CannabisNewsWire
Editorial Coverage: Following a tumultuous month, cannabis
continues to carve its own path rather than following the lead of
other stocks.
- As the stock market plummeted earlier this month, cannabis
companies stayed strong, buoyed up by legislative changes in
Canada.
- The cannabis market appears set for continuing growth as it
expands into expected sales worth billions of dollars across North
America.
- While it still faces regulatory challenges in some locations,
this market sector is preparing for corporate big players to move
in.
Companies with varied interests are moving into the cannabis
sector, such as lifestyle business Youngevity
International, Inc. (NASDAQ: YGYI) (YGYI
Profile). While the stocks of some cannabis players
such as Tilray, Inc. (NASDAQ: TLRY) appear
overvalued, this reflects problems with valuation tools more than
the stocks themselves. The sector has developed its own heavy
hitters, such as Canopy Growth Corp. (NYSE: CGC) (TSX:
WEED), whose millions of square feet of growing space are
now leading to sales into the United States as well as Canada. Some
companies are focused only on medical products, such as GW
Pharmaceuticals Plc (NASDAQ: GWPH) with its cannabis-based
prescription medicines. But it’s the recreational side of the
cannabis space that has drawn in Constellation Brands Inc.
(NYSE: STZ), a huge beverage maker that has invested $4
billion in a cannabis cultivator.
To view an infographic of this editorial, click here.
Cannabis Stocks Versus the Market
It’s been an interesting month for cannabis stocks.
Three weeks ago, cannabis looked like a particularly strong bet.
As the wider stock market fell, cannabis stayed strong. Some
cannabis stocks even saw significant rises in
value amid promising developments from those companies.
Legalization in Canada undoubtedly played a part in their success,
with the run-up to Oct. 17 seeing predictions of massive profits
for cannabis companies. But some commentators argued that it was
part of a bigger trend in which cannabis stocks are among those
that don’t follow other market indicators.
Then came the week following legalization and a notable fall in
the value of cannabis shares. The hype around these companies was
punctured by market shifts. Had they fallen in line with the rest
of the market? Was the reality of Canadian legalization catching up
with the imagined utopia? Or was this simply a downturn for a
sector trending separately from competitors?
More to the Market
To understand shifts in cannabis shares, one needs to take a
look at the state of the industry.
The cannabis industry isn’t self-contained. The spread of
legalization and the emergence of derivative products has created a
diverse sector combining exciting startups with older companies
dipping their toes in a novel market. Alongside the pure-play
cannabis brands, there are pharmaceutical businesses and even
lifestyle companies such as Youngevity
International, Inc. (NASDAQ: YGYI).
These companies are selling three distinct products.
First, there’s medical cannabis. Supplied on prescription to
deal with pain and nausea, cannabis’ medical properties remain
hotly debated but that hasn’t stopped the state-legalized use of it
from spreading across more than half of the United States.
In material terms, recreational cannabis has exactly the same
chemical makeup as some of the medicinal products. What’s primarily
different is the way that it’s marketed, sold and used. This is
cannabis used for fun and relaxation. It’s now available by law in
nine U.S. states and Canada.
Then there are the derivative products. Most, including those
sold by Youngevity, use cannabidiol (CBD). Cannabidiol is an active
ingredient that doesn’t get users high. CBD can be extracted from
cannabis, both from the marijuana plant as well as its
tetrahydrocannabinol (THC)-free variety known as industrial hemp.
Research into CBD is still in its infancy, but it is already used
in a wide range of health and wellness products.
Over the past 20 years, cannabis has grown from a black market
drug to a major public market product in North America, with
growing influence in the rest of the world. From the first
stirrings of a medical market to the current state of affairs in
which a G8 country has a recreational market and the White House is
hinting at U.S. reforms, it’s been a fast ride. As a result,
there’s still a lot of uncertainty about cannabis’ destiny.
Where Now for Cannabis Shares?
The idea that weed doesn’t correlate to other stocks seems to
have some truth. This was shown by the events of early to
mid-October, when legal reform and individual brand announcements
set it on an opposite trend from other shares. While the Dow has
headed towards its worst month since May 2010,
cannabis stocks have carved their own path. It looked like good
news for companies such as Youngevity.
