3 Cannabis Stocks to Add on the Dip

Stocks like Village Farms International Inc. (TSX:VFF)(NASDAQ:VFF) have retreated from soaring valuations. This means investors can start thinking about re-entry this spring.

| More on:
edit Cannabis leaves of a plant on a dark background

Image source: Getty Images

In early February I warned investors about valuations in the cannabis sector. A report from Canadian Imperial Bank of Commerce analysts had driven up the stock price of some key players in the industry, which had coincided with a broader upward trend for the TSX Index. Several of these top stocks have retreated since early-to-mid February. Does that mean it’s worth jumping in right now?

Cronos Group (TSX:CRON)(NASDAQ:CRON)

Cronos Group is a Toronto-based cannabis company. Shares have climbed 56.7% in 2019 as of clos on April 11. The stock has surged 182% from the prior year.

The CIBC report touted Cronos Group as one of its forecasted winners in the global cannabis market scramble. It also touted Canopy Growth as a potential “titan” going forward. Cronos Group made a big splash after announcing its partnership with Altria, a U.S.-based producer and marketer of tobacco, cigarettes, and related products.

Cronos is moving quickly to expand its production, mirroring the push by its peers in the industry. Revenues jumped to $5.6 million in the third quarter of fiscal 2019 compared to $1.6 million in the prior year. The stock last had an RSI of 35 as of close on April 11, putting it close to oversold territory.

Green Organic Dutchman (TSX:TGOD)

The Green Organic Dutchman is a cannabinoid-based research and development company headquartered in Mississauga. Shares of Green Organic Dutchman have climbed 69.5% in 2019 as of close on April 11. The stock is up 7.2% from the prior year. Shares have more than halved since reaching an all-time high of $10.24 in the early fall of 2018.

The company released its year-end results for 2018 on March 19. Green Organic Dutchman finished the year with over $260 million in cash and restricted cash and announced revenues of $1.9 million in Q4 2018. It announced that it had increased its planned annual production capacity to 219,000 kilograms as it has accelerated its construction spending at key locations.

Green Organic Dutchman is trading at the low end of its 52-week range. The stock last had an RSI of 44, which puts it in neutral territory. Value investors may want to wait on the sidelines and jump on a more favourable entry point for this volatile stock.

Village Farms International (TSX:VFF)(NASDAQ:VFF)

Village Farms is a British Columbia-based company that owns and operates greenhouse and agricultural facilities. Its foray into the cannabis sector sparked a surge for the stock as its boasts impressive infrastructure that will support quick expansion. Shares have soared over 290% in 2019 as of close on April 11.

In early March I’d warned investors not to burn themselves with this hot stock. Village Farms would go on to hit an all-time high of $24.25 in mid-March, but shares have fallen in late March and early April. The stock is down 28% from its March high. Sales shrank year-over-year at Village Farms in 2018, but it has scored supply agreements with key partners, including the Ontario Cannabis Retail Corporation, which positions it for big growth going forward.

The stock had an RSI of 46 as of close on April 11. Shares were firmly in overbought territory from late January on through most of March. Village Farms has time to exhale, but its potential is still very encouraging and growth investors should think about picking out entry points this spring.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned. The Motley Fool owns shares of Village Farms International, Inc.

More on Cannabis Stocks

A cannabis plant grows.
Cannabis Stocks

TLRY Stock: Here’s What’s Coming in 2023

Tilray Inc. (TSX:TLRY) is geared up for big growth this decade and looks like one of the top cannabis stocks…

Read more »

A person holds a small glass jar of marijuana.
Cannabis Stocks

Canopy Growth Stock: Here’s What’s Coming in 2023

Canopy Growth stock has made a lot of new moves in the last few months, but where is the company…

Read more »

A cannabis plant grows.
Cannabis Stocks

Better Cannabis Buy: Canopy Growth Stock or Tilray?

Only two TSX weed stocks can deliver substantial returns in the highly anticipated growth of the global cannabis market.

Read more »

Medicinal research is conducted on cannabis.
Cannabis Stocks

Is Tilray Stock a Buy in January 2023?

Tilray stock has lost 50% of its value in the last 12 months, in line with its peers.

Read more »

Pot stocks are a riskier investment
Cannabis Stocks

Are Cannabis Stocks Still a Thing in 2023?

The whole question of whether cannabis stocks are still relevant in 2023 is an interesting one. Here's my take on…

Read more »

A cannabis plant grows.
Cannabis Stocks

Why Canopy Growth Stock Fell 72% Last Year

Canopy Growth stock is a beaten-up cannabis giant that is trading at a discount compared to historical multiples. But is…

Read more »

Cannabis grows at a commercial farm.
Cannabis Stocks

Is SNDL Stock a Buy in January 2023?

SNDL is among the worst-performing cannabis stocks in the last three years. But is SNDL stock a buy right now?

Read more »

a person watches a downward arrow crash through the floor
Cannabis Stocks

Why Tilray Stock Fell Almost 60% in 2022

Tilray is a Canadian cannabis stock that is down 93% from all-time highs. Let's see if TLRY stock is a…

Read more »