The stock may be hurting, but it is expected to make a huge bounce upward soon
Since the beginning of June, Hexo’s stock price has dropped about 20%. This is a substantial amount more than the ETFMG Alternative Harvest ETF and is 35% lower than the cannabis company’s 52-week high. As a result, some analysts and investors have become extremely bearish on the stock, forcing it into a weaker position. However, they may have pulled the trigger too soon and Hexo is more than likely set for a big return.
The bears may not like the price drop, but investors should. The low price makes it ripe as an investment vehicle and Hexo has a lot going for it. It controls 30% of Quebec’s marijuana market and, as Canada’s marijuana industry continues to improve, Hexo will be in a position to be the beneficiary of improved sales.
Hexo is expected to post revenue of around $47.7 million for 2019. This is only the beginning, though, as its revenue could increase to as much as $300 million next year. Analysts have been hesitant to give the stock anything better than a “underperform” rating because of its current earnings statement and a lack of forward progress in Canada, but the latter is rapidly changing and the Canadian market is on the verge of explosion.
Hexo is also looking to get into the US CBD (cannabidiol) market and has partnered with Molson Coors to roll out cannabis beverages. That partnership is expected to begin distribution of beverages before the end of the year, which will put Hexo in an awesome position. If Hexo’s revenue growth over the next year is able to meet, or beat, forecasts, expect Hexo’s stock to jump tremendously.