|Bid||48.05 x 1200|
|Ask||0.00 x 1100|
|Day's Range||47.50 - 48.52|
|52 Week Range||21.00 - 59.25|
|Beta (3Y Monthly)||3.99|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||N/A|
Cannabis stocks were mostly lower Thursday, with Valens GroWorks and Hexo Corp. bucking the trend after announcing a partnership, and Cresco Labs boosted by a bullish analyst note.
Canopy Growth (NYSE:CGC) has surged higher on a deal that will position the firm to buy U.S.-based Acreage Holdings (OTCMKTS:ACRGF). The agreement, contingent on the U.S. legalizing marijuana at the federal level, would position Canopy as the leading cannabis company in the U.S. Unfortunately for investors, Canopy Growth is not CGC stock.Source: Shutterstock With CGC trading at bubble-like multiples and the challenges facing marijuana stocks and the market in general, I would not buy Canopy Growth stock on the proposed Acreage deal. The Acreage Deal Is a Visionary Move for Canopy GrowthFrom a business standpoint, I love this deal with Acreage Holdings. Now that Canada has fully legalized weed, the focus has shifted to the U.S., a market with nearly nine times the population. Yes, marijuana remains illegal on the federal level. However, the deal only occurs if the U.S. legalizes cannabis nationwide.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 5 Hot Dividend Stocks to Buy as the Weather Heats Up Moreover, it looks more like pot's legal status in the U.S. has become only a question of time. The Jeff Sessions tenure as Attorney General was likely the last hurrah of the pot prohibitionists. Former Republican House Speaker John Boehner once opposed weed. Now he has become a leading advocate of legalization. Even deep-red states have moved to loosen restrictions.Once weed becomes legal, the deal probably leaves Canopy in a better position to benefit than any of its peers. As a result, CGC stock has risen by nearly 19% in ten days.In one sense, I find this surge understandable. Due to investments by Constellation Brands (NYSE:STZ) and now, the Acreage deal, I see CGC as the stock to own within this sector. However, a bigger question hinges on whether investors should own stocks in this sector at all. CGC Stock Faces Unappreciated DangersMarijuana stocks have returned to the high multiples seen right before Canada officially legalized. While I see CGC stock and many of its peers as long-term winners, traders need to exercise caution. CGC trades at more than 96 times sales and over 357 times forward earnings. For now, such multiples have become the norm in this industry. Still, investors need to remain wary of these valuations for two reasons.First, the current bull market has reached its 11th year. This does not necessarily mean that stocks will stop rising soon. However, it increases the danger of such a downturn. Investors tend not to tolerate high valuations under such conditions.Moreover, we should not forget that legalization in Canada set off a "sell the news" type of reaction across the sector. As a result, CGC stock fell by over 57% between October 16th and December 24th. Thanks to pre-legalization anticipation switching to the U.S., Canopy Growth stock recovered most of that lost value.Still, after pot achieves legal status in the U.S., CGC stock will more than likely compare to Altria (NYSE:MO) or that of its largest investor, Constellation Brands. Both MO and STZ have long supported relatively low P/E ratios and high dividends. Such stocks usually benefit from healthy revenues, but they generate little investor excitement.Analysts predict 80.4% earnings growth for CGC next year. Despite that rate of increase, it will take more than another 57% drop to make Canopy look like an Altria. I would recommend CGC stock if it became such an equity. However, at current levels, I see more danger than upside. The Bottom Line on CGC StockBoth valuation and the likely late-stage status of the current bull market make CGC stock one to avoid despite the Acreage Holdings deal. Assuming pot achieves full legal status in the U.S., the Acreage deal will probably position Canopy Growth ahead of its U.S. and Canadian peers.However, the problem lies with CGC stock itself -- and all marijuana stocks. With multiples already in the stratosphere, it will need ever-higher levels of euphoria to surge higher. In the 11th year of an overall bull market, that order only becomes taller. Consequently, the Acreage-driven surge looks more like a selling opportunity than a buy signal. * 7 Dividend Stocks That Could Double Over the Next Five Years If and when the U.S. legalizes, Canopy Growth stock will likely become one that supports a low P/E and pays a generous dividend. Until CGC looks ready to become that type of stock, traders face more potential risk than reward.As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can follow Will on Twitter at @HealyWriting. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Dividend Stocks That Could Double Over the Next Five Years * 6 S&P 500 Stocks Ready to Break Out * 5 Mining ETFs to Dig Into Compare Brokers The post Acreage Deal Helps Canopy Growth More Than It Helps CGC Stock appeared first on InvestorPlace.
