Despite favorable state-wide election results, concerns among cannabis investors have increased and cannabis stocks continue to move lower following an overextended industry wide rally as well as highly questionable cabinet nominations by president elect Donald Trump.
Although the recent downward trend is concerning, this weakness has created an opportunity for investors to purchase high quality cannabis investments at a considerable discount.
Today, we want to take the time to highlight three recent trends and price movements that investors should be aware of.
Kush Bottles Falls Almost 20% from Last Week’s High
Kush Bottles (KSHB) has fallen more than 18% from its highs on Tuesday and the shares are now trading below the $3 price target issued by Cowen and Company in mid-September. The analyst assigned the shares a Buy rating and a $3 price target because of its unique exposure to the high growth, emerging cannabis industry.
This correction has created a great opportunity for investors as consider Kush Bottles to be one of the best cannabis investment opportunities. We are favorable on Kush Bottles due to the product it provides, its geographic diversity, its growth potential following positive state-wide election results and its continued execution.
The company offers several child resistant and non-child resistant exit bag solutions, all of which are fully customizable, allowing Kush Bottles’ customers the opportunity to creatively market and brand themselves. We find this aspect of its offering to be extremely important as companies compete to become a recognized brand amongst consumers.
Zynerba Fall More than 12% from Friday’s Highs
Zynerba Pharmaceuticals (ZYNE) fell approximately 3% yesterday and we are monitoring ZYNE closely as the shares are down almost 12% from its highs on Friday. This move lower has caused momentum to plunge and we remain favorable on ZYNE at current levels.
Investors should take note of Zynerba’s recent correction since it has followed a more than 15% rally so far this month. We consider Zynerba to be one of the top biotech cannabis investment opportunities due to:
1) its product pipeline, which will create catalysts for the shares over the next few years, 2) its attractive size (from a market cap standpoint) as it is a takeout candidate for a larger pharmaceutical company looking to enter the cannabis sector, and 3) its attractive valuation as the shares come down from recent highs.
Canadian Licensed Medical Cannabis Producers Bounce Back
Although yesterday’s trading activity within the cannabis sector was mixed, certain sub-sectors performed better than other and we are monitoring this activity closely. Canadian licensed medical cannabis producers saw strength yesterday and each member of the Big Five (Canopy Growth, OrganiGram, Aphria, Aurora, and Mettrum) ended the day in positive territory.
Yesterday, Emblem Corp (EMC.V) lived up to the hype during its initial public offering as trading activity exceeded our already high expectations. Emblem is a licensed medical cannabis producer in Canada uniquely positioned within the rapidly growing medical and recreational cannabis industry.
We are favorable on Emblem for the following reasons: 1) The company operates three distinct divisions which can create value for each other, 2) Its initial public offering saw remarkably high interest from the marketplace, 3) Its Emblem Cannabis division started selling medical cannabis in August and we expect to see continued growth on a month-over-month basis, and 4) It is led by a management team that has a proven track record of building successful multi-billion dollar companies.
Important Investor Disclosures
Disclosure. Compensated Affiliate. This report was authored by and is property of StoneBridge Partners LLC. All information and data relied upon in drafting this report is publicly available. The author believes and considers its sources to be reliable, but does not guarantee the accuracy or completeness of any information contained in this report. Any and all information, data, analyses and opinions are provided for informational purposes only and is not intended, in any manner, as investment advice. Any projections or other information generated by StoneBridge Partners LLC regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. None of the material contained in this report is intended as a solution or offer to sell or purchase a specific stock or any other investment. This report is not directed to, or intended for distribution or use by, any person or entity that is a citizen, resident or located in any municipality, state, country or other jurisdiction where the distribution, publication, availability, or use of this report is contrary to any governing law or regulation. The securities discussed in this report may not be eligible for purchase and/or sale in certain jurisdictions or by particular individuals. It is important that you check any and all governing laws and/or regulations that may be applicable in your jurisdiction. Investing in securities of issuers organized outside of the United States, including ADRs, entail certain risks. The securities of non-United States issuers may not be registered with, nor be subject to the reporting requirements of the United States Securities and Exchange Commission. Please contact a Financial Advisor for professional advice regarding any and all securities investments. This report is intended for informational purposes only. StoneBridge Partners LLC’s officers, directors, employees, affiliates, or subsidiaries may have positions in securities covered by StoneBridge Partners LLC. StoneBridge Partners LLC receives compensation from the company and/or has a position in the securities mentioned in this report
Authored By: Michael Berger