Cannabis stocks have been beaten down for many months, and the sell-off in the market due to the coronavirus pandemic did nothing to help matters. However, things have changed quite dramatically for cannabis stocks this week, with many pot stocks moving higher. The rally in cannabis stocks was led by Tilray stock and is apparently due to speculation that the United States might actually legalize marijuana at the federal level due to the coronavirus pandemic. However, that is not the only reason that cannabis stocks have been on the move over the course of the week.
The coronavirus pandemic has led to lockdowns in several parts of North America, which has meant that hundreds of thousands of people are now holed up in their homes all day. That has resulted in a surge in the sales of marijuana. Cannabis Health Insider has reported that between March 16 and March 22, the sales of cannabis have soared by as much as 50%. Medical cannabis sales have soared by 41%. This is also a factor behind the stock rally. Here is a look at 4 cannabis stocks that could benefit from possible legalization and also the surge in sales.
Cannabis Stocks Rebound on Speculation: Tilray Inc (NASDAQ:TLRY)
Tilray stock was one of the worst performers in the cannabis industry over the past months, but since March 18, it has reversed the trend impressively. Since that day, Tilray stock has rallied by as much as 300% on the back of higher sales, but it should be noted that it is still down by 55% from its levels in mid-February.
In this regard, it is also important to point out that earlier this month, Tilray announced its quarterly results and reported a bigger quarterly loss due to an impairment charge. Additionally, issues related to oversupply and slow rollout of stores also took a toll on the company’s performance.
Tilray also diluted its shares and issued 7,250,000 shares at $4.76 per share in order to raise $90 million. The capital raise was needed for the company to stay afloat.
Cannabis Stocks Rebound on Speculation: Aphria Inc (TSX:APHA) (NYSE:APHA)
Aphria is one of the major cannabis producers in the industry, and recently its stock had gone down to $1.95 a share. However, since the middle of March, Aphria stock has staged a remarkable turnaround and soared by as much as 75%. It should also be noted that back on March 20, Christopher Carey of Bank of America upgraded APHA stock from Neutral to Buy.
Carey stated that Aphria’s strong cash position and its success in having boosted its market share are the main factors behind the upgrade. He went on to state that Aphria offers a defensive option at a time when the economic environment is quite volatile. He cited the company’s big push into the high margin cannabis derivative market as the reason for that. Investors may want to keep an eye on this pot stock during this rally.
Cannabis Stocks Rebound on Speculation: CV Sciences Inc (OTCQB:CVSI)
Like many other cannabis stocks, hemp-based CBD company CV Sciences Inc had also performed poorly in the past. Last week, the stock declined to as low as $0.25, but since then, it has rallied by 180% and emerged as one of the cannabis stocks to watch. In mid-March, the company announced its financial results for the year ended on December 31, 2019. For the financial year 2019, CV Sciences generated revenue of $53.7 million.
However, it should be noted that in the fourth quarter of the year, sales declined from $14.2 million in the prior-year period to $9.4 million. CV Sciences cited greater competition in its line of business and the regulatory uncertainty about CBD products for the decline. However, this week, CVSI stock has come roaring back, and investors could consider tracking it.
Cannabis Stocks Rebound on Speculation: HEXO Corp (TSX:HEXO) (NYSE:HEXO)
HEXO has been in all sorts of trouble in recent times, and its recent decision to delay the announcement of the fiscal second-quarter results did not go down well with the markets either. The bad news crushed the stock, but this week, HEXO stock has emerged as one of the bigger gainers. Since the middle of March, HEXO stock has gained as much as 200%.
The company needed to delay the quarterly results because it was working on finalizing a large impairment charge. However, the company did reveal that gross sales for the period stood at C$23.8 million, and net sales came in at C$17 million. Sequentially, net revenue grew 17%, and that performance is not be scoffed at. Investors could do well to keep an eye on this cannabis stock over the coming days.
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