Markets

This Is the Best Way to Approach Cronos Stock Today

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

Others are buying into it off and on the price chart. But if you're going to go long Cronos (NASDAQ: CRON ) without the risk of a "what was I smoking" outcome, please chose to trade CRON stock rather than invest in hope.

Let me explain.

To be sure, the cannabis industry is big business. And Thursday's farm bill, which legalizes industrial hemp, is the latest development to support the growth and legitimacy of this sprawling area. But don't think for a second that investing in any one of today's go-to publicly traded companies, isn't highly speculative business. They all are, including CRON stock.

From the larger market caps like Tilray (NASDAQ: TLRY ) or Aurora Cannabis (NYSE: ACB ), to New Age Beverages (NASDAQ: NBEV ), whose CBD products stand to gain under Thursday's legislation, or Canopy Growth (NYSE: CGC ), which enjoys a strategic partnership with Constellation Brands (NYSE: STZ ), pot stocks as a group are highly speculative.

CRON stock bulls might argue similar to Canopy, Cronos Group now enjoys its own healthy size $1.8 billion partnership with Altria (NYSE: MO ). That's a vote of confidence in the company and CRON's management.

The recent deal is also another sign big business is buying into the marijuana field to get a piece of the action in this massive growth market. Bullish Cronos investors may also point out that unlike CGC, business being transacted on the price chart in CRON stock are growing like the color of money.

Still, similar to the internet during the "dot.bomb" bust or the much more recent hyped-up cryptocurrency craze turned bust, investing for the long term in cannabis and a name like CRON stock is inherently more challenging than simply trading Cronos and not having to worry about the "what was I smoking" potential buy-and-hope, longer-term outcome.

CGC Growth Daily Chart

History lessons such as the internet bubble are important to appreciate when investing in CRON stock. Ultimately, there will be big winners in cannabis similar to Amazon (NASDAQ: AMZN ). But remember or know this, for many years, one of the market's greatest modern bull runs looked like a terminal dog with fleas.

Closer to home, CRON stock investors need look no further than medicinal and well-supported peer CGC stock to get a whiff of what the future may look like. Shares of Canopy Growth have quickly retreated from being a market leader and having a nice constructive price chart to shedding more than 50% in two months.

CRON Stock Daily Chart

If history teaches us anything with examples like AMZN or CGC stock, fortunes can change rapidly. That's particularly true of newer markets like the cannabis industry and as our second price chart reflects, a still mostly smoking-hot CRON stock.

The moral of the story is if you're bullish on Cronos stockCRON stock should be on your radar as a trade, not a buy-and-hope investment. Here's what investors need to know about Cronos., keep the enthusiasm contained to a trade and not a buy-and-hope investment. For investors agreeable with this logic, waiting for momentum to reassert itself above $12 and 10 cents above January's "first whiff" highs, looks much better than the potential alternative future for CRON stock.

Disclosure: Investment accounts under Christopher Tyler's management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler's observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual.. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits .

More From InvestorPlace

Compare Brokers

The post This Is the Best Way to Approach Cronos Stock Today appeared first on InvestorPlace .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

AMZN CRON STZ MO TLRY

Other Topics

Stocks

Latest Markets Videos

    InvestorPlace

    InvestorPlace is one of America’s largest, longest-standing independent financial research firms. Started over 40 years ago by a business visionary named Tom Phillips, we publish detailed research and recommendations for self-directed investors, financial advisors and money managers.

    Learn More