For now, cannabis is offering a real challenge for traders.
Cannabis stocks look overvalued based on traditional valuation
metrics such as price-to-book ratio, price-to-earnings ratio or
price-to-sales ratio. But these metrics are based on past results,
not future valuations. Given ongoing changes, the future
performance of cannabis companies will be nothing like the past.
Whole new customer bases are opening up, bringing staggering
potential for growth.
In the next month, there will be votes on whether to allow
recreational cannabis in North Dakota and Michigan, at least one of
which is likely to pass. North of the border, Canada is planning to
legalize cannabis-infused edibles next year. That means a whole new
sector of profit opportunities.
Then there’s the impending arrival of big players in the market.
Big pharmaceutical and consumables companies haven’t paid much
attention to cannabis yet, as its value is relatively low compared
with their existing revenues. But with the market expanding, both
groups may get involved — beverage and tobacco companies pursuing a
natural spin-off from their existing businesses and big pharma in
pursuit of new medicines. Those are moves that will bring
disruption unrelated to wider markets.
As a lifestyle brand selling both coffee and cannabis
derivatives, Youngevity has already placed itself to enter this
cross-over market. And with its new HempFX™ line now
available online, it’s moving fast to profit from changes in
the cannabis market.
Riding High
Alongside medical and recreational marijuana, CBD is seeing huge
growth. Youngevity CEO Steve Wallach has spoken about the huge potential of CBD products in
direct sales channels, not just in America but around the world.
His company is riding high on this trend with the announcement of new CBD products.
Youngevity’s first offering in the CB market is the HempFX™
product line, a trio of three different hemp-derived cannabidiol
oil products that contain organically grown products in proprietary
formulas designed for a variety of everyday use.
The products include Soothe™, a blend of botanicals designed to
relieve muscles by calming aches and pains; Uplift™, which combines
CBD with St. John’s Wort to improve cognitive performance and mood;
and Relax™, which combines CBD with a variety of herbs and
melatonin to bring relaxation and a better night’s sleep.
Cannabis’ Long-Term Prospects
The signs remain good for cannabis companies. One study predicts
that sales in Canada could reach $7.1 billion in
2019, $4.3 billion of that coming from the recreational
market.
The boss of cannabis company Tilray, Inc. (NASDAQ:
TLRY) believes that the market in the United States
will soon be worth $150 billion. A leading
player in the medical cannabis market, Tilray has established
agreements with Canadian partners that will let
it profit from changes in that country, changes that could
radically improve its earnings.
Other companies are also making significant movements in the
market. Drinks giant Constellation Brands, Inc. (NYSE:
STZ) has invested $4 billion in Canopy Growth
Corp. (NYSE: CGC) (TSX: WEED), showing that it is serious
about moving into the cannabis market. Canopy Growth is one of
Canada’s largest cannabis companies, with 5.6 million square feet of growing space. Like Tilray,
it’s looking at the wider North American picture and carried out a
legal transfer of cannabis
to the United States, the first such transfer with a Drug
Enforcement Administration (DEA)-issued permit.
Canopy Growth’s strong performance has drawn the attention of
companies outside the cannabis sector, leading to the
headline-making investment from Constellation Brands earlier this
year. Many commentators have talked about this as a chance for
Constellation to produce cannabis-infused beverages, a largely
untapped market likely to take off once new rules come in Canada
next year. But it may represent a broader play, as alcohol and
tobacco companies aim to take control of cannabis and fill the gaps
as sales of their existing lines fall.
Some companies are focused only on the medical market.
GW Pharmaceuticals Plc (NASDAQ: GWPH) has created
the first Food and Drug
Administration (FDA)-approved cannabis-based prescription
medicine as part of its substantial research and design program.
Even as the recreational market and CBD steal its thunder, the
medical market remains strong.
Clearly, there are still big uncertainties for the cannabis
market. Questions about regulation and how far legalization will
spread hang over everybody’s heads. Yet companies are thriving
despite this, showing the rewards that so often come with risk and
innovation.
