|Bid||21.29 x 900|
|Ask||21.32 x 1300|
|Day's Range||20.72 - 22.22|
|52 Week Range||15.01 - 89.88|
|Beta (5Y Monthly)||N/A|
|PE Ratio (TTM)||N/A|
|Earnings Date||Nov 11, 2019|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||25.64|
I recently wrote that Aurora Cannabis (NYSE:ACB) stock isn't headed for $0, but it's still too early to buy. However, in the past couple of weeks, multiple Wall Street analysts have updated their outlook for Aurora. Some analysts are getting more pessimistic on the fundamental outlook for Aurora in the first half of 2020. Others are getting more bullish on the potential long-term value opportunity in Aurora stock.Source: Jarretera / Shutterstock.com Aurora's next earnings report is less than a month away. I think it's still too early to be buying the dip. Besides, there is at least one better option out there for speculative cannabis investors. Management Is ConfidentOne of the biggest Aurora bulls on Wall Street is Cantor Fitzgerald analyst Pablo Zuanic. Zuanic recently met with Aurora management. This week, he said he came away from the meeting even more convinced that Aurora's massive selloff is a buying opportunity.InvestorPlace - Stock Market News, Stock Advice & Trading TipsZuanic says there are three primary drivers of Aurora's underperformance in the past month, none of which are real reasons to sell the stock. First, CCO Cam Battley was let go. Zuanic says the market seems to think Battley resigned, but that's not the case. In fact, he says some more fresh blood would be good news for Aurora."We think ACB would benefit from some pruning and from bringing in an outside CEO renown in the investment community for both sound growth strategy and financial discipline (cost/cash flow)," Zuanic says. * 7 Earnings Reports to Watch Next Week Second, traders have been speculating that Aurora may significantly write-down the value of certain assets after a recent property listing price came in below expectations. Zuanic says Aurora's move to sell non-core assets is part of its cost management plans and should be considered good news for the balance sheet.Finally, Aurora's credit facility requires it to have a total funded debt-to-adjusted shareholders equity ratio at or below 0.25:1 by Sept. 30, 2020. Zuanic says all Aurora needs to get its ducks in order prior to this deadline is to generate around $21 million in earnings before interest, taxes depreciation and amortization (EBITDA) per quarter by the September quarter.Company management and Zuanic himself are confident that goal is still within reach."We would make use of the recent pullback," Zuanic said in conclusion. Cantor has an "overweight" rating and $3.85 price target for Aurora stock. Balance Sheet ConcernsThe same week Zuanic came out with his bullish commentary on Aurora, Bank of America analyst Christopher Carey downgraded the stock to "underperform." Carey also cut his price target to just $1.15.Like many Aurora bears, Carey's primary concern is the company's balance sheet."With [balance sheet] risks to remain a core investment thesis in 2020 in our view, and lingering uncertainty especially on financial covenants, we struggle to envision a scenario where shares have sustainable support," Carey wrote in the downgrade note.Carey credits Aurora with taking several steps to improve its balance sheet, including spending cuts, deferred capex and asset sales. However, he says Aurora is still not in position to meet the terms of its credit facility.Bank of America expects weakness in the Canadian cannabis market to continue throughout the first half of 2020. Without impressive growth numbers to support the bull thesis for cannabis stocks in the near-term, Carey says investors will remain focused on balance sheets. "Unfortunately, ACB has the weakest in our group, while valuation is still near group high," he said.In other words, Aurora has a lot of good things going for it. But at this point of uncertainty and at the current valuation, he simply can't recommend the stock. A Better Option Than Aurora StockLong-time readers know I've been like a broken record when it comes to cannabis stocks. There will likely ultimately be some huge winners in the space in the long term. But there is simply too much risk and uncertainty at this point to be picking one winner. * The 10 Best Value Stocks to Own in 2020 If you insist on picking one stock, I believe Canopy Growth Corp (NYSE:CGC) is the best pick in the space today. It certainly has a lot less risk than Aurora. Canopy has a strong balance sheet and a major financial backer in Constellation Brands (NYSE:STZ). In addition, I think there's a good chance Constellation may step in and buy out Canopy as soon as the financial outlook for cannabis stocks clears up.In the meantime, rather than buying a single stock, cannabis investors should consider owning a basket of at least four or five cannabis stocks to diversify their portfolio. Analysts expect the difficult cannabis market to persist in the first half of 2020. It would be wise for cannabis investors to consider clash flow, debt levels and valuation. In addition to Canopy, investors should consider other top-tier stocks such as Tilray (NASDAQ: TLRY) and Cronos Group (NASDAQ:CRON).As of this writing, Wayne Duggan did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * The Top 5 Dow Jones Stocks to Buy for 2020 * 7 Fintech ETFs to Buy Now for Fabulous Financial Exposure * 3 Tech Stocks to Play Ahead of Earnings The post Is It Finally Time to Buy Aurora Cannabis Stock? appeared first on InvestorPlace.
