|Bid||16.48 x 0|
|Ask||16.58 x 0|
|Day's Range||15.88 - 16.56|
|52 Week Range||8.37 - 25.56|
|PE Ratio (TTM)||N/A|
|Expense Ratio (net)||0.94%|
Previously in this series, we discussed the target price upgrades for Canopy Growth (WEED) (CGC) from PI Financial and Canaccord Genuity. In this part, we’ll discuss two more upgrades on August 16.
On August 15, Tilray (TLRY) rose ~21.0% to $29.30 from the previous day’s closing price as of the time of this writing. The stock rose as the cannabis market saw optimism from the latest investment of $4.0 billion made by Constellation Brands (STZ) in Canopy Growth (CGC)(WEED). Just yesterday, the investment firm announced its coverage on Tilray and gave its ratings and price target.
On August 15, Canopy Growth (WEED) (CGC) popped 30% when the market opened and rose to $33 on news that Constellation Brands (STZ) intends to invest $4 billion in the company. Constellation Brands, one of the top alcoholic beverage makers with brands including Corona, already invested $200 million in Canopy Growth last year.
The Ontario government’s announcement that it will push back cannabis sales until next year didn’t seem to sit well with investors. This announcement comes when the cannabis sector is already on edge. Most major cannabis stocks such as Aurora Cannabis (ACB) (ACBFF), Aphria (APHQF), and Cronos (CRON) have delivered terrible YTD (year-to-date) returns.
On August 14, the overall cannabis sector was in the deep red. The Horizons Marijuana Life Sciences ETF (HMMJ) fell 4.5% during the day, while the Emerging Marijuana Growers Index ETF (HMJR) fell 5.7%. The sell-off in the cannabis sector came amid the ongoing global economic concerns, especially in emerging markets. However, the developed markets were broadly positive with the S&P 500 Index (SPY) up by 64 basis points and the TSE Composite Index up by 49 basis points.
Canopy Growth (CGC) (WEED) is well-known when it comes to investing in the cannabis sector. The company reported its earnings for the first quarter of 2019 on August 14. Canopy Growth is one of the largest cannabis producers by capacity. The company has aggressively built its portfolio to serve Canadian recreational cannabis users.
Last week, the cannabis sector saw positive movement, and the Horizons Marijuana Life Sciences ETF (HMMJ) ended 1% higher between the closing on August 3 and the closing on August 10. The Emerging Marijuana Growers Index ETF (HMJR) also rose 2.6% over the same period, while the ETFMG Alternative Harvest ETF (MJ) fell by 82 basis points.
Organigram (OGRMF) is among the top gainers compared to cannabis companies (HMMJ) such as Canopy Growth (WEED) (CGC) and Hydropothecary (HYYDF), both of which have delivered positive YTD returns. Organigram has returned about 14% YTD as of August 7. The consensus ratings on Organigram also remained unchanged month-over-month as of August 7.
Hydropothecary (HYYDF) has done much better than other cannabis producers (HMMJ) such as Cronos (CRON), Aphria (APHQF), and Aurora Cannabis (ACB) (ACBFF). The stock has returned about 4.9% YTD (year-to-date) as of August 7, and it is one of the few cannabis stocks to be in the positive territory so far this year. Interestingly, more analysts are covering the stock compared to Aurora Cannabis.
Cannabis stocks have experienced significant declines since the beginning of this year. With that said, some big names such as Canopy Growth (WEED), Aurora Cannabis (ACB) (ACBFF), and Aphria (APHQF) have made heavy capital investments and are here to stay. In this series, we’ll discuss what analysts think about marijuana stocks (HMMJ) in terms of their ratings and price target.
The overall sentiment towards the cannabis sector remained weak last week. The Horizons Marijuana Life Sciences ETF (HMMJ) ended last week 2% lower, while the Emerging Marijuana Growers Index ETF (HMJR) was down by 1.3%. On the other hand, the ETFMG Alternative Harvest ETF (MJ) gained 1.1% last week.
Aphria (APH) (APHQF) reported its fiscal fourth quarter of 2018 earnings on August 1. It more than doubled its sales but reported a net quarterly loss. The quarter ended on May 31.