ETF Managers Group (ETFMG), the issuer behind the world’s largest cannabis ETF, MJ (MJ), is partnering with Canopy Growth Corporation (CGC), the world’s largest diversified cannabis and hemp company, to host an exclusive thought leadership breakfast at the Bellagio Hotel on May 9 at 7:45 a.m. PDT. The morning event takes place during the SALT Conference in Las Vegas and will give the first 100 attendees to RSVP a unique look behind the curtain of the booming global cannabis industry. Sam Masucci, CEO of ETFMG and featured speaker on cannabis investing at SALT, will join visionary and CEO of Canopy Growth Corporation, Bruce Linton, in a fireside chat followed by a live Q&A.
SMITHS FALLS, ON and TORONTO , April 25, 2019 /CNW/ - Spectrum Cannabis, the medical division of Canopy Growth Corporation (WEED.TO) (CGC) is pleased to announce a partnership with the Arthritis Society to raise awareness and educate people about living with arthritis, including the potential of medical cannabis as a treatment for arthritis symptoms and the importance of seeking guidance from health care practitioners. The Arthritis Society is a leading charitable funder of arthritis research whose vision is to live in a world where people are free from the devastating effects of arthritis. The partnership will engage Canadians across the country in a series of symposiums titled "Arthritis Talks," presented by the Arthritis Society and Spectrum Cannabis.
CORAL GABLES, FL / ACCESSWIRE / April 24, 2019 / Marijuana Stocks took a brief but much-needed breather on April 23, 2019. This trend has been clearly observed from some of the key players in the cannabis industry. Today we are highlighting: Aurora Cannabis (ACB), Canopy Growth (CGC) (TSX:WEED.TO), Aphria (APHA), Innovative Properties Inc. d/b/a Nabis Holdings (INNPF) (NAB.CN).
Last week, a blockbuster story for marijuana stocks -- one of the biggest in years -- slipped by a lot of investors. It was in the news, but most investors don't know the industry well enough or the players involved to grasp its huge significance. To them, it was just another headline.Not to me. I've been waiting years to write this story, and now the final chapter is taking shape.I'm extremely bullish on the once-in-a-lifetime opportunity to build wealth in marijuana stocks. There was a time when other investors laughed at me because of it. Not anymore.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBasically, the biggest marijuana company in the world and some of the most connected people in the world all but told us that U.S. marijuana legalization is coming… and perhaps sooner than expected. What's the Big Deal?Cannabis giant Canopy Growth (NYSE:CGC), which is based in Canada, confirmed last week that it plans to enter the U.S. market. The $16.5 billion company made an offer to buy U.S.-based Acreage Holdings (OTCMKTS:ACRGF).At first glance, that doesn't sound all that important. But remember: Marijuana is legal in Canada. It is not in the United States, at least on the federal level. * 10 Stocks to Sell Before They Give Back 2019 Gains In fact, any company that touches the marijuana plant in the United States cannot list on a major stock exchange -- the New York Stock Exchange (NYSE), NASDAQ, even the Toronto Stock Exchange (TSX).Well, guess what? Canopy already trades on the NYSE and TSX. If it were to enter the U.S. marijuana market right now, it would be forced to delist from both and move down to a lesser known, less liquid exchange.There is no way the company would let that happen.So what prompted Canopy to prepare to enter the U.S. now? Why not next month? Next year? Why not wait until after marijuana legalization?Two reasons. One, Canopy wants to be ready to capitalize on what will instantly become the largest marijuana market in the world the moment it becomes legal.And two, Canopy all but knows -- or is at least extremely confident -- that legalization is right around the corner.Management didn't say that outright. I wouldn't expect them to. But I believe it to be true because of three very important people on the board of Acreage Holdings: * Former U.S. Speaker of the House John Boehner, * Former Canadian Prime Minister Brian Mulroney, * And former Massachusetts Governor and current Republican presidential candidate William Weld.Among those three gentlemen, there is