By Eric Vengroff, Financial Analyst, Cannabis Daily
As the TSX hit a new intra-day high amidst all the talk of trade uncertainty, rising interest rates and a weak Canadian dollar, you’d think that Canadian investors might be smoking something this morning. Indeed, they appeared to be earlier in the day as investors sent weed company shares to historic highs or previous, more optimistic levels. With the Senate’s passage of C-45, we are now in a world of ‘when’ as opposed to ‘if’, and that when appears to be in early-mid September.
As of writing, the ‘big three’ -Canopy Growth Corp., (TSX:WEED) is $42.37, Aurora Cannabis (TSX:ACB) is $9.73 and Aphria Inc. (TSX:APH) is $12.17. Them and a bunch of others are approaching their previous 52-week highs.
Meanwhile, in the sober world of investment, financial statements, and fundamental analysis, many are scratching their heads. The ‘shorts’ are gathering as cannabis stocks’ upward trajectories are expected by some to start their earthbound descent.
Having lived through the tech bubble as a CEO of a web publisher in 2000, I’m sensing déjà vu. I can remember a time when I was beckoned to Vancouver and Toronto for investor road shows. “I can get you $10 million right now for www.pissingpostsfordogs.com, but you gotta move now!” When, not if, the music stops, some players may be left without a chair.
As has been reported by numerous reporters and analysts, the time is coming when fundamentals will matter more than hype. BNN provided stark analysis this morning by comparing the ‘big three’, with collective sales totaling 1% of Molson Coors’ tally of $14.5 billion, but a combined market cap just $3 billion short of Molson Coors’ $19 billion. As legalization rolls out, these kinds of fundamentals will be brought into sharper focus, but I would submit we’re still months or years away from understanding what many companies’ medium to long-term prospects look like. Export markets, edibles, the black market and so much more cloud the forecast. Furthermore, many of these companies are sitting on massive reserves of cash, and despite their burn rates, may have the capacity to ride out short-term operational and sales choppiness as they get their acts straight. Grab some popcorn and stay for the show.
The information and opinions presented here are that of the analyst and do not represent the thoughts and opinions of this website. The analyst does not own or represent any of the companies listed in this article and receives no compensation from any party mentioned in this article. Readers are urged to do their own research and due diligence and should seek advice from an independent financial advisor before making any financial investment.