The sector was already shaky before COVID-19, but companies must now have the right mix of cash, pot and sales channels to make it to the other side
Before the outbreak of COVID-19, cannabis stocks had plummeted from fattened valuations as they failed to find promised profit and seemed at risk of bankruptcy. The global pandemic has made the situation even worse, and investors now are looking for companies that will simply survive.
There are only two names in the legal-marijuana sector that investors can look to for relative safety. Some of the remaining companies may be safe, too, depending on how much cash they have, their stockpile of pot, retail access and their ability to make more marijuana products.
The two cash-rich companies are the easiest to pinpoint as able to make it through the pandemic. Canopy Growth Corp. CA:WEED US:CGC has long had the strongest balance sheet, snatching up a $4 billion investment from Corona distributor and beverage giant Constellation Brands Inc. US:STZ in 2018. Executives have bled the war chest quarter-after-quarter, making questionable acquisitionsand losing hundreds of millions on operational expenses. But under the leadership of freshly installed Chief Executive David Klein, Canopy has begun to rein in expenses and curtail operations in a move toward eventual profitability.
Trading close to the cash value of the company divided by the number of shares, Cronos Group Inc.US:CRON CA:CRON is seen by many investors MarketWatch spoke with as a relatively safe place to park money. [Read More @ MarketWatch]