Is Cronos Group Stock a Buy?
Cronos Group (NASDAQ: CRON) is one of the safer investments in the cannabis industry, largely thanks to the backing of big investor Altria Group (NYSE: MO). The tobacco giant's deep pockets can help offer stability that other pot stocks lack, especially when generating positive cash flow is still a goal for many cannabis companies. But let's take a look at whether Cronos, on its own, is a good investment and if it can outperform its peers in 2020.
On March 30, Cronos released its year-end and fourth-quarter results for 2019. They showed year-over-year sales growth of 71%, largely thanks to sales in the U.S. that didn't exist a year ago. That was because on Sept. 5, the Canada-based cannabis company closed its acquisition of Redwood Holding Group, which gave Cronos control over Lord Jones, a U.S. brand of hemp-derived cannabidiol (CBD) products.
Offering hemp-derived CBD products is the only completely legal way for Cronos to enter the U.S. cannabis market, as marijuana remains illegal at the federal level. It's an important piece of the company's growth strategy for the U.S. market, and the new segment contributed $2.7 million in revenue in Q4. That was 37% of the total $7.3 million that Cronos reported in consolidated net revenue. A strong footprint in the U.S. gives Cronos less dependence on Canada and international markets, where it currently generates the bulk of its revenue.
Source Fool.com
