up in smoke

Pot Sector; What About Bob… and his Friend?

Due to my unenthusiastic view of the sector from valuation, competition and regulation standpoints, the Pot segment in NFTRH is really just a chart showing the ETF (MJ), several growers and Charlotte’s Web (CWEB.TO/CWBHF), which we have identified as the the CBD best of breed (BoB). Well, “we” didn’t identify it as that. Fred Lacy, a long-time fundamental voice in my ear ID’d it as that. We had to weed through [<<<no pun intended; seriously, I just noticed it on a re-read] some hits and misses in also-rans CVSI and ELLXF, but it appears that refining down to our friend Bob here was the right thing to do.

The thing that sent it on its way was the Kroger news. But there is a quarterly coming up and it’s overbought, so who knows about the short-term? But it does look like a longer-term winner in the space.

The dots show my history. Blue: I make 1st buy on pullback. Green: I make 2nd buy. Red: I don’t add because I hold enough, but refuse to sell as it white knuckle whipsaws the moving averages. Then… patience won out. CWEB goes one way while the sector fades to the other.

charlottes web

Aphria, which is my second favored pot stock due to a more reasonable valuation (as a result of scandals surrounding previous management) took a 40% launch today on earnings. I am position-less, but that was notable and I wonder if it’s a signpost to the future. I still think there are significant headwinds for the growers, but things could be changing.

The Barrons piece linked below has the Aphria news and some interesting notes about how companies are changing, management-wise and strategy-wise. It appears the entrepreneurs who started some of these companies were partying a little too hearty when they should have been preparing for major business battles. Business competition is not mellow, it is cut throat and you need to be on the ball.

I think we’ll retool the NFTRH Pot segment when I get a chance to do more reading. Meanwhile, CWEB is a hold and APHA is a potential guiding light.

Aphria Stock Is Soaring Because the Marijuana Producer’s Earnings Weren’t Like Canopy’s

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