Should You Jump on the Cronos Stock Rally?

Cronos Group (NASDAQ:CRON) may not be a household name for most investors, but this Canadian business is one of the largest marijuana companies in the world. It first made headlines in February, when Cronos stock became the first marijuana company to list on the Nasdaq, and it has found itself back at the forefront of the news over the last month as it has been attracting some big money.

The first big announcement was a deal with Agroidea SAS — a leading agricultural service provider in Colombia — that allows Cronos to expand into South America. The newly formed partnership will manufacture and export cannabis-based medicinal and consumer products for South America and the rest of the world. This was clearly viewed as a positive, as the stock rallied 14% and finished the day at a new all-time closing high.

Global growth is one aspect of the marijuana industry that is often overlooked. South America in particular is a region where growing marijuana can be inexpensive, so it is flush with potential upside. Plus, we may see further expansion as more countries move to legalize marijuana for both medicinal and recreational uses.

Then, earlier this week a report from Canadian newspaper The Globe and Mail reiterated rumors that more large beverage companies are looking to invest in the marijuana industry. That means Constellation Brands’ (NYSE:STZ) $4 billion investment in Canopy Growth (NYSE:CGC) two weeks ago was only the beginning.

Currently, there are rumors that companies like Anheuser-Busche InBev (NYSE:BUD), Heineken (OTCMKTS:HEINY), Coca-Cola (NYSE:KO) and Diageo (NYSE:DEO) are in talks with marijuana companies. And I suspect CRON is a top candidate to make a deal in the relative near term.

Huge Upside Potential for Cronos Stock

The recent rally in the shares has the company’s market cap quickly closing in on $2 billion, which is an impressive feat considering CRON was trading at just one-tenth that value a year ago.

Huge Upside Potential for CRON Stock

While Cronos stock has more than doubled in the last two weeks, I continue to view it as a solid buy on pullbacks. The long-term marijuana trend is still in its very early stages, and over time the growth potential is nearly endless.

Matthew McCall is the founder and president of Penn Financial Group, an investment advisory firm, as well as the editor of FUTR Stocks and the ETF Bulletin. Matt just launched two new investment advisories focused around the “next” generation investing theme. His trademark three-prong investing approach targets the mega-trends old Wall Street is missing out on. Click here for more information on the “NexGen” Experience.


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