What Happened?

A number of stocks jumped in the morning session after the release of a favorable Consumer Price Index (CPI) report, which showed inflation cooling more than anticipated. The July report from the Bureau of Labor Statistics indicated a year-over-year inflation rate of 2.7%, just below the 2.8% economists had forecast. This suggests that price pressures on consumers may be easing. Particularly beneficial for the sector was the news that the food index remained flat, with grocery prices even declining by 0.1% month-over-month. This development is seen as a positive for the profitability of food, beverage, and personal care companies, as lower input costs and increased consumer purchasing power could boost sales. 

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:

• Beverages, Alcohol, and Tobacco company Tilray (NASDAQ: TLRY) jumped 12%. Is now the time to buy Tilray? Access our full analysis report here, it’s free.
• Shelf-Stable Food company B&G Foods (NYSE: BGS) jumped 3.7%. Is now the time to buy B&G Foods? Access our full analysis report here, it’s free.
• Shelf-Stable Food company SunOpta (NASDAQ: STKL) jumped 3.1%. Is now the time to buy SunOpta? Access our full analysis report here, it’s free.
• Shelf-Stable Food company Hain Celestial (NASDAQ: HAIN) jumped 6.7%. Is now the time to buy Hain Celestial? Access our full analysis report here, it’s free.
• Shelf-Stable Food company TreeHouse Foods (NYSE: THS) jumped 4%. Is now the time to buy TreeHouse Foods? Access our full analysis report here, it’s free.

Zooming In On Tilray (TLRY)

Tilray’s shares are extremely volatile and have had 60 moves greater than 5% over the last year. But moves this big are rare even for Tilray and indicate this news significantly impacted the market’s perception of the business.

The previous big move we wrote about was about 21 hours ago when the stock gained 38.5% on the news that reports that President Donald Trump is considering reclassifying marijuana as a less dangerous drug, a move that could transform the cannabis industry's regulatory landscape. The potential move, first reported by The Wall Street Journal and later confirmed by President Trump, would reclassify marijuana from its current status as a Schedule I substance, easing federal restrictions on the industry. At a press conference, the President stated he is “looking at reclassification” and will make a determination “over the next few weeks.” For cannabis companies, this change could be a game-changer. 

A key benefit would be relief from Internal Revenue Code Section 280E, which currently prohibits companies dealing with Schedule I substances from taking normal business deductions. This tax relief would significantly improve profitability. The optimism spread across the sector, with peers like Canopy Growth and Cronos Group also seeing their shares surge, reflecting broad investor hope for federal reforms.

Tilray is down 28.4% since the beginning of the year, and at $1.05 per share, it is trading 46.4% below its 52-week high of $1.95 from August 2024.

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