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 | | | Midyear Review: Best and Worst Pot Performers of 2019 (So Far) | | Matthew Carr | Chief Trends Strategist | The Oxford Club | | | | | It's been a topsy-turvy year for pot stock investors.
So far in 2019, the North American Marijuana Index has moved in a parabola.
And today, we find ourselves at the wrong end, as the index has reversed course from the peaks we saw back in March... After the past two months of selling pressure, pot stocks have gone from green to red for the year.
Mind you, not by much - a mere loss of 2.16%.
But that's a devastating shift in fortunes from the 40% gain the index had at the end of March.
Cannabis has gone from being out in front to severely lagging the double-digit gains and record highs we're seeing on the Dow Jones Industrial Average, Nasdaq and S&P 500.
Though the realities of the cannabis sector's performance are more nuanced.
For example, the U.S. Marijuana Index is still up for 2019. Meanwhile, the Canadian Marijuana Index - following the negative news from Canopy Growth Corp. (NYSE: CGC) and CannTrust Holdings (NYSE: CTST) in recent weeks - is down nearly 12% for the year.
But even that isn't as black and white as it may seem, which I'll get into below.
For today's Making the Grade, my team and I dug a little deeper into the bifurcated returns of pot stocks in 2019. And we pulled together the best and worst performers so far this year. | | | Best Performers
Let's start with the good news...
There are 15 cannabis companies that have gained more than 100% year to date... For just a little more than six months, those are gains worthy of a thumbs-up.
The top performer is Exactus (OTC: EXDI), the hemp-derived CBD products company out of Delray Beach, Florida. Its more than 700% gain in 2019 has taken it from a penny stock to a microcap.
Our second-best performer has returned from the dead.
Late in 2018, infused-beverage maker India Globalization Capital (NYSE: IGC) was on the chopping block. The New York Stock Exchange delisted its shares - a death sentence for any stock.
But in February, the company won an appeal against this move, and shares were relisted on February 26.
This sent India Globalization shares skyrocketing. And even though they've come down from their March peak, they're still up more than 400%.
As are shares of Veritas Farms (OTC: VFRM), the Florida-based industrial hemp oil and hemp-derived CBD products maker.
These companies are followed by cannabis-focused biotech Zynerba Pharmaceuticals (Nasdaq: ZYNE) - sporting a gain of 357% - and hemp producer Two Rivers Water & Farming (OTC: TURV) - up more than 300%.
Let's pause here and take note of something: All of these are U.S. companies. And many of them focus on hemp-derived CBD.
In fact, of the 15 cannabis companies that have gained more than 100% this year, 10 of them are American or U.S.-focused. For example, even though Body and Mind Inc. (OTC: BMMJ) and Flower One Holdings (OTC: FLOOF) have headquarters in Canada, their operations are in Nevada.
But before you make a binary decision, like "U.S. good; Canada bad," know that some Canadian companies are holding their own.
The best Canadian performers are SugarBud Craft Growers (OTC: RLLRF) and Heritage Cannabis Holdings (OTC: HERTF), which have gained more than 200% in 2019.
Investors should also recognize that beyond hemp-derived CBD, extractors like Valens GroWorks (OTC: VGWCF) and cannabis real estate operators like Innovative Industrial Properties (NYSE: IIPR) have been top gainers this year.
Worst Performers
Now let's turn our attention to the less-than-stellar performers.
There are 14 pot stocks that have lost roughly half of their value or more this year... At the top is Tilt Holdings (OTC: SVVTF), tumbling almost 80%.
The cannabis services and branding company wrote down a big portion of its business back in May. Shares then struggled following the CannTrust implosion.
That's followed by industrial hemp products company Hemp Naturals (OTC: HPMM). Even though shares popped more than 40% on Friday, shares are still down sharply in 2019. This is a really early-stage company, selling products in just 25 stores at the moment.
Next, we have Canadian producer Westleaf (OTC: WSLFF). This is a very unique operator in Canada that's just getting the wheels turning, which is why it's lagging. (Make sure to check out this week's CannaBiz Now! for my interview with Westleaf.)
Then we have DionyMed Brands (OTC: DYMEF) and Cannabis One (OTC: CAAOF), both of which have struggled mightily this year.
And they haven't done so quietly. In fact, Cannabis One CEO Jeffery Mascio has aired his grievances about short sellers and the differences in Canadian trading regulations that have hammered Cannabis One as well as a number of other pot stocks this year.
But this is where I want to point out something interesting...
Four of those five worst performers are U.S. companies.
Not to mention, of the 14 biggest cannabis decliners year to date, 10 are either American or U.S.-focused.
And many are something other than cultivators and dispensary operators. They're biotechs and pharmaceuticals, vaporizer companies like mCig Inc. (OTC: MCIG), and CBD pet wellness companies like Better Choice Company (OTC: BTTR).
What does this mean?
On the marijuana indexes, the U.S. and Canadian industries have clocked in two very different performances this year. But American pot stocks are both the highest fliers as well as the lowliest dogs of 2019.
That's because the U.S. cannabis market is really starting to come to life. I believe this market will be an $80 billion opportunity by 2030.
Fortunately, right now American pot stocks are still cheaper than their Canadian counterparts.
But they're also extremely volatile - notching both the biggest winners and losers of 2019 so far.
Here's to high returns,
Matthew | | | | |  | | | | | |  |  | | | | Matthew Carr | July 15, 2019 An investigation into CannTrust Holdings uncovered unauthorized growing activity... and started the company's tragic fall from grace. Read More | | | | |  | | | | Matthew Carr | July 13, 2019 The "Christmas in July" craze has become so huge that every retailer is now rushing to cash in on the summer fun. Read More | | | | |  | | | | Matthew Carr | July 11, 2019 OTC Markets Group Director Jason Paltrowitz busts some of the biggest myths about OTC listings. Read More | | | | | | | | | | |
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