2 cannabis stocks that are still not worth buying

Since legalization, cannabis stocks have fallen to increasingly low levels. It seemed that not only had the bubble burst, but there really was no place for investors to see a future. That is to say until the recent elections and the inauguration of the new American president Joe Biden.

Cannabis stocks rallied at all levels after the inauguration of the new democratic leader of the free world. In addition, in the November 2020 election, four more states legalized the recreational use of marijuana. But does that make cannabis a good buy today?

While there are certainly stocks of cannabis to consider, this is not a drastic choice as it seemed to be in 2018. In fact, I would still stay away from these three stocks now and in the future. . Even though the United States legalizes marijuana across the country, these stocks are still doomed to fail.

Cannabis Aurora

Aurora Cannabis Inc. (TSX: ACB) (NYSE: ACB) was once considered the biggest think tank on cannabis stocks. The company boasted not only of the highest pot production, but also the cheapest price per gram. But while other cannabis companies have entered into partnerships, Aurora refused. Rather, he was diluting actions over and over again, creating a situation that he just couldn’t get over.

While the company can still boast of low costs, this is something that can be replicated by others in the future. He also focuses primarily on medicinal marijuana, which will soon take a step back as cannabis continues to grow. Shares have only risen 133% in the past five years, nothing compared to other companies in the four digits, and have fallen 92.5% since legalization. Revenue continues to decline year on year and the value of profit to sales (EV / sales) remains at a high level of 11.2x in the past 12 months (LTM). So sorry investors, this stock is on the rise but certainly not cheap.

Cronos Group

Cronos Group Inc. (TSX: CRON) (NASDAQ: CRON) has an advantage over Aurora in that it is in the United States and has a partnership with Altria. Unfortunately, the company still has a ton of competition. While it has an advantage in the cannabidiol (CBD) market, that market will be nil if and when cannabis is legalized in the United States.

Now if you look at sales / EVs, Cronos is insanely overvalued among cannabis stocks at a whopping 59.2 times in the LTM! Although revenues are increasing year on year with the increase in recreational use, they are still far behind what they were a few quarters ago. While the stock could rise 36% last year, it is still 57% below its highest point in March 2019. Again, analysts just don’t think this stock has what it is. is necessary to face the competitors of cannabis.

At the end of the line

There is certainly a stellar stock of cannabis to choose from to take advantage of this momentum. But these actions are not part of it. Every business has far too much to do, and with other, more solid options for long-term investors, it’s best to steer clear.