undoubtedly insight into marijuana's future that you and I are not yet privy to.But if we know the industry and the players involved, we can connect the dots. These two companies have access to and insight from three of the most politically connected men in the world. They decided it was time to make a deal.If Canopy believed U.S. legalization was still years away, there would be absolutely no reason to buy the rights to Acreage yet.Last week's announcement is like knowing the score of a game before it starts. Marijuana stocks are already on the move, but you still have time to position yourself to make a lot of money as legalization sweeps the globe and the industry grows many times over. Now is the TimeInstead of buying Acreage outright today, Canopy wisely bought the "rights" to purchase the company when marijuana becomes fully legal in the United States. That last part is the key. And Canopy wouldn't do that if legalization were still years away.When marijuana does become legal, Canopy will pay $3.4 billion, a 42% premium over Acreage's average value the last month. The deal is mostly stock, which means Canopy still has more than enough cash to make similar deals.Canopy Growth is not just any marijuana company. It is the biggest cannabis company in the world, so deals like this speak volumes. Canopy's $16.5 billion market cap is nearly 80% above its closest competitor, Aurora Cannabis (NYSE:ACB), which his valued at $9.2 billion.Last June, Canopy was the first of the marijuana stocks I've recommended to my Investment Opportunities readers. We're up 58% since then, capitalizing on the stock's nearly 80% jump in 2019. It is above my recommended buy limit, but it is a stock every cannabis investor should try to own at the right price.In the wake of the big news, we will be adding fresh stocks in position to benefit from the coming U.S. marijuana legalization. In the meantime, there are other great buys with huge potential, from growers to suppliers to real estate companies to IPOs and more.Some of the absolute best opportunities are in smaller companies that are about to explode -- possibly into the next Canopy Growth or Aurora Cannabis. In fact, one tiny company I recommend even has interesting connections to Canopy Growth.I am more excited than ever about the opportunity to make life-changing gains as the marijuana industry grows exponentially in the coming years. Now is the time to act. A Chance for Life-Changing GainsThat tiny company I mentioned is a unique type of investment among red-hot marijuana stocks.As the cannabis industry grows exponentially in the coming years, it could realistically multiply your money several times over… if you take part soon -- I'd say no later than April 25.The company is part of a phenomenon that has only occurred a small handful of times in the past few decades -- in other industries. But on many occasions, it's resulted in an explosion of wealth so incredible, the numbers almost seem made up.The first time we saw it was in 1983, when it returned early investors as much as 45,300% gains!Incredibly, there is that opportunity once again, right now… in the booming marijuana market.This is so important that I put together a presentation with all of the details on this rare opportunity and why you need to act now. Click here to learn all about it.Matthew McCall is the founder and president of Penn Financial Group, an investment advisory firm, as well as the editor of Investment Opportunities and Early Stage Investor. He has dedicated his career to getting investors into the world's biggest, most revolutionary trends BEFORE anyone else. The power of being "first" gave Matt's readers the chance to bank +2,438% in Stamps.com (STMP), +1,523% in Ulta Beauty (ULTA), +1,044% in Tesla (TSLA), +611% in Liquefied Natural Gas Limited (LNGLY), +324% in Bitcoin Services (BTSC), just to name a few. If you're interested in making triple-digit gains from the world's biggest investment trends BEFORE anyone else, click here to learn more about Matt McCall and his investments strategy today. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Oversold Stocks to Run From * 7 Red-Hot E-Commerce Stocks to Consider * 4 Stocks Surging on Earnings Surprises Compare Brokers The post A Game-Changing Moment for Marijuana Stocks Just Got Closer appeared first on InvestorPlace.
