In the past month, stocks have taken a significant dip. We haven’t quite seen a correction just yet, but we’ve got stocks trending downward in a big way. For the month of September, the TSX Index fell about 3%. U.S. indexes like the NASDAQ 100 fell even more than that.
So it shouldn’t be surprising that we can now find plenty of stocks trading near 52-week lows. Stocks are still up for the year overall, but some sectors are getting severely beaten down. As a result, we’re now finding stocks in these sectors–like cannabis and precious metals–that are trading near 52-week lows. In this article I will explore three such stocks that you can find on the TSX today.
Why is Canopy Growth stock declining?
Ever since legalization hit in 2018, Canopy Growth has been consistently losing money. In some quarters it booked losses over $1 billion due to huge impairment charges. The most recent quarter technically showed a $382 million profit, but if you look closer, operating earnings and cash flows were both negative. So the company is still losing money despite the paper earnings beat.
Barrick Gold (TSX:ABX)(NYSE:GOLD) is another TSX stock near 52-week lows. Unlike Canopy, this one isn’t quite at a 52-week low. But at $18.23, it is just barely above the $17.50 low. It’s pretty easy to understand what’s going on with Barrick Gold. This company is a gold miner, and gold is down over the past year. So the stock is falling along with the commodity it mines.
Unlike Canopy, this company is not actively losing money. In fact, its revenue and earnings are both up for the trailing 12-month period. But with the price of gold declining, Barrick’s margins are facing a squeeze. So investors are rapidly losing faith in this stock.
Hexo (TSX:HEXO)(NASDAQ:HEXO) is another cannabis stock like Canopy. It is declining for much the same reasons that Canopy is. Hexo is losing money, and its growth has slowed down considerably. In the most recent quarter, Hexo produced the following results:
- Sales were up only 2% from a year ago.
- Sales were down 10.2% sequentially.
- A $20 million net loss.
Clearly, these aren’t the types of results that inspire enthusiasm, to put it mildly. But frankly, most cannabis stocks are in the same boat. As a sector, they are all chronically losing money with no end in sight. Many people thought that federal legalization in the U.S. would improve their fortunes, but it doesn’t look like that’s happening any time soon. So we have got a bunch of cannabis stocks like Hexo justifiably trading near 52-week lows. Personally, I wouldn’t buy the dip.