/Why Sundial, Aurora Cannabis, Cronos Group, and Other Marijuana Stocks Surged Today – Motley Fool

Why Sundial, Aurora Cannabis, Cronos Group, and Other Marijuana Stocks Surged Today – Motley Fool


What happened 

Friday was a good day for cannabis investors. Here’s how some of the most popular pot stocks fared:

So what

A wave of deal-making has swept over the cannabis sector in recent months. Industry leaders Tilray and Aphria completed their merger earlier this month. Sundial Growers recently snapped up cannabis retailer Inner Spirit Holdings. Canopy Growth reached a deal to acquire The Supreme Cannabis Company in April. And today, investors awoke to the news that HEXO struck a deal to purchase privately held marijuana producer Redecan for roughly $766 million. 

$100 bills are cut into the shape of a cannabis leaf.

Image source: Getty Images.

The industry is rapidly consolidating, and investors appear to be betting that the businesses that remain will have a better chance at generating sustainable profits.

Now what

Canopy, Cronos, and Sundial have cash-rich balance sheets and thus could choose to make additional acquisitions in the coming months. Aurora and OrganiGram have less cash and are therefore more likely to be courted by larger suitors. Yet all of these companies’ investors should expect continued deal-making to reshape the marijuana industry in the years ahead.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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