What Happened?
A number of stocks fell in the afternoon session after markets pulled back amid hotter-than-expected inflation data. The main concern for investors was the July Producer Price Index (PPI), a measure of wholesale inflation. The higher-than-expected reading suggests that companies could face squeezed profit margins due to rising costs. This also reduces the likelihood of the Federal Reserve cutting interest rates, which could further dampen economic activity. Compounding these inflation fears are multiple reports signaling a weakening consumer.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Shelf-Stable Food company SunOpta (NASDAQ: STKL) fell 3%. Is now the time to buy SunOpta? Access our full analysis report here, it’s free.
- Beverages, Alcohol, and Tobacco company Tilray (NASDAQ: TLRY) fell 6.4%. Is now the time to buy Tilray? Access our full analysis report here, it’s free.
- Personal Care company Olaplex (NASDAQ: OLPX) fell 3.8%. Is now the time to buy Olaplex? Access our full analysis report here, it’s free.
- Household Products company Energizer (NYSE: ENR) fell 4.9%. Is now the time to buy Energizer? Access our full analysis report here, it’s free.
- Shelf-Stable Food company Hain Celestial (NASDAQ: HAIN) fell 3.2%. Is now the time to buy Hain Celestial? Access our full analysis report here, it’s free.
Zooming In On Tilray (TLRY)
Tilray’s shares are extremely volatile and have had 61 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 1 day ago when the stock gained 18.9% on the news that it announced a strategic partnership to expand its medical cannabis presence in Italy, amid broader sector optimism fueled by potential U.S. regulatory changes. The company's subsidiary, FL Group, has partnered with Italian pharmaceutical firm Molteni to increase the availability of Tilray's medical cannabis extracts across Italy. Beyond this company-specific news, Tilray's stock is also benefiting from a powerful sector-wide rally. Investor optimism is surging due to speculation that the U.S. government may reclassify marijuana from a Schedule I to a Schedule III substance. This potential regulatory shift, reportedly being considered by the President, could provide significant tax relief for cannabis companies by easing restrictions under Internal Revenue Code Section 280E, which would directly improve profitability.
Tilray is down 20.5% since the beginning of the year, and at $1.16 per share, it is trading 40.5% below its 52-week high of $1.95 from August 2024.
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