New York Analyst Calls ‘Bottom’ in Marijuana Stocks
New York Analyst Calls ‘Bottom’ in Marijuana Stocks

The cannabis sector sell-off is overdone. With pot stocks trading at a two-year low, and with several positive industry catalysts (especially in Canada), cannabis stocks are currently an incredible bargain.
Cannabis investors have heard this message consistently at The Seed Investor in recent weeks. Now a New York-based analyst is saying the same thing.
“We are calling the bottom on Canadian cannabis stocks and think positive catalysts far outweigh negative ones,” Zuanic said in the report.
Unequivocal. “Positive catalysts far outweigh negative ones”. Exactly.
Zuanic’s focus is primarily in Canada and he initiated coverage on Aphria Inc (US:APHA / CAN:APHA) and Organigram Holdings (US:OGI / CAN:OGI) with “overweight” ratings. Other Canadian pot giants like Aurora Cannabis (US:ACB / CAN:ACB), Canopy Growth (US:CGC / CAN:WEED) and Tilray Inc (US:TLRY) were rated “neutral”. HEXO Corp (US:HEXO / CAN:HEXO) was given an “underweight” rating due to weak revenue growth and new regulatory issues with the Quebec government.
The Seed Investor has been stressing precisely the same positive fundamentals.
Cannabis investors may also note a sudden change in tone in the reporting on the cannabis sector. After more than a year of a relentlessly negative drumbeat from the mainstream media on the cannabis industry, these same outlets are suddenly singing a different tune.
A change in media reporting will not (by itself) cause a reversal in cannabis stock valuations. However, it will cause some short traders to reconsider their aggressive shorting of cannabis stocks.
As was noted in a previous Seed Investor article, short positions in the cannabis sector remain disproportionately large – even with valuations at a two-year low. This creates the potential for a “short squeeze” to amplify the boomerang in cannabis stock valuations.
We also recently pointed out some former JPMorgan and Deutsche Bank investment bankers were raising $2 billion for a cannabis fund – precisely because they were also seeing very attractive opportunities in the legal cannabis space.
It’s been a long, brutal trough for patient cannabis investors. However, in terms of positive fundamentals and (now) friendlier reporting on the sector, there does appear to be a light at the end of the tunnel.
Published at Tue, 05 Nov 2019 18:35:41 +0000