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OrganiGram: An Under the Radar Cannabis Stock to Be Listed on the Big Board Today

support@smarteranalyst.com (Ben Mahaney)

One of the biggest catalysts for a cannabis stock is 2019 is to uplist to a major stock exchange. OrganiGram (OGRMF) is the next company in that line causing the stock to reach new highs.

NASDAQ Uplisting

After the closing bell today, OrganiGram's stock will uplist to the Nasdaq Global Select Market, and the symbol will be changed from “OGRMF” to “OGI.”

On the news, the stock is trading above $8 to a market cap of $1.3 billion. Investors clearly jumped into the stock following the announcement that the company filed an application to uplist back on April 26 when the stock was trading closer to $6.50.

The stock has more than doubled from the lows back in December. As some of the large Canadian players struggle with lofty valuation premiums after those stocks went public or uplisted to major stock exchanges last year, the smaller players are outperforming on the greater liquidity and stock recognition from being on the Nasdaq or NYSE.

Strong FQ2 Results

The uplisting news comes on the heels of OrganiGram posting strong FQ2 results last month. For the quarter ended February 28, the cannabis company posted revenues of C$26.9 million that doubled the prior quarter.

The Canadian company has made a focus on the adult-use market and the results are shining. As opposed to some larger players chasing global expansion and consumables market that aren’t even open yet, OrganiGram is focused on producing in the Canadian markets that are already open for business.

For the quarter, the company generated an impressive adjusted EBITDA of C$13.3 million for a margin of 49%. OrganiGram achieved this target by refraining from wild expenses with SG&A costs that included stock-based compensation at only 21% of net revenues. As well, cultivation costs were a minimal $0.85 per gram of dried flower harvested.

Another great part of the story is that the company is perfectly positioned to reach production targets of 113,000 kg by the end of 2019.  The best part of the expansion plans are that OrganiGram isn’t aggressively trying to supply the world with cannabis, but the company is still tripling expansion in order to meet  demand growth as the Canadian market slowly shifts from illegal to legal sources.

The additional Phase 5 expansion will provide the company with the ability to enter the derivatives and edibles market as it opens up later this year. Vape pens and edibles offer some promising high-margin revenue sources as 2019 ends.

Takeaway

The key investor takeaway is that these under the radar cannabis stocks uplisting to major stock exchanges are providing the best opportunities in the current market climate. With annualized revenues topping $100 million in the last quarter prior to further expansion and the stock trading at only $1.3 billion, OrganiGram provides an appealing valuation. A quick stock pop next week to $10 would only yield a market valuation of $1.7 billion.

The best part of the story is the cost focus in the competitive market. OrganiGram isn’t wildly spending on bleeding edge expansion plans while still taking advantage of the growth opportunities in the Canadian cannabis market.

To read more on the nitty gritty of what’s going on in the rising cannabis industry, click here.

 

Disclosure: The author has no positions in OrganiGram stock.

 

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