OGI - Is Cronos Group Ready to Make a Comeback?
Marijuana companies started the year on a strong note. A wave of new laws that were enacted late last year helped drive many pot stocks to new heights. Things look much less impressive at the moment, though. The past few months have been brutal for the marijuana sector, and Cronos Group Inc (NASDAQ: CRON) has not escaped this apocalypse. A round of disappointing financial results -- coupled with a series of downgrades from several analysts -- have taken a toll on the Toronto-based firm. As a result, Cronos' shares are only worth a fraction of what they were in mid-March. While I do not think Cronos' investment thesis is particularly compelling, maybe these recent headwinds have created an excellent entry point for long-term investors. Is Cronos worth buying at current levels?
Why Cronos might still be a Buy
Perhaps the best argument for Cronos still being an attractive option is its partnership with Altria Group (NYSE: MO). By way of a reminder, the tobacco company invested $1.8 billion for a 45% stake in Cronos. This partnership allows Cronos to have access to some much needed cash. The firm seems to be putting these funds to good use, too. Back in May, the marijuana company announced the opening of a research facility, or more precisely, a cannabinoid device R&D facility, in Israel. The goal is to develop state of the art vaporizer devices for cannabis consumption. This move may be a stepping stone to Cronos entering the high-margin cannabis derivative market, which is set to open in Canada sometime this fall.