The cannabis sector has been facing some headwinds lately, and many of the sector stocks have fallen. When prices fall, it is often a good opportunity to buy stocks, as investors may be able to purchase a good company with strong fundamentals at a bargain.
Positive territory YTD
In the above chart, we see that almost all of the companies experienced a sell-off recently. However, despite the sell-off, almost all of the stocks except Tilray (TLRY) were in the positive return territory YTD. Tilray’s stock continued to trend lower after it released its fourth-quarter earnings. We saw that analysts turned bearish on the stock in the current month compared to the prior month. Read Tilray: Analysts Are More Bearish in March.
It’s not enough to just look at a drop in the stock price to determine whether it is a good buy or not. We need a better measure to make that determination. Valuation multiples are a tool that can aid in making a determination as to whether a stock has fallen enough to be considered attractive.