Following a disastrous performance in 2019, marijuana stocks are staging a huge comeback in early 2020. So far this year, the ETFMG Alternative Harvest ETF (NYSEARCA:MJ) is already up about 10%, representing an impressive average gain per trading day of nearly 1%.Leading the charge are the usual suspects. So far this month, Canopy Growth (NYSE:CGC) is up 15%. Tilray (NASDAQ:TLRY) has gained 19%. and Cronos (NASDAQ:CRON) has added 6%.But one marijuana stock missing out on this party is Aphria (NYSE:APHA). Best known as the only cannabis company to report a quarterly profit so far, APHA has not rebounded with its peers in 2020. Instead, Aphria stock is flat in 2020.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThis relative underperformance of APHA stock won't last.Aphria's trends are too favorable, its fundamentals too good, and its valuation too discounted to keep Aphria stock depressed for much longer. As marijuana stocks continue to rebound throughout 2020 amid favorable cannabis trends, Aphria stock will turn into the one of the segment's hottest stocks. Indeed, my estimates indicate that Aphria stock could more than double this year.Here's how that could happen. Marijuana Stocks Will Keep ReboundingCentral to the bull thesis on APHA stock is the idea that the entire cannabis sector will rebound dramatically in 2020.Three positive catalysts will drive that rebound. First, the currently depressed demand trends of Canada's legal cannabis market will improve significantly in 2020. The factors that will bring about its improvement are the introduction of new edibles and vape products, more aggressive launches of new stores, and logistical improvements by legal suppliers and distributors. The demand rebound will turn falling revenue growth rates across the whole industry into rising revenue growth rates. * The Top 5 Dow Jones Stocks to Buy for 2020 Second, the supply glut of Canada's legal market will ease due to accelerating demand trends. Economics 101 teaches that falling supply and rising demand lead to higher prices. Higher prices create higher margins. Consequently, the cannabis industry's margin weakness of 2019 could turn into margin strength in 2020.Third, various cannabis markets outside of Canada will gain traction and turn into meaningful revenue contributors for legal suppliers. That is, governments around the world will adopt more lenient marijuana laws, thanks to increasing pressure by consumers for such laws. As that happens, more countries will legalize cannabis in 2020. At the same time, more and more states across the U.S. will legalize marijuana, and more and more Canadian cannabis companies will jump into the U.S. market.The marijuana industry seems optimally positioned for a huge rebound in 2020, meaning that the recent strength of the sector's stocks will most likely persist. Aphria Stock Will Join The RallyAphria stock is currently sitting out the big rally by cannabis stocks. That won't last forever. Soon enough, Aphria will join the rally, and when it does, Aphria stock could explode higher.Investors have been relatively bearish on Aphria recently because the company's second-quarter earnings report, delivered in early January, missed analysts' average expectations, and the company, in conjunction with the results, cut its full-year revenue and profit guidance. But the miss doesn't tell the whole story.Aphria's trends are actually pretty good. Its quarter-over-quarter cannabis revenue growth and its QoQ cannabis volume growth accelerated compared with Q1's rates. Those two data points imply that demand for Aphria's cannabis is rising. At the same time, its cannabis gross margins improved tremendously, rising from 50% in Q1 to 57% in Q2. The data supports the idea that improving supply-demand dynamics are meaningfully lifting Aphria's margins.Aphria has all the momentum it needs to join the marijuana stock rally, as demand for its products is accelerating and its margins are expanding.Eventually, these improving growth trends, combined with the massively discounted valuation of APHA stock, will produce an epic rally by the shares.Analysts, on average, expect Aphria's fiscal 2022 earnings per share to be 40 cents. That estimate will prove to be conservative. My modeling indicates that improving demand and margin drivers will push the company's FY22 EPS to 50 cents or higher. Based on a forward earnings multiple of 20, which is average for growth stocks, my 2021 price target for Aphria stock is $10.The shares closed at $5.19 yesterday. The Bottom Line on APHA StockAphria stock has sat out the 2020 marijuana stock rally so far, but it won't remain on the sidelines forever. Instead, as soon as worries about the Q2 earnings report fade, the shares will start to climb higher. Given how cheap this stock is and how good APHA's fundamentals are, the rally will be huge and could reach 100%.As of this writing, Luke Lango was long CGC. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * The Top 5 Dow Jones Stocks to Buy for 2020 * 7 Fintech ETFs to Buy Now for Fabulous Financial Exposure * 3 Tech Stocks to Play Ahead of Earnings The post Here's How Aphria Stock Could Double in 2020 appeared first on InvestorPlace.
