Tilray Brands Inc (TLRY)

[FUNMAN]

Tilray Just Got A Lot Bigger — So Is The Pot Stock A Buy?

https://www.investors.com/research/tilray-stock-buy-now/?src=A00220

By: BILL PETERS
11:58 AM ET 05/28/2021

Canadian pot producer Tilray (TLRY) has fallen from its massive run this year. But it completed its planned merger with Aphria, making it a far bigger cannabis company but one that has raised questions from analysts.

So should you buy TLRY stock now?

The new combined company takes Tilray's name, with Irwin Simon serving as CEO. Simon had been CEO of Aphria. Former Tilray CEO Brendan Kennedy will hold a seat on the new company's board. Its market cap is $6.7 billion, trailing Canopy Growth's (CGC) $8.5 billion.

Along with their recreational businesses in Canada, the merger gives the combined company the old Tilray's medical business in Europe and Australia — as well as its debt. It also folds in Aphria's pharmaceutical distribution business, which, rather than cannabis, had driven a majority of Aphria's sales.

The deal also brings together a handful of U.S. businesses: Manitoba Harvest, a company owned by the old Tilray that sells hemp granola and CBD products, and SweetWater, "a leading cannabis lifestyle branded craft brewer" owned by Aphria.

Some analysts have questioned whether that infrastructure would be enough to capture more business in THC products, should the U.S. legalize cannabis on a federal level. Even as more states legalize, Canadian entry into the U.S., if it's ever allowed, won't be easy.

Below, we take a closer look at TLRY stock.

TLRY Stock Fundamental Analysis

Earnings growth is a staple of top stocks. But the EPS Rating of TLRY stock stands at 30, with 99 being the best possible. Other marijuana stocks also have not-great profit ratings. The EPS Rating is a gauge of a company's profit growth.

The Composite Rating of TLRY stock stands at 36, according to Marketsmith chart analysis. IBD research says investors should focus on stocks with Composite Ratings of 90 or higher.

Aphria last month reported disappointing quarterly results, which it attributed to coronavirus lockdowns in Canada. But Tilray, in February, reported fourth-quarter results that beat some expectations. And it became the rare weed company to hit its (albeit adjusted) profitability targets.

Analysts expect Tilray to lose money through this fiscal year and the next one. The company's SMR Rating — or Sales + Margins + Return on Equity rating — is a weak E. The rating tallies the past three quarters of sales growth, pretax and after-tax profit margins and return on equity.

Tilray Stock Technical Analysis

TLRY stock began trading in July 2018 on the Nasdaq via an IPO. That IPO was the first on a big U.S. exchange from a pure-play cannabis company.

But the stock largely fell between then and September of last year, after industrywide concerns about profitability, sales growth and cash grew more severe.

This year, shares soared as much as 711%, hitting a high 67 on Feb. 10. Legalization hopes in the U.S., as well as a possible Reddit-inspired stampede into weed stocks, helped drive the increase.

But shares have since lost much of the year's gains. While they have rebounded recently, the stock is not in a buy zone, and no new pattern has formed.

Tilray's relative strength line, and shares overall, are off lows reached last year. The line spiked on Feb. 10, along with a massive jump in the stock. It fell from those levels afterward. While still below those February levels, the line curved slightly upward this month. TLRY stock has also found support at its 50-day line.

Is Tilray Stock A Buy?

Shares of Tilray are not in a base or in buy range. So TLRY stock is not a buy right now.

IBD advises investors to focus on stocks with stronger fundamentals that are moving into buy zones.