TM editors' note: This article discusses a penny stock and/or microcap. Such stocks are easily manipulated; do your own careful due diligence.

The Canadian cannabis sector has been trading lower on average recently and we are monitoring the recent decline. Although the sector has been under pressure, companies continue to execute and advance their story.

The summer slow season is ending, and we are monitoring how the sector trades during the month of August. Today, we have provided an update on 3 cannabis companies and believe that these are stocks that should be monitored.

Aphria Trades Lower on Earnings

Aphria Inc. (APH.TO) (APHQF) released fourth quarter financial results and the shares traded lower on this report. During the quarter, Aphria reported an approx. $5 million net loss on $12 million in revenue. When compared to the prior quarter, revenue grew by 17% and was driven primarily by Broken Coast reporting results for a full quarter, increased sales to medical patients at Aphria, all offset by the previously announced decision to discontinue wholesales sales to other licensed producers.

We are favorable on the decision to stop selling wholesale as this will increase the amount of inventory available for recreational and international market opportunities over the next six to nine months. This will result in improved margins and a higher average cost per gram sold. We expect the recreational market to be significant and this will provide more inventory to capitalize on it.

The market responded negatively to the quarterly loss and we are monitoring how the shares trade from here. In 2018, Aphria has significant advanced its story and this was primarily accomplished via acquisitions and investments. We are favorable on the continued execution and this is a stock to watch

Hydropothecary Announces Agreement with Molson Coors

The Hydropothecary Corporation (HEXO.TO) (HYYDF) jumped higher and recorded a double-digit percentage gain after announcing a definitive agreement with Molson Coors Brewing Company (TAP) (TPX.TO) to form a joint venture to pursue opportunities to develop non-alcoholic, cannabis-infused beverages for the Canadian market following legalization.

This is a significant development for the Canadian cannabis producer and the deal is expected to close before September 30th. The joint venture will be structured as a standalone start-up company with its own board of directors and an independent management team. Molson Coors Canada will have a 57.5% controlling interest in the JV, with HEXO having the remaining ownership interest.

The new company will combine the proven beverage experience of Canada's leading brewer with a recognized innovator in the fast-growing cannabis sector to explore the highly anticipated consumable cannabis market, which is expected to be legally permissible in Canada in 2019.

We are favorable on Hydropothecary and will monitor how the shares trade from here. Yesterday. The shares came off its highs of the day and we expect this relationship to be a significant growth driver and will provide updates on how they trade from here.

Emblem is an Undervalued Execution Story

Over the last month, Emblem (EMC.V) (EMMBF) has made some significant announcements and we are monitoring how the team continues to execute, Last week, the Canadian cannabis producer announced a major acquisition that will significantly increase production capacity and we are favorable on this move.

Earlier this week, Emblem and GreenSpace Brands (JTR.V) announced a strategic partnership to develop and commercialize CBD infused health and beauty products for the recreational cannabis market. We will monitor how this relationship adds value in the back half of 2018 and in 2019.

The partnership will leverage GreenSpace’s expertise in consumer brand development and distribution to launch products infused with Emblem’s CBD extracts across a number of verticals including beauty, health and wellness, supplements, food and beverage. Expansion into edibles and consumables using cannabis CBD extracts will move forward when these additional products are permitted under applicable regulations, expected in 2019.

CBD-infused products are a growing consumer trend gaining substantial media attention. CBD is one of the most common cannabinoids in cannabis or hemp that is known for a variety of medicinal qualities without the psychoactive “high” that can be associated with tetrahydrocannabinol (THC).

Under the terms of the agreement, GreenSpace will commit to a five-year exclusive CBD supply agreement with Emblem. Emblem agreed to make an investment in the company and will earn a 4% royalty on all hemp-based CBD product sales and a 7% royalty on all cannabis-based CBD product sales.

Although Emblem continues to execute, the shares have been under pressure and is one of the most undervalued Canadian cannabis producers. We are going to monitor how the company continues to execute and recommend keeping an eye on this one.