As every investor knows by now, the cannabis market was one of the biggest disappointments in recent memory. But among the major players, medical marijuana specialist Tilray (NASDAQ:TLRY) printed some of the ugliest technicals. Indeed, the 2019 price chart of Tilray stock resembles a near-linear decline to the doldrums. That said, can its recent and dramatic resurgence lead to a sustained recovery in 2020?Source: Jarretera / Shutterstock.com Admittedly, relatively few investors want to hear about cannabis right now. Although its 21% move from January's opening price is noteworthy and impressive, it doesn't detract from last year's painful implosion.In 2019, Tilray hemorrhaged almost 76% in the markets. Mathematically, we'll need to see more than a 300% move for stakeholders to break even with last January's opener.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThus, I can understand why observers are cynical and skeptical about the recent rally. Nevertheless, Tilray stock didn't move on simply dumb news. Instead, Wall Street clearly approved of the underlying company's efforts to reorganize its executive team.Currently, Tilray's CFO is Mark Castaneda, who will shift over to strategic business development. In his place will be Michael Kruteck, who previously held positions at Molson Coors Beverage (NYSE:TAP) and Pharmaca. Additionally, John Levin, formerly of Revlon (NYSE:REV), will join Tilray as its COO. * 10 Cheap Stocks to Buy Under $10 The hope is that the executive-level transition will spark a viable growth strategy. Plus, with Kruteck and Levin both levering substantial experience with consumer retail products, they can help maximize growth in what has been an extraordinarily challenging market.But should you gamble on Tilray stock because of this high-level recruitment? Unfortunately, shares remain risky so they're not appropriate for all. However, I can see a reasonable speculative case. Inefficiencies and Tilray StockAlthough Tilray has disappointed in the markets, on the financials, it's produced some impressive metrics. For instance, in its most recent earnings report for the third quarter, the cannabis firm generated $51.1 million, a more than five-fold increase against the year-ago quarter's haul, which was $10 million.Of course, net income losses widened, which worried stakeholders due to sustainability concerns. The trailing 12-month tally is at a loss of $132 million. Therefore, meaningful profitability seems a long way away.Still, if management can provide a rational framework for continued impressive growth and eventual profitability, the stock can realistically build off its recent surge. Combined with the new blood in the executive ranks, along with potential opportunities in the Canadian cannabis market, this embattled name can legitimately surprise folks.Contrary to commonly expressed criticisms, Canadian adult cannabis demand is robust despite ongoing supply chain issues from licensing backlogs. For instance, in calendar Q3 2019, nearly 5.2 million adults used marijuana. That's a sizable jump from the Q3 2018 figure of just under 4.6 million adults. And it's also a huge leap from the nearly 4.2 million adult users from Q1 2018. Click to Enlarge Source: Chart by Josh Enomoto For Tilray stock specifically, the Canadian price index for medical marijuana products has not only stabilized but has increased in recent quarters. I'd expect this trend to continue moving favorably as supply chain issues and social stigmas fade.Thus, the demand for Tilray's products is strong, even in the saturated Canadian market. So, what's keeping it from realizing its true potential? Again, it's the administrative backlog that has imposed severe inefficiencies in the retail market.The biggest example of this is the province of Ontario. Home to over two million cannabis users, Ontario only has 75 stores to serve their needs, which is simply untenable. The Bottom Line on Tilray StockBuilding off the above point, the state of Colorado has approximately one store for every 10,000 residents. Surely, the ratio for store count per active cannabis user is much, much lower. To get the ratio in Canada in sync with reality, the government must approve far more stores than they have.Call me an optimist but I think our northern neighbor will get the job done. Indeed, their government is incentivized to do so. The longer these inefficiencies exist, the more the black market will steal what would otherwise be taxable revenue.Thus, the opportunity is that the markets haven't priced in this possible trend into the Tilray stock price. Clearly, the Street still views Tilray and the marijuana sector with much skepticism. I don't blame them. But I also believe that once these governmental and platform issues are gone, cannabis firms can finally play with a full deck.As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 9 Up-and-Coming Small-Cap Stocks to Watch * 7 Energy Stocks to Buy on the Resurgence of the Oil Boom * 3 Standout Oil Services Stocks to Buy The post This Surge in Tilray Stock May Not Be a One-off Event appeared first on InvestorPlace.
