The Canadian cannabis sector continues to see sales expand while the related stocks haven’t generally rallied. Aphria (APHA) is a prime example of a sector stock unable to generate any momentum due to a reset of expectations to more reasonable levels. My investment thesis remains bullish on the stock here around $6 after urging investors to buy below $4 during the COVID-19 crisis.

APHA Aphria Inc. daily Stock Chart

Breakout EBITDA

The main Canadian LPs have suffered from an inability to reach positive EBITDA due to over production and expense structures built for global companies multiple the size of current business. Aphria is one of the only companies to already generate EBITDA profits and the soon-to-be released quarter is the potential breakout quarter for the stock and the sector.

Aphria had previously promoted some very aggressive EBITDA numbers while the other large Canadian cannabis LPs like Aurora Cannabis (OTC:ACB) and Canopy Growth (OTC:CGC) can’t even figure out how to eliminate large losses. A year ago when reporting the FQ1 results, Aphria outlined a path to adjusted EBITDA between C$88 million and C$95 million for FY20:

Source: Aphria FQ1’20 earnings release

The company had only reported a quarter where adjusted EBITDA was just C$1 million. Aphria spinning this level of EBITDA into another C$90 million over the next 3 quarters appeared highly unlikely. The update even came halfway into FQ2’20 leaving only 7.5 months left in FY20. Unsurprisingly, Aphria came nowhere close to reaching those targets in part due to COVID-19.

For this reason, the upcoming FQ1’21 earnings on October 15 are so crucial. Aphria actually hit FQ4’20 adjusted EBITDA of C$8.6 million and the current estimates are for numbers to nearly double in the last quarter.

Industry data have shown Aphria taking market share in a growing market. Canadian cannabis sales grew substantially in July with



a blue and white sign: A Lockheed Martin (LMT) Space Systems sign in Sunnyvale, California.


© Source: Ken Wolter / Shutterstock.com
A Lockheed Martin (LMT) Space Systems sign in Sunnyvale, California.

For years, investing in defense and aerospace paid off but that changed in the last year. Certification delays for the 737 MAX, made by Boeing (NYSE:BA), is clouding the airplane industry. It is also casting a shadow in well-run companies like Lockheed Martin (NYSE:LMT). The detail-oriented investor will look at the whole picture and realize that LMT stock, which spent much of the last few months in the $400 range, is on the verge of a break-out.



a close up of a sign: A Lockheed Martin (LMT) Space Systems sign in Sunnyvale, California.


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A Lockheed Martin (LMT) Space Systems sign in Sunnyvale, California.

Late last week, Lockheed management announced a few shareholder-friendly moves. This could help shares rebound from here.

Lockheed declared a $2.60 per share dividend, 20 cents higher than last quarter. Shareholders of record as of the close of business on Dec. 1, 2020, will collect the distribution.

The corporation’s board also authorized the buyback of another $1.3 billion of Lockheed stock. The total authorization for future repurchases is now around $3 billion.

Stock buybacks benefit investors because it lowers the share count and increases the earnings per share. In the second quarter, Lockheed posted revenue of $16.22 billion, up 12.43% from last year. Cash from operations topped $2.2 billion, while net earnings topped $5.79 per share.

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“I’m pleased to see continued strong operational and financial results this quarter as we remain focused on performing with excellence for our customers,” said Chief Executive Officer James Taiclet.

A Closer Look at LMT Stock

Given the favorable low-interest-rate environment, the company may re-evaluate its debt and go to the debt market to refinance. That would cut interest costs.

To lighten the cost burdens for governments, Lockheed said it cut its

Introduction

The Weekly Breakout Forecast continues my doctoral research analysis on MDA breakout selections over more than 5 years. This subset of the different portfolios I regularly analyze has now reached 177 weeks of public selections as part of this ongoing live forward-testing research.

In 2017, the sample size began with 12 stocks, then 8 stocks in 2018, and at members’ request into 2020, I now generate 4 selections each week, 2 Dow 30 picks, and a separate article for monthly Growth & Dividend MDA breakout stocks. I now provide more than 6 different ways to beat the S&P 500 since my trading studies were made public.

Remarkably, the frequency streak of 10% gainers within a 4- or 5-day trading week remains at highly statistically significant levels above 80% not counting frequent multiple 10% gainers in a single week. More than 200 stocks have gained over 10% in a 5-day trading week since this MDA testing began in 2017. A frequency comparison chart is at the end of this article.

2020 YTD Breakout Portfolio Returns

The Breakout Picks are high volatility selections for short-term gains, but with no selections below $2/share, under 100k average daily volume, or less than $100 million market cap. The returns were at +41.50% in the first 9 weeks of 2020, consistent with exiting the portfolio following the negative Momentum Gauge signal of Feb. 24th (red weeks below).

The cumulative average returns YTD are at +220.42% compared to the S&P 500 +3.64% over the same period. The very best case perfectly timed returns at +440.5%, and in the worst case, fixed buy/hold, do nothing, equal-weighted average returns year to date, the returns are +0.33%.

So far YTD, 62 stock selections in the past 39 weeks have gained over 10% in less than 5 days with 32

DraftKings  (DKNG) – Get Report stock continues to move well. While the shares are down about 1% on Tuesday, the stock had earlier hit an all-time high in the session at $59.45.

Even with Tuesday’s dip — which comes as some NFL teams suspend activity due to the coronavirus — DraftKings stock is still up more than 5.5% for the week.

What’s going on in the broader market doesn’t seem to matter. While the indexes have been swaying, DraftKings and Penn National (PENN) – Get Report investors don’t seem to care.

Admittedly, these names don’t necessarily trade without volatility. But the pullbacks have been shallow as buyers continue to gobble up the dips.

Let’s take a closer look at DraftKings now that the stock has pushed up to new highs.

Trading DraftKings Stock

Daily chart of DraftKings stock.

Daily chart of DraftKings stock.

Earlier this month, the stock pushed up to the 161.8% extension, where it promptly met resistance. While DraftKings stock held up for a few days, sellers were eventually able to push it lower.

But that dip didn’t last long, with the 10-day moving average ultimately holding as support. With a multiday rally unfolding, DraftKings stock on Monday was able to close above the 161.8% extension.

The bulls would love to see this extension hold as support. If that remains the case, they will be looking for a rotation through Tuesday’s high and north of $60. On the upside, see how the shares handle the two-times range extension up at $62.04.

Ultimately, the bulls will likely be looking for a push up to the 261.8% extension, near $72.70.

On the downside, look to see how DraftKings stock handles another dip to the 10-day moving average. Below could open the door to an eventual retest of