Is Cronos Group Stock a Buy?
Marijuana companies had a dreadful 2019. The industry benchmark, the Horizons Marijuana Life Sciences ETF (OTC: HMLSF), fell by 36%. Investors hoped things would turn around in 2020 after Canada legalized recreational cannabis derivatives (edibles, vapes, concentrates, beverages, and more) in October 2019. And then the coronavirus pandemic hit. Surprisingly, the pandemic proved favorable for pot companies in the U.S. after marijuana was deemed essential in many locales, boosting sales. Canada also made marijuana an essential item, but the situation for Canadian companies remains dire. Headwinds including fewer legal stores than expected, regulatory delays, a growing illicit market, and supply constraints distressed sales.
Toronto-based Cronos Group (NASDAQ: CRON) has always played it safe by not aggressively going after acquisitions, instead using cash to focus on research and development with its products. With steady revenue numbers, it has kept its balance sheet strong -- enough to at least survive the COVID-19 storm. Moreover, its partnership with tobacco giant Altria Group (NYSE: MO) keeps its pockets deep, making it attractive to investors, as cash position has been a crucial matter in the cannabis industry. But are these reasons enough to invest in the stock?
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Source Fool.com