For more information on Youngevity, visit Youngevity
International, Inc. (NASDAQ: YGYI)
About CannabisNewsWire
CannabisNewsWire (CNW) is an information service that provides
(1) access to our news aggregation and syndication servers, (2)
CannabisNewsBreaks that summarize
corporate news and information, (3) enhanced press release
services, (4) social media distribution and optimization services,
and (5) a full array of corporate communication solutions. As a
multifaceted financial news and content distribution company with
an extensive team of contributing journalists and writers, CNW is
uniquely positioned to best serve private and public companies that
desire to reach a wide audience of investors, consumers,
journalists and the general public. CNW has an ever-growing
distribution network of more than 5,000 key syndication outlets
across the country. By cutting through the overload of information
in today’s market, CNW brings its clients unparalleled visibility,
recognition and brand awareness. CNW is where news, content and
information converge.
Receive Text Alerts
from CannabisNewsWire: Text "Cannabis" to
21000
For more information please visit https://www.CannabisNewsWire.com and
or https://CannabisNewsWire.News
Please see full terms of use and disclaimers on the
CannabisNewsWire website applicable to all content provided by CNW,
wherever published or re-published: http://CNW.fm/Disclaimer
CannabisNewsWire (CNW)
Denver, Colorado
www.CannabisNewsWire.com
303.498.7722 Office
Editor@CannabisNewsWire.net
DISCLAIMER: CannabisNewsWire (CNW) is the source of the Article
and content set forth above. References to any issuer other than
the profiled issuer are intended solely to identify industry
participants and do not constitute an endorsement of any issuer and
do not constitute a comparison to the profiled issuer. The
commentary, views and opinions expressed in this release by CNW are
solely those of CNW. Readers of this Article and content agree that
they cannot and will not seek to hold liable CNW for any investment
decisions by their readers or subscribers. CNW is a news
dissemination and financial marketing solutions provider and is NOT
registered broker-dealers/analysts/investment advisers, hold no
investment licenses and may NOT sell, offer to sell or offer to buy
any security.
The Article and content related to the profiled company
represent the personal and subjective views of the Author, and are
subject to change at any time without notice. The information
provided in the Article and the content has been obtained from
sources which the Author believes to be reliable. However, the
Author has not independently verified or otherwise investigated all
such information. None of the Author, CNW, or any of their
respective affiliates, guarantee the accuracy or completeness of
any such information. This Article and content are not, and should
not be regarded as investment advice or as a recommendation
regarding any particular security or course of action; readers are
strongly urged to speak with their own investment advisor and
review all of the profiled issuer’s filings made with the
Securities and Exchange Commission before making any investment
decisions and should understand the risks associated with an
investment in the profiled issuer’s securities, including, but not
limited to, the complete loss of your investment.
CNW HOLDS NO SHARES OF ANY COMPANY NAMED IN THIS RELEASE.
This release contains “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E the Securities Exchange Act of 1934, as amended and
such forward-looking statements are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995. “Forward-looking statements” describe future expectations,
plans, results, or strategies and are generally preceded by words
such as “may”, “future”, “plan” or “planned”, “will” or “should”,
“expected,” “anticipates”, “draft”, “eventually” or “projected”.
You are cautioned that such statements are subject to a multitude
of risks and uncertainties that could cause future circumstances,
events, or results to differ materially from those projected in the
forward-looking statements, including the risks that actual results
may differ materially from those projected in the forward-looking
statements as a result of various factors, and other risks
identified in a company’s annual report on Form 10-K or 10-KSB and
other filings made by such company with the Securities and Exchange
Commission. You should consider these factors in evaluating the
forward-looking statements included herein, and not place undue
reliance on such statements. The forward-looking statements in this
release are made as of the date hereof and CNW undertakes no
obligation to update such statements.
Source:
CannabisNewsWire
Contact:
CannabisNewsWire (CNW)
Denver, Colorado
www.CannabisNewsWire.com
303.498.7722 Office
Editor@CannabisNewsWire.net
Constellation Brands (NYSE:STZ)
Historical Stock Chart
From Apr 2024 to May 2024
Constellation Brands (NYSE:STZ)
Historical Stock Chart
From May 2023 to May 2024