Canopy Growth (CGC) made a major announcement last Thursday. If everything goes as planned, the Canadian cannabis giant will acquire Acreage Holdings (ACRGF) for an estimated value of $3.4 billion.The entry into the U.S. cannabis market has been anticipated for quite a while, though the strategy for entering the U.S. market became better understood via the announced acquisition.The announcement offers a constructive narrative for how Canopy could actually enter the U.S. Cannabis market, which is estimated to be a $50 billion+ market (inclusive of black market and legal sales) versus the much smaller Canadian market at $4.5 - $5.3 billion annual sales, according to Cowen analyst Vivien Azer. Canopy’s expansion beyond the Canadian market into the U.S. market suddenly expands the TAM (total addressable market) opportunity by upwards of 10x.The U.S. cannabis market is more fragmented with domestic producers heavily concentrated in Northern California (or really all of California with a number of well-established brands and strains). The fragmentation of the market and the stiffened competition, along with a number of established strains (predominantly from California growers) makes entry into the U.S. market very difficult. Not to mention, much of the black-market activity is concentrated in various regions across California, where they not only don’t pay taxes, but price below wholesale rates anyway.The acquisition of Acreage is an integral bridge to the U.S. market for Canopy. Acreage has managed services agreements in place for cannabis-related licenses across 20 states (giving it the right to develop), including 87 dispensaries and 22 cultivation and processing sites. Therefore, the expansion into the United States becomes a lot easier with those existing facilities and licenses, as it takes away a significant sum of the legwork involved with establishing recognizable strains or immediate channels to retail end-consumers that would pay the conventional retail rate. Also, getting licenses in the United States is a complicated legal process in a number of States where medical is legal whereas recreational is illegal, so the immediate impact from an acquisition would be more than material. Hence, it’s another reason why I anticipate the 41.7% acquisition premium to increase, and deal terms to be modified.Legalization in the United States at the Federal level could happen, but it’s really conditional on the re-introduction of the STATES Act by Elizabeth Warren (D) Senator, and Cory Gardner (R) Senator from Colorado. Cory Gardner mentioned that Donald J. Trump would support the STATES Act, which diminishes the likelihood of a presidential veto, but it’s also worth noting that Cory Gardner comes from a more moderate (plus an already legalized state), hence there’s implicit bias in Cory’s stance despite being a Republican. Not to mention, conservatives have been slow on the issue, and it’s not yet clear whether they have mustered enough political capital from the Republican Party to sell their voter base on the STATES Act.Historically, the Republican Party (especially in recent history) has polarized their voter base with the “War on Drugs,” and various drug policy enforcement initiatives tied to the southern border. Not to mention, the Republican Party base leans towards anti-drug, anti-crime, and touts investments along with statistics tied to various law enforcement initiatives. Sudden support for marijuana legalization could undermine the main narrative Republicans have been preaching for ages. The Speaker of the Senate, Mitch McConnell has yet to comment publicly on the STATES Act, and in recent weeks he has been more vocal in the support of raising the minimum age of tobacco consumption from 18 years to 21 years of age. I.e., he’s still sticking to his guns and getting more aggressive on regulating pre-existing drugs that are already legal, and now stock speculators expect him to rally his party base to legalize something illegal? Something doesn’t seem to add up here, quite yet."Top banking regulators from 24 states sent a letter to Congress to urge enactment of the SAFE Act, which would permit banks to service cannabis companies that comply with state law. Our View: We continue to expect the 116th Congress will enact cannabis-related legislation. Our view remains that this is more likely to be a narrow bill like the SAFE Act on banking rather than a broader bill like the STATES Act, which defers the issue of legalization to the states," said Cowen's Jaret Seiberg in a note to clients.The SAFE Act could gain passage as it’s much easier to sell to conservatives, as it ties into banking, and economic policy, which would push the narrative towards deregulation. Something the conservative party does support. Referencing statistics on job creation, cutting back on burdensome regulation, and pro-banking regulation has been a staple of the Republican Party. So, getting the SAFE Act past congress and the senate seems more doable than federal legalization of marijuana in the immediate near-term.Although, some of that might have factored into the decision making made by the board at Acreage whom