The 4/20 Pot Stock Bonanza
In years past, the unofficial cannabis holiday 4/20 brought many enthusiasts out for celebrations.
Festivals, art shows, pop-up bazaars, you name it. People would come in droves to express their support for cannabis legislation — and maybe pick up a cool hemp hoodie along the way.
But today with COVID-19 running rampant there are no celebrations — at least not physically.
You would think that this would hamper the industry by not being able to bring awareness to businesses and not being able to sell their products.
But as we’ll soon learn, cannabis companies are having their best fiscal quarters in a long time…
And it’s thanks to COVID-19.
Coronavirus Brings Profitability
Last Wednesday, a major Canadian cannabis company was forced to rescind its revenue and profit guidance for the rest of the year.
That’s a big deal — and it’s rarely a good thing, especially given the current environment.
Yet shares of this cannabis stock actually moved higher on the news, climbing about 4% during a down day for the market.
Unlike most companies in 2020, this cannabis firm had to pull its guidance because of the surge in cannabis sales that it’s experienced in the last couple of months.
And it’s not alone.
Across many parts of North America, we’ve seen cannabis sales rocket higher as folks stocked up on cannabinoid medicines, experimented with cannabis to try to relieve stress and looked to recreational pot as a way to pass the time while stuck at home.
More states are reporting the spikes in cannabis sales than we originally talked about at the onset of the pandemic…
In Illinois, recreational marijuana sales continued to be red-hot in March. On one occasion, a line of about 100 cars built up outside the drive-thru window for Rise Dispensary in Mundelein, a village of about 31,000 residents outside of Chicago.
“For one thing, I’m at home so I have a little bit more time and just, you know, dealing with the stress of every day and wondering when is this going to be over,” one customer at Rise told the local news.
“It just kind of helps me forget about troubles and things that I have no control over. It helps me sleep at night; otherwise, I’d be up all night thinking about What if my kids get it? or What if my husband brings it home from work?”
And you can add Pennsylvania to the list of states where dispensaries are seeing upticks in cannabis sales.
Philadelphia magazine reported, “Coronavirus is legitimizing Pennsylvania’s marijuana industry.”
Meanwhile, some pot companies are doing something that’s even more shocking to businesses in other industries right now: posting profits.
Several companies are reporting record quarters around the cannabis sector as well.
And the smallest ones right now have a huge chance at beating out the large established cannabis companies.
With the proper guidance, they set themselves up to be bought out by the larger firms. Or even becoming large names on their own.
As Wall Street wakes up to the fact that many cannabis stocks are both operationally sound and trading at dirt-cheap valuations right now, it should add fuel to the rebound rally we’ve been enjoying in the industry.
Stay tuned — it’s just the beginning. Plenty of notable cannabis names are set to report their results to investors in the days and weeks ahead.
I’ll keep you informed of any notable items.
To a bright future,