|Bid||0.00 x 900|
|Ask||0.00 x 800|
|Day's Range||42.69 - 44.07|
|52 Week Range||21.50 - 300.00|
|Beta (3Y Monthly)||N/A|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||79.30|
Curaleaf is buying private, midwest-focused multi-state operator GR companies Inc aka Grassroots for $875 million dollars in a cash and stock deal. Yahoo Finance's Zack Guzman & Sibile Marcellus, along with Dealbreaker Executive Editor Thornton McEnery discuss with Curaleaf CEO Joe Lusardi
If I was a holder of Cronos Group (NASDAQ:CRON) stock, I would have serious anxiety about the much-hyped cannabis investment.Source: Shutterstock While CRON stock is up 46% this year, most of those gains occurred in January. Eventually, though, I believe that the company will be facing some tough times -- and in the not-so-distant future. Here are five things to consider: CRON Stock Is More Expensive Than Its PeersVarious metrics indicate that Cronos stock is more expensive than its peers. The company has an extremely high price-to-sales ratio of 336. To put that into perspective Tilray (NASDAQ:TLRY) has a PS ratio of 135, while Aurora Cannabis (NYSE:ACB) runs at 79. Moreover, the PS ratio for Aphria (NYSE:APHA) and Canopy Growth (NYSE:CGC) is 52 and 68, respectively.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Stocks Top Investors Are Buying Now In addition, Cronos is the only member of this group to have negative gross margins. Aurora's gross margin is 11%, while Tilray, Aphria and Canopy all feature double-digit margins. Cronos has a gross margin of -21%. Judged from these two metrics, CRON stock is clearly a much more expensive investment than its peers. The Coming Price WarFew people talk about it, but I believe a price war will erupt in this industry very soon. That is because investors are starting to realize that growing marijuana outside is significantly cheaper than growing in an indoor facility or a greenhouse.Admittedly, advantages exit to growing in indoor facilities, such as better security and better quality. However, the cost advantages of outside growing outweigh them.Still, Cronos seems to grow the vast majority of its cannabis indoors. If the company doesn't develop outdoor growing, it may not be able to compete with outdoor projects. Eventually, this will hurt the Cronos stock price. Potential Share DilutionOne thing that really stood out to me when I was reading Cronos' income statement: the massive amount of potential dilution.The company just reported earnings per share of $1.95. However, the diluted share earnings were only 48 cents. Regular earnings per share is the net income of the company divided by the number of outstanding shares. Diluted earnings per share is what the earnings would be if all of the company's bonds that can be turned into shares are converted.This potential share dilution is very concerning. Therefore, I don't want to buy Cronos Group stock because it exposes me to two risks.First, CRON stock trades in a volatile market. Second, management can potentially dilute shares at any time, presenting a hidden but serious threat to my portfolio. Wall Street Is Falling Out of Love with Cronos StockAt this time last year, it seemed like every analyst was extremely bullish on the cannabis industry. But as the sector consolidates, it seems to be losing its luster.For instances, analysts have issued some downgrades. Further, I noticed a rise in bearish sentiment seems. And on top of it all, The Street seems to favor CRON stock the least out of the large growers.The average rating for Cronos stock is a hold. In contrast, the other four -- Tilray, Canopy, Aurora and Aphria -- have average ratings of overweight.Finally, you don't need to be a market guru to see that the $14 level is important support for CRON stock. This level is support because it was resistance in September and December of last year.Resistance levels become support levels because the investors who sold or shorted Cronos Group stock at $14 profited from the decline. But then when Cronos stock rallied above $14, the shorts lost money, creating a panic.As of this writing, Mark Putrino did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Tech Stocks That Are Still Worth Your Time (And Money) * 7 Marijuana Stocks With Critical Levels to Watch * 7 of the Best Smart-Beta ETFs to Target Right Now The post I'm Glad I Don't Own Cronos Group Stock and Hereas Why appeared first on InvestorPlace.
On Thursday, Bank of America downgraded Aurora Cannabis stock (ACB) to “neutral” from its previous “buy” rating. Here's why.
