Big developments in this area could drive correspondingly large moves among stocks in the cannabis space, but are any of these names in the “Green Zone?”
TradeSmith offers investors valuable tools for determining which stocks to watch. A good example is its Health Indicator feature. This comprehensive indicator provides an overall rating of a stock’s current health.
Using this metric, you can quickly find potential opportunities to explore. Broken down into three “zones” (green, yellow, and red), you’ll have a general idea about whether it’s best to be bullish, bearish, or neutral on a particular stock.
As you may have guessed, stocks in the “Green Zone” are performing well, with little indication that the trend is on the verge of shifting.
A stock in the “Yellow Zone” has corrected by more than 50% of its volatility quotient (or VQ), a proprietary TradeSmith metric that helps measure a stock’s risk. When a stock in your portfolio goes from green to yellow, it may be a good time to reassess whether to maintain the position.
Stocks entering the “Red Zone” have corrected by more than their calculated volatility quotient. VQ can be useful when adding stop losses to positions. View any move into the Red Zone as a warning sign to exit your position for now.
These three cannabis stocks to watch are currently in the “Green Zone.”
Molson Coors (TAP)
In the “Green Zone” for over eight months, Molson Coors (NYSE:TAP) is, as you may know, mainly a brewing company. In fact, it is the world’s third largest brewer. Besides its namesake Molson and Coors brands, other brands in TAP’s portfolio include Miller and Blue Moon.
Molson Coors’ involvement with THC-infused beverages technically makes TAP stock a cannabis play as well. However, this is arguably changing. Last month, the company announced that it was selling its 57.5% interest in infused-beverage startup Truss to its partner in the venture, Tilray (NASDAQ:TLRY).
This divestiture suggests Molson Coors is getting out of the cannabis business and not looking back, but that’s not for certain. If additional federal legalization progress is made, the company could decide to once again pursue opportunities in this fast-growing sector. TradeSmith’s volatility quotient for TAP is 21.83%, which makes it a medium-risk stock.
Green Thumb Industries (GTBIF)
Green Thumb Industries (OTCMKTS:GTBIF) shares have been in the “Green Zone” for the past seven days. GTBIF experienced a strong rally in late August and early September. This was due to developments that may bode well for the eventual federal legalization of marijuana.
However, that’s not the only bit of positive news lately for this Chicago-based purveyor of cannabis products. The company also announced earlier this month plans to repurchase up to 5% of the outstanding subordinate voting shares of GTBIF stock. An established operator with a presence in several U.S. states, Green Thumb generates over $1 billion in annual revenue.
Green Thumb is also expected to report steady earnings growth in 2024 and 2025. Poised to capitalize on federal legalization if and when it happens, consider this one of the cannabis stocks to watch. TradeSmith’s volatility quotient for GTBIF is 48.75%, which makes it a high-risk stock.
Trulieve Cannabis (TCNNF)
Like GTBIF, Trulieve Cannabis (OTCMKTS:TCNNF) has also recently entered the “Green Zone,” holding that status for over one week. Shares in this cannabis company have also been boosted by the recent positive legalization news.
Based in Quincy, Florida, Trulieve cultivates, produces, and is a retailer of medicinal and recreational cannabis products in eight U.S. states. In terms of fundamentals with TCNNF stock, while profitable on an EBITDA basis, the company has yet to reach GAAP profitability.
Still, one of the latest proposed marijuana law reforms may enable state-level cannabis companies like this one to narrow net losses, and get on track toward reporting positive net earnings. Trulieve has also recently made progress de-levering its balance sheet, buying back $47.6 million worth of debt at a discount to par value. TradeSmith’s volatility quotient for TCNNF is 46.74%, which makes it a high-risk stock.
The TradeSmith Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.