Will Cannabis Stocks Soar Again?

The most important time of the quarter has arrived for cannabis stocks.

Earnings season is when companies reveal sales and earnings results for the previous quarter – and just as important, the company provides guidance on what investors should expect for the following quarter.

Quarterly earnings that beat expectations have a documented history of helping shares outperform the broader stock market in the following weeks and months.

On Wall Street, this pattern is known as the post-earnings announcement drift (PEAD).

Post-earnings announcement drift is the tendency for a stock’s cumulative abnormal returns to drift in the direction of an earnings surprise for several weeks (or even several months) following an earnings announcement.

Here are some more details from Wikipedia.

Once a firm’s current earnings become known, the information content should be quickly digested by investors and incorporated into the efficient market price. However, it has long been known that this is not exactly what happens.

For firms that report good news in quarterly earnings, their abnormal security returns tend to drift upwards for at least 60 days following their earnings announcement. Similarly, firms that report bad news in earnings tend to have their abnormal security returns drift downwards for a similar period. This phenomenon is called post-announcement drift.

cannabis stocks

The power and reliability of the PEAD was on full display in the cannabis sector last quarter. An elite group of early cannabis leaders delivered impressive quarterly results that have been driving shares higher for the last two months. Continue reading "Will Cannabis Stocks Soar Again?"

Top Stock To Capitalize On Connecticut's Move To Legalize

The US cannabis market just got another big boost from one of the largest, most populous states on the East Coast.

Connecticut just became the latest US state to make a big move towards legalizing recreational cannabis as state legislators advanced a critical bill.

Here are some more details from Marijuana Moment.

A key committee in the Connecticut legislature approved a bill to legalize marijuana on Monday.

The General Law Committee, which is one of two panels that heard testimony about legalization legislation last week, voted 10 to 8 to advance the bill.

Beyond legalizing cannabis for adult use, the legislation also includes a number of social equity provisions aimed at encouraging participation in the legal industry by individuals from communities that have been disproportionately impacted by the drug war. A governor-appointed commission would be charged with giving such individuals advance time to apply for a marijuana business license and promote diversity in hiring.

The vote was an important milestone that moves Connecticut much closer to legalizing recreational cannabis.

Connecticut is already home to a thriving medical cannabis market. Continue reading "Top Stock To Capitalize On Connecticut's Move To Legalize"