|Bid||6.96 x 43500|
|Ask||6.97 x 39400|
|Day's Range||6.92 - 7.34|
|52 Week Range||4.05 - 12.52|
|Beta (3Y Monthly)||2.49|
|PE Ratio (TTM)||32.20|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||N/A|
Aurora Cannabis shares tumble Thursday to pull the overall sector lower, after an analyst at Bank of America Merrill Lynch downgraded the stock on concerns about its rate of spending cash.
Miami-based investment banker Ladenburg Thalmann waded into the marijuana patch Wednesday, initiating coverage of a quartet of cannabis stocks. Unsurprisingly, among these was Aurora Cannabis (ACB), currently the No. 2 Canadian cannabis company by market capitalization and, as analyst Glenn Mattson pointed out, owner of "the top 5 selling [marijuana] brands in British Columbia."In a stats-heavy initiation report, Mattson laid out its investment case for Aurora Cannabis. The analyst rates Aurora Cannabis stock a 'buy', with a $9 price target, which implies nearly 21% upside from current levels.On production RatesAt the end of March 2019, Aurora Cannabis boasted an annual production capacity of 65,000 kilograms of cannabis product. By early next year, the company expects to more than double that capacity to 150,000 kg. More incredibly, by the end of next year, the company will quadruple that number -- and be growing 625,000 kg per year by the end of calendar year 2020.Cost of production at some facilities is approaching $1 per gram, an industry low."One feature of this company is that they look to bring industrial scale to their growing facilities. The benefit of this approach is that they lower their average cost significantly. In the case of the company’s largest facilities like Aurora Sky and Aurora Sun, the production costs per gram are expected to be under $1 once the space is fully functional," Mattson noted.On expansion -- at home and abroadSince 2016, Aurora Cannabis has effected 18 "strategic acquisitions" and made 12 "strategic investments ... across the value chain."Internationally, the company now operates 15 global production facilities and is "active" on five continents and in 24 countries, including Australia, the Cayman Islands, Denmark, Germany, Italy, Lithuania, Malta, Mexico, Poland, and South Africa (and Canada, of course). Its activities range from cultivation to processing to retail (in order to gain "insight into trends as they evolve in the industry"). While most cultivation and processing is currently conducted in Canada, the company purchased a 51% ownership stake in cannabis cultivator "Gaia Pharm" -- now renamed Aurora Portugal -- in February 2019.Mattson points out that "While some firms are being cautious about expansion with the possibility that the Canadian market may see oversupply, Aurora is taking the view that the market for cannabis will be global and it can export to areas like Europe if the Canadian market sees saturation."On target marketsThe Canadian adult recreational market will provide the nearest term opportunity for growing sales for Aurora Cannabis. The company is especially keen to expand into derivative consumables such as vapes and edibles -- which Canada is expected to permit beginning in December -- in hopes that these forms of cannabis will both "attract a broader customer base" (i.e. boost revenue) and also command higher average selling prices (i.e. increase profits).What's importantA lot has already been written about the Canadian cannabis industry since legalization occurred on October 17 -- and even before. In Mattson's report, we just want to highlight one tidbit that might otherwise escape notice:According to the analyst, "ACB achieved 4 of the top 5 selling brands in British Columbia in the early weeks of adult-use cannabis legalization." At the same time, Mattson notes that "ACB saw 20% market share from October 17th legalization."Do you see the disconnect here? The seller of 80% of the five top-selling marijuana brands (albeit in just one representative province) in Canada nonetheless has only 20% market share in the country. This speaks to the very fractured nature of the Canadian cannabis industry at this point in time -- and explains why one of the first things Aurora began doing was rolling up some competitors and buying stakes in others, concentrating power under its own brand name.Given the rapid rate of production growth this has helped create, Mattson thinks this was a smart move.To read more on the nitty gritty of what’s going on in the rising cannabis industry, click here. Read more on ACB: * Why Aurora Cannabis Is Likely to Attract More Institutional-Level Investment * Aurora Cannabis (ACB) Is Firing on All Cylinders * Aurora Cannabis: Great Prospects… That Are Fully Priced Into the Stock Already * Don’t Jump on the Bandwagon for Aurora Cannabis (ACB) Stock More recent articles from Smarter Analyst: * There's Light at the End of the Tunnel for Canopy Growth (CGC) Stock, Analyst Says * Aurora Cannabis (ACB) Stock Wins a 'Buy' for Rolling Up the Marijuana Industry * Organigram (OGI) Reported a Strong Quarter, But Don’t Buy the Stock Just Yet * More Gains Ahead for Cannabis Stock Curaleaf
Aurora Cannabis Inc. shares fell 2.3% in early trade Thursday, after BofA Merrill Lynch downgraded the stock to neutral from buy and lowered its stock price target to $8 from $10, on concerns about the company's cash burn. "Aurora has emerged as one of the best operators in the cannabis sector, with industry leading scale and margins even vs other large peers, and global optionality," analyst Christopher Carey wrote in a note to clients. "However, despite this, and a focus on profit, (CQ2 positive EBITDA target), it is burning cash and by our estimates could be cash negative by CQ120 (absent financing), namely if a large convertible debenture due in CQ120 stays out of the money." Even if its current cash burn were to improve, Aurora will likely need funding in the next few quarters," said the analyst The company has access to about C$100 million in a credit facility, but a convertible note that matures in the first quarter of 2020 will likely need to be paid in cash, he wrote. Shares have gained 47% in 2019, while the S&P 500 has gained 19%.
Aurora Cannabis Inc. (NYSE: ACB) announced Thursday it has won the Italian government’s public tender to supply medical marijuana in Italy. Aurora Cannabis was the only company to meet the demanding requirements of the tender, with the Italian cannabis market being one of the most strictly regulated in the world. Benzinga's Cannabis Capital Conference heads to Detroit on Aug. 15 -- Click here to learn more!
