Here at RichTV, we’ve been talking a lot about the summer slump. Stocks tend to take a bit of a hit right around May and can occasionally stay that way until Halloween. As Rich noted last week, when the weather gets hot, even pot stocks can’t resist taking a dip in the shallow price pool.
This week, however, things are beginning to bounce back. A number of cannabis corporations posted big numbers today, indicating that the summer slump might have ended early. Rich talks us through some of the big re-bounders in particular.
Bottom-Hunting Season Might Be Over
Last Wednesday Rich explained that low summer prices are a “bottom-hunter’s” dream. Bottom hunting is all about waiting until a typically lucrative corporation experiences a significant dip in its share price. When the stock is at its lowest, the bottom hunter swoops in, buys as much of the company as they can, and then waits for the price to rebound.
It’s this kind of behavior that may have led the Canadian Marijuana Index to jump back up as the market opened this morning. Finishing Friday at $72.44, the index quickly rose to $73.77 before stabilizing around the mid $73 mark throughout the day.
Which Companies are Up?
Big companies like Canopy Growth Corporation (TSX:WEED) (NYSE:CGC) and Aurora Cannabis Inc. (TSX:ACB) (NYSE:ACB) were among the cannabis leaders posting growth. Canopy’s growth comes as some much needed good news for the cannabis giant, as its price has wavered somewhat precariously following the highly-publicized departure of co-founder Bruce Linton.
“There was a lot of green today. Pretty much everything was green,” says Rich. “If you’ve got a cannabis stock that’s not green today, it’s probably not that good of a company because all the big boys were green.”
Rich predicted this would happen after pot stocks hit a 52-week low at the end of last week. He correctly identified that prices tend to go up after a week of losses, especially after a big day in the red, as Friday was.
Even CannTrust Holdings (TSX:TRST) (NYSE:CTST) rebounded somewhat from its terrible, horrible, no good, very bad week. Health Canada found that the Ontario-based company was in violation of its regulations and slapped a hold on more than 5,000 kgs of cannabis. The company then elected to hold on to another 7,500 kgs, and its stock price suffered for it. However, after falling significantly, today CannTrust stock returned to nearly $4.00 on the TSX after a low of $3.25 on Friday.
“CannTrust, after getting obliterated, had a monster day today,” Rich explains. “I don’t want to see those guys go all the way to nothing. A lot of investors are down on that one, so it’s nice to see that they’re back up.”
Where Pot Stocks Go from Here
Only time will tell if today marks the beginning of a resurrection for the cannabis sector or if the upward trajectory is just an anomaly amidst the summer slump. Either way, Rich advises investors to watch closely in the coming days to pick up on emerging trends.
“I’m not going to rush to buy anything in the green,” he says. “But if we go in the red tomorrow, I’ll be buying.”
Featured image: Deposit Photos © jukai5