are also composed of former Republican politicians, according to Seiberg: "As a leading multi-state operator (MSO) in the U.S., Acreage Holdings has differentiated itself given their political prowess. As a reminder, Acreage has seeded their board with heavyweights including John Boehner (former Speaker of the House (R)), Bill Weld (former Governor of Massachusetts (R), Republican candidate for President) and Brian Mulroney (former Prime Minister of Canada). With the state of cannabis policy changes in the U.S. inextricably linked to politics, these relationships can certainly be viewed as offering outsized value."Piper Jaffray analyst Michael Lavery stated, "The timing of potential legalization in the US is unknown, but we expect it in the next 2-5 years, possibly sooner, and we note that the terms of this deal expire after 7.5 years if legalization has not come by then. We estimate the total US cannabis market (including illicit trade) is $35-50B, with the largest seven publicly traded US cannabis operators combined capturing only 1.5% market share. Cannabis is still federally illegal in the US, but the lack of regulation has allowed products to evolve much more rapidly than in Canada."What’s unique? Lavery believes Federal legalization could happen within 2-5-years triggering the transaction between Canopy and Acreage . It’s certainly plausible that the political map, and the number of R-Senate seats could change hands in 8-years (given numerous election cycles), hence the political insiders/board of directors of Acreage recommended the deal given their political prowess and anticipation of legalization at a much later point. This seems plausible, but it also implies that virtually no analyst (not even me) anticipates that the STATES act will make it past the current 116th Congress, but perhaps the 117th or 118th Congress instead.Lavery maintains an Outperform rating on Canopy stock, along with a $60 price target, which implies about 25% upside from current levels. (To watch Lavery's track record, click here)Bottom lineThe deal terms look good for Canopy shareholders (because an acquisition later is better than never), but from the perspective of ACRGF shareholders, it wouldn’t be surprising to see terms negotiated again in the month of June, as the triggering of the transaction could happen way out into the future (as opposed to something near-term). Since that’s the most probable outcome, the lack of arbitrage adjustments in ACRGF stock will lead to some disapproval from shareholders as most M&A transactions lead to an immediate arbitrage adjustment with a slight market discount (virtually all cases).This hasn’t occurred yet, which is why I’m expecting Canopy to pay even more to adjust the un-even dynamic of the transaction. Given the overwhelming dependence on this major acquisition to enter the U.S. market, I’m confident that Canopy will eventually find a path to both executing the transaction and gaining the necessary shareholder approval from ACRGF.Expectations among Canopy shareholders should shift towards higher dilution to make the transaction work long-term, but with a call option to enter the U.S. markets at a point when production has ramped more meaningfully in its Canadian grow facilities. This is still a major catalyst for Canopy shareholders long-term and should be viewed positively. Just keep in mind, that ironing out the details will be an arduous process for the foreseeable 12-months.Disclosure: The author has no position in Canopy Growth or Acreage Holdings stocks.To read more on the nitty gritty of what’s going on in the rising cannabis industry, click here. Read more on CGC: * Canopy (CGC) Could Race Above $60, but Caution Is Warranted * Canopy Growth: Piper Jaffray Wishes Upon a Marijuana Star (But Will Its Dreams Come True?) * Canopy Growth (CGC): Is This Spanish Acquisition Too Good to Be True? More recent articles from Smarter Analyst: * Top Analyst Reiterates Positive Stance on Amazon (AMZN) Stock as Investors Digest Earnings * What's in Store for Alibaba (BABA) Stock Ahead of Earnings * China Worries Aside, Top Analyst Bullish on Starbucks (SBUX) Stock Ahead of Earnings * Has Boeing (BA) Stock Hit Bottom? Looking for the Silver Lining
On CNBC's "Mad Money Lightning Round," Jim Cramer said he likes CarMax, Inc (NYSE: KMX ) in the auto dealerships space, but he will take a closer look at CarGurus Inc (NASDAQ: CARG ). Instead ...
Cannabis stocks were mostly lower Tuesday, as investors took a breather after Monday’s gains to lock in profits and await the next developments in the sector.
Like stoners, cannabis investors seem euphorically oblivious to marijuana risks. Investors in companies including Tilray (TLRY) Canopy Growth (CGC) Cronos (CRON) and Green Thumb Industries (GTBIF) are taking on serious litigation risk. Cigarette companies like Philip Morris International (PM) and Altria (MO) sell “cancer sticks.” Anheuser-Busch InBev (BUD) and Constellation Brands (STZ) sell beer and booze, which have obvious health risks.
Acreage Holdings said last week's acquisition deal with Canopy Growth was its first step to becoming a global player. Marijuana stocks fell.
