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Top Picks in the Resurgent Cannabis Stock Space (TLRY, SGMD, SNDL, GRWG, TCCNF, CRLBF, CRON, OGI)

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Aug 22, 2022 (WallStreetPR via Comtex) -- Stocks have picked up a more speculative vibe once again, ever since the deeply red sentiment low cemented into place for the broad indices in mid-June. At that time, we saw sentiment readings that were as or more bearish than at the lows of the global financial crisis in 2008, according to data from the options market, the American Association of Individual Investors (AAII), and other key market sentiment sources. (1)

In other words, people were expecting the absolute worst reality lying ahead as of two months ago. So, it's no surprise to see a key bottom form around that period. When everyone is leaning one way, there's mechanically no way for things to go but the other way. (2)

That has highlighted the appeal of long-term growth stories in the market, with more speculative, retail-oriented bets leading the way. And many of these stocks can now be considered "value" stories given the baby-out-with-the-bathwater nature of selling in growth names during the first half of the year. (3)

One of the most interesting groups that fits this description thus far during Q3 in the market is the cannabis space. (4) Stocks in the space like Tilray Brands Inc. /zigman2/quotes/209129655/composite TLRY -8.34% and Cronos Group Inc. /zigman2/quotes/206842762/composite CRON -4.29% made huge headway, rallying as much as 25% and 38% off their June or July lows before the pullback across the space of the past few sessions, demonstrating the appeal of these stocks to retail investors as soon as the market finds some footing. (5)

This is in line with long-term growth estimates for the cannabis space - with a recent report from Grand View Research citing a global legal marijuana market size valued at USD 13.2 billion in 2021, estimating its expected expansion from there at a compound annual growth rate (CAGR) of 25.5% from 2022 to 2030, making it easily one of the most robust growth markets in any segment during this period. (6)

Does that jive with stocks in the space getting hammered by 80, 85, 0r 90% over the past two years? For investors interested in taking some risk in oversold areas with strong industry growth prospects, the cannabis stock space appears to potentially be a prime candidate.

With that in mind, we take a look below at some of the most interesting names in the space.

Tilray Brands Inc. /zigman2/quotes/209129655/composite TLRY -8.34% is a global cannabis-lifestyle and consumer packaged goods company with operations in Canada, the United States, Europe, Australia, and Latin America. The firm is focused on medical cannabis research and the cultivation, processing, and distribution of cannabis products worldwide. Its products include dried cannabis and cannabis extracts.

The company's Cannabis segment consists of adult-use, medical and bulk sales of cannabis under regulated licenses and sold to retail, wholesale, pharmacy, government, and direct to patient. Its Hemp segment consists of hemp seed, hemp foods, and broad spectrum hemp extract containing CBD, which are sold in an unlicensed operation and sold to retail, wholesale and direct to consumers.

Tilray Brands Inc. /zigman2/quotes/209129655/composite TLRY -8.34% recently announced that its medical cannabis division, Tilray Medical, has received approval to commercialize its Tilray branded medical cannabis products in Poland expanding its product offering and distribution across pharmacies in Europe.

Denise Faltischek, Tilray's Chief Strategy Officer and Head of International Business, said, "I'm extremely proud of our team in Europe for once again expanding our approved authorization for Tilray Medical products across Europe. Tilray will continue to advocate for reasonable patient access to reliable and high-quality medical cannabis in Europe and countries around the world." (7)

While this is a clear factor, it has been incorporated into a trading tape characterized by a pretty dominant offer, which hasn't been the type of action TLRY shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -7% on above average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities. (8)

Tilray Brands Inc. /zigman2/quotes/209129655/composite TLRY -8.34% managed to rope in revenues totaling $153.3M in overall sales during the company's most recently reported quarterly financial data — a figure that represents a rate of top line growth of 171.1%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels exceeding current liabilities ($415.9M against $280.3M). (9)

Sugarmade Inc. /zigman2/quotes/205890489/delayed SGMD 0.00% is an interesting more speculative name in the space trading at much cheaper levels than other stocks in this report. But the company is moving forward with a number of key catalysts that make it worthy of our focus here.

