|Bid||3.4600 x 0|
|Ask||3.4700 x 0|
|Day's Range||3.4200 - 3.6100|
|52 Week Range||2.8200 - 13.6700|
|Beta (5Y Monthly)||1.56|
|PE Ratio (TTM)||N/A|
|Earnings Date||Feb 10, 2020 - Feb 14, 2020|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||5.57|
CBC report says Ontario will open more stores, making it easier for licensed producers to get their product to consumers.
IMPORTANT INVESTOR ALERT: The Schall Law Firm Announces the Filing of a Class Action Lawsuit Against Aurora Cannabis Inc.
It has been a rough ride for shares of Canadian cannabis producer Aurora Cannabis (NYSE:ACB) in 2019. Aurora began the year priced around $5. However, it's exiting the year at around half of that value -- mostly thanks to stagnant revenue growth amid challenging demand trends in its core Canadian consumer market.Source: Shutterstock But, I think that 2020 is shaping up to be a great year for Aurora Cannabis.The contrarian bull thesis here is simple. Those challenging demand trends in the Canadian consumer market will turn around in 2020. This is due to the launch of new products like edibles and vapes, a reduction in legal channel supply constraints and an expanded retail distribution footprint.InvestorPlace - Stock Market News, Stock Advice & Trading TipsAs those demand trends turn around, Aurora's revenue growth will re-accelerate higher. This resurgence, coupled with favorable U.S. legislation progress, will spark a big rebound for Aurora. * These 7 S&P 500 Stocks Will Deliver a Repeat Performance in the Next Decade As such, although it's easy to write off Aurora Cannabis as a falling knife at this point. I ultimately think that dip buyers who exercise patience at these levels will be rewarded in a big way over the next 12 months. The Canadian Cannabis Market Will Bounce BackThe Canadian cannabis market looks poised for a big rebound in 2020 after a rough 2019.The big problem with the Canadian cannabis market in 2019 was that consumer demand in the legal channel fell flat. That happened for a number of reasons, all of which come back to this idea that the legal channel failed to pull that much demand from the black market.That said, the black market had lower prices because they didn't have to pay legal or regulatory fees. They also didn't have any supply issues -- whereas nascent legal suppliers had huge supply constraints. They were also able to get product to consumers in a timely manner -- whereas legal suppliers were still learning the ropes of cannabis distribution and logistics -- and offered a wider array of products that legal suppliers couldn't sell.Fortunately for those interested in investing in the Canadian cannabis market, all of that will change in 2020.First, that Canadian government is aware that the black market is outpricing the legal market, and there appears to be legal steps being made to rectify this issue. Second, legal suppliers have spent all of 2019 increasing growing capacity. So, come 2020, there should be no more supply constraints. Third, legal suppliers are also aggressively expanding their retail footprint throughout Canada, and that should lead to improved logistics. Fourth, the legal market will able to sell cannabis 2.0 products like vapes and edibles in 2020.Therefore, 2019 cannabis market demand headwinds should turn into 2020 demand tailwinds. As they do, everything will improve for cannabis companies. Revenue growth rates will ramp back up, margins will improve and net losses will shrink.As all those things happen, pot stocks should bounce back. It also doesn't hurt that the U.S. is inching towards federal legalization of cannabis with the House Judiciary Committee recently passing the Marijuana Opportunity, Reinvestment, and Expungement (MORE) Act. Aurora Will Bounce Back, TooAs the cannabis sector bounces back in 2020, Aurora will bounce back, too.I like Aurora Cannabis in the cannabis sector for a few, very simple reasons. First, the company is very big in this world. They are second to only Canopy Growth (NYSE:CGC) in terms of sales and growing capacity. After those two, it's a steep drop off to the rest of the pack.Second, they have a strong leadership position in the markets in which they operate. In the Canadian consumer market, Aurora owns the top three best-selling cannabis consumer products in Ontario -- Pink Kush, Blue Dream and Tangerine Dream. Internationally, the company has a leadership position in medical marijuana throughout