I've always regarded publicly traded marijuana companies like Canopy Growth (NYSE:CGC) as transformative investments. Prior to the legalization movement, an equity like CGC stock would have been impossible to materialize. Therefore, an entire industry is enjoying revenue streams that simply didn't exist several years ago.Source: Shutterstock But as much as I continue to emphasize the description "transformative," the CGC stock price is unfortunately not cooperating. After getting off to a great start in January, shares had only extracted brief moments of upside. However, since late April, the trajectory is decidedly negative, with Canopy Growth stock shedding roughly 30%.So what explains this mismatch between longer-term fundamental potential and the current volatility in Canopy stock? First, the company's fiscal fourth quarter of 2019 earnings report wasn't great. Although Canopy beat its revenue target, it widened per-share earnings losses much more than analysts expected.InvestorPlace - Stock Market News, Stock Advice & Trading TipsHowever, the markets didn't appreciate certain details. For instance, Canopy's recreational marijuana sales were down from the year-ago quarter. So too was the volume of cannabis sold. Shortly after the disclosure, the CGC stock price tumbled badly.And we haven't recovered from the turmoil. For the month so far, Canopy Growth stock is down 14%. * 7 Stocks Top Investors Are Buying Now More bad news comes in the form of revised profitability expectations. According to an interview between Jefferies' covering analyst Andrew Bennett and Canopy's CFO Mike Lee, CGC stock won't be profitable in its fiscal 2020 (April 1, 2019 - March 31, 2020).Of course, the counterargument is that we should give Canopy stock some time. However, since marijuana stocks are inherently emotional investments, the profitability downgrade represents a serious distraction. Why You Can Still Trust CGC StockBefore you give up on Canopy Growth stock, though, you should know that its volatility is not isolated. Other major cannabis firms, such as Cronos Group (NASDAQ:CRON) and Tilray (NASDAQ:TLRY), have faltered as well this year.That's not to say you should feel good about this or any other portfolio loser. Certainly, other investments' losses have no bearing on your target asset's decline. However, the shared fallout demonstrates that the issue is systemic rather than individualized.And what's causing cannabis stocks to shed so many percentage points in the markets? Mostly, it's institutional traffic jams. Specifically, Health Canada, our northern neighbor's department of national public health, is inundated with cannabis-licensing applications.Unfortunately for most sector players, Health Canada will need substantial time to process all the paperwork. In the meantime, viable projects just sit, waiting for approval. Obviously, this presents a massive dark cloud on the CGC stock price.However, I don't expect this situation to continue without some kind of resolution. At worst, Health Canada will just roll up its sleeves and crank out the application approvals. This would mean that Canopy Growth stock would likely enjoy a delayed bull run.But at the same time, I can envision emergency support at Health Canada. As long as those licensing applications sit, the Canadian government is needlessly throwing away cannabis-related tax revenues. Essentially, this would void the entire economic case for going green.Moreover, the health agency's backlog is a known headwind. While I can't say this bearish factor has been completely priced into CGC stock, I believe we're getting close.If it's any comfort, I'm putting money where my mouth is, having recently picked up Hexo (NYSE:HEXO) stock. We've Seen This Before …Another reason why I'm not panicking on names like Canopy Growth is that we've seen this narrative before.Prior to Canada becoming the first G7 nation to legalize recreational marijuana, demand for cannabis stocks spiked dramatically. Again, the markets had that transformative investment idea in their heads.But as we all know from retrospect, the investment community couldn't support the wild valuations that cannabis firms received. As a result, marijuana stocks tumbled.I think we're seeing the sequel to this movie: speculators love the potential of marijuana stocks, but then they encounter an operational or other fundamental challenge (like Health Canada). Those same speculators panic out of the markets, wreaking havoc on the CGC stock price and similar investments.However, these outside challenges will eventually fade. The Health Canada backlog is an external pressure that has nothing inherently to do with cannabis demand. If you think cannabis stocks are wild, just wait until they have a clear road ahead.As of this writing, Josh Enomoto is long HEXO. 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 Why I Still Believe in Canopy Growth Stock and the Weed Market appeared first on InvestorPlace.