When the year started, Hexo (NYSEAMERICAN:HEXO) stock got off to a nice start. The shares went from $5 to $8 -- riding the cannabis bull wave spurred by the legalization in Canada. But unfortunately, the expectations were too exuberant. Since late April, the HEXO stock price has gone into reverse; right back to $5.Source: Shutterstock But the company is not alone. Various other cannabis stocks have also been in the downtrend, such as Canopy Growth (NYSE:CGC), Aurora Cannabis (NYSE:ACB) and Cronos Group (NASDAQ:CRON). For the most part, all have had challenges in scaling up for the enormous demand in the industry.Now in the case of Hexo Corp stock, the latest earnings report was particularly disappointing. The company reported revenues of 13.02 million CAD, compared to the Street estimate of 14.8 million CAD. In fact, there was a quarter-over-quarter drop of nearly 9%. There was also weakness in the average price of adult-use dried grams as well as the average gross selling price per gram.InvestorPlace - Stock Market News, Stock Advice & Trading TipsYet the choppiness should not be a surprise. The cannabis is still in the early stages and there will be growing pains. * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip But despite all this, I still think HEXO stock represents an interesting opportunity. And to see why let's take a look at the following catalysts: HEXO Stock: ScaleWhile at an investor conference, Tilray (NASDAQ:TLRY) CEO Brendan Kennedy and CFO Mark Castaneda provided some interesting insights about the cannabis opportunity. One of their main contentions was that there will ultimately be a handful of major winners in the market. After all, a company will need a global platform to realize economies of scale so as to provide competitive pricing.Granted, as for HEXO, the company has struggled to ramp up production. Yet this should prove temporary. The company already is the dominant player in the Quebec market (which is the second largest in Canada). What's more, HEXO has began construction of a 323,000 square-foot facility in Greece. The acquisition of Newstrike Brands should also be a boost.Keep in mind that Hexo's management has reiterated its aggressive growth for revenues. For fiscal 2020, the forecast is for 400 million CAD. HEXO Stock: Strategic PartnershipHEXO has entered a 50-50 strategic relationship with Molson Coors (NYSE:TAP). Both parties will develop drinks that are infused with cannabis. Consider that the goal is to begin selling in Canada on Dec. 17.Gauging the potential impact of this is tough. But having the expertise, marketing capacity and distribution of TAP will be significant.But this is likely to just be one of the major deals for HEXO. During the latest earnings conference call, CEO Sebastien St.-Louis noted that he is talking to over 60 potential partners - and that there should be another deal announced by the end of the year. HEXO Stock: Liquidity and ValuationHEXO stock will soon be listed on the venerable New York Stock Exchange. This will put the company in a rare group, with only two other cannabis operators (CGS and ACB). The new listing will provide more visibility for the company - helping to snag partnerships and deals. But it will also mean more liquidity for the shares.Oh, and the valuation on HEXO stock is at fairly reasonable levels, at least compared to its other large rivals. For example, Bank of America (NYSE:BAC) analyst Christopher Carey believes it is the most attractive within his coverage universe - and he has a juicy $10 price target on the stock.Tom Taulli is the author of the upcoming book, Artificial Intelligence Basics: A Non-Technical Introduction. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip * 7 Services Stocks to Buy for the Rest of 2019 * 6 Stocks to Buy and 1 to Sell Based on Insider Trading The post 3 Reasons Investors Should Be High on Hexo Stock appeared first on InvestorPlace.
Canadian pot producer Aurora Cannabis Inc said on Thursday it had secured a two-year contract to supply medical cannabis to the Italian government. The company will supply a minimum of 400 kg of medical cannabis to the country, one of the most strictly regulated medical cannabis markets in the world. Aurora said it will supply cannabis from its Canadian EU GMP certified facilities and imported into Italy through Aurora Deutschland, its wholly-owned European unit.
Cannabis stocks were mostly higher Wednesday, with Curaleaf leading the pack after announcing an $875 million stock-and-cash deal that will help it expand into new states, including Illinois.
EDMONTON , July 18, 2019 /CNW/ - Aurora Cannabis Inc. ("Aurora" or the "Company") (ACB) (ACB), the Canadian company defining the future of cannabis worldwide, announced today that the Company has been selected as the only winner of the Italian government's public tender to supply medical cannabis in Italy . The supply contract is expected to be signed in September 2019 .