With recreational cannabis use legal among adults in Canada and marijuana companies on the rise, there is an opportunity for imports to the U.S.
Despite waning investor optimism in the cannabis space, AdvisorShares CEO Noah Hamman says 2020 could be a big year for the sector.
Aphria Inc.’s U.S.-listed shares slid 9% Tuesday before paring their losses, after the Canadian cannabis company posted weaker-than-expected revenue for its fiscal second quarter and revised down its guidance to reflect issues including a slower rollout of retail locations in Ontario.
Canadian cannabis company Tilray Inc. said Tuesday it has named former Molson Coors executive Michael Kruteck as its chief financial officer, replacing Mark Castaneda, who will take on the role of strategic business development. The company has also hired former Revlon executive Jon Levin as chief operating officer. Tilray's Nasdaq-listed shares slid 1.8% premarket and have fallen 84% in the last 12 months, while the S&P 500 has gained 27%.
Tilray, Inc. (NASDAQ: TLRY), a global pioneer in cannabis production, research, cultivation, and distribution, announces the expansion of its global senior leadership team with two strategic hires: Jon Levin as Chief Operating Officer, who was formerly with Revlon, and Michael Kruteck as Chief Financial Officer, who was formerly with Molson Coors and Pharmaca. Mr. Kruteck’s appointment will be effective immediately after filing the Annual Report on Form 10-K for the year ended December 31, 2019. Mark Castaneda, Tilray’s current CFO, will take on the role of Strategic Business Development and continue to advise the company and assist in Kruteck’s transition.
It's no secret 2019 wasn't a good one for cannabis stocks. Some investors might be asking the question: Is now be a good time to gain industry exposure with Aurora Cannabis (NYSE:ACB)? Let's see what happening off and on the price chart to reach a stronger risk-adjusted determination in 2020's early going.Source: Shutterstock Last year was a painful one for Aurora stock. Not that the marijuana producer was alone. From former standout Tilray (NASDAQ:TLRY) to the industry's largest Canopy Growth (NYSE:CGC), or niche players such as Aphria (NASDAQ:APHA), most cannabis companies shares went up in smoke in 2019. For its part ACB stock plunged 67%. * 7 Inflation-Beating REITs to Ground Your Income Portfolio To be clear, much of the bearish price action in Aurora wasn't without cause. Over the period there were plenty of quarterly misses and losses to contend with. But the real albatross weighing on shares in 2019 was Aurora's precarious debt situation within a much more challenging cannabis market than investors anticipated. And right now Wall Street doesn't see 2020 as looking any easier.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Analyst Take on ACBLate last week two analysts came out with "sell" ratings on ACB. Investment bank Piper Jaffrey cited a poor balance sheet and weak EU sales as risks for the company. The firm also issued a $1 price target for the stock.The firm warned Aurora Cannabis isn't likely to achieve positive cash flow until the third quarter of 2021. In the interim, it sees the company's debt growing by roughly $152 million. Worse yet, the liability is on top the outfit's existing need to refinance approximately $274 million in debt due August 2021.On Friday Bank of America Merrill Lynch chimed in with similar reservations. In their estimation, the pot producer's debt obligations won't be covered and supersede ACB's strong position in Canada's recreational marijuana market. Aurora Cannabis Stock Monthly ChartSource: Charts by TradingViewThe monthly chart of ACB stock largely supports Wall Street's sell-side at this juncture. ACB stock is down in nine of its last ten months. Worse and technically, shares have broken most every conceivable layer of bullish price, pattern and Fibonacci support along the way. Aurora is now in strong position to challenge 2017's key low of $1.38 which followed the initial run-up in shares.At this time there's little reason to see this next technical test as having an outcome any different than ACB's multiple failures in 2019. The bears are in control with no signs of letting up. Moreover, in 2020 I wouldn't dismiss or discount Piper's $1 price target and the threat of shares once again becoming an actual penny stock.Market Maker's Edge: Despite the obvious admonitions off and on the price chart, I'm not