It might not seem like penny stocks and Twinkies go together. But with the latest surge in marijuana stocks, Hostess stock might not be the worst complement to the cannaboom in 2023. While neither of these trends has a direct connection, it is interesting to see Hostess Stock – the maker of Twinkies and other treats – rising. Like milk and cookies, munchies and marijuana go hand in hand.
Hostess Stock News
Snack giant Hostess Brands, maker of classic treats like Twinkies and Ding Dongs, has agreed to be acquired by food manufacturer The J.M. Smucker Company (NYSE: SJM). The deal is valued at $5.6 billion. Announced Monday, the cash and stock deal will expand Smucker’s offerings into the growing sweet baked goods space.
Hostess brings an iconic stable of brands that play off of Smucker’s portfolio of sugary foods like jams, peanut butter, and Uncrustables. Adding Twinkies and other Hostess snacks provides Smucker greater scale in the breakfast and convenience snacking categories.
For Hostess, the deal marks a rebound after bankruptcy filings in recent years halted Twinkies production briefly in 2012. Since being restarted in 2013 following an acquisition, the century-old Hostess company has regained its popularity. The deal is expected to boost growth opportunities for both corporations. Hostess stock (NASDAQ: TWNK) jumped 19% on the news as investors welcomed the deal’s potential further to expand the iconic snack brands under Smucker’s leadership. Pending approvals, the acquisition is slated to close in 2024.
Marijuana Stocks In Focus
While the move in Hostess stock does not correlate with marijuana stocks, it is a bit comical that at the time when pot stocks are surging, so are shares of munchies makers like Hostess. A sign of the times, perhaps? In any event, legal news surrounding the future of cannabis legalization remains a hot topic in the stock market today.
MSOS Stocks Continue Rising Amid Legislation Speculation
The Department of Health and Human Services (HHS) formally recommended that the Drug Enforcement Administration (DEA) ease federal restrictions on marijuana. This comes 11 months after President Biden ordered HHS to review cannabis’s status as a Schedule I drug, meaning high potential for abuse and no accepted medical use.
HHS advised reclassifying marijuana to Schedule III under the Controlled Substances Act. This would most significantly allow cannabis businesses to deduct ordinary costs on their taxes, potentially saving the industry hundreds of millions of dollars per year.
The DEA has ultimate authority on drug scheduling and will now conduct its review, though it’s unclear how long that will take. The Biden administration had hoped to announce marijuana’s rescheduling this fall, but the timeline depends on the DEA’s process.
If implemented, it would be the first federal recognition of marijuana’s medical value. However, advocates say full legalization is needed to align state and federal marijuana laws properly.
Lawmakers have praised the move, including Senate Majority Leader Chuck Schumer. But some say more legislative action is required to end prohibition. Meanwhile, Congress is working on a separate bipartisan bill to enable banking for cannabis companies. Schumer called it a priority for September, but a potential government shutdown could complicate things. This has sent a jolt to some of the most popular names among MSOS stocks – a popular cannabis ETF, the AdvisorShares Pure US Cannabis ETF (NYSEARCA: MSOS). But it isn’t limited to only those select companies. The trend is apparent industry-wide.
Marijuana Stocks To Watch
Canopy Growth Corporation (CGC)
Canopy Growth continues its latest rally. The last few sessions have seen CGC stock climb back from levels around its 52-week lows. The trend remains strong heading into the middle of September.
Mid-August brought notable news that ignited interest in Canopy Growth. The company agreed to sell its Hershey Drive facility in Ontario, Canada, to The Hershey Company. However, Canopy will keep its Smiths Falls post-harvest manufacturing site. “Purchasing the Hershey Drive property demonstrates our strategic investments in the supply chain and Canadian operations to support growth,” said Jason Reiman, Hershey’s Chief Supply Chain Officer.
In other Canopy developments, the company recently launched distillate-infused pre-rolls. These will have up to 39% THC under its Tweed, 7ACRES, and Spectrum Therapeutics brands. This product news, together with speculation around cannabis legislation, has boosted Canopy’s stock this month. As with previous marijuana stock rallies, whether the action can last remains to be seen.
However, for those watching CGC stock, it will be important to keep September 25th in mind. This is when the company’s shareholders vote in the annual general and special meeting. Anyone holding CGC stock is being asked to approve, among other things, to amend the articles of the Company to consolidate the Company’s issued and outstanding common shares.
SNDL Inc. (SNDL)
One of the popular and sometimes infamous cannabis stocks, SNDL Inc., has continued trading higher in the stock market today. The move also comes in conjunction with the marijuana industry news related to looser regulation on pot. It also comes when SNDL is approaching a significant milestone event.
The company and Nova Cannabis announced that they anticipate closing their strategic partnership transaction by the end of September. “SNDL and Nova recently participated in constructive discussions with the regulatory body responsible for final approval,” stated Nova’s CEO Marcie Kiziak.
“The conversation was productive, and we are confident in the transaction’s timely progression. SNDL and Nova remain committed to navigating through these processes with transparency and diligence, ensuring the best outcome for all parties involved.”
SNDL stock has come under scrutiny thanks to prior instances of capital raises and dilution in the market. If SNDL stock is on your list, keep September 30, 2023, in mind. This is when the SNDL/Nova deal is expected to close.
Aurora Cannabis (ACB)
Aurora has been making its own news in recent weeks. Some of the latest were regarding its sale of the Aurora Sun Facility being completed via Bevo Farms’ acquisition. Bevo is one of North America’s largest suppliers of propagated vegetables and ornamental plants. In an update, Aurora’s CEO, Miguel Martin, also mentioned, “Bevo has successfully repurposed the Aurora Sky facility in Edmonton, and we’re excited to further support their continued growth. Bevo’s acquisition of the Aurora Sun facility further demonstrates the close synergies between our companies and the value that our partnership creates for shareholders.”
The company also reported Q1 fiscal 2024 results. Aurora beat sales estimates by a wide margin, $55.91M versus $46.80M. Aurora also pointed out that there was meaningful Adjusted EBITDA growth realized. Miguel Martin noted the strong performance and explained, “We are pleased to have generated strong net revenue and record adjusted EBITDA during Q1, which positions us well for what we believe will be a successful fiscal year 2024.”
Furthermore, Aurora recently reported that it has bought back an aggregate of roughly $12.3 million (US$9.0 million ) principal amount of its senior notes. After completing these buybacks, Aurora said it will have approximately $53 million (US$39 million) of Notes outstanding.