The cannabis industry is starting to change on the production side of the business, as a few companies, such as Aurora Cannabis (ACB), are starting to not only grow revenue, but are approaching positive EBITDA as they do so.While I don't think this is going to be a big catalyst for Aurora in the very near term, over the next few quarters, if it performs in alignment with guidance, it's going to be a huge advantage over its competitors, who continue to struggle to grow revenue while reducing costs.In this article we'll look at why this is likely to attract a lot more interest from institutional investors going forward, and why it could surprise to the upside over the next year or so.Revenue vs. earningsFor some time I've been persuaded that revenue will be the key metric to watch for cannabis producers. Those that prove they can grow sales show they have the capacity to supply growing demand. That ensures a steady flow of revenue, which when consistent, should eventually lead to lower costs on scale and becoming more efficient.If companies aren't growing sales, cutting costs becomes an exercise in futility because market demand for cannabis has a long way to go before being satiated. Selling a relatively small amount of pot as a profit isn't going to attract the interest of investors for a prolonged period of time.While I maintain my thesis that revenue is the key catalyst to watch in the near term, I am starting to believe that companies that are able to maintain sales growth and do so at a profit, are going to attract the most investor interest, and their value will increase.Aurora Cannabis is uniquely positioned to do just that, and if it delivers on its guidance for profitable EBITDA in the current quarter, it should result in its valuation jumping significantly, along with its share price.Its major competitor, Canopy Growth on the other hand, continues to grow revenue, but in the latest quarter, it resulted in an adjusted EBITDA loss in the fourth quarter of C$93 million, or about US$74.5 million. That's far beyond any EBITDA losses of its competitors, which are also spending on domestic and international expansion.When asked about that, CEO Bruce Linton said that "it does dwarf our peers and it all comes back to the war chest that we talk about which we think is going to turn into a competitive advantage over time as we're building this global scale."Canopy Growth does like to wave its $4 billion plus on its balance sheet like a magic want before the market, but the reality is Aurora Cannabis has been able to land great partnerships and acquisitions without the money.The company has also rapidly expanded at a pace internationally far beyond Canopy Growth, and is doing so while continuing to lower costs.Profitable expansionAurora is on pace to boost production capacity to about 625,000 kilograms a year by early 2020. There will be some lag time there as the company goes from seed to harvest in the available facility space, but in the relatively near future the company is going to far exceed all its competitors on how much cannabis it can supply to the market.Considering the higher margin products becoming legal in Canada, the increasing revenue coming from higher-margin medical cannabis, the low production cost per gram of $1.42 as of the last reporting period, and rising overall sales, it's easy to see that Aurora Cannabis is close to separating itself from its competitors in a big way.Assuming Aurora can sell the enormous amount of inventory it'll soon have available to it, its numbers are going to shoot through the roof.ConclusionAurora Cannabis has been able to do rapidly increase revenue, lower costs, and expand internationally, without having to give up control of a large part of its company, or seat board members that may or may not align with their business model and strategy.Management has guided for positive EBITDA in this quarter. But even if it were to slightly miss and it takes another quarter to reach that outcome, the company is poised to be profitable in a very short time while it's rapidly growing revenue.As the cannabis market continues to grow on a global basis, it also has available holdings to increase capacity to over 800,000 kilograms annually by my estimates, and possibly beyond 1 million kilograms a year if demand warranted it.Based upon the approximate 625,000 kilograms a year the company will be producing starting in early 2020, it has the flexibility to use its product to sell, research, extract, or apply to whatever segment it needs, without sacrificing revenue.For these and other reasons, I still consider Aurora Cannabis to be the top cannabis company on the production side of the cannabis business.To read more on the nitty gritty of what’s going on in the rising cannabis industry, click here. Disclosure: The author is Long ACB.Read more on ACB: * Aurora Cannabis (ACB) Is Firing on All Cylinders * Aurora Cannabis: Great Prospects… That Are Fully Priced Into the Stock Already * Don’t Jump on the Bandwagon for Aurora Cannabis (ACB) Stock * Aurora Cannabis Stock Set to See Big Gains, Says Analyst More recent articles from Smarter Analyst: * There's Light at the End of the Tunnel for Canopy Growth (CGC) Stock, Analyst Says * Aurora Cannabis (ACB) Wins a 'Buy' for Rolling Up the Marijuana Industry * Aurora Cannabis (ACB) Stock Wins a 'Buy' for Rolling Up the Marijuana Industry * Organigram (OGI) Reported a Strong Quarter, But Don’t Buy the Stock Just Yet
What is going on with the cannabis space? Seemingly every stock in the group is getting sold lower, including Cronos Group (NASDAQ:CRON). In fact, what's even more interesting is the way that they're all selling off. CRON stock and others are positioning in a similar bearish setup.Source: Shutterstock It's drawing questions from observers as to why the industry is under such pressure. The inquiry becomes even more pressing as the Dow Jones, S&P 500 and Nasdaq are hitting new highs on a seemingly daily basis.How can equities be at a high while cannabis stocks are scraping multi-month lows?InvestorPlace - Stock Market News, Stock Advice & Trading Tips Breaking Down Cronos Group StockThere are dozens of cannabis stocks investors can consider -- that goes for almost any industry. And like any other sector, there are good companies and not-so-good companies to choose from. Luckily for Cronos stock, it is a good company. But that doesn't seem to matter right now, and that's because of the fundamentals.You see, even though CRON stock runs a good operation, this company has a $4.7 billion market capitalization and had just -- wait for it -- 6.5 million CAD in sales last quarter. This was up an impressive 120% year-over-year, but is a very small revenue number given its valuation. * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip The company turned a pretty strong profit for the quarter, earning more than 400 million CAD. How's that possible on 6.5 million CAD in sales? CRON generated a non-cash unrealized gain of 436.4 million CAD on the revaluation of derivative liabilities.The cannabis space is a land grab right now. And the ones with the cash get to grab the most assets. Canopy Growth's (NYSE:CGC) big bank account was infused by Constellation Brands (NYSE:STZ). But now CRON stock can throw its hat into the ring, after it closed a $2.4 billion investment from Altria (NYSE:MO) in the most recent quarter.Now its balance sheet is strong, even if its income statement remains unimpressive. This vault will be important down the road. Earlier this month, Stifel analysts said the cannabis market could hit $200 billion in the next decade. That's up from $8 billion in 2018.The bottom line: you might look at the revenue underlining Cronos stock and question all the hype. But with more than $2.4 billion sitting in cash and making up half the market cap, it commands some respect. Trading CRON StockSo, did CRON stock just become a big-time sell? Not yet, but it could be soon. Aurora Cannabis (NYSE:ACB) is breaking down, while Canopy plunged through support. Both stocks were setting up as a descending triangle, a bearish technical development.Cronos stock isn't looking healthy, either.After falling hard on Friday and closing below the 200-day moving average, shares rebounded 4.5% on Monday. The stock closed just above this key moving average on Monday, but only by a dime. It's not clear whether Cronos stock will reclaim this mark or find it as resistance. Click to EnlargeBut that doesn't really matter because we know two things now. One, $14 support is a must-hold level. Unlike ACB, CGC and other cannabis plays, CRON stock is still clinging to its support level. Below $14 puts the June lows of $13.51 on the table, as well as the 61.8% retracement for the one-year range at $13.06.Below that and there's no immediate support level to lean on.The other thing that's clear? In order for Cronos Group stock to look healthy on the long side, we need to see it clear the $15 to $15.50 area. Over the past few months, $15.50 has been a relevant level, while both the 20-day and 50-day moving averages are trading in this range.It's a bit early to say Cronos Group stock is doomed, but it's not looking healthy as the industry draws in sellers. I'd rather wait for CRON stock to have the wind at its back than buying now and hoping support holds up.Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip * 7 Services Stocks to Buy for the Rest of 2019 * 6 Stocks to Buy and 1 to Sell Based on Insider Trading The post Did Cronos Group Just Become a Big-Time Sell? appeared first on InvestorPlace.
