After all of the panicking subsides, investors could see a major rebound with pot stocks. Of course, this is mostly speculation right now. But, if we look at the history of the market, steep declines are usually met with steep increases. The one issue is that no one knows when the market will begin to calm down. Currently, fears are extremely high and the larger stock market is almost in a free fall. All we can do is take things day by day and see where that leaves us. Interestingly enough though, the projections for the cannabis industry still remain high which means that we should see prices stabilize at some point.
Entering into this period of volatility, we did already see a lot of bullish sentiment for cannabis traders. But, maybe this is exactly what the market needs, and will act as a reset button for the industry. As we move into a period where stability could be on the horizon, we can use the present time to refine our trading strategies. No more will trading be done solely off of speculation. As responsible investors, we must use all of the research we have at our fingertips to make a smart decision about a given company. With this in mind, these two pot stocks could show some upside once all of the dust settles.
The Biggest Pot Stock in the Industry
Canopy Growth Corp. (CGC Stock Report) is without a doubt, the largest pot stock in the industry. Prior to the coronavirus, the company showed very solid third-quarter numbers which were posted in mid-February. In the report, the company showed that it has worked on expanding its margins right alongside expanding its revenue. Canopy Growth is working day and night to produce a profit, which pretty much no pure-play pot stock has done yet. Although this quarter wasn’t perfect for the company, it does show that investors can feel confident that Canopy Growth is on the right track.
After the earnings were released, analyst Bill Kirk stated that “we had expected only small improvements from the prior quarter, but Canopy is showing a meaningful progression.” After those numbers were released, the company was clobbered by the coronavirus, shooting down quite substantially in value. But, maybe this could be a great time to get in at a low price. Logically, it would make sense to stay away from any stock, let alone a cannabis stock right now. But, once the dust settles, Canopy Growth could be a candidate for a pot stock to watch.
The Other Big Pot Stock
Aurora Cannabis (ACB Stock Report) is another major cannabis producer that has been hit exceptionally hard by the most recent market volatility. In the past month alone, the company has shot down by as much as 60% in value to right around $0.70 as of March 16th. This number is quite low, and one that the NYSE isn’t happy with, but massive losses have been felt across the market. Despite this, Aurora Cannabis is the second-largest cannabis company working out of Canada. Investors have shown their fears surrounding the company’s financials and whether or not it will be able to turn a profit.
Currently, it looks like Aurora is burning through free cash which is not an incredibly positive sign. But, the company has been working to save as much of this free-flowing cash as it can. After a series of layoffs and a slashing of cannabis production, the company looks as though it is taking its balance sheet veery seriously. So will these changes affect how investors feel about the company? In the short term, no. But, moving forward, Aurora Cannabis could begin to show that size does matter when it comes to pot stocks.