Elliott FishmanHexo CorpHEXO.TODON'T BUYJan 28, 2019

Weed stocks have been enjoying a resurgence after plummeting after Canadian legalization in October 2018. The driver, of course, is American legalization, happening state-by-state but definitely moving forward after the Democrats took the White House last November. While several names are buying candidates, from Canopy to Curaleaf, Hexo has soared 84% so far this year and yet it's still well off its 52-week highs. Such is the volatility of cannabis stocks, but investors liked Hexo's purchase of Redecan, a private Canadian company, which is widely expected to make Hexo the adult-use market leader in Canada, including Ontario and Quebec. Investors also liked Hexo's deal with 48North Cannabis Corp. which sees Hexo gobbling up their outstanding common shares. Recent earnings indicate a quarterly loss of $-0.05 EPS, but a 68.8% jump YOY with revenues even higher. The cannabis biz is still consolidating, but Hexo's recent deals have been savvy and pave the way to a bright future. The run-up in shares, however, warrants a partial buy to take advantage of sector volatility. The street targets $10.59 or 22% upside based on six holds and two buys.

(A Top Pick Dec 15/20, Up 36.8%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with HEXO has triggered its stop at $7.50. To be disciplined, we recommend covering the position. Combined with the previous recommendation to cover 50%, this will create a net investment return of 36%.

(A Top Pick Dec 15/20, Up 59.4%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with HEXO has been progressing well. We are now recommending to trail up the stop to $7.50 (from $4.50), where we recommended covering 50% of the position previously. If triggered, this would ensure a minimum investment return exceeding 36%.

(A Top Pick Dec 15/20, Up 36.8%)Stockchase Research Editor: Michael O'Reilly Following a 4:1 stock consolidation last month, which effectively made our recommended acquisition cost be $5.48, our PAST TOP PICK with HEXO has achieved its equivalent target of $7.50. We are recommending to cover 50% of the position to remain disciplined. We are also suggesting to trail up the stop to $4.50.

Stockchase Research Editor: Michael O'Reilly HEXO is a Canadian cannabis grower. Not the largest, but positioned as a key player in Quebec, which is moving towards opening more outlets. Now that issues of market oversupply and cash burn are being worked out in the Canadian market, the space is looking more positive. Revenue for the company is up over 100% over the year. Margins at 39% continue improving every quarter. Although not profitable yet, the company sits on over $150 million in cash. We would buy this with a stop-loss at $0.85, looking to target $1.85 -- over 35% upside. Yield 0% (Analysts’ price target is $1.60)