Key Points
Tilray Brands' shares are gaining ground on the possibility of cannabis legalization in the U.S.
However, similar developments didn't lead to much success for the company in Canada.
Tilray Brands still faces too many unknowns, and the stock remains too risky for now.
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Is this the year Tilray Brands (NASDAQ: TLRY) finally starts its comeback? During the past five years, the company has lagged broader equities as the cannabis industry, where it is a leader, continues to fall far short of expectations. However, Tilray Brands has been on fire this year, and during the past six months alone, the stock is up more than 150% (as of Oct. 2). Yet, the shares are still well into penny stock territory and are currently trading for about $1.65 apiece.
If Tilray can maintain the momentum of this year through the end of the decade, those who miss out on this opportunity to invest in the stock might regret it in the future. Let's see whether there is more upside ahead for Tilray Brands.
Image source: Getty Images.
Why is Tilray Brands performing well this year?
Tilray's business spans several industries, including medical and recreational cannabis, the purchase and resale of pharmaceutical products, hemp-based wellness products, and the company's craft brewing operations. Tilray also operates in many countries, including Canada (where it is based), the U.S., Germany, and others. The company's biggest opportunities, however, might lie in the U.S., especially if cannabis is legalized at the federal level, which it hopes will be the case.
During the past six months, Tilray's shares have soared precisely because of optimism regarding U.S. marijuana legalization. The latest signs of potential developments came directly from the White House. In August, President Donald Trump said that his administration was considering rescheduling cannabis from a Schedule 1 substance (the most dangerous category) to a Schedule 3 (substances with medical uses, but with risks). While that is short of full-blown legalization, it might still move the needle for the industry.
And more recently, Trump posted a video on social media that promoted the alleged health benefits of CBD for seniors. Wall Street is very excited about these developments, and Tilray's shares jumped on this news.
We have seen (a version of) this movie before
Recreational use of cannabis has been legal in Canada since late 2018. Shares of leading pot companies in the country soared as a result of that milestone, as investors rushed to profit from what they thought would be a huge and ever-growing market. Things didn't turn out that way, however. Even though cannabis was legalized in Canada, the market opportunity has not been what many expected.
[SRC] https://finance.yahoo.com/news/stock-doubled-past-6-months-094000391.html
