Bottom feeders are moving into Canada’s marijuana sector, buying beaten-up stocks after a brutal six-month selloff,. For investors who ignored the sector when the stocks were rallying to record highs on frothy expectations, perhaps now is the time to give pot stocks another look. The reason: While stock valuations and investor sentiment have changed, the cannabis market hasn’t.
Perhaps demoralized retail investors have lost interest in a stock like Canopy Growth, for instance. But institutional investors are another story. A look at Canopy’s biggest 20 investors shows that these savvy money managers have increased their holdings, on a net basis, by more than five million shares since the end of September.BMO’s chief investment strategist Brian Belski started 2019 forecasting that the S&P/TSX Composite Index would hit 17,000 by the time this year was out.
In his new market outlook released this past week, his “base case” 2020 year-end price target is 18,200, a healthy gain of 7 per cent from where the index stands today. His reasoning is similar to last year when looking ahead to 2019. The TSX is still beaten down versus other global markets and valuations are reasonable given prospects for earnings growth.