Beyond the Bong

Earnings Season Hits for Cannabis Companies

It’s been a tough few weeks as the U.S.-China trade war flared up.

And I bet all those “Sell in May” disciples have sore shoulders from patting themselves on the back so hard.

In fact, the Dow Jones Industrial Average, S&P 500 and Nasdaq are on pace for their first loss in May since 2012.

Even worse… they’re on track for their worst May performance in 50 years.

But investors are getting a short reprieve today as Americans celebrate Memorial Day. It’s a day when we honor those who gave their lives for their country.

It’s also the unofficial start of the summer barbecue and vacation seasons.

And for investors, the shortened trading week means upcoming sessions are going to be jam-packed with activity.

As you’ll see in this week’s special High Five…

The High Five (x2!)

Below are this week’s High Five, where – each Monday – I cover the five pot stocks I believe will make major moves – up or down – in the week ahead.

But even though this is a shortened trading week because of Memorial Day, there are more than a dozen cannabis companies reporting earnings. And almost all of them are U.S.-focused multistate operators (MSOs).

So it’s going to be an action-packed few days. Here’s your double dose of The High Five…

1) Charlotte’s Web Holdings (OTC: CWBHF) kicks off the excitement, releasing first quarter earnings after the closing bell on May 28.

Shares were pummeled earlier in May after the company released preliminary first quarter results that spooked investors. Revenue is expected to be between $21 million and $22 million. That’s flat compared with the fourth quarter’s $21.5 million.

The CBD maker made it worse by announcing a secondary offering nearly 15% below where shares were trading.

Investors will be looking for some good news.

2) Trulieve Cannabis (OTC: TCNNF) is a dominant player in Florida, as I covered here and here.

In mid-April, it opened its 27th dispensary in the state. That’s a considerable stronghold for what’s expected to be a $1 billion market in 2020.

The cannabis company will release first quarter results before the opening bell on Wednesday. The bar is high after it reported record fourth quarter revenue of $35.9 million last month. And it forecast 2019 revenue of $214 million.

3) MedMen Enterprises (OTC: MMNFF) recently secured an additional $80 million from Gotham Green Partners.

The California-focused MSO will release third quarter results after the closing bell on Wednesday. MedMen released preliminary results of $36.6 million last month. This garnered cheers, but all eyes will likely be on gross margins.

4) Cresco Labs (OTC: CRLBF), Chicago’s own MSO, will also report first quarter results after markets close on Wednesday.

The company acquired Origin House in April for $823.5 million. At the time it was the largest U.S. cannabis acquisition.

5) Acreage Holdings (OTC: ACRGF) has the largest geographic American footprint, as I’ve covered here before.

The company will release first quarter results after the closing bell on Tuesday.

6) Green Growth Brands (OTC: GGBXF) is taking CBD shops to malls across America. It’s given up its hostile takeover bid for Aphria (NYSE: APHA).

The company will report third quarter earnings after the closing bell on Wednesday. So we’ll see whether the strong consumer numbers we’ve seen are boosting Green Growth’s bottom line.

7) Curaleaf Holdings (OTC: CURLF) acquired its sixth dispensary in Arizona last week. The Emerald dispensary in Gilbert brought in more than $1 million in gross revenue in March – making it one of the highest grossing in the state.

Curaleaf will report first quarter results after the markets close on Thursday.

8) Planet 13 Holdings (OTC: PLNHF) already reported record-breaking sales for 420. And it’s one of the most transparent pot stocks out there, releasing monthly customer traffic totals. This is both a blessing and a curse, as we saw a sell-off following April’s slight dip from March.

Not to mention, Planet 13 has already posted results for the first five months of 2019.

But we’ll hear first quarter results on Thursday after the closing bell.

9) Vireo Health (OTC: VREOF) started trading last month. But we’ll get our first peek of how the Minnesota-based company is doing when it reports first quarter earnings before the opening bell on Friday.

10) Emerald Health Therapeutics (OTC: EMHTF) has been a regular guest of ours here at Profit Trends. The company has one of the largest grow operations in the industry with its Pure Sunfarms joint venture with Village Farms International (Nasdaq: VFF).

We’ll hear first quarter results on Thursday from the Canadian producer after the markets close.

As always, we want to compare our “High 10” with the industry’s benchmark

Over the past month, the Horizons Marijuana Life Sciences Index ETF (OTC: HMLSF) slid roughly 2%. That may seem bad, but it’s beating the broader markets, including the Dow Jones Industrial Average.

And in this week’s double dose, The High 10 found it hard to amass gains to various degrees…

line graph - the high five

Now, there are several companies keeping pace with the Horizons Marijuana ETF: Cresco Labs, Emerald Health and Vireo.

These have all lost about the same amount as the index.

The next-best performer (which is a relative term) is Acreage Health, down less than 10%.

That’s followed by Curaleaf, Green Growth, Trulieve and MedMen.

The biggest laggards have been Charlotte’s Web and Planet 13.

Even though cannabis is outside any impact from the U.S.-China tariffs, investors everywhere are caught between the two countries pounding their chests at each other.

And because cannabis companies are smaller, they’re more prone to swoons as the broader markets get gut-punched by uncertainty.

This week though, we’ll hear directly from the American MSOs about how their businesses are doing. And that’s going to move the needle for us.

If you have a pot stock in mind that you’d like me to discuss here, leave the ticker symbol in the comments section.

Here’s to high returns,

Matthew