If You’re Thinking Of Pot Stocks, Consider Timelines

If You’re Thinking Of Pot Stocks, Consider Timelines

Brenda O'Farrell  | Feb 11, 2019 10:02

Timing. It is perhaps the key variable that affects the outcome of most things. And that includes everything from the small stuff, like rush-hour traffic – five minutes one way or the other, can make the difference between clear sailing and getting stuck – or the big issues, like buying a house – jumping into the market early, can mean gaining equity at a much faster pace and living mortgage-free sooner.

Timing your investments is also crucial. When do you jump in?

But when you think of timing, you should also consider timelines, especially when it comes to emerging sectors like the Canadian marijuana industry.

The country’s pot stocks have attracted a lot of headlines since the substance was legalized last year. Huge daily gains and losses have generated a lot of attention. Investors have made a lot of money. But there is still a lot of volatility. Daily gains and losses are often reported in the double digits.

To get a clearer picture, you have to take a step back and look at the activity over a longer timeline.

Let’s take a look at four of the top marijuana stocks traded on the S&P/TSX Composite – Cronos Group Inc (TO:CRON), Canopy Growth Corp (TO:WEED), Aphria Inc (TO:APHA) and Aurora Cannabis Inc (TO:ACB).

In the last month, their stock prices have gained between 38.91 percent, as in the case of Canopy, and 64.23 percent, which is how phenomenally well Cronos performed. Aphria and Aurora each saw their stock jump just under 43 percent. Results like that can only be described as stellar.

And although still early in the year, even if you look at the gains on a year-to-date basis, their performances have been remarkable: The gains range from a low of 50.74 percent for Aurora to a high of 95.41 percent for Cronos.

But what would have been the case if you had jumped a year ago?

When you stretch the timeline back a full 12 months, the story is a little different.

The big winner was Cronos, which gained a whopping 205 percent, followed by Canopy, which grew by 119 percent. But for those who would have invested in Aphria or Aurora, they would have suffered losses. Aphria is down 20.68 compared to a year ago, while Aurora dropped 9.8 percent in the same time period.

So don’t get too caught up in the headlines. Keep timing in mind. And even more importantly, think of timelines. The longer they are, the clearer the picture they provide.

Stock 1 m Year to date 1 year

Cronos +64.23 +95.41 +205.43

Canopy +38.91 +68.85 +119.44

Aphria +42.99 +62.48 -20.68

Aurora +42.54 +50.74 - 9.8

Brenda O'Farrell

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Kevin Yue
Kevin Yue

Good luck timing the market. Especially with these volatile stocks  ... (Read More)

Feb 11, 2019 18:19 GMT· Reply
Kevin Yue
Kevin Yue

Good luck timing the market. Especially with these volatile stocks  ... (Read More)

Feb 11, 2019 18:19 GMT· Reply
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