Aurora Cannabis (NYSE:ACB) stock has steadily declined since late March. At a time when the S&P 500 continues to make new record highs, ACB stock and marijuana stocks in general have moved in the other direction. The industry has suffered after Canopy Growth (NYSE:CGC) fired its co-CEO and regulators caught CannTrust (NYSE:CTST) growing weed in unlicensed facilities.Source: Shutterstock The slow process of legalization in the U.S. has likely weighed on all marijuana stocks. However, triple-digit revenue growth by cannabis companies could foster a recovery. Also, despite a recent pullback, ACB stock and other cannabis equities trade at high valuations. While the cannabis industry should prosper, the actions of Aurora Cannabis could make it difficult for investors to benefit from this growth. * 7 Stocks Top Investors Are Buying Now Aurora Cannabis Versus ACB stockInvestors should not view Aurora Cannabis and ACB as identical entities. From a business standpoint, I think Aurora has made some wise acquisitions. These deals have made it the world's largest cannabis producer. Given the bubble-like valuations of marijuana stocks, I cannot blame Aurora for issuing massive amounts of ACB stock. I agree with my colleague ,James Brumley, that this dilution of Aurora stock will ultimately benefit the company.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBut the key question for investors is if it helps the owners of ACB stock. I have trouble seeing the benefits of the share dilution for these investors. As I pointed out in a previous article, the number of shares outstanding of Aurora stock rose from about 129 million in 2016 to 1.003 billion as of the end of the first quarter of 2019. ACB Remains an Expensive, High-Growth EquityThe dilution has helped to take the price of Aurora Cannabis stock down by almost 28% over the last four months, and by nearly 43% from its highs of last October. Despite that drop, ACB stock currently trades at about 56 times its sales. This lags Canopy Growth and other large Canadian peers such as Cronos Group (NASDAQ:CRON) and Tilray (NASDAQ:TLRY).In fairness, the anticipation of legalization has driven cannabis stocks higher in the past. The United States and several other countries continue to move toward legalization. That trend alone could reinflate marijuana stocks. Moreover, analysts, on average, expect revenue growth for Aurora of almost 385% this year and over 156% in 2020., Consequently, traders should not assume that the multiples of ACB stock will necessarily compress anytime soon. Aurora Is Financing Its Operations With ACB StockEven if Aurora stock price remains the same, it will still have an elevated price-sales (PS) ratio. Considering the recent behavior of the company, one has to assume acquisitions and dilution will continue. Those deals could make Aurora Cannabis' business bigger and better. Still, investors buy equities because they want returns on their investments. But instead of reaping profits from Aurora stock, they may finance the cost of the company's expansion.This growth could make ACB stock a buy some time in the future. However, by that time, marijuana stocks like ACB will probably resemble the equities of the large companies that are investing in them now. Emulating Constellation Brands (NYSE:STZ) and Altria (NYSE:MO), marijuana stocks will likely eventually trade at price-earnings (PE) ratios at or below the S&P 500 average. They may also pay significant dividends. Under these conditions, Aurora Cannabis stock may become a lucrative income play. Final Thoughts on ACB StockBut Aurora Cannabis will likely serve as the biggest obstacle to the growth of ACB stock for the foreseeable future. Aurora has solidified its position as the world's largest cannabis producer. However, the company has financed its growth by significantly diluting ACB stock. The number of shares outstanding has grown by about 800% over the last three years. While ACB probably invested the funds well, its actions have made it considerably harder for the owners of ACB stock to benefit from their investment.Someday, the hype that's lighting a fire under marijuana stocks will fade. At that point, they will probably become profitable, slower-growth, dividend-paying companies. ACB stock should become a solid investment at that time. However, given the recent dilution of Aurora stock, I would stay away from the shares for now.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 Stocks Top Investors Are Buying Now * The 10 Best Cryptocurrencies to Keep on Your Radar * 7 Marijuana Penny Stocks That Could Triple (But You Won't Make Money) The post The Growth of Aurora Has Largely Come at the Expense of ACB Stock appeared first on InvestorPlace.
Brightfield Group estimates that the CBD market could hit about $23.7 billion by 2023. However, regulatory hurdles could impact the US market.
