Sector rotation at the right time. A good way to make your portfolio grow faster is to rotate. Rotate out of the sectors that had a good run and have become overvalued to the new sector that offers good value, growth or has been beat down to pulp i. e 90 % from the top. In the last two years, it was the oil sector that was destroyed, About a year ago was the time to load up this year the entire sector has come back with forcer. It is dependent on oil prices.
One should position in the stocks that will bounce faster than others in the undervalued and beaten-down sector. Once those stocks run up and if the momentum continues rotate into the laggards till they catch up.
This sector is not undervalued but has been beaten down. It will track growth stocks and NASDAQ. This year will see the demise of some companies in the sector that are burning too much cash and will not be able to raise more money.
I have started screening companies and like TLRY while their market share is not growing in some segments they are giving up sales to maintain their margins. They have a positive adjusted EBITDA for about 10 quarters and good gross margins.
Like OGI somewhat because they are increasing market share their market share is growing, their gross margins are not great but improving with the growth of revenues. The burn rate of both the companies is manageable and both have substantial cash to cover them. My concern with OGI is the CEO. She is the queen of dilution which scares me. If she becomes reckless and dilutes the shares for money-losing companies or builds a war chest with dilution I will drop this company from my list. Like the fact that BAT is backing this company.
I think that once this sector bottoms out these companies will run harder than the other crowd. Weed might be among them. While they have too much cash on hand about two billion they have a debt of about $1.5B. The past management was very reckless and bought too many money-losing companies and wrote them off in the pursuit of market share. Burning and wasting too much cash. Waiting for their financial results to form an opinion and see how the share price will react. At a certain price that stock will be very interesting once it has found a bottom.
I think TLRY will lead the recovery because it has a massive short position. It can catch fire much much faster because of a short squeeze. . The short position of OGI is small and will not have a short squeeze, but will perform well.