Cronos has had a good run since October, in part thanks to the investment of Altria. Long-term, it’s a solid hold, but I’m going to sell half now because we’re overweight in the stock (it’s currently 13% of the portfolio).
Curaleaf Holdings (CURLF)—Curaleaf is the other new (and young) stock in the portfolio, though it’s valued much higher than CRLBF—which may be one reason it was slower than CRLBF to get going. If you don’t own it, wait for a pullback.
CV Sciences (CVSI)—CV is still trending sideways, neither strong nor weak. Hold.
HEXO Corp. (HYYDF)—HYYDF built a nice base at 3 and blasted higher into the New Year. Hold.
iAnthus Capital (ITHUF)—ITHUF has had a good couple of weeks, but I don’t see a real uptrend yet. Hold.
Innovative Industrial Properties (IIPR)—This low-risk component of the portfolio has a lovely uptrend, capped by a reasonable pullback into December. If you don’t own it and you would benefit from the diversification, you can buy here.
KushCo Holdings (KSHB)—The main trend is still sideways and KSHB is near the top of its trading range, so it’s not a buy here. Hold.
MedMen (MMNFF)—If you bought near 2.5 as I suggested last week, congratulations, you caught a nice bounce. But the main trend is still questionable, so the best I can give it is a solid hold rating.
Organigram (OGRMF)—Like MMNFF, OGRMF has had a great week, so if you bought last week as I suggested, you’re off to a great start—and might consider taking partial profits here. It’s a solid hold.
Tilray (TLRY)—TLRY continues to build a base here, burdened by the fact that it was the hottest marijuana stock last September and the fear that insiders will sell when the lockup period expires later this month. But the long-term is bright for the company. Hold.
Turning Point Brands (TPB)—TPB has been working on a base at 27. We’re holding for diversification but may eventually lighten up as the leaders of this industry mature. Hold.