Cronos Group’s run might not be over, this chartist says

Since last November, Cronos Group (Cronos Group Stock Quote, Chart TSX:CRON) has been an outstanding performer, rising an incredible 200 per cent since November 1st.

The stock has been trading sideways for the past month, however, which may lead investors to think that the run is over. Not necessarily, says Elliott Fishman of Scotia Wealth, who argues that a little consolidation is a good thing.

The whole of the pot sector has been on a tear since the start of 2019, with names like Canopy Growth and Aurora Cannabis posting big gains, while the Horizons Marijuana Life Sciences ETF (TSX:HMMJ), which tracks the North America cannabis sector, is now up 56 per cent year-to-date.

But while most of the pot stocks have yet to reach back up to their highs set in the weeks before recreational legalization in Canada, Cronos is a definite outlier in that respect. On October 16, CRON hit a high of $16.84 before dropping as low as $8.47 by the end of the month. But since then, the stock hasn’t looked back, passing the $16.00 mark by early December and climbing as high as $32.95 by early February.

All that upward momentum may be making investors a little edgy, but the pause that the stock has taken over the past month or so is actually a good thin, says Fishman, director of US and international equity trading at Scotia Wealth.

“It got stuck just above $30.00 and now it’s building a nice base. I like it here. It’s the first time up at these levels and I like it to take its time. I’d still buy it here,” says Fishman to BNN Bloomberg on Monday.

Ahead of Cronos’ fourth quarter fiscal 2018 financials due for delivery on March 26, investors will be keen to see how the licensed producer fared during its first full quarter within Canada’s adult-use market.

Cronos released its Q3 on November 13, reporting sales up 186 per cent year-over-year to $3.8 million, with average sale price per gram dropping from $8.50 in December 2017 to $7.00. The company said it lost $7.3 million over the quarter, due to higher general and administrative expenses as well as higher operating expenses.