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When thinking about "first movers" in cannabis, this Canadian licensed producer (LP) has to be at or near the top of anyone's list.
It was one of the first publicly traded marijuana stocks ever, and it made a massive splash stateside as the first Canadian cannabis company to list on the NASDAQ.
It didn't stop there; its extensive, successful investments in Canopy Growth Corp. (NYSE: CGC), VIVO Cannabis Inc. (OTC: VVCIF), and other industry players helped make the cannabis industry a must-own sector.
And, after a massive $1.8 billion cash infusion from an $87 billion S&P 500 heavyweight, it was free to expand wherever it needed - a "sky's the limit" situation.
That sounds like an ideal position for a company to be in, right? Who wouldn't want to own it?
Well, the trouble is, it expanded in all the wrong directions.
And now, this stock is a "sell." A hard sell...
How a Once-Great Stock Went Off the Rails
If you hadn't guessed, I'm talking about none other than Cronos Group Inc. (NASDAQ: CRON).
With a $1.8 billion investment from Altria Inc. (NYSE: MO), Cronos used the fresh cash and stock to buy companies in which its executives had a personal interest... at the expense of its shareholders. The situation escalated to point where the U.S. Securities and Exchange Commission opened an official inquiry into Cronos' books last March.
That would've been enough, but it didn't stop there.
Shareholders filed a class-action lawsuit soon after, and this once-promising company got caught red-handed, basically, inflating revenue numbers to make it seem like financials were stronger than they really were.
Incredibly, after this massively irresponsible waste of capital... after this shareholder betrayal... you can still find this company on Robinhood's "Top 100" most-popular stocks list!
That's the stunner here. Since Feb. 10, CRON shares have plummeted from a 52-week high of $15.55 to $7.45, and the stock is still drastically overvalued. There was heavy buying this past Thursday, where the stock surged 6.7% by midday, but don't be fooled; in the investing dictionary under "Sucker's Rally," there's a picture of yesterday's CRON stock chart.
And the one thing the company had going for it - its strong billion-dollar cash and equivalents position - is burning up fast.
There Are Much Better Cannabis Stocks Out There
With its cash going up in smoke, there's simply zero business or investment case left for owning Cronos. Even the most wildly optimistic investors out there, hoping for a "turnaround" opportunity of some kind, should pull the ripcord on this one. The prospect of a turnaround is imperceptibly dim, and a stock like this will actually deal out more damage to your portfolio the longer you own it.
But, you have options, of course. Cannabis is a "big tent"...
Our paid-up National Institute for Cannabis Investors (NICI) subscribers have received two recommendations for dynamite cannabis stocks to own instead, and the folks following along have had the chance to pocket triple-digit gains over the past year. I'll name those in a second.
As recently as this past February, two of these stocks combined had done around 20X - twenty times - better than the S&P 500.
Curaleaf Holdings Inc. (OTC: CURLF) is a multistate operator (MSO) with designs on becoming the top processor and manufacturer of cannabis products in the United States. Chair Boris Jordan has said, point blank, that he wants to reach the 93% to 95% of U.S. households that don't currently consume cannabis. Those are its future plans, but its present couldn't look better. The company operates around 101 dispensaries in 23 states right now, with a customer base of about 350,000 cannabis users. Curaleaf expects to clear more than $1 billion in revenue this year, which would make it the largest cannabis company by sales in the country. It's up more than 33% over the past year.
And Jushi Holdings Inc. (OTC: JUSHF) is another standout MSO. This stock can be had for less than $5 right now, and the upside potential is extreme - even though it's seen 52-week gains of more than 145%. Jushi is an MSO with a "business fortress" built out around it. One of its most important core markets is Pennsylvania, one of the biggest cannabis markets in the country. It enjoys a de facto monopoly in Northern Virginia, and it owns one of a handful of permitted dispensaries in wealthy Santa Barbara, Calif. The positioning doesn't get much better than this.
Cannabis should be a top destination for investors interested in explosive-growth and big-gains potential, but America's booming pre-IPO scene, fueled by entrepreneurial innovation and $569 billion cash flood since November 2020, can't be overlooked. There are around 500 companies in the U.S. alone looking to go public as we speak, and in some of these firms, it's possible to grab "pre-IPO rights," often for around $1. In the event these companies go public, these rights have the potential to skyrocket in value; in exceptional cases, peak gains of up to 27,550% have been realized. You can learn more about these extraordinary instruments right here.