Here are 3 marijuana stocks to watch closely during and post the corona virus period. At the beginning on the year, marijuana stocks had began to show signs of a rebound. However, the rebound has stalled since the beginning of the corona virus pandemic; the fear factor has paralyzed every sector of the stock market.
These 3 marijuana stocks had promising fundamentals before the COVID-19 pandemic struck. The stocks had registered massive improvements in their structures and investors were looking to jump in for a buy. As it is, there is much skepticism about buying anything right now as most stocks are on a serious downhill plunge. If the trend continues and pot stock prices hit an all time low it will present yet another opportunity for bulls to enter in at a historical support and ride the wave up to the next resistance.
Marijuana companies listed on the stock exchange are involved in cannabis research and development, cultivation, distribution, or the sale of medicinal or recreational cannabis. This industry as a whole has had its fair share of upheavals since its inception. From weak and changing laws and regulations to unfair competition from the black-market; it has been an uphill task. However, the uptake of pot products has been encouraging with cannabis sales hitting an all time high of 13B by the end of 2019. The industry has experienced steady growth in revenues, in spite of the challenges. Profitability has remained a pipe dream for most pot companies even as they grapple with lack of funding capital and poor support from the traditional banking system. 2020 appeared to be the year that the whole industry will experience an about-turn, until corona virus popped up caused prices to dwindle yet again.
Looking at Q3 results, marijuana stocks have underperformed compared to the broader market. From our analysis, this will go on until normalcy is restored post the COVID-19 pandemic. As a marijuana investor you should not be focused on the falling prices but rather on the company fundamentals. Should the fundamentals be strengthened during this period, it is highly likely that the prices will rebound in May or whatever time this pandemic will lapse. As it is pot stocks are grossly undervalued in relation to the long-term potential of the industry.
Here are the three pot stocks to eye during and post the corona virus period.
Canopy Growth (CGC) Stock
In mid-February 2019, Canopy growth released their Q3 results which were very promising for itbulls. The company posted positive revenue and volume growth, improved margins, while reporting narrower adjusted loss for the quarter. These are the things than an investor should be on the lookout for and they were all pointing in the right direction, at least before the corona virus pandemic struck.
Looking at the balance sheet of this company, they have significant sums of money to cushion them through this period, at least through the first half of 2020. Post COVID-19, it appears that this company will regain momentum and even shoot past previous highs. It is one interesting marijuana stock to watch during this period.
Aphria (APHA) Stock
This Canadian based company is another interesting stock to watch in 2020. This company is involved in the productions and sale of cannabis products, both medicinal and recreational. In November last year, they elected several new board members in a bid to give the company a new lease of life. Previously, Aphria Inc. has been in the red for various reasons. As of March this year, APHA stock had lost 60% of its value.
The COVID-19 outbreak has not done much to help this stock. However, we remain hopeful that post the pandemic this stock might actually realize its full potential. Early 2020 figures point towards steady revenue growth and positive gross margins from the previous quarter. Lastly, Aphria posted significant growth in adjusted EBITDA following a massive drop in the previous quarter. These are all inklings of positive growth in this stock’s fundamentals.
If APHA stock continues on this positive trend it is highly likely that the price will shoot post the corona virus pandemic.
Aurora (ACB) Stock
This Canadian based pot company is the second largest after Canopy Growth. Aurora Cannabis is involved in the production, and sale of marijuana products. They recently announced that their long-serving founder and CEO Terry Booth will be retiring to be replaced by Michael Singer for an interim period.
Aurora has been criticized for having one of the worst balance sheets and liquidity problems in the marijuana industry. Recently the management tried to rectify this by having a new C-Suite, executing massive layoffs, balance sheet restructuring, and other significant changes.
These changes are likely to drive down the operating and capital expenses, which should translate into improved cashflows and better a balanced sheet.
The headwids from the corona virus pandemic are definitely doing a number on the value of this stock. Post COVID-19, it will be interesting to watch whether this stock goes on with a massive rebound having rectified most of their internal setbacks.
Canopy Growth, Aphria, and Aurora are the 3 marijuana stocks to watch for a potential buy post the corona virus pandemic. Feel free to share with us similar stocks that you have a Keen eye on.