most of Europe.Third, Aurora is supported by favorable margin trends. Gross margins here are high for the cannabis industry, up near 60% last quarter. Those gross margins are also stable, and haven't changed in several months. At the same time, management is exercising disciplined cost control, while selling, general and administrative expenses dropped 1% quarter-over-quarter last quarter.Fourth, the valuation on Aurora is favorable relative to other pot stocks. Aurora's market cap presently stands at $2.7 billion. Revenue estimates for two years ahead stand around $950 million. That gives Aurora Cannabis a two-year-forward sales multiple of less than 3. Peers Canopy Growth, Tilray (NASDAQ:TLRY), and Cronos (NASDAQ:CRON) all trade north of four-times sales that are two years out.All in all, there are a lot of positives which make Aurora stand out in the cannabis sector in a good way. Those positives ultimately mean that if the cannabis sector rebounds in 2020, Aurora could rebound by even more. Bottom Line on Aurora CannabisYes, Aurora looks like a falling knife. In 2019, it was. But, in 2020, it won't be.Instead, Aurora's awful 2019 performance actually sets the stock up nicely for a big 2020 rebound amid a significant reversal in Canadian consumer market demand trends.As such, I think patience will be rewarded here. There's no need to rush and buy the dip just yet. Instead, be patient. Wait for signs that the turnaround is emerging. Then, buy the dip and hold for the big 2020 rally.As of this writing, Luke Lango was long CGC. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * The 10 Worst Dividend Stocks of the Decade * 7 Game-Changing Tech Stocks to Buy Now * 5 Chinese Stocks to Buy for the Big 2020 Rebound The post Patience With Aurora Cannabis Will Pay Off in 2020 appeared first on InvestorPlace.
Cannabis stocks rallied out of the gate Friday, after a report that the Canadian province of Ontario will open up the market for retailers with plans to issue abut 20 new store approvals starting in April of 2020. The news reported by Canadian network CBC eased concerns about the shortage of stores that has hampered the development of the legal cannabis market in Canada and allowed the black market to continue to thrive. "This is certainly better than the status quo," said MKM analyst Bill Kirk. "In the fight to take share from the illicit market (which has ~80% share), access to stores has been a major issue." he cautioned, however, that access is not the only obstacle the market is facing, highlighting quality and price as other major issues. A survey conducted by MKM found Canadian consumers using the black market due to price convenience and also quality. "Further, Canopy teased an expectation for 40 Ontario stores per month beginning in January," said Kirk. "If the details of 20 store/month beginning in April hold true, Ontario would have 62% fewer stores by year-end 2020 than Canopy had expected (480 vs 180). All else being equal, we would recommend selling into any strength this news may produce." Canopy shares rose 5%, Aurora Cannabis was up 5.2%, Cronos was up 3% and Tilray rose 2.5%. MedMen rose 11%, Aleafia rose 5% and Organigram added 5%.
The past six months haven't been great for Aphria (NYSE:APHA), but shares haven't fallen as far as the company's more famous peers. Aphria stock is down 27.7% in the past six months. In contrast, the more popular "pot stocks" are down much more. Shares in Aurora Cannabis (NYSE:ACB) dropped 66.5% in the same period. Hexo (NYSE:HEXO) has fallen 61%. Canopy Growth (NYSE:CGC) is down 50.9%.Source: Shutterstock Why hasn't APHA stock performed as badly? Perhaps it's because Aphria has historically traded at a discount to its competitors. Back in September, Aurora, Canopy, and Hexo were trading at enterprise value/sales (EV/Sales) ratios north of 30. At the same time, Aphria's EV/Sales was just 9.5.Today, Aphria trades at an EV/Sales ratio of 6.7. While it is by no means a "value stock," APHA remains a relative bargain.InvestorPlace - Stock Market News, Stock Advice & Trading TipsDoes this mean its time to buy? Let's take a closer look. Growth is priced into shares, but this overlooked pot stock could be a diamond in the rough. Aphria Marches Towards ProfitabilityAPHA may be an also-ranb pot stock, but the company is no slouch when it comes to market share. Aphria has supply agreements across all of Canada's provinces. This gives them