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4 Cannabis Stocks to Avoid in May

Stock MarketsMay 03, 2021 04:30PM ET
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© Reuters. 4 Cannabis Stocks to Avoid in May

The cannabis industry is booming on the back of the legalization hype and increased acceptance of CBD products. However, not all pot companies possess sufficient fundamental strength and liquidity to capitalize on the industry tailwinds. Given that the cannabis market is becoming more competitive with the entry of new players, we think investors should avoid financially weak and overvalued cannabis stocks Canopy Growth (NASDAQ:CGC), Tilray (NASDAQ:TLRY), Sundial Growers (NASDAQ:SNDL), and OrganiGram Holdings (NASDAQ:OGI). Let’s discuss these names.The cannabis landscape has been sprouting new opportunities of late because of increasing legalization in the United States and the growing acceptance of marijuana’s medical and recreational uses. Although marijuana usage has yet to be made legal at the federal level, state legalization momentum remains strong as more governors take steps to end marijuana prohibition in their states.

However, the cannabis space is highly competitive and not all players are in a good shape financially. In fact, now that Mexico has passed a bill to legalize recreational pot use—making it one of the world’s largest cannabis markets—the business climate for Canadian and U.S. pot operators could become even more competitive.

Against such a backdrop, the stocks of cannabis companies Canopy Growth Corporation (CGC), Tilray Inc . (TLRY), Sundial Growers Inc . (SNDL) and OrganiGram Holdings Inc. (OGI), which are expensive, and the companies financially inadequate, should be avoided now.

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4 Cannabis Stocks to Avoid in May
 

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