4 Cannabis Stocks Swimming Against the Tide

The Canada-listed cannabis stocks we’ve identified are bucking the trend and have had positive returns year-to-date

SmallCapPower | September 30, 2019: Cannabis stocks have enjoyed some rich valuations leading up to legalization in Canada on Oct 17, 2018. But recently, they have been in a six-month bear market, with the Horizons Marijuana Life Sciences Index ETF (HMMJ) down 45% since its most recent high of $23.65 on March 19, 2019. There are a number of factors causing the downward trend, including: 1) the CannTrust scandal that has shaken investor confidence in the sector; 2) the dismissal of Bruce Linton as CEO of Canopy Growth by Constellation Brands; 3) poor roll-out of retail stores, particularly in Canada’s largest two provinces: Ontario and Quebec; 4) major Canadian cultivators’ revenues that have been underperforming consensus analyst estimates; and 5) the recent vaping epidemic with the Center for Disease Control (CDC) reporting 805 cases, and 12 deaths related to vaping. However, even with all the negative news, some cannabis companies have been bucking the trend and have enjoyed share-price appreciation. Today we have found four Canada-listed cannabis stocks that have performed well relative to the sector and have a positive return year-to-date.

*Share price data as of September 26, 2019, data obtained from S&P Capital IQ

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Ovation Science Inc. (CSE:OVAT) – $0.33

Ovation Science is a skincare research and development company that provides pharmaceutical-grade topical and transdermal cannabis products for the medical, recreational and beauty global markets. Leveraging its patented Invisicare® technology, Ovation develops industry-leading transdermal and topical cannabis products using a licensing/royalty business model along with marketing its own CBD product lines. The Company’s proprietary Invisicare® technology has a 4-10 times higher transdermal absorption rate of CBD/THC compared to other products tested. Ovation Science Inc. (CSE:OVAT) announced plans to launch Invibe MD, a line of CBD wellness skincare products addressing topical skin issues, sore muscles, and sleep issues with the tagline “Better with CBD,” as well as the planned launch of ARLO CBD Beauty, its anti-aging skincare line infused with CBD. Both lines, Invibe MD and ARLO CBD Beauty, will be manufactured using the Company’s patented Invisicare® delivery system. The products are expected to reach store shelfs during CYQ3/19. To learn more about Ovation Science please visit the company’s Investor Hub here.

  • Market Cap: $7.7M
  • 1-Month Return: +3.1%
  • YTD-Return: +10.0%
  • 30-Day Average Trading Volume: 7,700

Read: Ovation Science (CSE:OVAT) – Catalysts Exist for Significant Upside

Benchmark Botanics Inc. (CSE:BBT) – $0.43

Benchmark Botanics is a craft producer operating out of British Colombia growing premium cannabis. The Company has an 12,000 sq. ft indoor growing facility “Peachland Cannabis Complex” in Peachland, BC. The Company is also planning on building a 175,000 sq. ft greenhouse facility “The Pitt Meadows Greenhouse Operations” in Pitt Meadows, BC. Benchmark can produce cannabis extracts using its state-of-the art supercritical fluid CO2 extraction technology. This process extracts the major cannabinoids (THC and CBD), as well as the minor cannabinoids, terpenes and flavonoids. On August 28, 2019, BBT reported Q2/19 financial results and recorded its first revenues, coming in at $135K, from the sale of cannabis to another licensed producer. The average sale price was $5.50. During the quarter, Benchmark Botanics closed an $11.3M private placement on June 30, 2019 and received its Sales License from Health Canada.

  • Market Cap: $73.6M
  • 1-Month Return: +6.1%
  • YTD-Return: +77.6%
  • 30-Day Average Trading Volume: 6,900

Rubicon Organics Inc. (CSE:ROMJ) – $2.15

Rubicon Organics is a producer focused on growing certified organic, super-premium cannabis. The Company’s flagship facility is an 125,000 sq. ft hybrid greenhouse located in Delta, British Colombia. Management has demonstrated prior successful commercialization of cannabis with Whistler Medical Marijuana Company, which was purchased by Aurora Cannabis in January 2019 for $175 million. The Corporation is currently ramping up to achieve an annual production run rate of approximately 11,000 kg of organic, super-premium in 2020 and is also focused on creating super-premium brands in Canada.

  • Market Cap: $85.9M
  • 1-Month Return: +2.3%
  • YTD-Return: +13.2%
  • 30-Day Average Trading Volume: 38,360

Planet 13 Holdings Inc. (CSE:PLTH) – $2.54

Planet 13 Holdings cultivates, produces, and distributes medical and recreational cannabis in Nevada. The Company owns the world’s largest cannabis store, the Planet 13 Superstore. This store acts as a showcase for a growing portfolio of branded products, including vapes, edibles, pre-rolls, and concentrates. Planet 13’s ambition is to operate high-end dispensaries in Tier-One markets nationwide and to sell its brands in both its branded stores and wholesale. The Company’s brands include Medizin, Trendi, and Leaf & Vine. On August 29, 2019, PLTH reported Q2/19 financial results, which were highlighted by $16.5M in revenue, a net loss of $1.0M and adjusted EBITDA of $2.7M. Planet 13 is planning on opening a 15,000 sq. ft expansion to its Superstore during Q3/19, which will include a customer facing production facility, a restaurant, a coffee shop, and event space.

  • Market Cap: $346.7M
  • 1-Month Return: +4.3%
  • YTD-Return: +63.8%
  • 30-Day Average Trading Volume: 204,650

Ubika Research/SmallCapPower has received compensation from Ovation Science Inc. to provide analyst research coverage. For full disclosure please visit here >>

Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.

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