What’s going on?
Canada’s largest marijuana company just reported disappointing results for its most recent quarter ended September 30, 2019. Canopy Growth lost $374 million for the quarter, representing a 13% increase in losses compared to the same period last year. Management says the hit is mainly due to rising operating costs.
Cannabis producers have increasingly warned of weaker-than-expected for the current quarter and into and 2020 due to a lack of retail outlets in Ontario and Quebec. In fact, there is growing concern that the marijuana industry has switched from a shortage of product that hit the sector a year ago to an oversupply.
Canopy Growth booked a $32.7 million charge on returned products and a $15.9 million write-down on inventory in the latest results. The problem appears to be connected to weak demand and lower sales of oil and softgel products in the recreational market.
CEO Mark Zekulin specifically targeted Ontario as a major pain point. The province is dragging its heels on allowing an increase to the number of physical stores that can sell recreational cannabis products.
Net revenue from the quarter came in at $76.6 million, down from $90.5 million in the previous three months.
Investors had hoped the company would get spending under control after the board fired Bruce Linton, the former founder, chairman, and CEO this summer. Canopy Growth’s largest shareholder, Constellation Brands, recently put its CFO into the chairman role.
Constellation Brands invested $5 billion in August 2018 to boost its ownership to 38%. The investment was done at a share price of $48.60.
At the time of writing, Canopy Growth’s stock price is down to $20.20 per share. That’s a 17% decline on the day and well below the high near $70 the stock hit in April.
Cannabis bulls say the total Canadian medical and recreational market is more than $5 billion, and the opening of hundreds of new retail locations in Ontario and Quebec in the next two years should boost sales of legal pot products.
In addition, Canopy Growth is positioned well to benefit from rising demand for medical marijuana in Europe and South America, where it has established production and distribution operations.
The wildcard remains the United States. Selling cannabis products is currently illegal at the federal level, but many states have allowed the sale and consumption of the products. Canopy Growth has an agreement in place to acquire Acreage Holdings in the event marijuana is legalized federally south of the border.
Acreage has production and distribution operations in at least 20 states.
Should you buy Canopy Growth today?
The company now has a market capitalization of $7 billion, which still appears expensive based on annualized revenue of less than $400 million and no clear path to profitability.
Contrarian investors might want to start nibbling on the hopes of a near-term bounce, but I would keep any new position small right now. There is a risk we could see further downside across the sector before the dust clears and bargain hunters put a new floor under the stock.
Other oversold stocks in the TSX Index might be better options to consider today.
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- 3 Takeaways From Canopy Growth’s (TSX:WEED) Horrible Quarterly Earnings
- Could Canopy Growth’s (TSX:WEED) Drake Partnership Bring the Stock Back to Life?
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Forget Bitcoin: Go for Gold in 2020
The rise of Bitcoin has been one of the hottest topics in the investing world over the past two years. Back in May, I’d discussed its recent surge that managed to carry it to a 52-week high into the early summer. It has been hard to avoid skepticism when it comes to Bitcoin and other cryptocurrencies since its fall from grace. Bitcoin has plunged steadily over the past six months as of late-morning trading on December 12. Stocks that are connected to the spot price of Bitcoin and the crypto market in general have also taken a major hit.
HIVE Blockchain provides infrastructure solutions in the blockchain industry. When there is a spike in trading activity in this volatile market, providers of this key service naturally see a bump in activity. HIVE Blockchain stock has dropped 54% over the last three months at the time of this writing. This has put its shares well into the red for the full year.
More storm clouds may be on the horizon for HIVE. Its market cap has fallen precipitously in the second half of 2019, and this has inspired some analysts to drop coverage altogether. Shares were trading a penny off its 52-week low on December 12. The stock last had an RSI of 39, putting it outside technically oversold territory. Even for the risk-hungry investor, there is little reason to risk a gamble on HIVE Blockchain as we look ahead to the new year.
Bet on gold instead
I’ve liked gold over Bitcoin, even when the digital currency was at its peak, but the yellow metal appeared to cement its status as the preferred asset in 2019. The yellow metal has suffered a retreat from its summer high, but it has still put together a great year. In September, I’d discussed why gold has a chance to soar even higher on the back of global developments next year. Those include rising trade tensions and slowing growth for the world’s largest developed economies.
Kirkland Lake Gold (TSX:KL)(NYSE:KL) has been one of the best gold stocks to own over the past decade. Shares have surged 56.9% in 2019 so far. The stock has achieved average annual returns of 19% over the past 10 years.