After looking like they were set to break down, shares of Canopy Growth (NYSE:CGC) have been surging over the past few trading sessions. As such, CGC stock is up almost 20% over the past five days and on the cusp of breakout territory, with higher prices on many bulls' radar.Source: Shutterstock What so suddenly has CGC stock back in investors' good graces? To be fair, the company didn't really do anything to fall out of their good graces. Rather, it was simply the fading momentum of marijuana stocks at the time.However, momentum was restored in Canopy Growth stock once reports began circulating about its intention to purchase Acreage Holdings (OTCMKTS:ACRGF). The deal is for $300 million in cash and swelled to $3.4 billion once Canopy included 0.58 shares for each subordinate voting share of ACRGF.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Digital Ad Stocks That Deserve Your Attention Right Now Investors are viewing the deal favorably as Acreage Holdings has exposure in 20 different U.S. states. In other words, it's Canopy's way of pushing into the U.S. This comes as it focuses on its future and growing its market share. At the end of the day, market share is a very important component to the cannabis industry. That's one reason why Canopy is considered the leader of this group. Trading CGC StockThe charts for CGC stock look a little busy here, but each level is relevant. The recent action has shown a return of momentum to Canopy Growth stock, but also names like Aurora Cannabis (NYSE:ACB) and Cronos Group (NASDAQ:CRON), among others. It's even given a boost to names like Constellation Brands (NYSE:STZ), which has a near-40% stakes in CGC.That momentum has carried CGC stock into a potentially large breakout area over $48. Where can it go? One analyst says Canopy could run to $72, implying about 90% upside from current levels. Can it actually get there?$48 is the first key test. In the last three trading sessions, CGC stock reclaimed its 20-day and 50-day moving averages as well as prior uptrend support (blue line No. 1). It also cleared prior downtrend resistance (blue line No. 2) and key resistance at $48. Now hovering near $48.25, it's important that CGC stock doesn't give up these recent gains.Whether it can burst through its prior highs near $59 and run to $72 is currently unknown. But if it wants any shot at doing even that, it needs to hold over some of these key levels that it just cleared.Here's what to watch: $48 and prior downtrend resistance (blue line No. 2). According to the RSI, CGC stock is not overbought even after its strong rally over the past few days. According to its MACD reading, momentum is returning to the bulls' favor and could have a lot of upside going forward. Ideally we would see a continuation higher or consolidation near current levels, before a pullback to $48 that holds as support.If $48 soon acts as resistance, bulls need to see the backside of prior downtrend resistance act as support. Bottom Line on Canopy Growth StockIf investors feel that there is momentum in cannabis stocks, then CGC stock is certainly one of the top considerations to ride that wave. In the end though, this is a speculative group and investors have to remember that going forward. This isn't some blue chip stock with a reasonable valuation and strong cash flows.Last quarter (Q3, fiscal 2019), the company had $60.8 million in revenue. That's roughly the same total as it did for all of fiscal 2018. Clearly the growth is very impressive, but we're talking about a company that has consensus expectations for $176 million in sales this year vs. a market cap of more than $16 billion.Granted, estimates call for more than $600 million in sales in fiscal 2020 (which starts in one quarter), but this is still a lofty valuation. That's why M&A deals (such as with Constellation) are so important. It puts billions of dollars into Canopy's coffers, allowing it run its operations and make deals like it did for ARCGF. * 10 High-Yielding Dividend Stocks That Won't Wilt It's a speculative group, but Canopy is among the best in the business.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 * 10 High-Yielding Dividend Stocks That Won't Wilt * 4 Energy Stocks Soaring as Trump Tightens on Iran * 7 Tech Stocks With Too Much Risk, Not Enough Upside Compare Brokers The post Is Canopy Growth Stock Set to Break Out and Rally 90%? appeared first on InvestorPlace.
Are marijuana stocks on U.S. exchanges a good buy now? The marijuana industry gets a lot of hype, but look past the smoke and analyze pot stocks on their fundamentals and technicals.
