Curaleaf (CNSX:CURA) Leads Cannabis Gains in the Last 2 Days

Can Curaleaf Holdings Inc. (CNSX:CURA) stock continue to move higher after a 26% rise in October?

| More on:
Business man on stock market financial trade indicator background.

Image source: Getty Images

Several cannabis stocks were trading at their 52-week lows at the end of October 1, 2019. The last two days have shown signs of an uptick. Shares of Aurora Cannabis, Aphria, and the Horizons Marijuana Life Sciences ETF were up 6%, 3% and 3% respectively, in the last two trading days.

However, shares of Curaleaf (CNSX:CURA) have gained over 25% this month, easily outperforming its peers. Despite the impressive gains in October, however, Curaleaf stock is still trading 40% below its 52-week high of $15.75. This tells us something about the mayhem caused in cannabis stocks over the last year.

What drove Curaleaf higher?

While cannabis stocks were bound to move higher at some time after an elongated period of market correction, Curaleaf investors were buoyed yesterday after it was revealed that the company’s Executive Chairman, Boris Jordan, bought shares worth $821,000 (USD).

Investors look at insider buying as a positive for the company, which indicates that the management is confident about company performance and its stock price. Jordan has also purchased Curaleaf shares worth $18 million (CAD) earlier this year at a price of $9.72 per share.

Curaleaf launches the first medical flower product

On September 23, 2019, Curaleaf launched the Curaleaf Ground Flower Pods, which is New York’s first medical cannabis flower product. This product will be available in four Curaleaf dispensaries.

Patients will now be able to take the medicine via medical vaporizers. According to the company’s press release, “Each Curaleaf Ground Flower Pod contains 350 milligrams of active cannabinoids – a total of 700mg per 3.5g package – in a 20:1 THC:CBD ratio in Indica and -Sativa strains.”

Curaleaf also launched the Tabletop Vaporizer last month. While Curaleaf was optimistic about its latest products, the timing of its launch couldn’t have been worse. The vaping scandal in the United States erupted just a few days back and has accelerated the decline in cannabis stocks.

Around 14 deaths in the U.S. have been attributed to the use of vape products. Though cannabis vapes reportedly caused one death, the demand for these products has been impacted severely.

Curaleaf buoyant about the SAFE Banking Act

We have seen that the SAFE Banking Act was passed by the House of Representatives last month. The Secure and Fair Enforcement (SAFE) is a bill that protects banks who lend to cannabis companies.

The recreational and medical use of marijuana is still illegal at the federal level in the U.S., which makes banks cautious to lend to cannabis companies. The SAFE bill was approved by a margin of 321 to 103.

According to Curaleaf CEO Joseph Lusardi, the passage of the bill is an important step to normalize the ability of cannabis companies in terms of conducting business transactions. Lusardi claimed that the cannabis industry will grow from $50 billion in 2019 to $80 billion in 2023 and the banking act will provide safety to a variety of stakeholders.

It will also reduce the industry’s reliance on cash, drive transparency higher and provide capital access to businesses which is a key driver for growth and expansion. While the banking act was passed in the House of Representatives, it still has to be approved by the U.S. Senate.

Solid growth expected for Curaleaf

Similar to other cannabis companies, Curaleaf is estimated to experience robust revenue growth. Analysts expect company sales to rise by 230% to $254 million in 2019, 300% to $1.01 billion in 2020 and 52.3% to $1.54 billion in 2021.

Curaleaf is valued at 11.5 times its 2019 sales which is line with other cannabis stocks. The question is, can Curaleaf sustain its upward spiral?

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 Aditya Raghunath has no position in any of the stocks mentioned. 

More on Cannabis Stocks

A cannabis plant grows.
Cannabis Stocks

Canopy Growth Stock Is Rising But I’m Worried About This One Thing

Canopy Growth stock is soaring as the legalization effort makes real progress in both Germany and the United States.

Read more »

Cannabis grows at a commercial farm.
Cannabis Stocks

Why Canopy Growth Stock Could Double in 2024

Canopy Growth (TSX:WEED) stock saw its share more than double in the last two weeks. So, can it do it…

Read more »

Coworkers standing near a wall
Cannabis Stocks

Why Is Everyone Talking About Canopy Growth Stock?

Canopy Growth stock (TSX:WEED) saw shares surge in the last two weeks for a variety of reasons investors can dig…

Read more »

Pot stocks are a riskier investment
Stocks for Beginners

Why Shares of Cannabis Stocks Are Rising This Week

Cannabis stocks received a boost this week as the White House urged the drug enforcement administration to reschedule the drug.

Read more »

A person holds a small glass jar of marijuana.
Stocks for Beginners

Why Canopy Growth Stock Jumped 16% on Wednesday

Canopy Growth stock (TSX:WEED) is up 16% on Wednesday, adding to a surge of 60% growth in the last week…

Read more »

Pot stocks are a riskier investment
Cannabis Stocks

Is the Worst Over for Canopy Growth Stock?

Down 99% from all-time highs Canopy Growth stock has burnt investor wealth and remains a high-risk investment.

Read more »

Pot stocks are a riskier investment
Cannabis Stocks

Steer Clear: This Stock Spells Trouble

A newly listed cannabis stock is outperforming in 2024 but investors should stay clear to avoid trouble and losses.

Read more »

Cannabis stocks have fallen.
Cannabis Stocks

2 Best Marijuana Stocks to Buy This Month

Marijuana stocks in the U.S. such as Green Thumb and Curaleaf can help you deliver outsized gains to investors in…

Read more »