There will always be naysayers in the sphere of stock market investing, especially when it comes to cannabis stocks. This is true for the bigger names like Canopy Growth Corp (NYSE:CGC) and Aurora Cannabis (NYSE:ACB). And it also applies to today's spotlight name, Hexo (NYSE:HEXO). But does Hexo stock deserve its reputation as a volatile, dangerous investment?I won't deny that Hexo Corp stock is a speculative play. But I wouldn't consider it any more dangerous than the broader cannabis market. You're either a believer in marijuana stocks or you're not. And if you can handle some risk, then Hexo stock could be your ticket to surprisingly impressive returns.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Too Legit to QuitOnce they were marginalized companies, but Canopy and Aurora have since transitioned from thinly traded over-the-counter markets to the major exchanges. In turn, this emboldened other cannabis up-and-comers to likewise move to the bigger exchanges.Hexo would be a textbook example of this. They're now being promoted from the much smaller NYSE American exchange to the New York Stock Exchange. Hexo Corp stock owners shouldn't experience any negative impact. Further, the ticker symbol of HEXO will remain the same. * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip CEO and co-founder Sebastien St-Louis rejoiced in this headline-making move. He commented that Hexo Corp is "extremely pleased to list on the NYSE and believe it reaffirms HEXO's strong track-record for exceptional corporate governance and is further proof that we are a valuable cannabis industry partner for Fortune 500 companies."I'd affirm that just like Canopy and Aurora, Hexo deserves to play on the same field as other major-league batters. One of the biggest licensed cannabis companies in Canada, Hexo Corp serves both the adult-use and medical-use Canadian markets through a multitude of popular brands. A Historic First for Hexo Corp StockLest we forget, this once under-the-radar company generated huge headlines. Hexo was the first major cannabis producer to ink a deal with a brand-name beverage company. Moreover, it did so with the explicit purpose of developing and manufacturing cannabis-infused beverages. In a landmark agreement with Molson Coors Brewing Company (NYSE:TAP), Hexo moved even faster than Canopy to map out a definitive plan to bring cannabis-enhanced drinks to the public.And it's not just about beer, as the two companies are also considering cannabis-infused water and hot beverages. According to Molson Coors president and CEO Mark Hunter, the total cannabis market in Canada is approximately valued between $7 billion to $10 billion. Within that figure, beverages account for anywhere from 20% to 30% of the total, or as much as $3 billion. That's a massive untapped (pardon the pun) market for Hexo stock. A Major AcquisitionIn what I believe to be a game-changing expansion, Hexo Corp acquired what was one of my favorite cannabis companies this year, Newstrike Brands, for around $197 million. In so doing, Hexo added another 470,000 square feet of licensed indoor cultivation space. Keep in mind it already has an expansive 1.31 million square feet of grow space.Moreover, Hexo will now have access to the numerous provincial deals which Newstrike already had in place. Altogether, Hexo's management expects the Newstrike acquisition to yield 400 million CAD in net revenues by the year 2020. The Bottom Line on HEXO StockI'm looking forward to watching the cannabis-investing community bid the HEXO stock price up through the end of this year. And probably the party will continue well into next year.If you're in the pot game, don't sleep on Hexo stock: this could be the company to bring legalized cannabis to the masses.As of this writing, David Moadel did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip * 7 Services Stocks to Buy for the Rest of 2019 * 6 Stocks to Buy and 1 to Sell Based on Insider Trading The post 3 Reasons Why HEXO Stock Is the Real Deal appeared first on InvestorPlace.
