Although the U.S. cannabis industry has been gaining steam, in-part due to the hopes around a Republican-led legalization effort, the health risks associated with the use of marijuana and its strong addiction in adolescents could curb the industry’s growth. Despite marijuana becoming…
mainstream in many states, it remains a thorny issue because growing cannabis is a federal crime that transgresses the Controlled Substances Act.
Furthermore, with the laws around cannabis becoming gradually more favorable, more players are entering the cannabis space, making the industry highly competitive. This trend could negatively impact the market share of existing players.
Given this backdrop, we think it could be wise to steer clear of cannabis stocks Curaleaf Holdings, Inc. (CURLF – Get Rating), Canopy Growth Corporation (CGC – Get Rating), and GrowGeneration Corp. (GRWG – Get Rating). The companies possess weak fundamentals, and analysts have recently downgraded these stocks.
Click here to check out our Cannabis Industry Report for 2021
Curaleaf Holdings, Inc. (CURLF – Get Rating)
CURLF in Wakefield, Mass., is a vertically integrated cannabis operator in the United States that researches and develops ways to distribute cannabis products. The company operates in two segments–Cannabis Operations; and Non-Cannabis Operations. Through its Curaleaf Hemp brand, the company provides service across the medical and adult-use markets and the cannabidiol (CBD) category. CURLF has been downgraded recently from Buy to Hold by a Craig-Hallum analyst.
CURLF’s total revenue increased 73.9% year-over-year to $317.13 million in the third quarter, ended September 30, 2021. However, its net loss grew 563.8% from its year-ago value to $59.28 million. Its net loss attributable to Curaleaf Holdings, Inc. rose 509.2% from the prior-year quarter to $56.92 million. Also, the company’s operating income decreased 22.9% sequentially to $39.99 million.
CURLF’s EPS is estimated to decrease 197.8% in the current year. The company has failed to beat the consensus EPS estimates in each of the trailing four quarters. Also, the stock has lost 26.7% in price over the past six months and 37.4% over the past nine months.
CURLF’s POWR Ratings are consistent with this bleak outlook. The stock has an overall F rating, which equates to a Strong Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
Also, the stock has an F grade for Growth, and a D grade for Value and Sentiment. We have also graded CURLF for Quality, Momentum, and Stability. Click here to access all CURLF’s ratings. CURLF is ranked #197 of the 200 stocks in the F-rated Medical – Pharmaceuticals industry.
Canopy Growth Corporation (CGC – Get Rating)
Headquartered in Smiths Falls, Canada, CGC is a diversified cannabis company that operates through Global Cannabis; and Other Consumer Products. The company, through its subsidiaries, produces and sells legal marijuana in the medical and recreational market. Its products include dried cannabis flowers, oils, and concentrates, and soft gel capsules. CGC has been recently downgraded by Cowen from an “outperform” rating to a “market perform” rating.
Last month, CGC entered agreements with the cannabis edible brands…
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