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.
Expansion of Cultivation Facilities: Newly constructed open-air greenhouses completed and fully operational, increasing initial production capacity by approximately 40% to 150,000 sq.ft. Upgrade to facility infrastructure, including irrigation and electrical systems, water reservoirs and propagation facility also completed. Extraction: Customized extraction line with capacity to process up to 75,000 kg/year of dried flower currently undergoing specializations and customization to meet EU-GMP standards. Strategic Partnerships: Announced several strategic partnerships including (i) an agreement with SLANG Worldwide (CSE:SLNG) (“Slang”) announced on July 11, 2019 to license their extensive portfolio of CPG (Consumer Packaged Goods) products and leverage Slang’s industry leading know-how and intellectual property to process and formulate cannabis products in Colombia and Argentina, (ii) a distribution agreement announced on February 14, 2019 with El Manantial, a local medical center network and (iii) a European distribution agreement announced on June 5, 2019.
When limited supply meets excess demand on both the long and short sides of the market for a stock, outrageous volatility is sure to ensue.
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.
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.
CALGARY , July 16, 2019 /CNW/ - Inner Spirit Holdings Ltd. ("Inner Spirit" or the "Company") (ISH.CN), a Canadian company establishing a national network of retail cannabis stores under its Spiritleaf brand, today announced it has received six additional licences from Alberta Gaming, Liquor and Cannabis (the "AGLC") for retail cannabis stores in the province. The Company also announced that its corporate-owned retail cannabis store in Jasper, Alberta located at 618 Patricia Street is expected to open on Monday, July 22. Please visit www.spiritleaf.ca for more information, including operating hours. The newly licensed locations include Spiritleaf retail cannabis stores in Beaumont , Calgary (Bow Trail), Calgary (Chinook), Edmonton (Ironstone), Grande Prairie and Medicine Hat, Alberta .
On Monday, OrganiGram (OGI) reported its third-quarter earnings. Following the company's earnings, we reported how it performed in the third quarter. To learn more, read OrganiGram’s Third-Quarter Earnings. Interestingly, OrganiGram stressed that the growth would be heavily driven by retail stores opening in Ontario and Quebec. The company stated that legalizing edibles and derivative products […]
(Bloomberg) -- With four quarters of profitability under its belt, Organigram Holdings Inc. is an anomaly in the Canadian cannabis market.Organigram has higher margins than most of its peers and one of the lowest costs per gram in the industry even though it grows indoors, generally considered the most expensive method of production. Chief Executive Officer Greg Engel attributes this to its ability to get higher yields from its pot plants than companies that grow in greenhouses, as well as its automated packaging lines.“We built a facility and designed a facility that was very focused on high-quality product because we felt there was a market opportunity that was sustainable,” Engel said in an interview at Bloomberg’s Toronto office.Organigram’s streak of profitability comes as the industry undergoes a period of significant upheaval. CannTrust Holdings Inc., previously considered one of the more reputable pot companies, plunged 48% last week after Canadian regulators said it grew cannabis in unlicensed areas of its greenhouse, forcing it to halt all sales and shipments of its products.That came less than a week after Canopy Growth Corp. fired co-CEO Bruce Linton amid shrinking margins and a C$323 million net loss in its most recent quarter.Lower ValuationMoncton, New Brunswick-based Organigram, meanwhile, reported its fourth consecutive quarter on Monday of positive adjusted earnings before interest, taxes, depreciation and amortization, or Ebitda. Revenue of C$25 million ($19 million) missed estimates and gross margin fell to 50% from 60% in the previous quarter, but Eight Capital analyst Graeme Kreindler said he views this as an “isolated event” related to a temporary change in cultivation protocols and the timing of shipments to provinces.Organigram said it cost 95 cents to produce a gram of dried flower in its most recent quarter. That was up from 65 cents in the previous quarter but still compares favorably with C$1.42 at Aurora Cannabis Inc. and $1.48 at Tilray Inc.No