Aurora Cannabis (NYSE:ACB), one of the world's largest cannabis producers, announced July 15 that it received two licenses from Health Canada for outdoor cultivation of marijuana. The move could be a significant catalyst for ACB stock. Source: Shutterstock InvestorPlace - Stock Market News, Stock Advice & Trading Tips The Details of the LicensesThe two licenses are for sites in Quebec and British Columbia. The Quebec site is a 21,000 square-foot operation at the company's Aurora Eau facility in Quebec. The B.C. site is a 207-acre property in British Columbia. It will be called Aurora Valley. The Quebec operation has already been planted; the B.C. site should be planted shortly. Now before any owners of ACB stock get excited about Aurora jumping head first into outdoor growing, they might want to take a deep breath. These facilities are for cultivation research. However, the research ACB does at both of the facilities will ultimately enable it to grow cannabis outdoors. * 8 Penny Stocks That Have Fallen From Grace But first, it needs to figure out what grows best and where. Once Aurora figures that out, it will go all-in on outdoor production. "For this season and next, our focus will be on researching cultivation methods and evaluating genetics to produce high THC and CBD cannabis in outdoor-grown plants, with the ultimate goal of extracting these components," Dr. Jonathan Page, Chief Science Officer at Aurora stated in its press release. "The unique climates of each site also presents a great opportunity to determine which cultivars will perform best in different outdoor environments," he added.A smaller detail from its July 15 press release, but equally important to Aurora's future and the future of Aurora stock, is that the company received a processing license from Health Canada to produce cannabis gummies and chocolate edibles once they're legally available for sale in mid-December. I've said for a long time that the most lucrative sector of cannabis is going to be edibles and cannabis-infused drinks. This license ensures that Aurora will be ready to go as soon as selling edible cannabis is legal in Canada. Outdoor Cultivation Can Boost Aurora StockHealth Canada only approved outdoor cultivation in June 2018, 17 years after medical pot became legal in Canada. Regulators took their time approving outdoor cultivation because they were worried about theft and quality control. Since outdoor cultivation was approved, several companies, including Canopy Growth (NYSE:CGC) have started growing cannabis outside. On July 12, 48North Cannabis announced that it had completed the planting of its first outdoor crop at its outdoor cultivation site in Ontario. The company planted a total of 250,000 cannabis seeds at its Good:Farm facility, which has 3.7 million square feet of cultivation space. The company expects to produce more than 40,000 kilograms of dried cannabis per year. The biggest attraction of 48North's cannabis facility is that it's expected to produce cannabis at the lowest cost in Canada. That's a big deal, considering that Stats Canada recently produced a report that suggested legal pot in Canada costs as much as 65% more per gram than illegal cannabis. The Canadian government is working on ways to shrink the gap, including lowering the minimum tax on cannabis and switching to a system that taxes cannabis solely based on wholesale prices. Aurora, Canopy Growth, and North48 are all thinking along the same lines. It's cheaper to produce cannabis outdoors, and cheaper, legal cannabis will attract more buyers. By following that philosophy, Aurora should be able to boost its top and bottom lines, elevating ACB stock in the process. The Bottom Line on ACB StockHere in Canada, the cannabis industry has been under fire in recent days due to the troubles facing CannTrust Holdings (NYSE:CTST) and its failure to follow Health Canada's rules. It could permanently lose its cannabis license as a result. CannTrust's failure is a sign that the cannabis industry still in the early stages of growth. It's not good news for owners of Aurora stock or theshareholders of the other big Canadian cannabis stocks because it puts their reputations under a microscope. However, if Aurora continues to grow its outdoor cultivation business, I believe its future profits could be a lot higher than people currently estimate. That, in turn, would certainly be great news for Aurora Cannabis stock. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip * 7 Services Stocks to Buy for the Rest of 2019 * 6 Stocks to Buy and 1 to Sell Based on Insider Trading The post Outdoor Cultivation Can Boost Aurora Cannabis Stock appeared first on InvestorPlace.
Ladenburg Thalmann initiated coverage of the cannabis sector on Wednesday, assigning buy ratings to market leader Canopy Growth Corp. and Aurora Cannabis Inc. , and a neutral rating to Tilray Inc. Analyst Glenn Mattson said he favors Canadian companies who are focused on long-term value creation and gaining market share, along with those with clear plans to enter the U.S. market, which is expected to become the world's biggest, if and when federal laws allow it. "In the U.S. we look for companies that are building a presence in states with large populations but a limited licensing outlook," Mattson wrote in a series of notes to clients. The analyst views Canopy as a compelling investment opportunity, and said he expects it to retain its leading position in Canada--and beyond. "We believe that Canopy can replicate that effort in other markets as those markets move toward legalization," Mattson wrote. "Canopy has the most aggressive approach to capturing the U.S. market (estimated to be the world's largest potentially) through its potential acquisition of Acreage Holdings (ACRGF: $14.50, Buy)," he said. Aurora is "one of the most aggressive capacity expansion plays" in the cannabis sector, with its aim to become the low-cost provider of premium product. "While some firms are being cautious about expansion with the possibility that the Canadian market may see oversupply, Aurora is taking the view that the market for cannabis will be global and it can export to areas like Europe if the Canadian market sees saturation," he wrote. Turning to Tilray, Mattson said that company is supplying medical cannabis to patients in 15 countries and praised its brand strategy and clinical trials. But the plan of distribution of its big shareholder Privateer will create an overhang on the stock that Mattson expects will weigh for some time. "It remains to be seen what kind of traction TLRY will have with CBD in the U.S. and until then we don't believe an established organic foods company should trade at the same multiple as a high-growth cannabis company," he wrote. The ETFMG Alternative Harvest ETF has gained 21% in 2019 to date, while the S&P 500 has gained 20%.
