2 Beaten-Down Stocks to Avoid
It's best to invest in valuable, promising companies when everyone else is ignoring their potential and bidding down their shares. However, blindly putting money into corporations just because they happen to have lagged behind the market is a terrible strategy. Many beaten-down stocks are performing poorly for good reasons. These types of stocks are known as falling knives in the investing trade, and here are two examples best avoided: Tilray Brands (NASDAQ: TLRY) and Innovative Industrial Properties (NYSE: IIPR). These two cannabis-focused companies are not worth investing in today. Read on to find out why.Tilray has been a leader in the cannabis industry in the recent years. This market has been a major disappointment despite the hopes and expectations investors placed in it after encouraging regulatory changes in the company's home market of Canada in the late 2010s. Tilray has performed better than many of its peers but it has still has been an abysmal investment, declining more than 90% during the past five years. The company realized it needed to diversify its operations away from cannabis. Nowadays, Tilray is far from a pure-play pot company.Its beverages segment looks somewhat promising. Tilray has become one of the largest craft brewers in the U.S. thanks to a series of acquisitions. Further, more regulatory progress could help boost the company's results. Last year, Germany legalized limited recreational use of pot for adults under very strict rules. In the U.S., cannabis could be rescheduled from a Schedule I substance -- the most restricted class -- to a Schedule III substance, which would represent some progress.Continue reading
It's best to invest in valuable, promising companies when everyone else is ignoring their potential and bidding down their shares. However, blindly putting money into corporations just because they happen to have lagged behind the market is a terrible strategy. Many beaten-down stocks are performing poorly for good reasons. These types of stocks are known as falling knives in the investing trade, and here are two examples best avoided: Tilray Brands (NASDAQ: TLRY) and Innovative Industrial Properties (NYSE: IIPR). These two cannabis-focused companies are not worth investing in today. Read on to find out why.
Tilray has been a leader in the cannabis industry in the recent years. This market has been a major disappointment despite the hopes and expectations investors placed in it after encouraging regulatory changes in the company's home market of Canada in the late 2010s. Tilray has performed better than many of its peers but it has still has been an abysmal investment, declining more than 90% during the past five years. The company realized it needed to diversify its operations away from cannabis. Nowadays, Tilray is far from a pure-play pot company.
Its beverages segment looks somewhat promising. Tilray has become one of the largest craft brewers in the U.S. thanks to a series of acquisitions. Further, more regulatory progress could help boost the company's results. Last year, Germany legalized limited recreational use of pot for adults under very strict rules. In the U.S., cannabis could be rescheduled from a Schedule I substance -- the most restricted class -- to a Schedule III substance, which would represent some progress.
