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Key for Investors: Watching Cannabis Sector Valuations

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Valuations

Investors and traders face challenges due to volatility in the cannabis sector (HMMJ). As a result, investors should pay close attention to the valuations in the cannabis sector.

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Performance

So far, the overall cannabis sector has performed well in 2019. Canopy Growth (WEED) (CGC) has returned as much as 67% YTD (year-to-date). Aphria (APHA) has returned more than 70%, while Aurora Cannabis (ACB) has returned nearly 50%.

Initiations

The returns and the cannabis sector’s economic potential have caused serious investors and well-respected investment firms to take a hard look at the cannabis industry. Recently, two investment firms started their coverage on cannabis stocks.

Seaport Global initiated coverage on several cannabis stocks. The company gave a “neutral” rating on Canopy Growth. Seaport Global also initiated coverage on Aurora Cannabis with a “neutral” rating.

Jefferies initiated coverage of Aurora Cannabis with a “buy” recommendation. The firm also provided a “buy” rating for CannTrust, OrganiGram, and Green Organic Dutchman.

Investors should look at cannabis stocks’ valuations to determine if the market is ahead of reality. Is the market paying more than what the investment costs?

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