All pot stocks have been on a roller coaster ride over the past year. But, none have been quite as volatile as Tilray (NASDAQ:TLRY) stock. Over the past twelve months, Tilray stock has gone from $20, to $300, to $100, to $150, to $35.Source: Shutterstock That's a wild ride. Investors should expect it to continue. At their core, almost all pot stocks are high-risk, high-reward investments, given the speculative nature of the cannabis market and its long term growth prospects.TLRY, though, has more risk and more potential reward than peer pot stocks. As such, while all pot stocks project to undergo volatile swings for the foreseeable future, the swings in TLRY stock should continue to be more pronounced.InvestorPlace - Stock Market News, Stock Advice & Trading TipsWhat's the investment implication? Stay away from Tilray stock. For now. If you're looking to invest in the cannabis market for the long haul, there are safer and more reasonable ways to do so -- see market leader Canopy Growth (NYSE:CGC). * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip But, there is a scenario in the foreseeable future where TLRY stock does become a buy. Consequently, while I'm staying away from Tilray for now, I'm also keeping a close eye on it, and am ready to pull the trigger if the stars align for this stock. The Current Dynamics Imply High Risk, High RewardThe present situation surrounding TLRY is defined by a few critical characteristics, all of which imply that TLRY stock's inherent high risk, high reward trading nature will persist for the foreseeable future. Those characteristics are as follows. * One entity holds most of the outstanding stock. Perhaps the most important element of Tilray stock is that one investor (Privateer Holdings) holds nearly 80% of the outstanding stock. To be sure, this one investor has agreed not to unload all of the shares at once, and instead will gradually unload them over the next two years. Still, in the meantime, the trading float here is relatively constrained, and a big portion of that float is short. A small float plus a big short interest implies sustained big volatility over the next few quarters. * No consumer staples giant has invested in Tilray, yet. Another important element of Tilray stock is that, while peers Canopy and Cronos (NASDAQ:CRON) have scored multi-billion dollar investments from global consumer staples giants, Tilray has not. There are two ways to interpret this. Either no one wants to invest in Tilray, or someone will invest in Tilray. There are reasonable investors in both camps. So long as both those competing theories have supporters, TLRY stock will remain volatile. * Tilray is much smaller than the cannabis market leaders. Both Canopy and Aurora (NYSE:ACB) sold over 9,000 kilograms of cannabis last quarter and reported revenues of roughly $50 million or greater. Tilray sold just 3,000 kilograms of cannabis last quarter, with revenues of $23 million. This relative "smallness" means that Tilray could one day gain on its bigger peers, or be eaten alive by its bigger peers. So long as both of those outcomes are possible, TLRY stock will remain volatile.Broadly, so long as the float remains constrained, no consumer staples company has invested in the company, and Tilray remains substantially smaller than the cannabis market leaders, TLRY stock will remain volatile. Tilray Stock Could Become a BuyGiven the enormous volatility inherent to the stock, I think TLRY is best avoided at the current moment. Having said that, there is one thing which could dramatically reduce the volatility and make TLRY stock a buy. That one thing would be a multi-billion dollar investment from a consumer staples giant.Here's the bull scenario. Privateer Holdings is just now starting to offload some of its shares to strategic and institutional investors. In so doing, they are paving the path for a consumer staples giant to inject capital into the business. Consequently, a consumer staples giant that was formerly unable to invest in Tilray because of Privateer's near 80% holding, may now pull the trigger on a big investment.If such a big investment does materialize, Tilray stock will pop, because such an investment will mitigate present stock volatility, shore up the balance sheet, equip the company with the necessary firepower to compete at scale, and add clarity to the long term growth potential of the business.How big will such a pop be? Pretty big. Cronos is much smaller than Tilray in terms of sales and volume. Yet, because Cronos has a multi-billion dollar consumer staples investment and Tilray does not, Cronos has a $5 billion market cap, while Tilray has a $4.4 billion market cap. Thus, if Tilray scores a similar investment, you could reasonably see TLRY's market cap rise to well over $5 billion. Bottom Line on TLRY StockTilray stock has been, still is, and will remain the most volatile pot stock in the market. Because of all this volatility, TLRY stock isn't a buy at the current moment. However, that volatility could subside in the not-so-unlikely event that Tilray scores a big consumer staples investment in the foreseeable future.If that happens, TLRY stock will become a buy, given its undervaluation relative to other pot stocks with similar consumer staples investments.Until then, though, it's best to wait on the sidelines.As of this writing, Luke Lango was long CGC and ACB. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip * 7 Services Stocks to Buy for the Rest of 2019 * 6 Stocks to Buy and 1 to Sell Based on Insider Trading The post Here's Why Tilray Stock Is a High-Risk, High-Reward Situation appeared first on InvestorPlace.
Ladenburg Thalmann initiated coverage of the cannabis sector, with preference for companies focused on long-term value creation.
Shares of Aurora Cannabis (NYSE:ACB) haven't been looking so hot. In fact, on July 12 alone, shares tumbled more than 5%. But the fall did more than give investors a sour ending to the week. It sent shares through a key level of support and all but put the nail in the short-term coffin of pain.Source: Shutterstock InvestorPlace - Stock Market News, Stock Advice & Trading TipsOK, maybe that's a little extreme. But the point is that ACB stock is not looking healthy on the charts. While that doesn't mean Aurora Cannabis can't bounce back and repair some of that technical damage, it makes it a lot harder to do so. From an investing standpoint, I like to blend technicals and fundamentals. When the technicals are not strong -- like with ACB stock -- we need to lean more heavily on the fundamentals. When the fundamentals are not the stock's strong point, we need the technicals to display strength. Unfortunately for Aurora Cannabis stock investors, while its end market looks to be a long-term opportunity, its fundamentals are not that strong in the short term. Without technicals to lean on, this stock could have more downside coming. Trading ACB Stock Click to EnlargeWith shares of ACB dumping on Friday, the stock lost a key level of support between $7 and $7.25. For the stock to even come close to repairing some of this damage, it needs to reclaim this former level of support. * 7 Dependable Dividend Stocks to Buy The risk here is two-fold, with the first being that Aurora Cannabis stock continues to head lower. The second risk is that it rebounds back up to the $7 to $7.25 range, which then acts as resistance. That would be bad news for the bulls. On Monday, ACB stock was rallying back toward that prior range support, so we should know relatively soon whether it can reclaim this area or if it will be found as resistance. At least we don't have to wait long to find out. Should ACB stock reclaim that key support area, it may run up toward $7.50 to $8. But here's the problem for traders looking to take ACB on the long side. Even if it reclaims prior support, it has to push through this next area too, before looking healthy again. And what's between $7.50 and $8? Just 2019 downtrend resistance (blue line), the 20-day, 50-day and 200-day moving averages. I'm not saying ACB stock is the worst equity to buy or that it's doomed. But until it repairs its technical damage and starts to put together more constructive price action for the bulls, it's a hard one to go long. Particularly