Canopy Growth's (CGC) announced intention to purchase Acreage Holdings dominated headlines last week. In fact, it dominated headlines so much that many investors may have missed the note that Cowen's Vivien Azer put regarding Canopy competitor Aurora Cannabis (ACB).That would be a crying shame -- because in Azer's estimation, there may actually be more reasons to buy Aurora Cannabis stock, than Canopy.Let's run down the list.A race to scaleFor all that investors have been fascinated by the growth of the marijuana industry for the past several years, the fact remains: This is still a very young industry, and in young industries like this one, the first challenge is generally to scale up quickly, grab market share, drive out competition -- so that by the time the industry matures, they'll be able to keep more profits for themselves.Aurora Cannabis aims to win this race.Already, Aurora says it's ahead of its targeted annual rate of 120,000 kilograms of annual marijuana production capacity for this time, this year. Annualized, management says it's now producing at something more like a 150,000 kg-per-year rate.150,000 kg -- and growing. As Azer reports, Aurora is expanding square footage at its Aurora Sun facility to 1.6 mm square feet so as to add 230,000 kg in annual capacity. Production rates at the Aurora Sky facility are also on the upswing, and in consequence, Aurora management says it is raising its targeted production capacity by 25%, from 500,000 kg to 625,000 kg annual production -- a goal it hopes to reach by mid-2020.To put that in perspective, Canopy Growth says it is looking to produce only 400,000 kg by mid-next year -- less than two-thirds of Aurora's target -- albeit Azer notes that Canopy's target may be "conservative."Cost cutsWhy expand production capacity so much? To create greater supply, of course, to serve the market -- but also to win production efficiencies derived from scale. Aurora Cannabis believes that once it reaches its targeted level of production, it should be able to cut cash costs nearly in half, from about C$1.92 per gram of marijuana produced currently to under C$1 per gram.MarginsGross margins equaling sales minus the cost of the goods sold, such cost cuts should be very good news for Aurora Cannabis' profit margins.Already, Azer says Aurora boasts 61% trailing gross margins, or twice the 29% margins that Canopy produced over the last 12 months -- and Aurora's margins have exceeded 50% for the past eight straight quarters. With lower costs, the analyst estimates Aurora could grow its gross margin to as much as 70%, the best rate in the industry.What to expect on earningsGranted, Aurora's net margins remain negative, but perhaps not for long. Most analysts expect Aurora to turn profitable as early as next year. As for this year, Aurora expects to have 25,000 kg of cannabis produced, packaged, and ready for sale in fiscal Q4 (ending in June). Azer says its own "conservative" estimate is that Aurora won't sell more than 16,000 kg this quarter -- but will be happy to be proven wrong, as this would mean only "upside to our forecasts."For an analyst that rates Aurora Cannabis "outperform," that's a good thing.To read more on the nitty gritty of what’s going on in the rising cannabis industry, click here. Read more on ACB: * How Aurora Cannabis (ACB) Stock Gets to $11 * Aurora Cannabis (ACB) Stock Is in Position for Another Bullish Leg * Aurora Cannabis: Flooding the Cannabis Market with More Supply More recent articles from Smarter Analyst: * Top Analyst Reiterates Positive Stance on Amazon (AMZN) Stock as Investors Digest Earnings * What's in Store for Alibaba (BABA) Stock Ahead of Earnings * China Worries Aside, Top Analyst Bullish on Starbucks (SBUX) Stock Ahead of Earnings * Has Boeing (BA) Stock Hit Bottom? Looking for the Silver Lining
Cannabis stocks were mostly higher on Monday, with Canopy Growth Corp. enjoying gains after two bullish analyst notes and CannTrust Holdings Inc. falling on news it plans to issue another $200 million in stock.
Acreage Holdings owns 87 dispensaries and 22 cultivation and processing sites in the U.S. and has $300 million cash.
Yahoo Finance's Zack Guzman & Heidi Chung, along with BigEyedWish Founder Ian Wishingrad discuss with Canopy Growth CEO Bruce Linton.
Canopy Growth's Bruce Linton appeared on Yahoo Finance, talking about the success of its product and what he would consider a "worst case scenario" for the company. Emily Paxhia, Poseidon Asset Management Managing Partner, joins Seana Smith on 'The Ticker' to discuss Canopy Growth's recent Acreage Holdings deal.