I much prefer analyzing (and writing about) stocks to buy rather than stocks to sell. It’s just more fun to try to pick the stocks that can generate big returns instead of delivering depressing losses. But sometimes it’s necessary to identify the stocks to sell so that you have cash freed up to buy more promising stocks…
My view is that there are quite a few marijuana stocks that are good picks to buy that should be winners in the new year. However, some are more likely to be losers. Here are two pot stocks that I think it makes sense to sell before 2021.
If you’ve owned shares of Aurora Cannabis (NYSE:ACB), selling before the end of 2017 would have been your best move. It’s been mainly downhill for the Canadian cannabis producer since then. Aurora really flopped in 2020, with the stock plunging more than 60%.
But could better days be ahead for Aurora? After all, the company has a new management team in place now. It’s cut costs dramatically. Aurora has even maintained in recent months that it was on track to report positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in its next quarter.
Note the use of the past tense there. The company backpedaled on this goal in an update on Dec. 16. Aurora now only expects to post an improved adjusted EBITDA loss in its fiscal 2021 second quarter. It attributed the delay to a strategy of investing in a “back to basics” strategy and “the unpredictability of the current demand environment.”
Aurora definitely needs to do something to turn things around. Reducing expenses was necessary for Aurora, but what it really needs is to return to strong sales growth. In the company’s latest quarterly update, Aurora actually lost ground in the important Canadian recreational marijuana market.
Maybe Aurora’s change in strategy will work. However, count me as…
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