It was another eventful week for the stock markets. We saw a huge rally starting Tuesday when the plan for the largest economic stimulus package in history took shape. The US government agreed to a $2.2 trillion stimulus package and the Federal Reserve pledged unlimited quantitative easing.
We also saw the cannabis sector rally with the overall market. Companies such as HEXO Corp. (HEXO) and Innovative Industrial Properties Inc. (IIPR) actually doubled in value. Online cannabis retailers were recording record sales as many individuals stocked up on cannabis for the long haul as the world needs to socially distance themselves from each other.
It’s going to be very interesting to see how the cannabis sector adapts to the drastic change in market conditions. For some companies, the COVID-19 crisis will severely affect their operations and will unfortunately put some others out of business. With the next round of quarterly earnings just around the corner, it’s going to be a very exciting few months.
On Friday, ACB once again reached the $1 level. The stock was trading up about 40% this week. There has been widespread fear that if the company wouldn’t be able to maintain the minimum $1 level and that management would be forced to do a reverse split or face delisting by the NYSE. A reverse split would be seen as a negative to most investors. The company is set to report earnings for their next quarter in May and many are excited to find out what the results will be. If ACB can manage to show signs of progress regarding operating expenses, revenue growth and further management changes during these times, the stock could soar like it did this week.
Innovative Industrial Properties Inc. (IIPR) doubles in value
As the real estate sector got hammered in the selloff last week, we put out an article mentioning how we felt that the selloff in IIPR was unjustified. The stock hit lows of $40 last week only to make a tremendous come back this week to trade over $80 per share. The company offers an attractive dividend that should be sustainable in this market due to its tenants focus on the medical cannabis market. Medical cannabis is usually a much more stable source of revenue compared to recreational use and the customers tend to be more loyal. For anyone who was able to catch IIPR in the $40s or $50s this week could have picked up one of the best deals on the market this year.
CannTrust (CTST) may face further delays, yet the stock makes a fierce comeback
CTST has traded under $1 for quite some time. Many investors are concerned that the company could be delisted if they can’t get their share price up. Another issue investors are concerned about now is the fact that the COVID-19 crisis could further delay CTST’s ability to complete their remediation process in hopes of obtaining their license back from Health Canada. Despite the concerns, CTST was able to stage a pretty impressive rally over the past week more than doubling in value. The company ran from lows of $0.38 all the way up to $0.74. If we continue to see moves like this the company could be on track to break above the $1 level which would put a lot of investors at ease. The company still has over $100 million in cash on its balance sheet as of February and hopes to obtain its license back from health Canada.
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ACB shares were trading at $1.04 per share on Friday afternoon, up $0.14 (+15.56%). Year-to-date, ACB has declined -51.85%, versus a -19.49% rise in the benchmark S&P 500 index during the same period.
About the Author: Aaron Missere
Aaron is an experienced investor who is also the CEO of Departures Capital. His primary focus is on the cannabis industry. He also hosts a weekly show on YouTube about marijuana stocks. Learn more about Aaron’s background, along with links to his most recent articles. More…