December 23, 2021

Undervalued Cannabis Stocks About to Bounce? | @SC_FUNDS

Midas Letter
Midas Letter
Undervalued Cannabis Stocks About to Bounce? | @SC_FUNDS
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Like our interview background, we all know that the cannabis sector has been underwater for the majority of 2021. This is because the weed stocks industry has been plagued by a lack of legislative action, problems with custodians, and now heavy tax-loss selling.

As there have been many winners from other sectors from a solid year in broad markets, investors are using cannabis to harvest their losses. The downwards trajectory is likely to continue until the end of this selling.

However, cannabis stocks could once again be ready to soar. With the events of 2021, many weed stocks have cheap valuations while they have made progress in expanding into new states, opening new dispensaries, and achieving stellar financial performance.

“The US MSO underlying business es have continued to strengthen, they continue to get more access to capital, and they continue to grow. And their stock prices have come down. From a multiple perspective, they were a lot more attractive than they were at the beginning of the year and even a year ago. That’s going to obviously have an impact on some investors, and you’ll start to see some money flow in there. And with any luck, as we move towards the US midterm election next November, we’ll start to see more talk of legislation. and we’ll start to see the stock prices move up in anticipation of that.” – StoneCastle Cannabis Growth Fund Portfolio Manager Bruce Campbell

Potential catalysts are coming online next year (the biggest of which is the US following Malta in legalizing cannabis). So, 2022 could be the year of weed stocks once again.

Transcript

00:00 – StoneCastle Cannabis Growth Fund Portfolio Manager Bruce Campbell
01:01 – Malta legalization
01:46 – 2022 cannabis industry outlook
04:09 – Share price reaction to potential legislation changes
06:36 – CSE tier system
07:14 – Biden administration
08:18 – Favourite weed stocks
09:00 – Cannabis stock scandals

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