Scotts Miracle-Gro Company (SMG) reported its third-quarter earnings on July 31 after the market closed. The company beat bottom-line estimates but missed top-line estimates. The stock rose 72 basis points to $80 in the after-hours market session.
The EPS (earnings per share) for Scotts Miracle-Gro Company (SMG) is estimated to decline in the third quarter, which was expected given our discussion on margins in the earlier part of this series.
The Scotts Miracle-Gro Company (SMG) is set to announce its third-quarter earnings on July 31 after the market closes. The company missed earnings estimates in both the first and second quarter. As a result, the stock took a beating.
The cannabis sector continued to slide last week. The benchmark Horizons Marijuana Life Sciences ETF (HMMJ) declined 9.2% between July 13 and July 20. Similarly, the Emerging Marijuana Growers Index ETF (HMJR) declined 5.6%, and the ETFMG Alternative Harvest ETF (MJ) declined by 5.5% over the same period.
In the earlier part of this series, we briefly discussed how the number of cannabis-licensed producers has grown over the years, which has led to the threat of oversupply. Big companies such as Canopy Growth (CGC) (WEED) and Aurora Cannabis (ACB) (ACBFF) have access to capital and can thus push out smaller players. For example, Quebec will limit its supplier base to only six suppliers. If provinces choose fewer suppliers, it likely means they will choose big players (HMMJ) with the ability to meet a large demand, which pressures smaller players (HMJR).
Tilray (TLRY), a medical cannabis producer in Canada, debuted on the NASDAQ today. The company’s IPO was priced at $17, but the stock popped to a high of $23.94, representing an almost 40% increase. The company raised $152 million through this IPO and intends to use the proceeds to pay down debt and expand its production facility.
The cannabis sector has lost some of the attention it garnered at the beginning of this year. The sector has delivered losses with some stocks losing almost half their value since the beginning of this year. Those who invested in the sector as a whole through ETFs such as the Horizons Marijuana Life Sciences ETF (HMMJ) are also left with negative returns as of July 17.
British Columbia’s Liquor Distribution Branch released its list of 31 suppliers that are to provide cannabis to the province for non-medical use. The notable companies that signed memoranda of understanding with the Liquor Distribution Branch to supply cannabis include Canopy Growth (CGC)(WEED), Aurora Cannabis (ACB)(ACBFF), MedReleaf (MEDFF), and Aphria (APHQF). Compared to other Canadian provinces that announced their lists of suppliers, British Columbia has one of the most diversified lists (HMMJ), which should give a wide range of diversity to the province.
On July 11, Aurora Cannabis (ACB) (ACBFF) announced it had established an agreement with Evio Beauty Group to develop cosmetic products that are hemp-based and CBD-based. According to the press release, the CBD-based products will be infused with CBD (a cannabis compound), while the hemp-based products will be non-infused cosmetic products.
Aurora Cannabis (ACB) (ACBFF) has made a move to grab the pre-roll cannabis market segment. The company announced on July 11 that it entered a joint partnership with Wagner Dimas through a cash and share transaction contingent on milestone achievement. Under this partnership, a new Canadian company will be formed to which Wagner Dimas will assign its intellectual property.
In the previous part of this series, we discussed the overall EV-to-EBITDA multiples of nine cannabis companies (HMMJ) and the trend over the last year. Here, we’ll discuss how the EV-to-EBITDA multiple of individual companies compares with the median.
On July 10, Canopy Growth (WEED) (CGC) announced that it had entered an agreement to acquire Hiku Brands Company (HIKU). According to the press release, Canopy Growth paid a ~33% premium above Hiku Brands’ 20-day VWAP (volume weighted average price) as of closing on July 9.
As the governments of individual provinces in Canada get ready for the first recreational cannabis sales in October 2018, the AGLC (Alberta Gaming, Liquor & Cannabis Commission) announced its list of producers that will supply cannabis to the province. Out of 31 applications, only 13 won bids to supply cannabis to the province of Alberta. While the Alberta Government news release didn’t specify how much it will receive annually, Canopy Growth (WEED)(CGC) announced that it will supply over 15,000 kilograms of cannabis to Alberta.