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Tilray (NASDAQ: TLRY ) has been on a tear recently. TLRY stock is up more than 200% this month alone! And it's not the only one. Marijuana stocks in general are fired up big time. Investors have poured an avalanche of money into the sector sparked by two events and hopes for a third.
First there was the massive $4 billion investment from Constellation Brands (NYSE: STZ ), the $40 billion wine, beer and liquor giant, in Canopy Growth (NYSE: CGC ), which increased its stake in the company from less than 10% to 38%. There are reports that other alcohol companies, like Diageo (NYSE: DEO ), are on the prowl for similar investments in marijuana stocks.
Second, we're seeing a lot of money coming out of cryptocurrencies and moving into other libertarian causes, with marijuana being the main beneficiary.
And third, there are hopes that Congress will return policy and the regulation of marijuana to the states. Right now, 31 states (and the District of Columbia) allow the use of cannabis for medicinal purposes and 9 (plus D.C.) have legalized it recreationally. If Congress returns oversight to the states, the adoption of recreational use could spread similar to the way the legalization of sports gambling is spreading state by state.
There's also a wildcard for the industry: Attorney General Jeff Sessions. I suspect the day he exits the Trump administration marijuana stocks will soar since there will likely be less opposition on a federal level. Eventually, the government will have to drop its legal opposition even if it's only on paper to allow for interstate banking.
The Cannabis Craze and TLRY Stock
The huge move into marijuana names has been especially good for Tilray stock, which is a global leader in medical cannabis research, cultivation, processing and distribution. TLRY stock has been on fire recently as Wall Street embraces the cannabis craze. Tilray stock soared as much as 300% (before settling to a still insane 240% gain) since August 1 .
I do see the stock going higher over time, but I am cautious here given its meteoric rise in the last month. In addition, the most recent quarterly earnings report showed revenue of $9.5 million, which is low to support a $8.1 billion valuation. And I am also not quite ready to recommend investing in the marijuana space yet, but you can be sure it's on my radar.
I wouldn't dissuade traders from TLRY, but it's hard to give it a firm price target right now.
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