The company released its third-quarter 2019 results on November 6. It reported record net earnings of $176.6 million, or $0.84 per basic share, in the quarter. This was up 69% from the prior year. Revenues grew by 71% to $381.4 million, which also represented a 36% increase from Q2 2019. EBITDA soared 148% year over year to $296.4 million, and operating cash flow climbed 145% to $316.8 million.
Shares of Kirkland Lake are still trading at the high end of its 52-week range. The company has benefited from huge earnings growth over the past year, and it has expanded operations at several of its key mines. This stock has performed well, even in the face of headwinds for the spot price of gold. Positive price momentum can take it to new heights in the next decade.
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What Is Holiday Trading for Penny Stocks?
If you’ve been in the chatroom or watched any of my DVDs, then you’ve probably heard me talk about holiday trading for penny stocks…
What is it? It’s the effect the holidays have on the market.
How do holidays have an effect on the market? Simple: There are more wannabe traders at home gambling in the market. They’re on holiday, bored at home with their families, and they want to try to make some trades. They don’t know what they’re doing, and that can create predictable patterns.
I like to take advantage of those predictable patterns.
The holidays also bring more volatility. That’s mostly due to reduced trading hours and short-sellers covering their positions. The usual morning volatility carries right through into afternoon action. There’s no midday lull.
There have been some great examples recently of the holiday effect. I’ll share those tickers and charts later on … but first…
How Will You Prepare for Holiday Trading?
I go over holiday trading in my DVDs — TimRAW, Pennystocking, and Pennystocking Framework Part Deux. (They’re on sale for a limited time)
Use your holiday time to study and prepare for the market. Learn the patterns. Be prepared. This will probably happen again around Christmas and the new year … and most holidays usually, but it’s not an exact science.
In this example, I was ready for a recent Friday morning spike. I even shared it in my watchlist to subscribers. But I chose the wrong ticker. I thought it was going to be CANF, but it turned out the best spike was on ASLN. I’ll show you that chart later…
Here’s a bit of what I alerted in my watchlist:
CANF, ONTX are two premarket winners to watch and remember today is a shortened trading day so holiday trading rules apply, stocks can spike MUCH more than you realize and it can happen quicker than you realize too so be on guard and be safe…because these stocks can crash faster than you think too so watch them closely at the market open, Today is a Friday morning which leads to many spikes on top of a holiday-shortened trading day so beware we can see some REAL volatility today…20-40% morning spikers can often become 50-100% winner in minutes if we do get the holiday trading spikes we have in the past.
As you can see, I was preparing my students for the morning spikes and warning them about the volatility.
I want to help prepare you, too — so you can avoid shorting too soon and getting caught in one of these squeezes. Or even better, help prepare you to buy, since these moves can create huge potential on the long side.
Holiday Trading for Penny Stocks: Replace Over-Trading with Study Time
Don’t use your holiday time over-trading and over-eating. Put your extra time to good use by studying.
You will NEVER regret spending a lot of time on your education because it leads to clear rewards; you can NEVER over-prepare!
— Timothy Sykes (@timothysykes) December 3, 2019
A Warning About Holiday-Trading Short Squeezes
Short sellers are trying to analyze penny stocks like real companies, using fundamentals.
They say, “Tim, short selling is the way to go, all these companies are worthless”…
And the truth is, they’re not wrong. Technically, yeah, all these companies are junk. And most of them will eventually go down.
Short sellers are like the new promoters. And they lure in other newbie short sellers with their logical argument that all the companies are awful and the price will fall.
But they’re not fully transparent. They don’t share their losses when they’re getting squeezed out of their positions. And I know they’re taking losses because I get emails from them. People who aren’t even my students come to me saying, “I should’ve listened to you.”
I tried to warn them…
The problem is there are too many short-sellers these days. They’re getting in too quickly because they’re not prepared. They’re just shorting any stock that’s up on the day.
Short selling is a terrible strategy right now, especially risk-to-reward wise. It’s just too crowded. And these short squeezes happen so fast, it can be hard to cut your losses quickly.
New traders especially aren’t prepared for these moves. That’s why I warn new traders about the dangers of shorting, but at the same time, I don’t want them to stop. I’m grateful for the opportunities it creates for the rest of us. Be prepared to take advantage of it from the long side.
I explain how all this works in this video: watch and learn!
Now let’s look at some chart examples of the most recent holiday spikers…
Stock Study Guide: 4 Holiday Trading Examples
You may be wondering what’s so special about holiday trading? How’s it different than any other short squeeze? Well take a look at the charts below and you’ll understand just how powerful these moves can be.
