HEXO Stock Outperformed Last Month: A Bullish Signal?

HEXO stock

HEXO stock has been outperforming over the past few weeks despite broader weakness in the cannabis sector. Let’s find out what’s gone in favor of HEXO Corp (TSX:HEXO) (NYSE:HEXO) lately.

Key Developments

The legalization of the marijuana in Canada last year led to a massive rally in pot stocks that operated in the country. However, while that rally took many stocks to new highs, it fizzled out a few months back, and like many other stocks, HEXO Corp suffered as well. In August, HEXO stock declined by another 4%, and it is interesting to figure out what actually went on with the stock last month. In this regard, it is important to note that the fall in the stock price was not as bad as in the case of its rivals. Cronos Group (TSX:CRON) (NASDAQ:CRON), for example, fell 19% in August.

Many analysts believe that the drop in the HEXO stock price could have been due to the problems suffered by other companies in the sector like CannTrust Holdings (TSX:TRST) (NYSE:CTST) and Canopy Growth (TSX:WEED) (NYSE:CGC).

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Canopy posted disappointing numbers in its latest quarter and in addition to that, Constellation Brands (NYSE:STZ), one of its biggest investors, posted a $54 million loss. Constellation blamed its investment in Canopy for the loss. That could have had a knock-on effect on HEXO stock.

Despite the recent trouble, HEXO Corp is a company that is primed for impressive growth. According to its own projections, sales should rise by 1,100% and hit $59.67 million in 2019, while in 2020, total sales are projected to rise by 452.3% to hit $329.5 million. Analysts also believe that by that time, the company will swing to profitability.

The company wants to emerge among the top three cannabis companies in the world, and to that end, it has entered into a range of partnerships. It has also signed an extraction agreement with Valens GroWorks (TSXV:VGW) (OTCQX:VGWCF) and is diversifying its earnings in a big way. The company is moving in the right direction and in the long run, HEXO stock may rise as the cloud lifts from the industry.

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