other large Canadian pot producer has managed to post such a long string of positive Ebitda. However, although it’s one of the best-performing pure-play pot stocks this year, up 64%, its valuation as measured by its price-to-sales ratio is well below those of its largest competitors.Engel is unperturbed. “At the end of the day, the worst thing that can happen to a company is you’ve got an artificial stock price that you can’t sustain,” Engel said.Competitors also spend a lot on stock promotion, he said. This “may in the short term be helping their stock price, but I’m not sure that’s sustainable without ongoing spending,” he said.The problems at CannTrust and Canopy signal a shakeout in an industry that’s still maturing nine months after Canada legalized recreational pot. Organigram is lucky because it had its wake-up call early, said Engel.The company had to recall several lots of its medical pot in late 2016 and early 2017 after it was found to contain an unapproved pesticide. Engel, who was CEO of Tilray Inc. at the time, was hired after the recall to “make a major cultural shift,” he said.“As a result of that recall, we had monthly ongoing inspections by regulators, and historically the industry was always complaining or defensive about the inspections,” Engel said. “My approach was to embrace them. At the end of the day it’s a partnership, not an adversarial relationship.”In the interview, Engel shared his views of the nascent industry:Beverages and EdiblesOrganigram isn’t being coy about its desire for a partner that can help it develop cannabis-infused beverages, similar to Constellation Brands Inc.’s investment in Canopy, Tilray’s partnership with Anheuser-Busch InBev SA or Hexo Corp.’s joint venture with Molson Coors Brewing Co.Organigram has developed a rapid-onset technology that will allow its drinks to take effect within 10 to 15 minutes, similar to alcohol, and has also created a flavorless cannabis powder that can be added to any beverage.“We wanted to go to these negotiations offering as much as possible,” Engel said. Organigram is seeking a partner from the alcohol industry that can help it develop beverages infused with THC, the cannabis compound that gets you high. It’s also seeking a consumer packaged goods partner for drinks infused with CBD, a non-intoxicating substance that’s thought to have health and wellness properties.BiosyntheticsEngel hopes Organigram’s investment in Montreal-based Hyasynth Biologicals Inc. will also help it lure a partner. Hyasynth is developing large-scale biosynthetic production of cannabinoids, or the active compounds found in cannabis. This method, which uses yeast to produce the compounds in a lab, is cheaper than extracting them from plants and will help lower production costs for products like beverages, edibles and vape pens, said Engel.U.S. Market“We’re very actively looking at the CBD market in the U.S.,” where the substance is legal at the federal level as long as it’s derived from hemp with very low THC content, Engel said. Organigram doesn’t plan to grow its own hemp but is looking at a range of possibilities, including investments in existing brands, products and companies.Corporate GovernanceOrganigram has a fully independent board of directors, a rarity in the cannabis sector. The CEO sees good corporate governance as essential to a well-run pot company.“This is an industry that’s still very much moving from founders and executives being chairmen or multiple insiders on boards, and I think some of the challenges we’ve seen in the industry have been because of a lack of governance,” he said. “You have to have independent governance that has oversight and holds management accountable.”To contact the reporter on this story: Kristine Owram in Toronto at email@example.comTo contact the editors responsible for this story: Brad Olesen at firstname.lastname@example.org, ;David Scanlan at email@example.com, Jacqueline ThorpeFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Canadian cannabis companies have leapt onto U.S. stock markets, dazzling investors. Here's a rundown of industry facts and how to invest in marijuana stocks.
On Thursday, Tilray Inc (NASDAQ: TLRY) announced its GMP-certified medical cannabis oral solution has reached Ireland. In this manner, Ireland became the 13th country where Tilray’s products are imported, as the company works on its global expansion in Europe. At the end of June, the Department of Health in Ireland approved the Medical Cannabis Access Programme that enables patients in need of medical cannabis to obtain it.
