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Why Aurora Cannabis, American Airlines Group, and Construction Partners Slumped Today

By Dan Caplinger - Sep 16, 2019 at 4:31PM

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Find out who got hit hardest in the stock market.

Wall Street didn't have a good start to the week on Monday. Investors weren't happy to learn about massive explosions linked to a drone attack in Saudi Arabia, and fear about global energy supply sent crude oil prices soaring. That was good for energy stocks, but it made most market participants nervous about whether the vulnerable economy will be able to sustain any further pressure. Some companies saw steeper declines in their share prices for a variety of reasons. Aurora Cannabis (ACB -3.01%), American Airlines Group (AAL -0.53%), and Construction Partners (ROAD -1.65%) were among the worst performers. Here's why they did so poorly.

Aurora gets downgraded

Shares of Aurora Cannabis dropped more than 8% after the Canadian marijuana stock got poor comments from analysts. Stifel cut its rating on the cannabis specialist from hold to sell, reducing its price target from 7 Canadian dollars to CA$5, or about $3.75. Stifel believes that marijuana investors are generally disappointed with how the sector has performed lately, and that might make it harder for Aurora to get the financing it'll need in order to achieve its global expansion goals. In the absence of a major catalyst, such as complete legalization of marijuana across the U.S. market, Stifel's finding it hard to see any reasons for Aurora shareholders to be optimistic in the near term.

Greenhouse in low light with rows of cannabis plants.

Image source: Aurora Cannabis.

American Airlines to get hit at the pump

American Airlines Group saw its shares fall 7% as airline stocks in general reacted negatively to the move higher in energy prices. Fuel costs are a major component of the expense structure for airlines, and American in particular faces more challenging conditions in the form of more significant debt, labor disputes, exposure to the 737 MAX controversy, and high fuel consumption. Airlines have come a long way, so few expect rising fuel prices to cause American no longer to be profitable at all. However, the industry remains competitive, and more pressure on the cost front will take away American's flexibility to respond to initiatives that rivals put in place.

Construction Partners has shareholders selling some stock

Finally, shares of Construction Partners slumped 6%. The Alabama-based civil infrastructure company announced a secondary stock offering, saying that major shareholder SunTx Capital Management intends to sell 5 million shares. That would've produced worth roughly $785 million in proceeds as of Friday's close, but the vote of no confidence from SunTx let some of the air out of the stock. Even with the drop, though, Construction Partners is still up more than 50% since the beginning of the year, and many see plenty more opportunity for the infrastructure specialist to benefit from projects and strategic moves in the future.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

American Airlines Group Inc. Stock Quote
American Airlines Group Inc.
AAL
$14.99 (-0.53%) $0.08
Aurora Cannabis Stock Quote
Aurora Cannabis
ACB
$1.61 (-3.01%) $0.05
Construction Partners, Inc. Stock Quote
Construction Partners, Inc.
ROAD
$29.21 (-1.65%) $0.49

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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