access to 99.8% of the country's population. * The 10 Worst Dividend Stocks of the Decade Oversupply in Canada is an issue, yet Cannabis 2.0 could spur demand. But unlike Canopy or Hexo, Aphria has not announced a big infused beverage launch. Yet, Aphria does have Cannabis 2.0 exposure. Back in June, the company announced a partnership with Pax Labs to develop cannabis vape products.Over in Europe, Aphria is betting big on medical marijuana. Especially in Germany. The company is one of just three to obtain a cultivation license there. The company's German unit CC Pharma is the biggest piece of the Aphria pie, making up 74% of net revenues. Aphria is also a big player in Latin America, via its acquistion of LATAM Holdings.The company's peers are hemorrhaging cash. But Aphria stock posts quarterly positive EBITDA. The company's strategy appears to be paying off. But why does Aphria continue to trade at a low valuation? Why is APHA Stock So Cheap?Aphria trades at a sharp discount to peers. As I mentioned above, Aphria's current EV/Sales ratio is 6.7. In contrast, Aurora Cannabis has an EV/Sales ratio of 14. Hexo also trades at an EV/Sales ratio of 13. Canopy's EV/Sales ratio is 21.9.But there is a reason behind the discount. Aphria has a bad reputation among investors. Prominent short-seller Hindenburg Research lambasted the company in December 2018. This was due to accusations some Aphria insiders engaged in self-dealing. Aphria has been able to salvage its reputation after a management shakeup, but Wall Street still gives Aphria a skeptical eye.Aphria's strong balance sheet ought to counter this. The company has $348.8 million in cash and short-term investments. Aphria does have an equally-sized debt load ($356 million). But as InvestorPlace's Ian Bezek recently pointed out, Aphria has no problems obtaining credit.Competitors have had more trouble raising capital. Yet Aphria was able to obtain attractive financing for its Diamond production facility. Aphria lacks a strategic partner like Constellation Brands (NYSE:STZ) or Altria Group (NYSE:MO). But the company has avoided the capital crunch seen with Aurora. The Bottom Line on Aphria StockAphria stock has a clear path to profitability. Yet, shares trade at a discount to peers. Past scandals continue to tarnish the stock. But for investors playing at home, run the numbers. The company has more going for it than Wall Street gives credit.But does this make APHA stock a buy today? Perhaps. Analyst consensus projects positive earnings-per-share in 2020 and 2021. Meanwhile, names like Aurora and Canopy will remain unprofitable. The bigger names dominate the headlines. But under-the-radar Aphria may be the best "pot stock" buy.I remain on the fence with regards to pot stocks. I'm waiting for valuations to fall to more reasonable levels. But if you have pot stock FOMO and worry today's prices will be a bargain in hindsight, consider APHA.As of this writing, Thomas Niel did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * The 10 Worst Dividend Stocks of the Decade * 7 Game-Changing Tech Stocks to Buy Now * 5 Chinese Stocks to Buy for the Big 2020 Rebound The post Consider Aphria Stock as the Cannabisphere Burns appeared first on InvestorPlace.
In late November, Aurora Cannabis Inc (NYSE: ACB ) (TSE: ACB) CEO Terry Booth told BNN Bloomberg that his company has its sights set on the United States market. "Carnage" could be ahead for ...
Germany recently halted Aurora Cannabis (NYSE: ACB) product sales, until the health authorities investigate the production process. The production step awaiting for the inspection is related to a method that Aurora utilizes to attain a long shelf life of the flower, German pharmacies reportedly said. Battley was alluding to the special permit that's demanded for distribution of irradiated medical cannabis products in Germany, adding “it’s going to take about four weeks” for the company to acquire it, according to Marijuana Business Daily.
Bragar Eagel & Squire, P.C., a nationally recognized shareholder law firm, reminds investors that class action lawsuits have been commenced on behalf of stockholders of Energy Transfer LP (NYSE: ET), Grubhub, Inc. (NYSE: GRUB), Aurora Cannabis, Inc. (NYSE: ACB), and The RealReal, Inc. (NASDAQ: REAL). Stockholders have until the deadlines below to petition the court to serve as lead plaintiff. Additional information about each case can be found at the link provided.
