Making the Grade

Best-Performing Pot Stocks Following 4/20 2018

Maybe you were in Denver at a Carl’s Jr., chowing down on a CBD-infused burger.

Maybe you were in Washington, D.C., heading over to the National Cannabis Festival.

Maybe you stayed home and tried to beat your personal best on Robotron: 2084. Or maybe you simply spent another beautiful Saturday morning at the farmers market.

How you spent your 4/20 doesn’t matter…

But as investors, we have to dig through the data to look for any potential nuggets that could help our stock-picking strategies.

So that’s exactly what my team and I did for this week’s Making the Grade.

We explored what impact 4/20 had on share prices. And we scoured price data to see if there were some verifiable trends we could extrapolate and exploit.

Here’s what we found…

In 2018, 4/20 marked the beginning of a blazing run for a number of cannabis companies.

In fact, we saw shares of 26 companies surge 100% or more in the six months following 4/20. On top of that, there were 14 moves of 200% or more.

Meanwhile, 74 pot stocks posted positive returns during that six-month stretch.

But the top 10 performers really stole the spotlight. The smallest gain here topped 300%…

Microcap EPHS Holdings (OTC: STNN) skyrocketed 780% in the six months following 4/20. And that was slightly better than the 750% gain from Organic Flower Investments (CSE: SOW).

But it wasn’t just penny stocks that enjoyed a terrific run.

In 2018, we also saw profitable post-4/20 performances from CV Sciences (OTC: CVSI), MedMen Enterprises (OTC: MMNFF), Aleafia Health (TSXV: ALEF) and MariMed (OTC: MRMD).

Those were life-changing gains from companies we all recognize here.

Not to mention, we also saw 100% moves from Green Thumb Industries (OTC: GTBIF) and Harvest Health & Recreation (OTC: HRVSF).

Here’s a really important takeaway, though… Shares of Canopy have averaged a 68% gain in the six months following 4/20 over the past five years.

So that’s a pretty solid trend to beat, even though the amount of data is limited at the moment.

Now, it wasn’t just high fives and home runs for the entire cannabis sector following last year’s 4/20.

There were plenty of stocks that stumbled.

Shares of 60 companies were either flat or down over the next six months.

And here were the lowly 10 laggards in 2018…

Isodiol International (OTC: ISOLF) really struggled, as did GSRX Industries (OTC: GSRX) and Vireo Health International (CSE: VREO). All lost more than 65%.

And there were some notable names just outside the bottom 10, like Green Growth Brands (OTC: GGBXF), Vivo Cannabis (TSXV: VIVO) and Zynerba Pharmaceuticals (Nasdaq: ZYNE).

So last year’s post-4/20 performance was split. And that was even with a number of notable catalysts on the horizon, including Canada’s adult-use market being legalized and then going live.

That means it’s not a rising tide that’s lifting all boats. Because plenty sank.

But we are talking about a nascent industry.

I’ll leave you with this to consider…

Year to date, the U.S. Marijuana Index is up 40.5%…

In 2018, the index gained 40% in the six months following 4/20.

In 2016, it gained more than 100% during that span.

And we’ve seen a consistent trend of gains from the industry’s biggest player, Canopy Growth, in the six months following cannabis’ “Black Friday.”

That means there’s reason to be optimistic – purely from a trend standpoint – that we’ll see strong performances from the right pot stocks in the months ahead.

Here’s to high returns,

Matthew