CannTrust, Cannimed, and Cronos Continue To Command Investors Attention

Around this time last year, marijuana stocks were starting to break out ahead of the November elections. Canadian marijuana stocks were one of the biggest beneficiaries of this rally and we continue to keep a close eye on this sector.

Earlier this year, Horizons Marijuana Life Sciences Index ETF (HMMJ.TO) (HMLSF) commenced trading on the TSX Exchange and we have used the index to measure the strength of the marijuana stock market.

After HMMJ rallied more than 13% off its July lows, the index pulled back and gave up most of these gains. We continue to monitor this index and will use it as a barometer for the marijuana stock market.

While we are concerned on the recent weakness, we believe it is transitory and expect to see the market rally well off these lows.

CannTrust: A New Opportunity for Marijuana Investors

CannTrust commenced trading on the Canadian Stock Exchange and the licensed medical marijuana producer ended the day at $2.50. The company is trading under the symbol, TRST and offers investors a differentiated opportunity. We are favorable on CannTrust as a long-term opportunity due to the following reasons:

1. The company has more than 25,000 registered patients
2. CannTrust is led by a management team focused on creating value for its shareholders
3. The company has 40 years of pharmacy and healthcare experience
4. The valuation is attractive when compared to its peers

Cronos Group: A Top Performer

Although Canadian licensed medical marijuana producers have been under pressure since last week, Cronos Group (MJN.V) has not. The company has been a top performer and the shares have rallied approx. 14% off its lows from last week.

Cronos Group was under pressure in May and the shares traded range-bound for a while. This drop came after Canadian licensed medical marijuana producer Aurora Cannabis (ACB.TO) (ACBFF) acquired German medical cannabis distributor Pedanios. Cronos had a partnership with the German medical cannabis distributor and the market responded negatively to this.

We are favorable on Cronos’ long-term outlook and will monitor how this rally continues. The company has a number of potential catalysts for growth an expect to see a corporate update released in the near future.

CanniMed Therapeutics: Breaking Down

After CanniMed reported second quarter financial results, the market responded favorably and the shares steadily moved higher over the following month. Since then, CanniMed has been under pressure and has fallen more than 11% from its highs in late July.

While we were favorable on CanniMed’s financial results, we are not surprised by the recent pullback. Shares of CanniMed look attractive on this pullback and we are monitoring the shares for a bottom.

We view CanniMed as long-term opportunity and are favorable on the shares for the following reasons:

1. The company has an international presence and exported its cannabis oil to Australia and the Cayman Islands
2. The company continues to benefit from a trend toward smokeless products
3. Management continues to expand its product line and CanniMed will launch its cannabis gelcap product soon
4. The company has a proven track record of success and was the first to be awarded an LP license under the MMPR (now ACMPR)
5. CanniMed has recorded strong growth and we expect this trend to continue

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Michael Berger is Managing Partner of StoneBridge Partners, LLC and Founder of Mushroomstocks.com. Prior to entering the cannabis industry, Michael was an Equity Research Analyst at Raymond James Financial covering the Energy Sector. Michael has been featured in publications such as The Street, Bloomberg, US Money News, and hosts various cannabis events across North America.

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