The rally across the stock market over the past six weeks has been sharp and powerful, driving new money off the sidelines and dealing a major blow to bears, with the Nasdaq lifting over 20% higher since June (1). Retail investors appear to be active once again, powering meme stocks and growth names higher as interest rates cool off ahead of Wednesday’s critical CPI inflation data point (2).
Among the best performing names, we see several themes pushing to the forefront so far in August. One of the most interesting groups to catch fire this month is the cannabis and CBD space (3).
Cannabis stocks like HEXO Corp. (Nasdaq:HEXO) and Tilray Brands Inc. (Nasdaq:TLRY) have been soaring higher, up 25% and 21%, respectively, over the past week alone (4, 5)
But the bigger story may be in CBD stocks, where momentum has been just as prevalent, but the rally may have even more room to run. Companies with strong ties to the CBD space include Altria Group Inc. (NYSE:MO), Jazz Pharmaceuticals PLC (Nasdaq:JAZZ), SNDL Inc. (Nasdaq:SNDL), Cronos Group Inc. (Nasdaq:CRON), cbdMD Inc (NYSEAMERICAN:YCBD), and Village Farms International Inc. (Nasdaq:VFF), as well as an emerging small cap name still trading on the OTC: Ubiquitech Software Corp. (OTC US:UBQU), which is the official publicly traded ticker for the CannazALL brand.
As we note below, some names in the cannabis and CBD space have crossover relevance to the multi-trillion-dollar metaverse theme as marketing and commerce channels for these products expand into the new technological frontier. (6)
Drilling deeper, CBD may have an even more appealing long-term growth narrative than Cannabis due to its smoother legislative runway toward national acceptance and what appears to be the more dramatic underperformance of CBD stocks over the past two years relative to long-term industry growth forecasts.
As of 2022, CBD that comes from hemp and has 0.3% or less THC is already legal at the federal level whereas pot doesn’t have federal clearance with many roadblocks still ahead (7). In addition, the total Global CBD Market is estimated to reach USD $47.22 Billion by 2028, up from USD 4.9 Billion in 2021, growing at a compound annual growth rate of 21.3%. That’s a stunning growth outlook. Even more remarkable is the fact that many stocks in the CBD space have declined by 75-90% over the past 24 months. (8)
With that in mind, we take a closer look below at some of the most interesting stories emerging in the CBD space as fresh momentum catches fire in these beaten down names.
Jazz Pharmaceuticals PLC (Nasdaq:JAZZ) operates as a biopharmaceutical company focused on the identification, development and commercialization of pharmaceutical products in the areas of narcolepsy, oncology, pain and psychiatry.
Its product portfolio includes: Xyrem, Xywav, Sunosi, Erwinaze, Vyxeos, Defitelio, and Zepzelca. The company was founded by Bruce C. Cozadd in March 2003 and is headquartered in Dublin, Ireland.
Jazz Pharmaceuticals PLC (Nasdaq:JAZZ) recently announced top-line results from the Phase 3 RELEASE MSS1 trial (NCT04657666) evaluating nabiximols oromucosal spray (JZP378, or Sativex ®, ex-U.S.) on clinical measures of spasticity in individuals with multiple sclerosis (MS). Nabiximols oromucosal spray is a complex botanical mixture formulated from extracts of the cannabis sativa plant and contains the cannabinoids delta-9-tetrahydrocannabinol (THC) and cannabidiol (CBD), as well as other cannabinoid and non-cannabinoid components.
“We remain committed to the nabiximols program and are actively assessing the RELEASE MSS1 trial results, which will be presented at a future medical meeting. We look forward to additional data from two other ongoing trials that have the potential to support a U.S. FDA New Drug Application submission,” said Rob Iannone, M.D., M.S.C.E., executive vice president, global head of research and development at Jazz Pharmaceuticals. “I would like to extend a heartfelt thank you to all those who supported and made this study possible, including the patients who were enrolled, their families, our investigators, staff, and all of the dedicated Jazz employees.” (9)
The context for this announcement is a bit of a bid, with shares acting well over the past five days, up about 2% in that timeframe. (10)
Jazz Pharmaceuticals PLC (Nasdaq:JAZZ) managed to rope in revenues totaling $932.9M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 24.1%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels exceeding current liabilities ($771.3M against $705.4M). (11)
Ubiquitech Software Corp. (OTC US:UBQU) is one of the more interesting speculative names in the CBD space. Through its subsidiary CannazALL, UBQU is rapidly pushing toward a possible leadership role in the hemp CBD health industry as the industry expands. The company utilizes its state-of-the-art global internet marketing, Metaverse marketing, Affiliate marketing, Direct Response (DRTV) Television, Radio, Internet Content, SEO, and traditional marketing to drive traffic to the CannazALL.com Website to succeed in the multi-billion-dollar industry CBD health space.
