Tuesday , 17 September 2019


Cannabis Central: These “Pot” Stocks Are the Least Volatile Of A High Beta Sector

The knock on stocks in the marijuana sector is their high volatility but here are some marijuana stocks with betas less than 2.

Lorimer Wilson munKNEE.com

Beta is a statistical value that measures the rate of change of a stock versus the price change of the overall market and is commonly used to determine the volatility of a stock.

  • When a stock’s beta is 1, it means the stock price moves with the market.
  • When a stock’s beta is less than 1 but above zero it is less volatile than the overall market.
  • When a stock’s beta is more than 1 it is more volatile than the overall market.

I have analyzed 135 “pot” stocks and could not find any with a market cap of $1B or more that had a beta of less than 1. In fact, I could only find 2 such stocks with a beta of less than 2, namely:

1. Cresco Labs Inc. (CSE:CL, OTCQX:CRLBF) has a Mkt. Cap of $1.4B and a Beta of 0.82

Cresco Labs Inc. is engaged in the production and sale of cannabis distributing its products to dispensaries across the U.S. including company-owned & operated dispensaries in Illinois, Pennsylvania, Ohio, California, Maryland, and Arizona. All the revenues of the company were generated in the United States.  www.crescolabs.com

 

As of August 16th, 2019 the stock was down 32% from its high on April 16th but is up 20% since July 31st.

2. Aurora Cannabis Inc. (TSX:ACB; NYSE:ACB) has a Mkt. Cap: $8.6B and a Beta of 1.5

Aurora Cannabis Inc. cultivates and sells medicinal and recreational cannabis primarily in Canada but has expanded internationally through medical cannabis exporting agreements or cultivation facilities in more than 20 countries.  www.auroramj.com

As of August 16th the stock was down 40% from its high on March 18th and is down 4% since July 31st.

I had thought that I would find more than 2 larger cap stocks with low betas so, for the record, I present below 6 other lower beta “pot” stocks, albeit with much smaller market capitalizations, as follows:

1. Neptune Wellness Solutions Inc. (TSE: NEPT) has a Market Cap of $726.1M and a Beta of 1.7

Neptune Wellness Solutions Inc. is engaged in extraction, purification, and formulation of value-added differentiated science-based products.  www.neptunecorp.com

 

As of August 16th the stock was down 27% from its high on July 22nd and is down 20% since July 31st.

2. iAnthus Capital Holdings Inc. (CSE:IAN, OTCQX:ITHUF) has a Mkt. Cap: $526.7M and a Beta of 1.2 

iAnthus Capital Holdings Inc. owns and operates licensed cannabis cultivators, processors and dispensaries throughout the United States with operations in Vermont, Colorado, New Mexico, and in Massachusetts where the majority of its revenue is generated. www.ianthuscapital.com

 

As of August 16th the stock was down 57.6% from its March 22nd high and is down 9% since July 31st.

3. Emerald Health Therapeutics, Inc. (TSXV:EMH, OTCQX:EMHTF) has a Mkt. Cap: $333.1M and a Beta of 1.8

Emerald Health Therapeutics Inc. is a vertically integrated Canadian licensed producer of cannabis, focused on developing proprietary, cannabis products for medical and adult-use customers. www.emeraldhealth.ca

 

As of August 16th the stock was down 55.6% from its March 19th high and is down 0.1% since July 31st.

4. TerrAscend Corp. (CSE:TER; OTCQX:TRSSF) has a Market Cap of $272.4M; and a Beta of 0.26

TerrAscend Corp is a Canadian company focused on creating and delivering quality cannabis products to patients suffering from chronic pain and debilitating illnesses and providing education and support programs to physicians and patients through healthcare professionals. www.terrascend.com

 

As of August 16th the stock was down 20% from its February 15th high but is up 7.7% since July 31st.

5.  The Flowr Corporation (TSXV:FLWR; OTCPK:FLWR) has a Mkt. Cap of $397M and a Beta of 1.0

The Flowr Corp. is mainly engaged in the cultivation and selling of cannabis for medical use. www.flowr.ca
As of August 16th the stock was down 62% from its March 13th high and is down 40% since July 31st.
6. Liberty Health Sciences Inc. (CSE:LHS, OTCQX:LHSIF) has a Mkt. Cap of $186M and a Beta of 0.46 
Liberty Health Sciences Inc. operates in the United States and Canada and produces pharmaceutical-grade medical cannabis. www.libertyhealthsciences.com
As of August 16th the stock was down 65% from its March 19th high and is down 24% since July 31st.
Conclusion
Imagine, out of 135 “pot” stocks reviewed only the above 8 have somewhat respectable beta scores (that’s less than 6%!) and those stocks are still rather risky compared to the price change of the overall market. I have provided links to each company’s web site so you can dig deeper into each company to determine which, if any, of the stocks are worth the risk. Indeed, given the volatility of the marijuana sector, it might well be prudent to buy the entire basket of stocks above to provide you with greater diversity on one hand and lesser risk on the other. The beta of the above 8 stocks is 1.1.
Editor’s Note:  A hyperlink to this article must be included in any re-posting to avoid copyright infringement.

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