HEXO stock has been cut in half since hitting a 52-week high of $8.40 in early May; shares tanked to roughly $4 by the end of July. However, though a volatile week on the charts, shares have managed to surge 10% this week and currently trade for $4.41. In fact, on the day, shares are climbing 5.25%.
For anyone following HEXO Corp (TSX:HEXO) (NYSE:HEXO) closely, the gains have been a long time coming. In the throes of a market-wide downturn, the Quebec-based company has suffered particularly hard.
HEXO Stock: Why is Miron Leaving?
The company has found itself hit with controversy in recent weeks, and this has had a knock-on effect on investor sentiment.
The most questionable announcement came last month when the company said that co-founder Adam Miron was leaving his role as chief branding officer, but will stay on as a "key" member of the board of directors.
For anyone watching this sector closely, the only time we've seen a CEO, executive manager, or founder step away from their position is when the company in question is dealing with a crisis of some form at head office.
As such, this announcement has left investors skittish, to say the least. The news has planted seeds of doubt in investors minds; a "What is really happening behind closed doors that we are not being told?" kind of doubt.
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Not Cheap
But assuming Miron left simply because he had enough (wanted to start a new life or something like that), there is another hurdle that HEXO Corp must face.
According to InvestorPlace,
"[HEXO stock is] not cheap. At almost 34x earnings, it’s actually expensive. Remember, HEXO is a small-cap stock and small caps are usually pricier than large caps, but at 34x earnings, HEXO stock is richly valued relative to the small-cap Russell 2000 Index, which has a price-to-earnings ratio of 16.74x."
So despite shares on an overall decline in recent months, it might serve investors better to bide their time before buying HEXO stock. Having said that, this week saw a surprising turnaround and shares are on the climb again.
Active ETFs
So, perhaps the downturn is over, and HEXO Corp will continue to grow in kind. After all, this is one of the most popular cannabis stocks out there. For example, HEXO stock remains a key play on all four cannabis ETFs active at present. Moreover, three out of four of these are actively managed funds, meaning a manager is actively picking and choosing the fund's holdings.
With these ETFs only taking the pick of the litter, it is a significant sign that HEXO is physically chosen by all three ETFs. It is clearly seen to be a potential winner.
What are your thoughts on HEXO stock?
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