as the PowerShares QQQ ETF (NASDAQ:QQQ) and SPDR S&P 500 ETF (NYSEARCA:SPY) are hitting new all-time highs. The breakdown in ACB stock was actually preceded by Canopy Growth (NYSE:CGC). CGC stock broke down ahead of ACB and led the way lower for a number of cannabis stocks. What's Up With Cannabis Stocks?So what's leading this charge lower? Because it's not just CGC and ACB stock. Cronos Group (NASDAQ:CRON), New Age Beverages (NASDAQ:NBEV), Aphria (NYSE:APHA) and others are all taking a very similar bearish setup. On the charts, this setup is known as the bearish descending triangle. Simply put, it's when trend is pushing shares lower against a static level of support. When support gives way, the bearish setup starts to play out, forcing share prices lower. The question is, why is the entire industry all setting up in the same manner? * 10 Best Dividend Stocks to Buy for the Rest of 2019 and Beyond Things really started to unravel when Canopy Growth -- which many consider the "blue chip" stock of the bunch -- ousted its CEO. Canopy was volatile but stable that day, but has been under pressure all month since. It seems to have turned investors into sellers throughout the group, as the cannabis industry awaits a new catalyst. That's even as growth has been incredible, with many of these names turning in earnings reports of triple-digit revenue growth gains.While Aurora Cannabis missed analysts' estimates, it still churned out revenue growth of 289% last quarter. That said, most of these names -- ACB included -- do not generate profits and do not have the strongest financials. Thus, we need the technicals to behave better to justify a long position. For now, I'd wait before establishing a position in ACB stock. Long-term investors may opt to accumulate the stock, but I would rather wait until the stock looks healthier. One alternative would be a position in Constellation Brands (NYSE:STZ), which owns 40% of CGC, but has strong fundamentals and a good-looking chart to boot. Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell held no position in any aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip * 7 Services Stocks to Buy for the Rest of 2019 * 6 Stocks to Buy and 1 to Sell Based on Insider Trading The post Does Aurora Cannabis Stock Chart Point to a Mid-Summer Plunge? appeared first on InvestorPlace.
Most owners of Canopy Growth (NYSE:CGC) stock have embraced micro details like the company's specific acquisitions or macro matters like the slow march towards the legalization of recreation cannabis in the U.S.Source: Shutterstock Most owners of CGC stock, however, have ignored the area in between those two extremes. That's the area where a company takes little building blocks like acquisitions and assembles them on a major foundation, enabling it to earn a profit. * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip Failure to respect that middle ground ultimately cost the now-former co-CEO of Canopy Growth, Bruce Linton, his job. Booze company Constellation Brands (NYSE:STZ), which is not only a major Canopy Growth stock holder but also has effective control of CGC's board of directors, fired Linton in early July primarily because of CGC's continued heavy losses that have weighed on CGC stock price.InvestorPlace - Stock Market News, Stock Advice & Trading TipsCanopy's other top executive, Mark Zekulin, is also on his way out.At first glance, it would be easy to simply chalk the whole affair up to company-specific, and even personnel-specific, misunderstandings. And there's some truth to that.In a much more meaningful sense, though, the surprising shakeup may be a microcosm of bigger cracks starting to form within the cannabis craze. Not unlike the ultimate fate of rare earth metals stocks in 2010, solar panel stocks in 2007 and 3D printing stocks in 2013, reality is starting to seep into marijuana mania.The owners of marijuana stocks are understandably not liking what they're seeing. Trouble in ParadiseDuring Constellation's most recent earnings call, CEO Bill Newlands explained he was "not pleased with Canopy's recent reported year-end results." For Canopy's fourth quarter that ended in March, the company posted an EBITDA loss of CA$257 million on gross revenue of CA$140.5 million. The total loss of CA$323 million translates into a loss of 22 Canadian cents per share of CGC stock, or 17 U.S. cents per share (U.S.) for the NYSE-listed equity of the Canadian company.The full year was even uglier.Perhaps even worse, sales of recreational marijuana -- which only became legal in Canada as of October -- fell nearly 4% versus Q3Don't think for a minute that Canopy Growth is the only marijuana stock flashing warning signs, though.Take CannTrust Holdings (NYSE:CTST), for instance. CTST stock has been nearly cut in half since July 5th, when it was discovered that its cannabis production was exceeding legal limits.I'm not suggesting that all cannabis companies are secretly growing plants they shouldn't be growing. But CannTrust's actions do point to the growing pressure for production hikes within the fiercely competitive cannabis market. That same pressure may well be inspiring other similarly risky efforts, including ill-advised acquisitions.To that end, Aurora Cannabis (NYSE:ACB) was pegged by Motley Fool's Sean Williams as a name that's exceedingly vulnerable to major writedowns in upcoming quarters. It's sitting on more than $3 billion worth of goodwill added to its balance sheet to account for a wave of dealmaking that's yet to bear fruit. The company must soon start conceding, via writedowns, that it overpaid for those companies.Bloomberg issued the same warning just a few days ago, with Bloomberg Intelligence analyst Kenneth Shea noting that some of the industry's most-loved names had driven an "aggressive pace of acquisitions at prices above book value." Aurora, Canopy Growth and Aphria (NYSE:APHA) were specifically cited as at-risk cannabis stocks.Hexo's (NYSEAMERICAN:HEXO) shares fell sharply last month after it reported that its cannabis sales somehow slumped during its third quarter, while its loss increased again.The list of red flags facing marijuana stocks continues to grow. And those red flags are starting to weigh on cannabis stocks in general and Canopy stock in particular. The Bottom Line on CGC Stock and Other Marijuana StocksOn their own, none of these developments or data nuggets is insurmountable. Indeed, most cannabis investors appear to know they're counting on hype rather than results to drive marijuana stocks higher, and that the cannabis market may not fully gel for years.In the aggregate, however, the paradigm shift in the tone and quality of the headlines not only poses a threat to the CGC stock price, but to all cannabis stocks.For the first time since the cannabis craze took shape in 2017, with Canopy Growth stock largely leading the charge, the industry and its individual components are being asked to justify their heavy spending in the name of future market share.As Charles Taerk, the CEO of Faircourt Asset Management, recently put it, the market is taking note of winners and losers. He explains "Now investors are starting to judge the companies a little differently. They're starting to say, 'Wait a second, how are they profitable and you're so far from profitable?'"An inability to justify the rapid move away from that profitability just cost Canopy Growth's co-CEO his job, serving as a shot across the bow for other cannabis company chiefs.The CGC stock price may have started this week out with a recovery effort, but the bar is quickly being raised for Canopy Growth stock and its peers. As we learned from crazes like 3D printing, rare earth metals and solar panels, not every player survives once the hype fades and companies have to at least move towards, rather than away from, profitability.As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about him at his website jamesbrumley.com, or follow him on Twitter, at @jbrumley. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip * 7 Services Stocks to Buy for the Rest of 2019 * 6 Stocks to Buy and 1 to Sell Based on Insider Trading The post The Firing of Canopy Growth's co-CEO Is Only Part of the Case Against CGC Stock appeared first on InvestorPlace.
