Hexo Looks Forward

Big Cannabis has had such a rough year that there just isn’t a lot of downside left in these stocks.

That’s in the background of the industry’s remarkable staying power this week. But then again, good news from Hexo Corp. (NYSE:HEXO) didn’t hurt, with sales last quarter jumping 30% and management offering guidance that the growth will translate into profits within the coming year.

On the surface, it’s great news. In a recession, it’s even better. So, it’s no wonder that the stock surged 22% this week, lifting the entire group in the process.

Only the lingering stink around cannabis stocks is holding HEXO back now. If this was a technology start-up or a biotech developer, it would probably rally even harder from here.

This may be a new beginning for HEXO and its larger counterparts. Long-term shareholders have needed to step back to the brink of insolvency.

A week ago, this company was facing expulsion from the NASDAQ. Even here at $1, it looks extremely vulnerable to being stripped of its listing.

We’re back at square one. But the numbers from here look good. The company’s management has turned the business around.

Maybe this is the first breath of a new springtime for the cannabis stocks and a new beginning. We’ll just have to see.

Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street. The Financial Times describes Ms. Kramer as “A one-woman financial investment powerhouse” and The Economist distinguishes her as “one of the best-known investors in America”. Ms. Kramer is often quoted in publications such as the Wall Street Journal, New York Post, Bloomberg, and Reuters. She is a frequent guest commentator on CNBC, CBS, Fox News and Bloomberg, providing investment insight and economic analysis. Ms. Kramer was an analyst and investment banker at Morgan Stanley and Lehman Brothers. Ms. Kramer founded and ran a long-short hedge fund and has been chief investment officer overseeing debt and equity portfolios. Since 2010, Ms. Kramer’s financial publications have provided stock analysis and investment advice to her subscribers. Her products include GameChangers, Value Authority, High Octane Trader, Triple-Digit Trader, 2-Day Trader, IPO Edge and Inner Circle. Ms. Kramer, a Certified Fraud Examiner, has also testified as an expert in investment suitability, risk management, compliance, executive compensation, and corporate governance. Ms. Kramer received her MBA from the Wharton School at the University of Pennsylvania and her BA with honors from Wellesley College. Ms. Kramer has provided testimony regarding investment policy to the U.S. Senate and is a frequent speaker on the markets, portfolio management and securities fraud and compliance. Ms. Kramer is also the author of “Ahead of the Curve” (Simon & Schuster 2007) and “The Little Book of Big Profits from Small Stocks” (Wiley 2012).