Following the legalization of cannabis in North America, many companies in Canada came into prominence among investors and one of those was Hexo (HEXO:NYSE). The company boasted of being one of the bigger operators in Canada and had access to the United States market as well through its partnership with Molson Coors. Those factors did not help the stock much and in recent times it has performed unimpressively.
It was believed that the coronavirus pandemic, the lockdowns, and the associated stress was going to lead to a surge in cannabis sales. However, that did not come to pass and many Hexo investors were left frustrated.
That being said, the Hexo stock gained between 1st and 26th October. In light of such gains, it is pertinent to wonder if it could be a worthwhile cannabis investment.
While it is true that the cannabis sector can be highly volatile, it is also true that it can be considered a high risk-high reward segment and Hexo could well be the stock to track in that regard.
However, there is uncertainty ahead owing to the Presidential elections and potential recovery. Hence, it is important for investors to have a look at the immediate factors that could help in boosting Hexo’s operations.
Beverage and CBD Pathway
Hexo is involved with Molson Coors in the joint venture Truss Beverages, which is engaged in creating CBD laced beverages. It may not have helped the stock this year, but it could in the future considering the fact that Truss gives Hexo a path into the lucrative American market.
CBD has gained considerable traction among American consumers and according to a poll from 2019, as many as 14% of the population revealed that they consumed CBD products.
14% may not be a lot but there is a promise for further growth as economic uncertainties and the possibility of a second wave of coronavirus infections make people more agitated.
On the other hand, the stigma associated with CBD consumption is also expected to be a thing of the past as more and more people get stressed due to the prevailing situation.
The products from Truss Beverages could also be a major factor in changing attitudes since people are expected to take to a beverage more easily than a vaping product. However, it is also necessary to keep in mind that the risks with the company are not going to go away, and hence, investors should be cautious.
Neither PSN nor its owners, members, officers, directors, partners, consultants, nor anyone involved in the publication of this website, is a registered investment adviser or broker-dealer or associated person with a registered investment adviser or broker-dealer and none of the foregoing make any recommendation that the purchase or sale of securities of any company profiled in the PSN website is suitable or advisable for any person or that an investment or transaction in such securities will be profitable. The information contained in the PSN website is not intended to be, and shall not constitute, an offer to sell nor the solicitation of any offer to buy any security. The information presented in the PSN website is provided for informational purposes only and is not to be treated as advice or a recommendation to make any specific investment. Please consult with an independent investment adviser and qualified investment professional before making an investment decision.