Welcome to the Cannabis Investing Newsletter Forum. Feel free to find your favorite cannabis stocks and contribute content as you please; content that continues the discussion of, and analysis of, cannabis stocks. – D. H. Taylor
Verano Holdings VRNOF stock The Most Undervalued Stock
Verano Holdings VRNOF stock may be one of the most undervalued marijuana stocks you can buy. When you look at the numbers and you compare what Verano earns versus the broader S&P 500, you see that this stock is very undervalued. By my calculation, there is a potential 500% upside opportunity in the stock should cannabis stocks be valued at the same metrics as other stocks.
To be sure, though, the markets are not going to ignore profits forever. The entire purpose of market participants is to pursue these profits. At some point, the market is going to catch on to what is happening in the cannabis market and buy into these opportunities.
Let me break down what I am looking at for Verano.
I bought Verano prior to earnings in hopes of a nice jump in share price, only to find out that there was a huge share unlock that caused massive dumping of shares. For investing in cannabis one must know more than just the fundamentals of a company, particularly in this sector. The following are just some of the considerations, outside of fundamentals, are:
1. Share structure and unlocks. Many of these companies have this complex structure involving superordinate shares, a large percentage held by insiders (e.g. Curaleaf), which can lead to relentless selling (we saw this with Kadens in Green leaf).
2. Legal issues due to criminal unethical activity (e.g. CannTrust and Ascend (LUFF)
3. Headline risks (e.g. Trulieve and indictment of River's husband)
4. Progress/setbacks on the legal front
5. Machinations on the OTC (naked short selling, manipulation by market makers, brokers, etc)
6. Poor understanding of the sector by retail and media (why does CNBC always post Canadian tickers when talking about the US?)
7. Massive short selling (many MSOs have over 50% of trades as short on some days)
8. The need to be aware of the "sell the news" sell-offs, such as was seen after the release by congresswoman Mace on the GOP States Act.
It would be nice if analysis of cannabis companies included a consideration of the above when making recommendations. For example, I would like to have known about Verano's share unlock before jumping in last week to accumulate shares. This was knowable if I had done my DD (my bad), but it would have been nice if this was pointed out by those who are promoting this stock.
I get the feeling that the focus on fundamentals only seems to miss these important influences on more near-term price movements. One could do better by taking all of this into account and finding better entry points.
Just my two cents. I appreciate the good info provided by Cannabis investing newletter!
Thanks for the comment. First, ALL cannabis stocks fell and I do not believe that Verano had the monopoly there. Nonetheless, from now on I am incorporating share information into my videos as well I am going to post a video up coming on Monday regarding short-selling and cannabis stocks. This is the real story that is going on. Every day, over 50% of daily volume is short selling. This continues to pressure stocks. I am going to put these data points into the videos as well I am building things up inside the website so that all can see what is going on with short selling. Tons of work, and unfortunately, I am a one-man show. Right now, I am sitting in a library and about to put together the data and charts on all 100 stocks showing the various financial data charts on all the companies. On Saturday, I am going to do the short selling charts. Then, Monday, look for the video.
Thanks again for the comment. I think this contribution to the analysis will greatly enhance people’s understanding of what is going on.