A full year after its widely publicized initial public offering, Tilray (NASDAQ:TLRY) shares experienced breathtaking highs and gut-wrenching lows. This dynamic attracted a fair share of skeptics and detractors. Even in an already volatile cannabis sector, Tilray stock is a big mover in both directions. Therefore, TLRY isn't for the faint of heart.Source: Shutterstock If you're seeking relative safety in the cannabis stock niche, you're probably better off sticking with a cannabis old-timer: Speaking relatively, I'm referring to names such as Canopy Growth (NYSE:CGC) or Aurora Cannabis (NYSE:ACB).But if you're ready to take a walk on the wild side, though, then buckle up for some cannabis controversy. Compared to other weed plays, Tilray stock is a veritable roller-coaster ride.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Not Your Grandfather's StockMillennials and younger traders are drawn to volatile stocks like TLRY; thus, don't expect to see this in a lot of retirement accounts. With a jaw-dropping 52-week range of $20.10 to $300.00, it's fair to say that Tilray stock experienced some growing pains before real price discovery finally took hold. * 10 Stocks to Sell for an Economic Slowdown Plus, with no price-earnings ratio listed because the earnings are negative, this is a "proceed with caution" play. Still, the price action for TLRY seemed to have calmed down this summer. After generating considerable noise as the NASDAQ's first listed pot stock, investors might identify a trading range for this wildcard. No Lock-up Worries for TLRYMuch of the bearish sentiment surrounding TLRY involved the company's largest shareholder, a private-equity firm known as Privateer Holdings. You may recall the hubbub over the ominous-sounding Tilray news that its insider shareholder lock-up period was ending earlier this year (Jan. 15, to be exact). That means that Privateer would now be allowed to sell all of its TLRY shares.This most likely caused some investors to panic and sell their holdings of Tilray stock before Privateer could sell theirs. But as it turned out, their fears were unwarranted: Privateer announced that it wouldn't sell any of its TLRY shares immediately after the lock-up period expiration.That was quite a relief, as Privateer owned approximately 76% of Tilray's outstanding shares. Not only that, they've agreed to extend their lock-up provision on those TLRY shares for two years. Street CredFor Tilray, gaining credibility on Wall Street wasn't easy. But they managed to align themselves with a bona fide giant when they partnered with beer-maker Anheuser Busch Inbev (NYSE:BUD). The purpose of their joint endeavor is to research nonalcoholic beverages containing THC and CBD.Personally, I feel that this partnership will prove transformative for the cannabis industry; investors and the media practically ignored this landmark arrangement, which is unfortunate. This deal will position Tilray in a unique position to capitalize on the potentially massive Canadian market for cannabis-infused beverages.Another boost to Tilray's credibility is the recent announcement that they're importing medical cannabis oral solutions in large quantities to the U.K. Sascha Mielcarek, the managing director of Tilray Europe, noted that Tilray already has six medical cannabis products approved for medical use in the U.K. Mielcarek also expressed optimism as the company continues to make inroads into the burgeoning European cannabis market, stating:Regulations are progressing as more and more countries across Europe are recognizing the benefits of medical cannabis and its potential to improve patients' quality of life. We're pleased to reaffirm our commitment to delivering medical cannabis to patients in the U.K. and look forward to offering a variety of GMP-certified, pharmaceutical-grade products in the coming months.Skeptics should also be aware that Tilray already ships to 12 countries with legalized cannabis. Among them is Germany, which has a population more than twice the size of Canada's. The Bottom Line on Tilray StockPlease don't misunderstand -- I'm not saying that retirees should load up their investment accounts with shares of TLRY stock. It's something of an acquired taste.However, cannabis-infused beverages and the rising cannabis market in Europe present huge opportunities. Therefore, I'm not at all against the idea of buying Tilray stock on the dip. It could turn into a joyride as the company strives for stability in this decidedly unstable industry.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 * 10 Stocks to Sell for an Economic Slowdown * 7 Marijuana Penny Stocks That I May Buy * 7 of The Best Schwab ETFs for Low Fees The post 'High' Caliber: Can Tilray Stock Close the Credibility Gap? appeared first on InvestorPlace.
From acquisitions to equity investments, the North American hemp industry has been awash in capital investment since the Farm Bill 2018 was federally passed in the United States last December. The Hemp Business Journal has been closely monitoring such activity, and will soon publish more comprehensive data pertaining to the latest deals. Arguably the biggest deal in the hemp industry so far this year has been the acquisition of Manitoba Harvest by Tilray (NASDAQ: TLRY).