5 US cannabis stocks to watch in November

Highlights:

• Canopy Growth Corporation (NASDAQ: CGC) stock noted its highest one-day percentage gain since August 2018.
• Tilray Brands, Inc. (NASDAQ: TLRY) revenue fell nine per cent YoY in Q1 FY23.
• Organigram Holdings notched its highest revenue in its history in Q3 FY22.

Cannabis stocks are the stocks of companies that specialize in the development, research, and production of marijuana products.

Some of the major names from the industry include Canopy Growth Corporation (NASDAQ: CGC), Tilray Brands, Inc. (NASDAQ: TLRY), Aurora Cannabis Inc. (NASDAQ: ACB), Hexo Corp. (NASDAQ: HEXO), and Organigram Holdings Inc. (NASDAQ: OGI).

The cannabis segment seemed to have gained traction lately, especially in October, after President Joe Biden took initiatives to overhaul the US policies on cannabis. President Biden pardoned thousands of federal offenders who had simple marijuana possession and initiated a review of how the drug is categorized.

In addition, the cannabis stocks were among the top percentage gainers on Tuesday, October 25, after the Canada-based cannabis firm Canopy Growth said that it would build a holding firm to accelerate its entrance into the US market.

Following the news, other cannabis stocks also went up, suggesting that the investors' have lauded the news and turned their focus to the sector. Several investors also explore opportunities in the cannabis segment while anticipating the federal legalization of the drug and its related products.

Around 40 states have legalized the use of cannabis in some form, it is still considered completely illegal in some states. Most Americans expect a reclassification of the drug, which might be the first step toward the wider legalization of marijuana.

Let's take a look at the performance of the stocks mentioned above and see how they have performed in recent months.

Canopy Growth Corporation (NASDAQ: CGC)

The stocks of one of the leading cannabis firms, Canopy Growth Corporation, closed at 27.07 per cent higher on October 25 while notching over six per cent gains for the month through Wednesday. For the year, the CGC stock fell over 66 per cent; on a YoY basis, it lost around 78 per cent.

The surge of over 27 per cent in the CGC stock on Tuesday, October 25 was its highest one-day percentage gain since August 15, 2018.

The company said on Tuesday that it would create a holding company, Canopy USA LLC, to speed up its entry into the US market. In return, the new holding company would take over Acreage Holdings Inc for the CGC shares.

The US$ 1.47 billion market cap cannabis firm said that its first quarter fiscal 2023 revenue of CAD$ 110 million remained flat on a sequential basis and declined 19 per cent from the year-ago quarter. Canopy Growth Corporation's net loss totaled CAD$ 2.08 billion for Q1 FY23, compared to an income of CAD$ 389.95 million in Q1 FY22.

Tilray Brands, Inc. (NASDAQ: TLRY)

Tilray Brands is a cannabis-lifestyle and consumer packaged goods firm. The stock of the US$ 1.62 billion market cap firm closed at 13.29 per cent higher on October 25, amid the rally led by the CGC stock.

Despite strong gains, the TLRY stock was down around 49 per cent for the year and 67 per cent YoY. In October, its price went up over 30 per cent. The cannabis firm's stock touched its 52-week low of US$ 2.65 on September 23 this year.

Tilray Brands' net revenue fell nine per cent YoY to US$ 153.21 million in Q1 FY23, while its net loss rose 90 per cent YoY to US$ 65.79 million.

Aurora Cannabis Inc. (NASDAQ: ACB)

Aurora Cannabis is another leading Canada-based cannabis-producing firm closed at 19.23 per cent higher on October 25. Despite the robust gains, the ACB stock remained lower over 77 per cent YTD and over 82 per cent YoY.

The stock has gained about one per cent in the running month while touching its 52-week low of US$ 0.9801 on October 11.

The US$ 375.54 million market cap company noted an eight per cent decline to US$ 50.21 million in its final quarter revenue of fiscal 2022, while its net loss increased to US$ 618.8 million from a loss of US$ 134 million in Q4 FY21.

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Hexo Corp. (NASDAQ: HEXO)

Hexo Corp is a consumer packaged goods and cannabis firm that provides several cannabis-related products like peppermint oil, sublingual sprays, etc.. Its stock closed at over seven per cent higher on October 25.

The price of the HEXO stock was down about 89 per cent YoY and 73 per cent YTD while adding nearly six per cent in the running month.

Hexo Corp's net loss was CAD$ 145 million in Q3 FY22 on revenue of CAD$ 45.56 million, while in the year-ago period, its net loss totaled CAD$ 20.71 million on revenue of CAD$ 22.66 million.

Organigram Holdings Inc. (NASDAQ: OGI)

Organigram is a leading licensed medical cannabis company that produces high-quality and indoor-growth cannabis for consumers, and its stock went up 7.38 per cent on Tuesday.

The US$ 291.71 million market cap licensed marijuana producer's stock fell over 46 per cent for the year and 59 per cent YoY. In the running month through Wednesday, it rose over six per cent. Meanwhile, the OGI stock also touched its 52-week low of US$ 0.8401 this month on Thursday, October 13.

Organigram Holdings, based in Moncton, Canada, noted a 90 per cent YoY growth in its Q3 FY22 gross revenue of US$ 55.2 million, and its net revenue was up 88 per cent YoY to US$ 38.1 million. The company's net revenue in the third quarter was the highest in its history. On a sequential basis, its revenue rose 20 per cent in Q3 FY22.

Bottom line:

While many market pundits anticipate the legalization of marijuana, some have argued that it is still unclear when it will happen. In addition, the rally from this week is also considered a short squeeze by some analysts.

According to experts, entering the US market could be beneficial for Canopy or any company. Still, given the lower prices of the cannabis stocks, any short move could also trigger a significant rally into the sector. There is no guarantee that the rally will last for a long run.

Hence, investors willing to gain exposure to the cannabis sector should focus on the broader picture, risks, and other factors rather than focusing on any short rally for these kinds of stocks.

The US Marijuana Companies Index rose over 17 per cent in October through Wednesday while falling over 55 per cent YoY and 51 per cent YTD.