As we head into the upcoming election on November 3, investors should anticipate major shifts in market behavior.
The uncertainty surrounding this election is palpable, not just because of the intense polarization that marks our current political moment, but because of added uncertainty drawn from the fact that, in a recent Pew research poll, nearly 70% of republican voters said they would vote in person at the ballot box on election day while over 75% of democrats said they were likely to vote by mail.
As both parties work to lay down strategies to support the narrative around this transition that best aids their partisan cause, markets shiver in anticipation of widespread social disarray as both seek to delegitimize the other’s claim to the throne after January.
That could create a lot of capital motion in the weeks ahead, as big money managers scramble to diversify and capitalize on new themes. One of those new themes that could vacuum up a lot of wandering capital is in the cannabis space, as we run toward multiple new legalization votes on state ballots as well as the potential that a putative Biden administration might quickly move to decriminalize on a national level.
As such, we put together a list of some interesting stocks in the space that could represent strong opportunities for speculators over the coming period, including: GrowGeneration Corp (NASDAQ:GRWG), Curaleaf Holdings Inc (OTCMKTS:CURLF), Sugarmade Inc (OTCMKTS:SGMD), and Aphria Inc (NASDAQ:APHA).
GrowGeneration Corp (OTCMKTS:GRWG) trumpets itself as a company that, through its subsidiaries, owns and operates retail hydroponic and organic gardening stores in the United States. Currently, GrowGen has 27 stores, which include 5 locations in Colorado, 5 locations in California, 2 locations in Nevada, 1 location in Washington, 4 locations in Michigan, 1 location in Rhode Island, 4 locations in Oklahoma, 1 location in Oregon, 3 locations in Maine and 1 location in Florida.
GrowGen carries and sells thousands of products, including organic nutrients and soils, advanced lighting technology and state of the art hydroponic equipment to be used indoors and outdoors by commercial and home growers.
GrowGeneration Corp (OTCMKTS:GRWG) just announced that it believes it has uncovered fraudulent attempts to manipulate the Company’s stock. On August 21, 2020, an organization calling itself “Hindenburg Research” published false and defamatory statements about certain Officers and Directors of the Company designed to provide a false impression to investors and to manipulate the market to benefit short sellers.
According to the release, GrowGen intends to collaborate with law enforcement and regulators to ensure that any criminal activity is investigated and prosecuted. GrowGen will be taking steps to ensure that the organization ceases and desists from all illegal and otherwise wrongful activity. GrowGen will vigorously defend the value of the Company on behalf of shareholders and investors.
The stock has suffered a bit of late, with shares of GRWG taking a hit in recent action, down about -6% over the past week.
GrowGeneration Corp (OTCMKTS:GRWG) managed to rope in revenues totaling $43.5M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 123%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($14.8M against $18.8M, respectively).
Curaleaf Holdings Inc (OTCMKTS:CURLF) operates as an integrated medical and wellness cannabis operator in the United States. Curaleaf Inc.’s Florida operations were the first in the cannabis industry to receive the Safe Quality Food certification under the Global Food Safety Initiative, setting a new standard of excellence.
It cultivates, processes, markets, and/or dispenses a range of cannabis products in various operating markets, including flower, pre-rolls and flower pods, dry-herb vaporizer cartridges, concentrates for vaporizing, concentrates for dabbing, tinctures, lozenges, capsules, and edibles. The company also provides non-cannabis services to licensed cannabis operators in the areas of cultivation, extraction and production, and retail operations.
Curaleaf Holdings Inc (OTCMKTS:CURLF) most recently announced the grand opening of Curaleaf Brandon, the company’s 31st location in Florida. The new location, located at 846 E. Brandon Blvd, is the third new dispensary in the Tampa / St. Petersburg / Clearwater metropolitan area this quarter.