New York, New York--(Newsfile Corp. - December 11, 2019) - Faruqi & Faruqi, LLP, a leading national securities law firm, reminds investors in Aurora Cannabis (NYSE: ACB) ("Aurora Cannabis" or the "Company") of the January 21, 2020 deadline to seek the role of lead plaintiff in a federal securities class action that has been filed against the Company.Faruqi & Faruqi LogoIf you invested in Aurora Cannabis stock or options between September 11, 2019 and ...
Cannabis stocks fell Tuesday, as analysts weighing in on Canopy Growth’s new chief executive took a cautious stance, highlighting the continuing challenges facing the company.
CALGARY , Dec. 10, 2019 /CNW/ - High Tide Inc. ("High Tide" or the "Company") (HITI.CN) (HITIF) (2LY.F), an Alberta -based, retail-focused cannabis corporation enhanced by the manufacturing and wholesale distribution of smoking accessories and cannabis lifestyle products, is pleased to announce that it has entered into a definitive share purchase agreement (the "Definitive Agreement") with 2651576 Ontario Inc. (the "Minority Holder"), a private Ontario company, to acquire the remaining 49.9% interest (the "Minority Interest") in High Tide's majority-owned subsidiary, KushBar Inc. ("KushBar"). Pursuant to the Definitive Agreement, High Tide, which presently holds a controlling interest of 50.1% in KushBar, will acquire the Minority Interest in a transaction (the "Transaction") that will result in KushBar becoming a wholly-owned subsidiary of High Tide.
A top task facing Canopy Growth’s newly-announced chief executive will be to control the cannabis company’s swelling expenses. Good thing that David Klein has been the financial chief at the pot producer’s big shareholder, (STZ) because his bud-counting skills will be tested by the costs of the new beverages, vapes and chocolates that Canopy starts selling in Canada next month. Investors seem happy that a financial guy is taking charge of (WEED) (ticker: CGC), whose founder Bruce Linton was forced out in July by Constellation (STZ) after the pot pioneer’s losses ballooned.
Cannabis Countdown: Top 10 Marijuana Stock News Stories of the Week Welcome to the Cannabis Countdown . In this week’s rendition, we’ll recap and countdown the top 10 marijuana stock news stories for ...
A big thesis of the Canadian cannabis LPs investment story was global expansion. The news last week of Aurora Cannabis (ACB) being blocked from Germany sales highlights the bigger problems of trying to operate in dozens of countries. With a concerning low level of cash, the cannabis giant doesn’t need another revenue problem while a competitor just opened up a potential financing source to solve the cash crunch.Unsurprisingly, investor sentiment is also very negative, with individual portfolios in the TipRanks database showing a net pullback from Aurora stock.Germany ProblemAccording to MJBizDaily, Aurora Cannabis’ medical cannabis products aren’t going to be on the Germany market until early next year at the earliest. Health authorities apparently are concerned about a “proprietary step” used by the Canadian company to ensure the shelf life of the products.The news outlet suggests Aurora Cannabis could have a problem with prescriptions following regulatory approval next year as German pharmacists move onto another product for treatment of patients. In the last quarter, the company had C$5 million in international cannabis sales with the majority of the revenues from the German market. The issue speaks to the bigger concern of trying to meet regulatory requirements in dozens of countries as the company ramps up global operations.Just last week, the company announced plans for entering Ireland. The CBD oil drops are approved by the Medical Cannabis Access Programme for three medical conditions.This news should again caution the excitement over global operations, especially considering Aurora Cannabis will report virtually nothing for ongoing international operations that were a cornerstone of the stock story.Facility Financing While investors are facing another revenue disappointment for Aurora Cannabis, the company got some good news from Aphria (APHA) and a potential game plan for resolving current cash crunch fears. The ability of Aphria to obtain a C$80 million secured loan with an interest rate in the 5% range is a very positive sign for Aurora Cannabis. The larger cannabis company has nearly C$1 billion worth of property and equipment on the balance sheet.The large cannabis company ended the last quarter with only C$237 million of cash on the balance sheet or roughly enough cash to wrap up the capital spending for the rest of FY20 ending next June. Aurora Cannabis must fund ongoing operating cash burn via funding sources such as the existing at-the-market stock offering which already sold C$107 million worth of stock in FQ2.The market would welcome low cost debt based on the massive facilities already in operation. Any anti-dilutive option is a concern with the company already having borrowings of C$282 million plus another C$283 million in convertible debt after the recent conversion of C$230 million worth of converts.Aurora Cannabis lacks the immediate path to EBITDA profits that makes Aphria a more attractive company to extend