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TSE:ACB
This sector has been caught up in euphoria. Peers are now breaking below their 200-day moving averages, which is not a good sign. This sector is very, very overvalued though it has a lot of potential. Cannabis is like the internet crash of the late-1900's. Same thing. There will be an industry, but you can't pick out the winners and losers at today's valuations.
He's wary about all cannabis stocks. He buys stocks with real cash flows and earnings, and that pay dividends, instead. How much success is already reflected in the stock prices? The profit margins likely won't evolve like they do in big tobacco (35-50% operating profit margins) or in liquor. Cannabis may evolve to become agriculture growers like corn or soybeans--capital intesive and low margin. There could be more bloodletting in this sector. One day, the dust will settle and these stocks will have a sensible valuation. Until then, own a producer with a unique strategy like medicinal or one with brand building which he doesn't see yet. Too much risk still.
Canopy Growth (WEED-T) vs Aurora Cannabis (ACB-T). The battle of the titans. Both companies do good things. He favors Canopy as it has a lower risk diversified growth strategy in 12 different facilities. He also likes the deal with Constellation for further diversification. Aurora is expected to grow with the expansion of the new facility near Edmonton, but he wonders if the growth will be staged and may be slower than people expect. Canopy also has an advantage given its size of existing product inventory.