Sugarmade is a growing presence in the California cannabis marketplace. It recently acquired a grow facility positioned on 640 acres in California and has reportedly planted its first crop for harvest on this farm in October. This morning, the company moved toward expanding its distribution and manufacturing capabilities, including access to licensing, ahead of this harvest, which could make the stock particularly interesting at this point.

Sugarmade Inc. /zigman2/quotes/205890489/delayed SGMD 0.00% announced this morning that its wholly owned subsidiary, SugarRush, has entered into a Management Services Agreement with Canndis, Inc., a California Cannabis Micro License holder based in Desert Hot Spring, CA, providing for an expansion in the Company's manufacturing and distribution footprint. Canndis' license covers delivery, manufacturing, distribution, and cultivation capabilities.

According to its release, through the MSA, Sugarmade will assume management responsibilities and operational control over manufacturing and distribution of cultivated cannabis produced at its partner's "Jerusalem Grade Farm", which is licensed for 43,560 square feet of outdoor canopy area currently growing at full capacity this season.

The MSA reportedly expands the company's manufacturing and distribution footprint as Sugarmade prepares to harvest its first cultivated cannabis crop from its partner's farm. The MSA will provide for the establishment of a new strategically located manufacturing and distribution hub near Palm Springs, CA, as Sugarmade brings that harvest to market.

Sugarmade Inc. /zigman2/quotes/205890489/delayed SGMD 0.00% CEO, Jimmy Chan, noted, "This deal will provide us with a new income stream as we apply our expertise and experience to mobilize Canndis' assets and market positioning. But it also has substantial strategic value because it lays a foundation for a significantly expanded manufacturing and distribution infrastructure under our control when we harvest our first crop in two months." (10)

GrowGeneration Corp. /zigman2/quotes/207254713/composite GRWG -8.51% engages in the retail of hydroponic and organic specialty gardening products. It offers lighting fixtures, nutrients, seeds and growing media systems, trays, fans, filters, humidifiers and dehumidifiers, timers, instruments, water pumps, irrigation supplies, and hand tools.

/zigman2/quotes/209129655/composite
US : U.S.: Nasdaq
$ 3.72
-0.34 -8.34%
Volume: 13.45M
Dec. 7, 2022 11:25a
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$2.48 billion
Rev. per Employee
$360,918
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/zigman2/quotes/206842762/composite
US : U.S.: Nasdaq
$ 2.90
-0.13 -4.29%
Volume: 835,547
Dec. 7, 2022 11:24a
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$1.14 billion
Rev. per Employee
$150,975
loading...
/zigman2/quotes/209129655/composite
US : U.S.: Nasdaq
$ 3.72
-0.34 -8.34%
Volume: 13.45M
Dec. 7, 2022 11:25a
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$2.48 billion
Rev. per Employee
$360,918
loading...
/zigman2/quotes/209129655/composite
US : U.S.: Nasdaq
$ 3.72
-0.34 -8.34%
Volume: 13.45M
Dec. 7, 2022 11:25a
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$2.48 billion
Rev. per Employee
$360,918
loading...
/zigman2/quotes/209129655/composite
US : U.S.: Nasdaq
$ 3.72
-0.34 -8.34%
Volume: 13.45M
Dec. 7, 2022 11:25a
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$2.48 billion
Rev. per Employee
$360,918
loading...
/zigman2/quotes/205890489/delayed
US : U.S.: OTC
$ 0.0002
0.00 0.00%
Volume: 8.21M
Dec. 7, 2022 10:57a
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$2.38 million
Rev. per Employee
$688,162
loading...
/zigman2/quotes/205890489/delayed
US : U.S.: OTC
$ 0.0002
0.00 0.00%
Volume: 8.21M
Dec. 7, 2022 10:57a
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$2.38 million
Rev. per Employee
$688,162
loading...
/zigman2/quotes/205890489/delayed
US : U.S.: OTC
$ 0.0002
0.00 0.00%
Volume: 8.21M
Dec. 7, 2022 10:57a
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$2.38 million
Rev. per Employee
$688,162
loading...
/zigman2/quotes/207254713/composite
US : U.S.: Nasdaq
$ 6.34
-0.59 -8.51%
Volume: 1.61M
Dec. 7, 2022 11:24a
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$422.24 million
Rev. per Employee
$457,480
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