A humorous look at the companies that caught our eye, for better or worse, this week
Business quiz! Shares of cannabis producer Aphria plunged after: a) McDonald’s shot down a rumour that it was joining with Aphria to launch a “McMarijuana Burger”; b) One of Aphria’s production facilities was destroyed in what the company described as a case of “careless smoking”; c) Short-seller Quintessential Capital alleged that Aphria is a “shell game” and that its acquisitions in Jamaica, Argentina and Colombia consist of businesses “with little or no sales” and whose values are “vastly inflated or outright fabrications” – claims Aphria rejected. Answer: c.
Dow Jones Industrial Average (DOG)
Investing in a low-cost index fund is one of the surest ways to make money – except when the index itself gets crushed, of course. Hit by concerns about trade, fears of a slowing global economy and worries about a flattening yield curve, the Dow Jones Industrial Average skidded about 1,150 points or 4.5 per cent this week and is now down more than 9 per cent since hitting a record high on Oct. 3. Look for a mea culpa from Donald J. Trump any day now.
Fool me once, shame on you. Fool me twice – I must be a Dollarama investor. Shareholders who stuck with the discount chain even after its second-quarter results sent the stock into a nasty tailspin in September got another dose of bad news this week when the retailer’s third-quarter results also missed estimates. Even as Dollarama’s same-store sales rose 3.1 per cent, the number of transactions fell by 0.9 per cent and its gross margin also slipped. Surely the next quarter will be better, right? Right?
True or false: When a company’s results miss expectations, investors are usually pretty understanding and will generally look the other way. Answer: false. Citing unseasonably warm fall weather, the lack of a major marketing campaign and tough comparisons with last year when Canada celebrated its 150th birthday, clothing retailer Roots posted a hefty 13.4-per-cent drop in same-store sales for the third quarter as earnings fell well short of estimates. With Roots cutting its fiscal 2019 outlook, the stock’s been marked down to clear.
Don’t say you weren’t warned, bitcoin investors. A year ago, with bitcoin fetching nearly US$20,000, gullible speculators were mortgaging their homes and liquidating their kids’ college funds to load up on the cryptocurrency, ignoring saner voices that said it was a classic bubble. Now that bitcoin has plunged more than 80 per cent from its peak, the cryptocurrency crowd should consider moving on to something less volatile. May we suggest putting your entire portfolio into marijuana stocks?