UBQU is particularly interesting because it is working from a very small market cap of just $5.4 million but has an established brand and ties together CBD and metaverse themes, linking it outside of the cannabis and CBD space to technology names such as Unity Software Inc. (NYSE:U), Roblox Corp. (NYSE:RBLX), NVIDIA Corp. (Nasdaq:NVDA), and Snap Inc. (NYSE:SNAP), as the multi-trillion-dollar metaverse investment premise gains traction. (12)
Ubiquitech Software Corp. (OTC US:UBQU) announced just this morning that it has joined Rakuten, the world’s largest Affiliate Marketing company and platform. By joining Rakuten, the company expects to dramatically expand its Affiliate marketing revenue streams on sales of hemp derived CannazALL CBD products. According to its release, CannazALL currently implements its own in-house Affiliate program, plus its Affiliate program on ShareASale. In adding Rakuten, the company now has access to many more Affiliate publishers and a significantly expanded reach in the market.
UBQU CEO James Ballas noted, “We believe that affiliate marketing is a great way to get the word out about our products and to create new customers daily. This is a big addition to our marketing program and the Company expects growing sales through our affiliate partners in fourth quarter and beyond”
With its Affiliate Marketing programs CannazALL Colorado grown and formulated CBD, which currently offers over 35 products, is marketed on hundreds of websites, blogs, news articles, and more, and the Company provides many special product promotions and incentives to its growing list of Affiliates to drive traffic and sales. The Company will keep shareholders apprised as to its newest Affiliate program through further news and Tweets.
Ubiquitech Software Corp. (OTC US:UBQU) CMO Frank Casella added, “In keeping with our aggressive strategy for e-commerce, we have always recognized the power of these types of programs, and our decision to go with the largest and most effective was very exciting for everyone here. We’re looking forward to a long and lucrative relationship with Rakuten. (13)
Cronos Group Inc. (Nasdaq:CRON) engages in the production and distribution of cannabis. Its brands include PEACE NATURALS, COVE, Spinach, Lord Jones, and PEACE+.
The company bills itself as an innovative global cannabinoid company committed to building disruptive intellectual property by advancing cannabis research, technology and product development.
Cronos Group Inc. (Nasdaq:CRON) recently announced the launch of the first of what is expected to be a range of products, in partnership with Geocann, which will utilize the advanced VESIsorb® delivery system. This technology provides better bioavailability and faster absorption. VESIsorb® formulations have set the industry benchmark in peer-reviewed published studies, delivering superior pharmacokinetic performance, including fast absorption, higher plasma concentration, and greater area under the curve.
“We are committed to bringing breakthrough innovations to the market, providing consumers with differentiated and high-quality products,” said Mike Gorenstein, Chairman, President and Chief Executive Officer, Cronos. “Working with Geocann’s technology enables us to expand our product offering to bring consumers a fast-acting cannabinoid product with a quicker onset than previously available, along with improved efficacy, helping enhance and differentiate effect and experience.” (14)
Recent action has seen 21% added to share values of the listing over the past month of action, but this action is running counter to the larger trend in the name. CRON shares have registered increased average transaction volume recently, with the past month seeing 21% more transaction volume compared to the stock’s longer term average trading profile. (15)
Cronos Group Inc. (Nasdaq:CRON) has a significant war chest ($1.2B) of cash on the books, which stands against about $50.3M in total current liabilities. CRON is pulling in trailing 12-month revenues of $109.1M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 98.6%. (16)
References:
- https://finance.yahoo.com/quote/%5EIXIC/
- https://www.cnn.com/2022/08/08/investing/meme-stocks-bed-bath-beyond-gamestop-amc/index.html
- https://www.fool.com/investing/2022/08/08/why-tilray-canopy-and-aurora-cannabis-just-jumped/
- https://www.tradingview.com/chart/?symbol=NASDAQ%3AHEXO
- https://www.tradingview.com/chart/?symbol=NASDAQ%3ATLRY
- https://www.bloomberg.com/news/articles/2021-11-17/metaverse-is-a-multitrillion-dollar-opportunity-epic-ceo-says?sref=8OqHAIMJ
- https://purecraftcbd.com/pages/states
- https://www.globenewswire.com/en/news-release/2022/02/08/2380516/0/en/CBD-Cannabidiol-Market-Size-to-Reach-USD-47-22-Billion-by-2028-Increased-Demand-for-CBD-Cannabidiol-for-Health-and-Wellness-Purposes-to-Drive-Market-Vantage-Market-Research.html
- https://finance.yahoo.com/news/jazz-pharmaceuticals-announces-top-line-113000844.html
- https://www.tradingview.com/chart/?symbol=NASDAQ%3AJAZZ
- https://www.marketwatch.com/investing/stock/jazz?mod=search_symbol
- https://www.ig.com/en/trading-strategies/top-10-metaverse-stocks-to-watch-220429
- https://www.otcmarkets.com/stock/UBQU/news
- https://finance.yahoo.com/news/cronos-group-partners-geocann-leverage-113000552.html
- https://www.tradingview.com/chart/?symbol=NASDAQ%3ACRON
- https://www.marketwatch.com/investing/stock/cron?mod=search_symbol
