Do Cannabis Stocks Look Expensive?

Valuations

In January, the cannabis sector experienced a significant gain. In our opinion, the gain wasn’t completely unexpected. If you look at December, the overall market was selling off. As a result, the valuations reached the oversold territory.

Do Cannabis Stocks Look Expensive?

YTD performance

In the above chart, you can see that cannabis stocks are off to a great start in 2019. Cronos Group (CRON) has risen nearly 89% YTD (year-to-date). Canopy Growth (WEED) (CGC) has risen nearly 62.3%, while Aphria (APHA) has risen nearly 55% during the same period. Aurora Cannabis (ACB) has risen nearly 45%. The Horizons Marijuana Life Sciences ETF (HMMJ) rose ~37.9% during the same period.

Now that cannabis stocks have risen, will the stocks become expensive due to the recent run-up?

Series overview

In this series, we’ll discuss the valuation multiples for the cannabis sector peers as a whole. We’ll also discuss the individual stocks that make up the peer group. We’ll discuss nine cannabis stocks. The valuation multiples that we’ll cover include the EV-to-sales and the EV-to-EBITDA multiples.