2020 May Be the Year Cannabis Stocks Surge Like Apple

Why go for overbought FAANG stocks that have limited upside when you can buy a badly beaten cannabis industry that’s ripe for bottom-picking?

After a strong start in 2019, the cannabis industry entered a vicious bear market. Weak sales performance, as well as government issues, drove pot stocks to record lows. Exchange-Traded Fund MJ, a bellwether of the industry’s performance, printed a yearly high of $39.25 in March 2019. The ETF then plunged to…

$15.95 eight months later for a massive 59.4% devaluation.

” alt=”” aria-hidden=”true” />MJ bubble burst in 2019
MJ bubble burst in 2019. | Source: TradingView

The good news is that the marijuana industry is starting to come to life. One analyst even believes that pot stocks will mirror Apple’s performance last year.

Leading Cannabis Stocks Are No Longer Trading Above Their Intrinsic Value

Many were pulled in by the cannabis boom between 2018 and early 2019. The pot industry was considered high-growth. Investors bought marijuana stocks regardless of fundamental value out of the belief that prices will go higher. During that time, leading cannabis names were extremely overvalued.

Cronos Group (TSE:CRON) had an astronomical PE ratio of 1,013.41 in September 2018. Canopy Growth Corporation’s (TSE:WEED) PE ratio skyrocketed to 324.7. With the correction over the last few months, many cannabis stocks are no longer overvalued. Some like Cronos Group are actually undervalued with a PE ratio of 9.788.

In short, the bear market eliminated the mania in the industry. Now, pot stocks are in a position to grow in a sustainable fashion.

Marijuana Industry Flashing Bottoming Out Signals

The widely-followed traderstewie took to Twitter to share his rosy outlook on the distressed industry. The analyst wrote that a new year often comes with a new trend. Last year, Apple was one of the most dominant stocks in the S&P 500. This year, pot stocks could grab headlines.

” alt=”” aria-hidden=”true” />Pot stocks showing signals indicating that the bear market may be over
Pot stocks showing signals indicating that the bear market may be over. | Source: Twitter

Based on traderstewie’s charts, Apple bottomed out in…

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