Top 4 Overbought Canadian Cannabis Stocks

The Canadian cannabis stocks we’ve weeded out have some of the sector’s highest RSI measures

SmallCapPower | September 24, 2018: Constellation’s $5B investment in Canopy Growth, announced on August 15, sparked a sector-wide rally with some Canadian cannabis stocks, such as the ones on our list today, trending into overbought territory, as measured by the Relative Strength Index (RSI). RSI is a measure of price momentum, with values over 70 signaling the stock may be overbought, while a value below 30 signals oversold conditions. For comparison, the average 14-day simple RSI for Canopy Growth, Aurora Cannabis, and Aphria is 65.5.

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Aleafia Health Inc. (TSX:ALEF)(OTC:ALEAF) – $2.02

Aleafia Health is involved in the production and sale of cannabis products, as well as consultation services to determine the suitability of the Company’s products for treating various chronic conditions. Aleafia operates 22 referral-only medical cannabis clinics across Canada, assisting over 50,000 patients to date. In addition, the Company expects its annual cannabis production capacity to hit 38,000 kg by 2019. On Sept 21, 2018, Aleafia announced that it had been added to the Horizons Marijuana Life Sciences ETF (TSX:HMMJ), which could further increase RSI in the short run.

  • Market Cap: $278.2 Million
  • 1 Month Returns: +184.5%
  • RSI Simple – 14 Days: 93.8
  • RSI Simple – 30 Days: 88.1

Planet 13 Holdings Inc. (CSE:PLTH) – $2.44

Planet 13 Holdings operates a number of cultivation facilities and dispensaries across Nevada. Its products include flower, concentrates, vape pens, and edibles. On November 1, 2018, Planet 13 intends open its largest dispensary to date, located adjacent to the Las Vegas strip. The dispensary is projected to serve over 2,000 customers daily and will cover more than 40,000 square feet. The Company reported US$1M in EBITDA for the first half of 2018.

  • Market Cap: $151.3 Million
  • 1 Month Returns: +216.9%
  • RSI Simple – 14 Days: 93.7
  • RSI Simple – 30 Days: 90.1

FSD Pharma Inc. (CSE:HUGE) – $0.90

FSD Pharma is in the process of transforming its primary facility in Cobourg, Ontario, into the world’s largest hydroponic cannabis production site. Hydroponics is a unique method of growing in that it does not use soil, instead it involves the submersion of the plant’s roots in a nutrient-rich solution. On September 20, 2018, the Company announced that it had raised $7.5M by selling stock to Auxly Cannabis Group Inc. (TSXV:XLY) at $1/share.

  • Market Cap: $1.2 Billion
  • 1 Month Returns: +480.7%
  • RSI Simple – 14 Days: 82.7
  • RSI Simple – 30 Days: 82.4

Green Thumb Industries Inc. (CSE:GTII) – $27.02

Green Thumb Industries produces and sells various cannabis products, including flower, concentrates, edibles, and topics to the U.S. market. In addition, it operates 59 dispensaries under the name RISE across eight states. The Company brought in US$13.6M in revenue and $393,000 in net income for the quarter ended June 30, 2018. Green Thumb also carries US$113M in cash on its balance sheet.

  • Market Cap: $495.9 Million
  • 1 Month Returns: +163.6%
  • RSI Simple – 14 Days: 77.2
  • RSI Simple – 30 Days: 78.8

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

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