Cannabis Bear Market Scenario Analysis with PS Ratio Valuation
Updated: May 3
The valuation analysis of cannabis stocks using PS Ratios is the highest weighted factor contributing to the stocks ranked as best cannabis stocks in the Best Cannabis Stocks Analysis. This page presents an analysis for Bear Market scenarios, while Bull Market scenarios are presented in the Cannabis Bull Market Scenario Analysis with PS Ratio Valuation page.
The following tables shows the analysis based on PS Ratio Valuations for 15 stocks shortlisted in terms of quarterly revenue (derived from cannabis) around or exceeding US$50 million. The list uses the fruits analogy and includes a combination of apriums (vertically integrated hybrid of production and retail: Trulieve Cannabis, Curaleaf Holdings, Green Thumb Industries, and High Tide), plums (Licensed Producers: Tilray, Canopy Growth and Aurora Cannabis) and one apple (Cannabis Technology: WM Technologies/Weedmaps).
This first table lists them in order of most undervalued (by PS Ratio), along with scenario analysis in a bear market.
This second table lists them in order of most revenue (last reported quarter annualized), along with scenario analysis in a bear market.
The price targets are calculated on 3 bear market scenarios:
Koala Bear: PS ratio of 2
Panda Bear: PS ratio of 1
Polar Bear: PS ratio 0.5
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On social media forums, Bulls are often confronted with Bears with price targets, “going to $3, $2, $1 and then 0”, accompanied by Fear, Uncertainty and Doubt (FUD) posts. Rarely are these posted with any valuation metrics like PS, P/E, EV/Sales, etc. My suspicion is that many are shorting the sector/stock and posting to manipulate investor sentiment and get retail investors to sell. That’s where an analysis like this can come in handy.
For short sellers, this presents price targets with various PS ratios. Koala bears can use 2 PS as a target. These are cute bears, and need to watch out for wildfires so they don’t get burnt. For the more hungry Panda bears, PS of 1 presents a target worth considering. Keep chewing bamboo but try not to run out of food. For the true bears, the Polar bears, a PS of 0.5 is worth considering. These are the bears who believe that it is the end of the world, habitat is melting with global warming, and that everyone is going to die.
Jokes aside, markets tend to be irrational. And in spite of spectacular growth in the cannabis sector, there is a likely scenario where valuations stay low till the sector and overall market sentiment improves. The analysis presented here provides some targets to watch in such scenarios.
Nobody can predict the future. But I have used the color coding such that a PS above 2 is color coded in shades of yellow and orange.
This analysis and the tables included will be updated on a regular basis and the relative rankings are expected to change based on quarterly revenues reported. The ANALYSIS category of this blog has the other analyses incorporated into the Best Cannabis Stocks analysis.
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Disclosure: I (username Adastra) am an investor not a trader. I am bullish on the Cannabis sector as a long-term investment (2025 and beyond), provided stocks/ETFs are carefully picked based on data-driven due diligence. Of the 15 stocks covered in the Best Cannabis Stocks analysis, I own only High Tide, which I am holding as a long-term investment. But my analysis indicates (without any guarantees) that there is a potential for impressive gains in investing in the stocks best ranked in the analysis, including WM Technology, Trulieve, Curaleaf and any other stocks that will have a dedicated page. I reserve the right to buy or sell at any time any of the stocks mentioned in this blog. I do not short stocks and never will short any stock in a company that makes the world a better place. I do not have insider knowledge of any company covered in this blog. All data used for analysis is from public sources. I have received (as of last update date of this page) ZERO funding for this blog from any of the companies featured in this blog.