Curaleaf is committed to serving the growing base of 394,000 registered medical patients in Florida, which is one of the nation’s fastest-growing medical cannabis markets in the country. In August, the company opened new dispensaries in Clearwater (2081 Gulf to Bay Blvd.) and South Tampa (3030 W. Gandy Blvd.). The company’s strategic expansion in the Tampa Bay area will provide patients and caregivers expanded access to high-quality medical cannabis products, including Select, America’s #1 cannabis oil brand.
The stock has suffered a bit of late, with shares of CURLF taking a hit in recent action, down about -4% over the past week. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -19%.
Curaleaf Holdings Inc (OTCMKTS:CURLF) generated sales of $162.8M, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of 25.4% on the top line. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($167.2M against $176.4M, respectively).
Sugarmade Inc (OTCMKTS:SGMD) operates now mostly through its controlling stake in BudCars, a leading California cannabis delivery company that operates on a traditional retail model with consistent 45-50% gross margins on cannabis inventory.
Sugarmade’s BudCars model has been feasting on increasing market share during the pandemic for obvious reasons: cannabis consumers can order their favorite products and have them delivered right to the door in touchless convenience. That dynamic has presented SGMD shareholders with a dramatic boom over recent months.
Sugarmade Inc (OTCMKTS:SGMD), to further drive that boom, recently announced that it is submitting an application to the California Bureau of Cannabis Control to expand into cannabis cultivation as part of a strategic plan to partially verticalize its BudCars model, a process that management strongly believes will further increase the Company’s gross profitability over the long-term and provide a rapid potential path to branded product development. The Company has already secured a property containing a 5,000 square-foot indoor premium cannabis cultivation facility located in very close proximity to its Sacramento BudCars hub.
Jimmy Chan, CEO of Sugarmade, noted, “BudCars is a high margin, high-growth business. But it will still benefit from verticalization. Because we have access to our end-market consumer directly and we have cultivation expertise and a premium grow facility, an expansion into cultivation to connect the dots is a clearly advantageous move. In addition, because BudCars is a rapidly growing distribution channel, we will have a clear edge in the marketplace in terms of the capacity to establish our own branded cannabis product line.”
Even with that news, the action hasn’t really heated up in the stock, with shares moving net sideways over the past week.
Sugarmade Inc (OTCMKTS:SGMD) has been posting major growth updates on a regular basis over the past couple months as its BudCars model takes apparent flight. The rate of sales growth expected from the company in 2020 has walked up a steep ladder, with the latest guidance suggesting we could see it north of $30 million in annualized sales by year-end.
Aphria Inc (NASDAQ:APHA) has been setting the standard for the low-cost production of safe, clean and pure pharmaceutical-grade cannabis at scale, grown in the most natural conditions possible. Focusing on untapped opportunities and backed by the latest technologies, Aphria is committed to bringing breakthrough innovation to the global cannabis market.
The Company’s portfolio of brands is grounded in expertly-researched consumer insights designed to meet the needs of every consumer segment. “Rooted in our founders’ multi-generational expertise in commercial agriculture, Aphria drives sustainable long-term shareholder value through a diversified approach to innovation, strategic partnerships and global expansion, with a presence in more than 10 countries across 5 continents.”
Aphria Inc (NASDAQ:APHA) recently announced it has entered into a Strategic Supply Agreement with Canndoc Ltd., a subsidiary of InterCure Ltd. (TASE: INCR) (TASE: INCR.TA), one of Israel’s largest and most established medical cannabis producers.
According to the release, under the terms of the Agreement, Aphria will supply Canndoc with dried bulk flower over a two-year period, with the option to extend for two additional terms of two years each, and an option for an additional year after that if the parties agree to terms. During the first two-year term and each additional term, if applicable, the Company will provide Canndoc with 3,000 kgs. of bulk dried flower, which will be processed into finished product, co-branded under the Aphria and Canndoc brand names, and sold exclusively within the Israeli market.
While this is a clear factor, it has been incorporated into a trading tape characterized by a pretty dominant offer, which hasn’t been the type of action APHA shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -4% on above average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -3%.
Aphria Inc (NASDAQ:APHA) managed to rope in revenues totaling $152.2M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 18.4%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($497.2M against $170.4M).
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