Investors are positioning themselves ahead of November, according to Daniel Pearlstein, research analyst with Dundee Capital Markets.
The Canadian Federal Government’s Task Force on Marijuana Legalization and Regulation is expected to report back to the government in November before legislation is introduced in the spring of 2017. It is anticipated that the proposed changes will include both medical and recreational marijuana.
Analysts weigh in
Pearlstein said, “… I think a lot of investors are trying to get ahead of these catalysts that may imply supply and distribution for a recreational market, because the downside is even a two to three billion dollar market where you know the players are already in the race, they’re right here today.” He adds, “Even if recreational does not happen at all.”
Jason Zandberg of PI Financial shared the same sentiment on a note issued October 5, and says, “With the Canadian federal government expecting to introduce recreationally legal cannabis legislation next spring, those companies that are active in the medical MJ sector are poised to benefit.”
Canopy Growth hits a 52-week high
True enough, a number of cannabis stocks are trending upwards this week, and for good reason.
Canopy Growth (TSX:CGC) jumped to a record high of $5.80 at 10am on October 6, after announcing that its subsidiary, Tweed Inc., is releasing Leafs By Snoop, a line of marijuana products in partnership with rapper and “cannabis connoisseur” Snoop Dogg. Mark Zekulin, president of Tweed, said in the release. “We’re welcoming a cannabis culture icon into the Canadian industry.”
Canopy also has a Buy rating from PI Financial, with a 12-month target of C$5. In its recent research note, PI Financial says that “near term catalysts could light stock up.”
Some marijuana stocks registering gains this week
Vancouver-based Aurora Cannabis (TSXV:ACB) is up 12 percent, closing its second day of trading on the TSXV at $2.00 per share. Aurora Cannabis commenced trading on the TSXV on October 5, and operates a 55,200 square foot production facility in Mountain View County, Alberta, with plans to open a 600,000 square foot facility next year.
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Ontario-based Aphria Inc. (TSXV:APH) hit a high of $4.02 and ended the day at $3.32. The stock is up 160 percent year to date. Aphria touts itself as “the first public licenced medical cannabis producer to report positive cash flow from operations and the first to report positive earnings in consecutive quarters.”
OrganiGram Holdings (TSXV:OGI) hit a high of $2.42 earlier in the day, and closed at $2.02. The stock is up 115 percent year to date. Organigram’s production facility and R&D is located in Moncton, New Brunswick, with a current production capacity of 2,700 kg/yr.
Mettrum Health (TSXV:MT) hit $4.24 earlier on October 6, and closed at $3.66. The stock is up 93 percent year to date. Mettrum has three licensed facilities in Ontario with an annual production capacity of approximately 12,000 kilograms. Economist Michael Decter has listed Mettrum as a “Top Pick”.
Investors should certainly take note that analysts predict the positive rally to continue on until the Fed’s Task Force proposes changes to the current marijuana regulations. Continue to watch this space to see future developments.
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Securities Disclosure: I, Pia Rivera, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Mettrum Health is a client of the Investing News Network. This article is not paid-for content.