Paringa Resources Limited (Nasdaq: PNRL) — Morning Spike
On Wednesday morning, November 27, the day before Thanksgiving, PNRL had a huge morning spike. It went from the $1s to the $8s within an hour! On Friday, the stock collapsed, opening at $3 and closing in the low $2s. This is a good example of the volatility in the markets around the holidays.
Here’s the PNRL chart:
Clovis Oncology, Inc. (NASDAQ: CLVS) — Earnings Winner/Short Squeeze
CLVS is a good example of an earnings winner, straight out of my “How to Make Millions” DVD (all sales proceeds go to charity, by the way).
Earnings winners can run longer than you think. Combine that with a Friday and a shortened holiday trading day, and you can get a pretty powerful move. CLVS squeezed from $12.55 to a high of $16.62! All before 11 a.m. It was the largest one-day move in its entire run-up. The short-sellers are just too early. It creates these giant short squeezes that just keep going.
That’s a great thing for longs!
Since its earnings release on November 7, the stock has gone from the $4.30s to a high of $17.37! It then dropped down to the mid $8s and has bounced back to the $11 range.
Cancer Genetics, Inc. (Nasdaq: CGIX) — Short Squeeze
CGIX was up trending all day Friday, and then 10 minutes before market close, the stock goes from $7.20 to $9.20 in 3 minutes! That’s short-sellers getting squeezed HARD…
This stock isn’t normally a volatile stock, but with the added volatility from a shortened trading day and a Friday, it created a monster spike.
Take a look at the CGIX chart:
ASLAN Pharmaceuticals Limited (Nasdaq: ASLN) — Morning Spike
This stock was the big winner for the day with a huge morning spike. As I said in the watchlist, Friday morning spikes can go up more, and they can be faster than you think.
This stock doesn’t normally spike very fast — it barely moves 50 cents in a day. But with the increased volume it had in the days leading up to the holiday, it made the stock more volatile.
The two previous days the stock was spiking, it couldn’t hold its gains. And the big morning spike was no different. The stock went from $3 to $7 in seven minutes but then quickly faded off.
Some students were wondering if they should dip buy after the big move. I don’t dip buy holiday short squeezes. After the big moves, all the shorts are squeezed out and there are no shorts left to buy, so the buying subsides.
No rational person should buy a stock that’s up $4 in a few minutes with no news. Especially when it couldn’t hold its gains in the previous days.
How You Can Prepare for Holiday Trading (Like These Students)
Many of my Trading Challenge students were prepared and they killed it! Notice that nobody nailed it perfectly. You don’t have to hit the exact top and bottom on these plays — just take the meat of the move.
Trading Challenge Chat
10:11 AM LKScientist: Traded PNRL… In at 3.64 and out at 5.5. I screwed up my order and ordered 50 shares instead of 500. Still a 51% profit ($93) from $182.
10:59 AM RMcInarnay: took $CLVS from 11.90 to 12.45 🙂
09:11 AM CharlieTango: Long ASLN 500 shares @2.77 out @3.3
09:16 AM Petros_rok_nation: ASLN o/n swing, purchased at 2.26 a/h and sold at 3.10.
09:38 AM Peachtart: I sold ASLN WAY too early at 3.64….then it jumped up to over $5 !!! Damn !!
09:49 AM Iceman29: ASLN 288 shares bought @4.50/share out @6.00/share
09:50 AM GrmnWondrBread: ASLN in at 3.83 out at 4.29 for a $34.08 win. Entered CANF at 3.435 in hopes of a reversal and settled at 3.30 at a $10.63 loss. One good one bad…creed got the best of me on this one.
09:51 AM Sierra3: sold ASLN at 4.14 from 3.00 grrrr. hahahahahahaha
09:55 AM RPhTrader: ASLN made around $300, got out early, but happy
09:56 AM NEOTHEONE: bought 1000 shares CANF @$3.35 OUT $3.44…good %8.8
09:57 AM TJinx13: so many short squeezes today
I took a small position on $ASLN and got out with 13% gained. It seemed like it was struggling a bit so I got out with a clean profit. I left a majority of the move on the table but I’ll take this as a learning lesson, analyse my mistakes, and move on from here. @timothysykes
— Nate B. (@NateB9916) November 29, 2019
$ASLN in @ 4.44 out @ 4.955
Took my 10% and got outta there!
Another successful dip buy!
It’s beginning to stick!@timothysykes
— Khyle Socrates (@KhyleSocrates) November 29, 2019
— Daytrader (@aTradeidea) November 29, 2019
In $ASLN at $6 out at $6.74 for 12%. Holiday trading on a Friday awesome time. Remember guys be smart and take the meat of the move. Like @timothysykes says singles add up over time. So thankful for studying and not trading as much lately.
