The Best And Worst Cannabis Stocks Last Month (Dec. 2018)

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Cornerstone Investments


  • Best performers are Cronos (+13.6%) and Auxly (+5.8%); Worst performers are Terra Tech (-50.9%) and Planet 13 (-45.8%).
  • Cronos benefited from Altria's $1.8 billion investment; we struggle to identify Auxly's catalyst and believe it was a temporary rebound.
  • Terra Tech dropped 42% in two days after a lawsuit and Golden Leaf terminated merger; Planet 13 got punished after retail license rejections in Nevada left its Medizin store closed.

We are launching a brand new series called "Best and Worst of the Month" where we discuss the extreme price movements of the month.

Best Performing Stocks

Worst Performing Stocks

  • Terra Tech (TRTC) (50.9% loss)
  • Planet 13 (OTCQX:PLNHF) (45.8% loss)

Cronos - Altria Buys 35% for US$1.8 Billion

The reason that Cronos outperformed the market should be well-known by everyone. On December 7, Altria (MO) announced a US$1.8 billion investment into for 35% of Cronos at a price of C$16.25. Cronos shares rose sharply post the announcement but have since come down to end the month at C$14.38, 12% below the price that Altria paid. We discussed the transaction in "Altria's $1.8 Billion Bet On Cronos Is Both Risky And Expensive" and discussed why we have been consistently cautious on Cronos. We upgraded Cronos to Neutral after the transaction as it now has the second largest cash balance after Canopy Growth (CGC) to pursue global cannabis opportunities.

(Source: TSX)

Auxly - Cannabis Streaming

Auxly is another outperformer in December after posting a 5.8% gain. There was no specific catalyst for the outperformance, but rather we think the stock was merely experiencing a temporary reversal after a prolonged sell-off. Auxly has dropped 47% in 2018, and the stock remains one of our bearish ideas from 2018. We would not view the outperformance in December as too much of a reason to cheer about. In fact, we continue to believe that Auxly's business model carries higher than average execution risks, and investors need to understand these risks. Auxly has not proven its business model so far and it remains in the investing stage while Canada is already two months into legalization. We do not see a clear path for Auxly to achieve satisfactory returns for the capital it has deployed and remain our Sell

This article was written by

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We are your best guide to cannabis investing. Read our 2021 Cannabis Sector Outlook here. We also provide in-depth industry analysis and coverage of 70+ cannabis stocks to help you get started.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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