Making the Grade

American Pot Stocks Push Through the Trade Tantrum

The broader markets were in meltdown mode yesterday.

The latest strain of China syndrome had investors feeling sick to their stomachs as trade talks crumbled.

That’s unfortunately bleeding into everything else. Even sectors like cannabis that aren’t exposed to the trade war.

But while the major indexes are going to rise and fall with the most heavily weighted stocks, there are still gains being made… if you know where to look.

Blood in the Streets

Yesterday, the Dow Jones Industrial Average lost more than 3%. Small caps on the Russell 2000 did even worse, tumbling nearly 3.5%. But the tech stocks on the Nasdaq were the hardest hit, plummeting almost 4%.

The broad collapse marked the fifth straight day of declines and earned an even more dour distinction: the worst day for stocks in 2019.

A lot of that pain came from the market’s “fab five.”

The beloved FAANG stocks – Facebook (Nasdaq: FB), Apple (Nasdaq: AAPL), Amazon (Nasdaq: AMZN), Netflix (Nasdaq: NFLX) and Google parent company Alphabet (Nasdaq: GOOGL) – have struggled over the past month…

Chart - FAANG Stocks

These are the five most heavily weighted stocks in the Nasdaq and S&P 500. And where these five go, the rest of the market typically follows.

Now, investors love acronyms. And I wish I could come up with a better one for cannabis’s version of the FAANGs… But my Scrabble skills have yet to unearth something usable.

Over the past month, four of the most heavily weighted cannabis stocks have performed much like the word their initials spell…

Chart - CACA Stocks

Shares of Canopy Growth Corp. (NYSE: CGC), Aurora Cannabis (NYSE: ACB), Cronos Group (Nasdaq: CRON) and Aphria (NYSE: APHA) have been in the toilet the past few weeks.

These four have lost 12% or more in the last month. And only Aphria’s more than 35% gain on Friday put its 30-day performance in the green.

The Cannabis Outliers

There have been a lot of headline headwinds lately with CEO oustings, scandals and what’s perceived as legislative stalls.

And the cannabis sector and indexes have largely struggled because of that.

But that doesn’t mean there haven’t been outperformers.

Here are some of the pot stocks that have posted the best returns over the past month…

Chart - Top Performing Pot Stocks Past Month

First things first… the majority of these are American pot stocks.

Some of them might be headquartered in Canada. But their operations are in the U.S.

For instance, DionyMed Brands (OTC: DYMEF) has surged on a number of deals, particularly with Innovative Industrial Properties (NYSE: IIPR), as it expands into the California edibles market.

Meanwhile, Auxly Cannabis Group (OTC: CBWTF) is flying because of its $123 million investment from Imperial Brands (OTC: IMBBY).

And Charlotte’s Web Holdings (OTC: CWBHF) can’t be stopped as it signed its largest distribution deal yet, and shares have taken off, nearing 52-week highs.

But we’ve also seen strong momentum from the Sunshine State’s Veritas Farms (OTC: VFRM), as it too announced a partnership with Kroger (NYSE: KR). California gummy producer Plus Products (OTC: PLPRF), fellow Floridian Exactus (OTC: EXDI), and Canadian and U.S. extractor Neptune Wellness Solutions (Nasdaq: NEPT) have also notched solid performances over the past month.

Not to mention, Curaleaf Holdings (OTC: CURLF) is riding high as it’s now the largest multistate operator in the U.S. following its $875 millionacquisition of GR Companies.

The broader markets are feeling the pinch from the tariff tantrum once again. And that’s unfortunately going to spoil everything.

Those major indexes will rise and fall with the FAANGs. And pot stocks will do the same with their own “fab five,” even if investors don’t have an acronym to latch onto.

But outside those heavyweights, there are still gains being made… especially in American pot stocks.

Here’s to high returns,


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