Canadian cannabis producer Tilray Brands (TLRY)rose Monday following a Donald Trump social media post that lifted cannabis stocks. So, is TLRY stock a buy now?
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Trump, the Republican presidential nominee, posted on his social media platform, Truth Social, on Sunday that he supports ending arrests for adults with small amounts of marijuana for personal use. He also backed research for medical marijuana and banking laws allowing cannabis companies to use credit-card transactions.
In addition, heagreed with assigning cannabis to a lower classification drug. The Biden administration also supports the recategorizing, which would move cannabis to the lower Schedule III class. Currently cannabis is listed as a Schedule I drug, in the same category as LSD and heroin.
Tilray stock climbed nearly 5% Monday in above-average volume.
TLRY Stock Volatile After Earnings Results
Tilray stock jumped more than 10% in huge volume after the company reported better-than-expected fiscal fourth-quarter sales on July 29. Its fiscal year ended May 31. Shares reversed lower several days later and violated their 50-day moving average and its 200-day moving average but have reclaimed both lines, although the stock remains in a long slump and under 2 a share.
On Aug. 12, the stock revisited its 52-week low of 1.50 marked in June 2023. But it has a long ways to go to get back to its 52-week high of 3.37 reached one year ago. Shares have lost 26% so far this year.
Tilray's IBD Relative Strength Rating is a dismal 18 out of 99, according to IBD MarketSurge.
The stock's decline over the past several years has been spectacular. Tilray went public in July 2018 at 17 a share and peaked exactly at 300 in September 2018.
Sales Continue To Grow, But Pace Slows
Tilray's fiscal fourth-quarter loss narrowed to 4 cents a share vs. the 15-cent loss in the year-ago quarter. Its adjusted net income per share was 4 cents vs. a 2-cent loss in the prior-year quarter.
"In Fiscal 2024, the Company achieved remarkable growth across its businesses, with a 26% increase in net revenue over the prior year, record-breaking performance in gross profit and adjusted EBITDA, and generated positive adjusted free cash flow for the fiscal year," said Chairman and CEO Irwin D. Simon in the earnings release.
Fiscal fourth-quarter net sales grew 25%, easing from a 29% increase in the February-ended quarter.
The company's cannabis net revenue grew 12% vs. the year-ago quarter. Its alcoholic beverage net revenue growth of 137% stood out, led by new products and contributions from its new Craft Acquisition brands.
FactSet estimates show its current-quarter revenue rising 23%, then weakening to 11% growth over the following four periods. Fiscal 2025 and 2026 estimates call for losses in both years.
Tilray retained its top spot in the Canadian cannabis market in the May-ended quarter. It is also the European market leader in medical cannabis.
Tilray Waits For More States To Legalize
So far, 24 states and Washington, D.C., have legalized recreational marijuana use. Eleven states may look to legalize marijuana in 2024, with five seeking medical cannabis legalization and six others adult-use legalization.
Florida, Idaho, Nebraska and South Dakota will try to put legalization before their voters in the November election, while state legislatures will decide the issue in the other seven states.
While the company waits on federal legalization of cannabis, it's bolstering its alcoholic beverage presence and developing new products for additional growth.
Its strategy is to leverage its brands, infrastructure, expertise and capabilities to drive market share. Tilray's growth plan focuses on new products and new geographies.
TLRY Stock Fundamental Analysis
Earnings growth is a staple of top stocks. But Tilray's EPS Rating fell to a mediocre 54. Other Canadian marijuana stocks also have weak profit ratings as they continue to lose money.
Tilray's Composite Rating weakened to 31. IBD research says investors should focus on stocks with Composite Ratings of 90 or higher.
The company's SMR Rating — which measures sales, profit margins and return on equity — is C. But its IBD Accumulation/Distribution Rating of D- indicates fairly heavy institutional selling over the last 13 weeks.
Is Tilray Stock A Buy?
TLRY stock is not in a base and the chart remains weak, so Tilray stock is not a buy right now.
In addition, Tilray's fundamentals still need a lot of improvement, including a return to sustained profitability.
IBD advises investors to focus on stocks with stronger fundamentals that are moving into buy zones. Institutional investors also typically avoid low-priced stocks like Tilray.
Follow Kimberley Koenig for more stock market news on X/Twitter@IBD_KKoenig.
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