Aurora Cannabis (ACB) has a problem.Valued at $7.1 billion, Aurora sold only $129 million worth of marijuana over the last 12 months. Worse, it didn't make any money selling that weed -- losing more than $160 million instead. Aurora sports a positive trailing gross margin of 67.5% on its product, but negative operating and net margins.In order to grow into its valuation, Aurora needs to do two things: Scale up production (i.e. grow revenue) and reduce the cost of that production (i.e. become more profitable).Growing more marijuana outdoors, where sunlight is free and you don't need to pay an electric bill or maintain buildings -- or even better, hiring someone else to grow their marijuana for them, sourcing the product from third parties and focusing on building Aurora's "brand" in the marketplace -- could help to solve both these problems.This is why it's such good news, says Jefferies cannabis analyst Owen Bennett, that Aurora Cannabis has just received two licenses from Health Canada to operate outdoor production fields for its marijuana. Bennett reiterates a Buy rating on ACB stock with a C$14.00 (USD$10.73) price target, which implies over 50% upside from current levels.Aurora will employ the two new sites, located in Quebec and in British Columbia, not with the aim of increasing production necessarily, but rather "to develop new technology, genetics and intellectual property in order to drive sustainable, high-quality outdoor production." To be clear, Aurora's aim will still ultimately be to have someone else take care of the production for it, while Aurora focuses its efforts on "growing brands." But in order to ensure that its subcontractors produce and sell it only product of consistently high quality and reliable attributes, Aurora first needs to get a better grasp of the science.As Bennett explains, "for high quality flower, and higher quality derivative products (particularly vapour), cultivation [currently] needs to be done indoors or in a greenhouse." Marijuana produced out of doors, in contrast, "is not at the required level, particularly around consistency from harvest to harvest." Indeed, thanks to its long history as a banned and outlawed crop, outdoor marijuana cultivation is "around 100 years behind when it comes to modern breeding techniques and scientific development."As a result, Aurora sort of has to play catch-up here, and this is what it aims to do with its two new licensed sites. Located on opposite ends of the continent, running grow sites in Quebec (in the east) and British Columbia (in the west) will help give Aurora a better grasp of how marijuana grows in the field in two very different environments, allowing the company to experiment with different cultivation methods on both coasts. It will give the company the opportunity to refine the genetics of its plants in both environments, selecting and preserving those specific genetic profiles that will, in each respective environment, demonstrate greater disease and pest resistance, and require the least amount of upkeep by the farmers to which Aurora eventually wants to outsource production.A successful test program, says Bennett, should drive down costs and permit more outsourcing of production, giving Aurora a first-mover advantage over rivals who have yet to figure out the trick of growing weed in the great outdoors.To read more on the nitty gritty of what’s going on in the rising cannabis industry, click here.Read more on ACB: * Aurora Cannabis: Great Prospects… That Are Fully Priced Into the Stock Already * Don’t Jump on the Bandwagon for Aurora Cannabis (ACB) Stock * Aurora Cannabis (ACB) Stock Set to See Big Gains, Says Analyst * What Is Aurora Cannabis (ACB) Competitive Advantage? More recent articles from Smarter Analyst: * There's Light at the End of the Tunnel for Canopy Growth (CGC) Stock, Analyst Says * Aurora Cannabis (ACB) Wins a 'Buy' for Rolling Up the Marijuana Industry * Aurora Cannabis (ACB) Stock Wins a 'Buy' for Rolling Up the Marijuana Industry * Organigram (OGI) Reported a Strong Quarter, But Don’t Buy the Stock Just Yet
MYM Nutraceuticals (CSE: MYM) (OTCBB: MYMMF) reported that planting is now complete for the 2019 growing season at the CBD-rich hemp project situated on 120-acres in Nye County, Nev. MYM has entered into a production agreement with Elite Ventures and invested $500,000 to grow one pivot of 120-acres of CBD-rich hemp in Nevada. Elite will […]The post Cannabis Stock News Daily Roundup July 16 appeared first on Market Exclusive.
Cannabis stocks were mostly higher on Monday, after the U.S. Food and Drug Administration said it is expediting its effort to create a regulatory framework for CBD with plans to publish a report on its progress by early fall.