secure facilities loans.TakeawayThe key investor takeaway is that Aurora Cannabis faces more operational struggles after a big hit to their international expansion plan. The company can’t face any hits that impact the path to profitability.A low-cost loan, secured by facilities would be one strong signal that Aurora Cannabis has turned the corner. For now though, investors are best watching on the sideline waiting for the cannabis company resolve funding issues first.To find better ideas for cannabis stocks trading at fair value or better, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Cannabis stocks have been on the mend lately, although most are still carrying painful losses this year. Hexo (NYSE:HEXO) is not an exception to this observation. Hexo stock has been under considerable pressure, down 37% in 2019 and more than 70% from its May high.Source: Shutterstock Is the cannabis space really going to make a comeback? That much isn't clear yet, unfortunately. But we can determine which ones to buy in the event that names like Hexo stock do rebound.In November, these names fell off a cliff. I mean, really tanked hard amid relentless selling. Painful as it was, the plunge at least got the discussion going that perhaps these names were capitulating. There could still be some end-of-year selling as investors look to lock in tax losses, but positive signs are starting to emerge.InvestorPlace - Stock Market News, Stock Advice & Trading TipsFor instance, on Tuesday, when the stock market opened lower with indexes down more than 1%, pot stocks were holding in. Then they turned positive and started to gain momentum. How could cannabis stocks be green on the day when the S&P 500 index was down 1.3% for the session?These are not high-quality equities or a flight-to-safety asset class. That got my attention and I'm now taking the charts more seriously. * 7 Stocks to Buy in December Trading Hexo Stock Click to Enlarge Source: Chart courtesy of StockCharts.comAt the beginning of summer, cannabis stocks started to swoon. I flagged a few of these breakdowns, like Canopy Growth (NYSE:CGC) and Aurora Cannabis (NYSE:ACB), cautioning investors to be careful now that key support was giving way.I didn't expect it would lead to some of the declines we've seen since. Many of these names are down 60% to 70% from the highs, while Tilray (NASDAQ:TLRY) is down 90%. Ouch!However, most of these names are rebounding from the lows -- Hexo stock included. Like I said of CGC the other day, two developments are now critical for bulls. First, Hexo stock price must avoid making new lows. It was a panic collapse that sent shares down to $1.56.Bulls also need to see Hexo stock price clear downtrend resistance (blue line). Clearing the 50-day moving average would also open things up a bit on the charts. In short, we need to stop seeing lower lows, and starting seeing higher lows develop on the chart.We're unlikely to go from a sharp downtrend to a massive uptrend overnight. There will be setbacks along the way, but we need to see these two developments before we can trust Hexo.On the chart above, investors can also see that $2 has played a key role lately. Below it should put investors on caution for a possible retest of the lows. If it can hold above $2 a share, a test of its downtrend marks will be in the cards, as well as a possible push to $3. Let's keep an eye on Hexo stock. Bottom Line on Hexo StockDo the charts make Hexo stock a buy? In a word: no. The charts show that the situation is improving from a few weeks ago, but has not signaled the all-clear to investors just yet.So what about the fundamentals?Judging cannabis stocks based on the fundamentals is difficult. That's because many have triple-digit sales growth but low revenue figures. Further, most are not free cash flow positive or profitable, yet garner valuations in the billions.Because of the large correction this year, Hexo stock now sports a market cap of $527 million. Is that too much? Well… * 7 Exciting Biotech Stocks to Buy Now Last year, Hexo had net revenue of 47.3 million CAD ($35.9 million) and lost over 86 million CAD. Investors should know that profits have been elusive for this company.That's not necessarily a nail in the coffin, but companies that are sacrificing profits for growth need to have staying power via the balance sheet. With just 113.5 million CAD in unrestricted cash, some investors have to be nervous. That's even as current assets sit at 314 million CAD, compared to just 52.6 million CAD in current liabilities.But the acceleration in liabilities -- with total liabilities up to 104.3 million CAD last quarter from 17.3 million CAD three quarters ago -- and the negative cash flow is a concern. Hexo isn't the worst pick, but amid a cannabis comeback, I prefer Aphria (NYSE:APHA) and Canopy Growth stock, which have stronger balance sheets.Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long APHA. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Retail Stocks to Buy That Dominated Thanksgiving Shopping * 6 Manufacturing Stocks to Buy as the Economy Recovers * The 7 Best Cryptocurrencies to Buy as Blockchain Heats Up The post Is the Right Move to Buy Hexo Stock Amid Cannabis Rebound? appeared first on InvestorPlace.
