Here's When I See Cannabis Stocks Being Hot Buys Again
The bear market has been pummeling stocks for much of the past year. But in the cannabis industry, investors have been dealing with falling valuations for much longer than that. Since 2021, shares of Tilray Brands (NASDAQ: TLRY) and Canopy Growth (NASDAQ: CGC) are down 70% and 92%, respectively. These aren't just dips; they are all-out crashes. And these declines are common in the industry as there simply hasn't been a reason to invest in pot stocks of late. Here's what I think needs to happen for these stocks to be hot buys again.
One thing that can and often does get investors bullish about pot stocks is when there's the hope that legalization in the U.S. might be on the horizon. A classic example of that is what happened when Joe Biden was elected president in 2020 and there was optimism in the industry that with a Democrat in power, it might lead to some progress on marijuana reform. Between November 2020 and February 2021, shares of Tilray and Canopy Growth more than doubled in value.
Those stocks have given back those gains since then. And pot stocks will not likely be hot buys again until there's a similar catalyst that gets cannabis investors excited. There was some noise late last year about marijuana legalization and guess when that happened -- just before the midterm elections. Although that failed to deliver much of a boost for pot stocks, you can start to see the role that politics can play in determining just how much excitement there is around the industry, which, in turn, determines the level of bullishness behind pot stocks.
Source Fool.com
