4 Canadian Cannabis Stocks To Avoid In March

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

The cannabis industry generated strong momentum in 2020. As people sort to deal with heightened stress level or anxiety while on lockdown at home for fear of contracting COVID-19, many stocked up on CBD products.

Canadian cannabis companies have an established domestic market. Many of them are now planning to venture into the United States through inorganic growth. With a new U.S. Presidential administration in office, investors anticipate continuing and widespread legalization of recreational marijuana usage in the United States.

However, the industry still has a long way to go and many underlying issues to overcome. While many pot producers have announced a series of growth initiatives, they often lack sufficient capital to support those initiatives. Most of these companies are also suffering from high debt levels.

Four such stocks are Cronos Group Inc. (CRON - Get Rating), HEXO Corp. (HEXO - Get Rating), Organigram Holdings Inc. (OGI - Get Rating), and Juva Life Inc. (JUVAF - Get Rating). We think these stocks are risky investments at this juncture and investors should avoid them for now.

Cronos Group Inc. (CRON - Get Rating)

CRON is a cannabinoid company involved in manufacturing, marketing, and distributing hemp-derived supplements and cosmetic products through hospitality partners, e-commerce, and retail. The company operates in Canada, the United States, and other countries.

During the fourth quarter, ended February 26, 2021, CRON’s revenue soared 133% year-over-year to $1.7 billion. Its EPS for the quarter declined to $0.19 from $1.62 posted in the same period last year. The company witnessed an expansion in its operating loss due to a rise in sales and marketing costs incurred for the launch of new U.S. hemp-derived CBD products under the Lord Jones™ and Happy Dance brands.

The company reported a loss due to an impairment charge and an increase in general and administrative expenses and an increase in R&D spending. Its cash at the end of the quarter fell to $1.1 billion from $1.2 billion in the same period last year.

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