The bull case for Canopy Growth (NYSE:CGC) stock at this point essentially is that the market has overreacted. Cannabis plays have been hammered this year amid disappointing revenue growth and fears of cannabis oversupply. Canopy Growth stock hasn't been spared: it's down 65% from its late April highs.Source: Jarretera / Shutterstock.com But there are reasons why its near-term results have disappointed investors. One of those reasons looks particularly key. Health Canada, that country's cannabis regulator, has been slow to approve retail licenses. Especially in Ontario, Canada's most populous province, the retail infrastructure is lagging the industry's production capacity.That should start to change in 2020. Meanwhile, Health Canada is starting to approve licenses for so-called "Cannabis 2.0" products like vapes and edibles. The hope is that more retail locations selling more products will ease the industry's overcapacity. That, in turn,will boost the revenue and margins of Canopy Growth and other cannabis producers.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIt's an intriguing theory, particularly with CGC stock near its lows. But there are still valid concerns about Canopy Growth stock, even after its 60%-plus decline. And if Cannabis 2.0 can't fix Canopy Growth stock, it's difficult to see what can. The Rollout of Cannabis 2.0Last week, Canopy Growth unveiled its extensive Cannabis 2.0 portfolio.Canopy Growth is launching a broad lineup of vaping products. In partnership with Hummingbird Chocolate, Canopy is unveiling multiple chocolate products under several brands. * 7 Retail Stocks to Buy That Dominated Thanksgiving Shopping The company will release several beverages, including the trademarked Distilled Cannabis, a clear liquid made from whole cannabis flower. Its Tweed RTD (ready to drink) flavored beverages contain THC (tetrahydrocannabinol) and CBD (cannabidiol). Canopy will also offer sparkling water under its Quatreau brand, THC-heavy Deep Space carbonated beverages, and unflavored mixers.The release of such a broad portfolio highlights one of the reasons why many cannabis bulls have chosen Canopy Growth stock. The multi-billion dollar investment by Constellation Brands (NYSE:STZ,NYSE:STZ.B) in CGC last year gave it enough capital to lead the industry. Canopy's plans for Cannabis 2.0 suggest it has a real chance to do so. The Case for CGC StockMeanwhile, CGC's rivals have very real financial concerns. Aurora Cannabis (NYSE:ACB) continues to dilute its shareholders, but it still has a significant balance sheet problem. Hexo (NYSE:HEXO) has focused on edibles from the start, but it, too, needs to conserve its cash.Canopy has no such problems. Thanks to the Constellation investment, it still has 2.7 billion CAD in cash and investments. Cash burn has been an issue in recent quarters -- its cash balance shrunk over 400 million CAD in Q3 alone -- but that problem should moderate going forward.That balance sheet gives Canopy plenty of options. It can be aggressive on pricing, hoping to outlast its rivals. It could pick up assets down the line, assuming distressed companies look to sell themselves before (or after) going bankrupt.More broadly, bulls can argue that the problem with the Canadian cannabis industry is not a long-term issue. The slow pace of regulatory action has caused many of the sector's problems, including oversupply and lower-than-expected revenue.Those problems will be fixed: Canopy Growth's management projected after Q3 that supply and demand would return to balance by the middle of next year. And once that happens, optimism towards the worldwide cannabis sector will