For investors solely interested in making profits in marijuana stocks and not enduring investments, it’s a time to look away from the hype and toward the price charts of Aurora Cannabis (NYSE:ACB), Tilray (NASDAQ:TLRY) and Innovative Industrial Properties (NYSE:IIPR).
What else can be added to the conversation about marijuana stocks, their potential for long-term secular growth and in-tow massive profits? Honestly, not much without fear of regurgitating a very popular, well-worn narrative.
More importantly, the other reality is this up-and-coming market will see many more losers than winners. Even those that do survive will not guarantee today’s purchase will be a good investment, let alone the next Amazon (NASDAQ:AMZN) or Apple (NASDAQ:AAPL).
Bearing this in mind, it’s nice to dream about what might be. But I’d rather focus on making money today with the charts of these three marijuana stocks pointing at a profitable tomorrow and possibly longer-term endurance.
Aurora Cannabis (ACB)
Aurora Cannabis is the first of our marijuana stocks to put on the radar for purchase. As the monthly chart shows, ACB stock has been consolidating in a volatile congestion pattern for the past 1.5 years. But I believe Aurora’s fairly difficult price action is close to taking on more meaningful and constructive bullish behavior.
Last month ACB stock put together a higher low doji candlestick within its volatile uptrend. With the pattern finding support at the 50% retracement level from 2019’s cycle low to high, a more durable reassertion of the trend looks compelling.
Trading ACB Stock
My recommendation is to buy ACB stock above the doji high of $8.16. My first price target for profit-taking is the March high of $10.32. For a stop-loss, the low of the June candlestick could be used. However, an exit below $7.50 which is the opening price of the monthly doji looks is seen as sufficient exposure off and on the price chart.
There was a time when Tilray was at the top of the cannabis industry food chain, well at least in the eyes of investors. But the feasting on TLRY stock was short-lived. Tilray turned into a classic boom-bust story with shares tanking roughly 90% over the span of nine months.
Today however, conditions are looking up. TRLY stock is offering potentially explosive gains if still fairly sour investor sentiment can continue to turn the corner after shares bottomed in June. Due to this marijuana stock’s intense volatility, the weekly chart is how I’d approach buying shares in Tilray.
Trading TLRY Stock
The weekly chart is readying a purchase in TLRY stock above $51.03. This entry is the high from three weeks ago and the starting point for today’s still-developing, flat basing pattern. Given this marijuana stock’s volatile history, I’d estimate quick gains of 20% to 30% are certainly possible.
On the downside, in respecting this short base breakout entry, it’s crucial to keep an exit strategy tied to the formation’s low. With risk of around 10% based on last week’s low of $45.90, that’s easy to appreciate technically and from a money management standpoint.
Innovative Industrial Properties (IIPR)
Innovative Industrial Properties is a momentum name within the universe of marijuana stocks. It’s also not a producer, but actually a landlord for many of the sector’s budding operators. IIPR is also a real estate investment trust, which means it even pays investors regular income. But please don’t treat this one as a widows and orphans stock.
As the weekly chart exemplifies, IIPR stock is a high-flyer. In fact, it has gained nearly 900% since hitting an all-time-low shortly after its 2017 IPO. And shares are up nearly 200% just this year. Nevertheless, I’m looking for this very friendly trend to continue if shares can break out from its current bullish candlestick pattern.
Right now, and with one trading day left in the holiday-abbreviated week, this marijuana stock is taking on the shape of a bullish symmetrical triangle continuation pattern. And with stochastics backing up the price formation with an oversold crossover signal, IIPR is in position to go long.
Trading IIPR Stock
The recommendation for playing IIPR is to buy shares above $132. This allows for a bit of confirmation that the pattern breakout is real, without giving up too much in the way of profits.
On the upside, if IIPR’s momentum is going to reassert itself, I’d estimate $175 is possible based on a continuation move out of the pattern. To manage the position’s downside exposure, I’d opt to exit below $125 to minimize losses. And as our chart hints at, this stop-loss also avoids getting potentially smoked in a much larger correction, which sooner or later is inevitable.
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 options-based strategies and related musings, follow Chris on Twitter @Options_CAT and StockTwits.