— Luke Dominick (@RedgoatThe) November 29, 2019
Holiday trading isn’t tied to any stock, hot sector, or news.
It can be extremely volatile, especially on the shorter trading days. And that can create a lot of opportunities. Be prepared to take advantage of the big moves.
Holiday trading can be a great thing for longs. But if you’re wrong on a trade, remember to cut losses quickly. Especially on stocks that don’t hold their gains.
Be careful with any short positions. Actually, I don’t recommend you short sell at all if you’re a new trader. But if you must, keep your positions small.
Use your holiday downtime to invest in your education. Study, study, study!
I know the extra time and freedom that comes with the holidays is great. Most of you want to relax and take it easy. But if you want to change your life and feel free every day, you need to put in the work now. You won’t get there by being lazy.
I had to work for it and so do you. For me, it’s well worth it.
I offer you the keys to financial success, but it’s up to you to utilize them & earn it! pic.twitter.com/yaaQ1mVi6x
— Timothy Sykes (@timothysykes) December 5, 2019
[Note that these results aren’t typical. It takes time and dedication and to build exceptional trading skills and knowledge. Most traders lose money. Always remember trading is risky … never risk more than you can afford.]
What do you think about this post? Leave a comment — I love to hear from my readers!
RIFT VALLEY RESOURCES CORP. ANNOUNCES COMMENCEMENT OF CONSTRUCTION OF FIRST WIRELESS BROADBAND NETWORK IN CROCKETT, TEXAS
Rift Valley Resources Corp. Announces Commencement of Construction of First Wireless Broadband Network in Crockett, Texas
December 12 2019 – Vancouver, B.C. Rift Valley Resources Corp (the “Company”) (CSE: RVR) – announces that the Company, through its subsidiary Ruralink Wireless (“Ruralink”) has begun construction of its wireless broadband network located in Crockett Texas, the first of a proposed 130 regional rural networks throughout the US, representing a market of over 44 million people.
It is estimated that there are over 160 million people, primarily in rural areas in the USA, who have limited or no access to true broadband internet connectivity. Ruralink is on a mission to solve this problem by bringing cost-effective broadband performance to markets that have been left behind in the digital divide by leveraging new technologies to deliver competitive services.
Ruralink has teamed with ARK Multicasting, Inc. (“ARK”) which controls 280 TV licenses in the US to create its new Hybrid Broadcast Broadband network. Of these, 130 television licenses are in rural markets, providing substantial coverage to the targeted rural residential, enterprise and government facilities.
Ruralink and ARK have entered into a Letter of Agreement that provides for the companies to collaborate with technical and market trials for a Wireless ISP broadband ISP access network using a combination of radio frequencies including TV White Space (“TVWS”) technology in the 500 MHz bands, and 3.5 GHz CBRS spectrum, and 5.7 GHz UNII band spectrum.
The parties will conduct a two-phase pilot program in Crockett, Texas to leverage the use of licensed TV broadcast spectrum with unlicensed TVWS radio spectrum to create a highly efficient and cost-effective solution providing wireless broadband (“last mile”) internet access in rural areas.
Crockett, Texas will be one of the first markets served by Ruralink. Upon completion of successful trials, Ruralink will move to expand its footprint and regions served with its unique approach of the mixing of mature and disruptive technologies to serve these communities, such as those brought by ARK Multicasting to finally deliver on the long overdue promise of true broadband internet connectivity to rural markets.
About Ruralink Wireless, Inc.: Ruralink is an innovative solutions-driven company founded by executives with extensive experience in wireless, fiber, satellite, and related communications technologies and services. The company's core focus includes:
· Deployment and operations of low-cost, highly reliable, wireless broadband ISP access networks in underserved areas.
· Access to broadband internet content, applications, and services, designed to improve the lives of people living in market areas that do not have cost effective broadband ISP services.
· Design and deployment of enhanced TV White Space internet access infrastructure and user devices supporting innovative products and service applications enabled by wireless broadband Internet access.
About Rift Valley Resources Corp: Rift Valley Resources Ltd. is a publicly traded company listed on the Canadian Securities Exchange (CSE). The Company recently announced the appointment of Mr. Vern Fotheringham as its Non-Executive Chairman.
About ARK Multicasting, Inc: ARK is a television-based IP content delivery network operator leveraging the new ATSC 3.0 standard serving the rapidly expanding Over the Top (“OTT”) internet video market. ARK is combining the “one-to-millions” efficiency of broadcasting for distribution of broadband IP content in concert with high capacity local storage at consumer locations essentially creating a massively “distributed data center” specifically targeted at rural and under-served areas of the United States.
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