return. Few, if any, companies will be better-positioned for that opportunity than Canopy Growth. The Risks to Canopy Growth StockI'm sympathetic to that bull case, particularly with Canopy Growth stock below $20. But there are risks to CGC stock that are worth noting.First, Canopy Growth stock might be cheaper than it was, but it's not cheap. Even backing out cash net of debt, the company is valued at about $5 billion. That's roughly eight times the mean Wall Street 2020 top=line estimate.Second, it's not yet clear that Cannabis 2.0 will be the blockbuster for which bulls hope. Cannabis derivatives are expected to bring in new consumers, but consumers simply may not be interested in them.Meanwhile, CGC's competition will be intense, with the likes of Cronos (NASDAQ:CRON), Tilray (NASDAQ:TLRY), and many others similarly releasing edibles and vapes. There already are legitimate worries about Canopy's plans to be all things to all consumers, plans which so far haven't worked out. At the least, Canopy needs to execute much better than it has so far, and it has to do so without a permanent CEO in place. CGC's Margin ProblemFinally, Canopy Growth stock is significantly dependent on Cannabis 2.0 products at this point. If demand for pot derivatives doesn't materialize, the stock is in real trouble.The company's deal with Acreage Holdings (OTCMKTS:ACRGF) targets a U.S. recreational market that may not open up for years. The CBD opportunity in the U.S. looks less attractive after the struggles of the sector's leader, Charlotte's Web (OTCMKTS:CWBHF). International markets haven't changed much in the past 18 months.The long-running concern about CGC stock, and cannabis producers more broadly, is that production is going to be a low-margin, commoditized business. There's early evidence to suggest that indeed will be the case. If derivatives don't drive real revenue at high margins, the company's long-term profit outlook will drop even further.In other words, CGC stock remains a risky bet to make. And it's tough to make a compelling case as to why the bet should be made right now. CGC's execution has been weak. It has repeatedly missed its guidance. Stocks across the sector remain falling knives, and Canopy Growth stock is largely in that category.That said, I can see why cannabis bulls see CGC as attractive below $20. If its long-term opportunity is even close to what optimists believe it is, there's a path to a longer-term rally. That path requires the company's Cannabis 2.0 to be successful, meaning those products will likely define the performance of CGC stock next year.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Retail Stocks to Buy That Dominated Thanksgiving Shopping * 6 Manufacturing Stocks to Buy as the Economy Recovers * The 7 Best Cryptocurrencies to Buy as Blockchain Heats Up The post Cannabis 2.0 Highlights the Rewards a and Risks a of Canopy Growth Stock appeared first on InvestorPlace.
Deadline Reminder: Law Offices of Howard G. Smith Reminds Investors of Looming Deadline in the Class Action Lawsuit Against Aurora Cannabis Inc.
CALGARY , Dec. 5, 2019 /CNW/ - High Tide Inc. ("High Tide" or the "Company") (HITI.CN) (HITIF) (2LY.F), an Alberta -based, retail-focused cannabis corporation enhanced by the manufacturing and wholesale distribution of smoking accessories and cannabis lifestyle products, today announced that it has closed the second tranche (the "Second Tranche") of the sale of unsecured convertible debentures (the "Debentures") of the Company under the private placement (the "Offering") previously announced on November 14, 2019 . Gross proceeds from the Second Tranche were $2,115,000 .
