IS TILRAY THE BEST CANNABIS STOCK
Famous for being the first cannabis company to 𝗜𝗣𝗢 on an American stock exchange (2018), Tilray rose 600% in its first 3 months! The bubble quickly popped and the stock fell 97% over the next 2 years. After a complete washout, it looks as though Tilray has finally 𝗕𝗢𝗧𝗧𝗢𝗠𝗘𝗗! I'm very optimistic about the stock in 2021 and below are 3 reasons why.
⚡ STOCK MOMENTUM
Over the past 4 months, Tilray’s stock has stabilised and has began 𝗦𝗧𝗘𝗔𝗗𝗜𝗟𝗬 𝗖𝗟𝗜𝗠𝗕𝗜𝗡𝗚. This steadying of the stock is resulting in more rational and dependable price movements which should entice investors who rely on 𝗧𝗘𝗖𝗛𝗡𝗜𝗖𝗔𝗟 𝗔𝗡𝗔𝗟𝗬𝗦𝗜𝗦. Below you can see how Tilray stock has been trending higher before breaking out above $9 per share. This chat also suggests that the stock might pullback to test support between $9-10 which I believe would represent an excellent entry point for investors looking to get into Tilray!
⚡ UPCOMING INDUSTRY GROWTH
More often than not, it pays to invest in stocks that are at the centre of industries expecting to benefit from near-term positive catalysts. With the Democrats winning the US presidential election & the Senate, the prospects for federal 𝗟𝗘𝗚𝗔𝗟𝗜𝗦𝗔𝗧𝗜𝗢𝗡 looks like a slam dunk! This will ensure that the total addressable market (TAM) continues to grow for all within the cannabis sector for years to come. However, investors hoping for short term gains based on upcoming cannabis reform must 𝗕𝗘 𝗣𝗔𝗧𝗜𝗘𝗡𝗧! It’s likely that legalisation will take longer than many expect as more pressing issues (pandemic, unemployment, struggling businesses etc.) take priority! Investors must also consider that if cannabis were to become legal across the US then not only will the TAM increase but so too will competition!
⚡ UPCOMING MERGER
Tilray will soon merge with Aphria! This deal is expected to close within the next 3 months and will create the 𝗪𝗢𝗥𝗟𝗗'𝗦 𝗟𝗔𝗥𝗚𝗘𝗦𝗧 cannabis company by revenue. The table below compares Aphria's fundamentals with other top cannabis companies.
As a larger company, the “𝗡𝗘𝗪 𝗧𝗜𝗟𝗥𝗔𝗬” will save on costs and be able to use 2 sets of existing partnerships to reach new markets! For example, Tilray will now be able to get it’s products into the German market thanks to Aphria’s network in Europe whilst they can begin distributing Aphria’s top products in the US through Tilray’s subsidiaries! Just to confirm, the newly merged company will trade under Tilray’s name and therefore Tilray shareholders will see 𝗡𝗢 𝗔𝗗𝗝𝗨𝗦𝗧𝗠𝗘𝗡𝗧 to their holdings whereas Aphria shareholders will receive 0.83 Tilray shares for each Aphria share they own when the deal completes in Q2.
Despite these reasons, I do want to point out that the Cannabis sector is a particularly 𝗥𝗜𝗦𝗞𝗬 industry to invest in. Cannabis companies are fairly new and don’t have proven track records of success and this makes it harder to separate the best and worst companies in the sector. That said, I expect the cannabis market to grow quickly for many years to come and as things stand, Tilray is positioned as well as anybody to 𝗥𝗜𝗗𝗘 𝗧𝗛𝗘 𝗪𝗔𝗩𝗘!
In fact, I included Tilray in a post that I did 3 months ago where I highlighted 𝟭𝟬 𝗦𝗧𝗢𝗖𝗞𝗦 𝗧𝗛𝗔𝗧 𝗖𝗢𝗨𝗟𝗗 𝗗𝗢𝗨𝗕𝗟𝗘 𝗜𝗡 𝟮𝟬𝟮𝟭. Since that post Tilray has already doubled and you can check out the entire list HERE!
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