2 Smoking Weed Stocks Set for Big Gains

Canopy Growth reported record net revenue for the third quarter

Feb 15, 2019 at 9:23 AM
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The shares of Aphria Inc (NYSE:APHA) are trading up 6.1% ahead of the bell, after a special review concluded the cannabis company's purchase of LATAM Holdings was sound. The committee also offered suggestions for improvement, including board compensation and adopting a formal strategic planning process.

Since bottoming at a record low of $3.75 on Dec. 6, the shares of APHA have climbed more than 142%, based on last night's close at $9.09. However, they remain below $11.65, which is where they opened on Nov. 2 -- their first day of trading on the New York Stock Exchange (NYSE).

Options traders have targeted more upside, though. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have bought to open 3.73 calls on Aphria over the last 10 days for every put, with the soon-to-expire February 12.50 call drawing particular interest among call buyers.

Canopy Growth Corp (NYSE:CGC) stock is 3% higher in electronic trading, after the pot producer reported a slimmer-than-expected fiscal third-quarter loss and said net revenue hit a record high in the three-month period. CGC is fresh off its third straight gain, and another win today would mark its longest daily winning streak since mid January.

More broadly, the shares have only finished the week lower once in 2019 -- boasting 71.6% year-to-date gain -- and were already up 1.5% this week through last night's close at $46.12. As such, options traders and analysts are bullish on CGC stock -- with six of seven brokerages maintaining a "buy" or better rating -- while short sellers have started to capitulate to the upward momentum. In the most recent reporting period alone, short interest plunged 20%.

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