Everybody and his uncle was buzzing about Canopy Growth (NYSE:CGC) stock last week — and given how it shot up like Evel Kenievel out of a cannon, I can’t blame them for their enthusiasm. At the risk of burying the lead, as they say, I’d like to direct your attention to the equally important player in the pot-biz game: Aurora Cannabis (NYSE:ACB) stock.
Source: Jarretera / Shutterstock.com
You see, a stock doesn’t have to be the star of the show in order to be hugely profitable. In fact, an argument could be made that ACB stock has the potential to fly farther than other cannabis stocks; it could even double or triple within the next year.
When the Weed Market’s Growing, Look to ACB Stock
Whenever the marijuana sector has a great week (like it did last week), suddenly everyone is bullish on the future of cannabis and its decriminalization. As for me, I’ve been predicting the spread of legalization for a while.
Confirming my outlook are the University of Oregon’s Keaton Miller and Indiana University’s Boyoung Seo, who contend in a research paper that “As voters shift toward supporting the legalization of cannabis, in part due to a desire for increased tax revenues, it appears likely that more jurisdictions in the United States and elsewhere will remove long-standing prohibitions on the substance.”
Last year, the cannabis craze was all about Canada’s full adult-use legalization law going into effect in October. This year, it’s all about Cannabis 2.0, in which Canada’s edibles, topicals, and concentrates markets are finally clearing legal hurdles. In anticipation of this, Canada’s collective salable cannabis-product inventory reached a whopping 390,000 kilograms in August.
Investors should exercise a measure of caution, though, as Health Canada spokesperson Tammy Jarbeau explained that “[i]t will be prohibited for cannabis extracts, including cannabis vaping products, to contain anything that may cause injury to the health of the user when the cannabis product is used as intended or in a reasonably foreseeable way.”
With that caveat in mind, it’s fine to pick up some shares of CGC, but I really like Aurora stock in the current market environment. According to the company’s projection, Aurora Cannabis’ production capacity will achieve an astounding 700,000 kilograms (or thereabouts) by the middle of 2020.
Sometimes, More Is More
In terms of quantity, Aurora’s got pot and plenty of it. I fully expect the Canadian market — and the global cannabis market, really — to expand substantially in 2020. Someone’s got to meet that demand, and Aurora Cannabis has a production capacity matched by very few players in the canna-biz game.
Of course, product quality is just as important as quantity, and Aurora continues to lead the pack when it comes to product offerings in the era of Cannabis 2.0. With production centers on both the east and west coasts of Canada, and given Aurora’s collaborations with the likes of Touché Bakery, WG Pro-Manufacturing, and JACEK Chocolate Couture, this cannabis company will be practically unbeatable in the coming year.
Terry Booth, Aurora’s CEO, appears to be preparing for an all-out assault on the cannabis market in Canada and beyond:
“Aurora has built industry-leading cannabis capacity and scalability supported by our consumer research and retail distribution bench strength to launch this next generation of cannabis products into the Canadian market. We are ready to ship product as soon as the regulations allow and are excited for consumers and patients to finally have access to a greater selection of product forms. We are already working on expanding the range of new products beyond those that will initially launch.”
That’s big talk, yes, but Aurora’s got the wherewithal to back it up. Personally, I’m looking forward to the new product rollouts as Aurora steps up its game and grabs market share in the emerging edibles niche.
The Takeaway on Aurora Cannabis Stock
It’s perfectly fine to own both Canopy Growth shares and ACB stock in your pot-folio (I just made that word up), but you’ll still need to decide how much to allocate towards each company. As I see it, Cannabis 2.0 is here and Aurora remains a leader in this niche-within-a-niche: the product’s ready to go, and the shares are ready to soar.
As of this writing, David Moadel did not hold a position in any of the aforementioned securities.
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