Even prior to the horrible September quarterly report, analysts were questioning the cash position of Aurora Cannabis (ACB). A big part of the problem was a large convertible debt due in March hanging over the stock. The recent decision for substantially all of the debtholders to convert into common shares was a painful dilution for existing shareholders, but necessary in order for Aurora Cannabis to attract new investors. The company still has more work to improve the balance sheet before the stock becomes a buy, but this convertible debt conversion was a key step.Convertible Debt ConversionAurora Cannabis announced that 99% of the company's C$230 million, 5% unsecured, convertible debentures due March 9, 2020 voluntarily elected to convert to common shares. As a result, the Canadian cannabis company will issue an aggregate of 69,135,117 common shares at a conversion price of C$3.2837.The company already had a diluted share count above 1.1 billion shares. This conversion places the diluted share count above 1.2 million shares.For investors not paying attention to this logical conclusion, the dilution is painful considering the stock once topped $10 earlier this year. At a stock price of $2.50, the fully diluted market cap is ~$2.6 billion.Still Needs More CashThe big question is where Aurora Cannabis goes now with the stock beaten down to $2.50 and the crucial convertible debt handled. The biggest remain hiccups are the operating losses combined with still large capital spending requirements despite halting the spending on their two primary facilities.On the FQ1’20 earnings call, management still outlined the following quarterly capital spending requirements for the rest of this fiscal year ending next June: * FQ2 - C$108 million * FQ3 - C$70 million * FQ4 - C$50 millionAurora Cannabis ended the September quarter with C$153 million in cash on the balance sheet. When combined with already completed at-the-market equity offerings, the company has raised enough cash to fund these remaining large capital spending plans for the year.The problem remains the ongoing operating losses must be completely funded. The company has plenty of options including selling assets with C$973 million in facilities and property and another C$115 million in investments or completing further equity offerings via the ATM, amongst other options. Of course, the other option is to cut the adjusted EBITDA losses from the large C$34 million loss in FQ1 to reduce funding requirements. This likelihood of cutting losses appears small in the near term as Aurora Cannabis invests for the Cannabis 2.0 rollout in Canada and the CBD market in the U.S.The requirement to raise more funds while these convertible debt holders are allowed to immediately unload their new shares will pressure the stock. A potential investor can wisely wait on the sidelines until further financing is resolved and the Canadian market rationalizes more supply while demand catalysts as Cannabis 2.0 take fold.Analyst Commentary * CIBC's John Zamparo: "Aurora has unveiled a promising array of items which should allow the company to maintain its market share leadership. The conversion of its 2020 debentures and $190MM reduction in capital spending on production reduce worries over the company's liquidity, though ongoing dilution still presents an impediment to owning shares. Net, we continue to view Aurora as fairly valued, as its strong Canadian performance is weighed against its balance sheet and lack of U.S. presence or strategic partners [...] Our price target falls to $5 (was $7), and Aurora remains Neutral rated. (To watch Zamparo's track record, click here) * MKM's William Kirk: "When a company shifts so rapidly toward conserving capital at the expense of diluting existing shareholders, one would normally start to look toward solvency concerns. However, at odds with recent trends, management sounded very confident about Aurora's strategy and viability, and its strong gross profit margin makes funding (which Aurora still needs) a bit easier to obtain. Kirk rates the stock a "sell" along with a C$3.00 price target. (To watch Kirk's track record, click here)Overall, Wall Street is pretty evenly split between the bulls and those choosing to play it safe. Out of 12 analysts tracked by TipRanks in the past 3 months, 5 say "buy," 5 suggest "hold," while 2 recommend "sell." However, the 12-month stock-price forecast stands tall at $4.96, marking nearly 100% in upside potential from where the stock is currently trading. (See Aurora stock analysis on TipRanks)TakeawayThe key investor takeaway is that Aurora Cannabis has made several smart moves to position the company for a bright long-term future in the cannabis market. Unfortunately, the company still needs to fund ongoing capital losses while facing a tough competitive situation in the Canadian market.The best move for investors is to continue waiting for further weakness in the shares while awaiting more clarification on the dilutive impacts of additional capital raises.To find good ideas for cannabis stocks trading at fair value or better, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
German pharmacies were recently asked to stop the sale of Aurora Cannabis (NYSE: ACB) products, according to Marijuana Business Daily. The products are awaiting for inspection by health authorities due to a proprietary step in Aurora’s production process, the publication said. Until the review is complete, the products will remain unavailable.
Glancy Prongay & Murray Reminds Investors of Looming Deadline in the Class Action Lawsuit Against Aurora Cannabis Inc.
Aurora Cannabis has been approved to sell CBD oil drops in Ireland. Marijuana stocks fell despite the news, with Aurora Cannabis stock reversing lower.
Cannabis stocks fell for a third straight day Monday, weighed down by the industry’s continued weak fundamentals with companies still posting losses as they struggle to generate revenue.