keen on shorting sub $2 stocks. As a former options market maker, I'd stress buying a bear put spread. This kind of position smartly limits and reduces the position's Greeks while allowing for solid profit potential.For investors wanting to buck today's overwhelming bearish warnings, I'd first recommend waiting on monthly chart confirmation a bottom is in Aurora Cannabis. Right now, that would mean waiting until February and a rally above January's high of $2.27 before considering a position. From there, a longer-dated married put strategy or out-of-the-money long call play due to potential asymmetric risk is where I'd begin looking for long delta exposure.Investment accounts under Christopher Tyler's management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler's observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies and related musings, follow Chris on Twitter @Options_CAT and StockTwits. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Inflation-Beating REITs to Ground Your Income Portfolio * 7 Healthcare Stocks to Buy or Sell As Pricing Pressures Mount * 7 Earnings Reports to Watch This Week The post Why 2020 Could Be an Even Uglier One for Aurora Stock appeared first on InvestorPlace.
One major catalyst for the U.S. cannabis market is cannabinoid or CBD sales. The passage of the 2018 Agriculture Improvement Act (farm bill) legalized hemp production setting the market up for a strong sales ramp.Hemp contains less than 0.3% of tetrahydrocannabinol (THC), whereas marijuana contains up to 30% of the psychoactive compound. CBD is increasingly presumed to contain properties for wellness and pain management increasing the attractiveness of hemp-infused CBD products, but the U.S. FDA has other thoughts.The FDA has questioned the lack of safety research on CBD products and placed into question the approval of edibles. In addition, CBD products aren’t allowed to advertise any medical benefits from the products such as pain relief.For this reason, the large proclamations for huge CBD sales have taken a hit. National retailers haven’t stocked edible products due to the potential ire of the FDA causing a pure CBD company in the U.S. like Charlotte’s Web Holdings (CWBHF) to recently miss sales targets. The industry is trending more towards 2022 sales of $4.4 billion versus some original high expectations up around $21.9 billion.The U.S. CBD market is even more complicated due to the flood of Canadian companies pushing south. The U.S. CBD space is the only area where most companies from Canada and the U.S. are expected to compete for now leading to the development of thousands of brands crowding into the space.We’ve delved into these three U.S. cannabis MSOs with a strong market position in Illinois that will benefit from the opening up of the adult-use market. Using TipRanks' Stock Comparison tool, we lined up the three alongside each other to give us an idea of what the Street thinks is in store for the trio in the year ahead.Canopy Growth (CGC)About a month ago, Canopy Growth officially launched their hemp-derived CBD product for the U.S. The First & Free brand marks the entrance of the Canadian cannabis company into an already crowded CBC space.At launch, the company is offering various assortments of oil drops, softgels and creams. Notably, Canopy Growth is avoiding marketing dietary supplements that are currently under the scrutiny of the FDA and the higher selling products by current U.S. brands.Canopy Growth has long promoted the desire to enter the U.S. via CBD products. The business provides the company with a second avenue to expand in the largest cannabis market after securing the right to purchase Acreage Holdings when cannabis is federally legal.The company has established an operating complex in New York for the extraction and production of hemp-derived products including CBD. Canopy Growth is spending several hundred million on its industrial hemp park in the state and contracted with American farmers for thousands of acres of hemp cultivation.While CBD sales are important to the plan for Canopy Growth to enter the U.S. market, the current $7 billion market cap of the stock suggests the crowded space won’t provide the sales to move the needle fro the stock.All in all, Wall Street is not as bearish on Canopy, but is not convinced on this stock, either. CGC holds a Moderate Buy from the analyst consensus, based on 6 "buy" ratings – but also 10 "holds." Shares sell for $21.92, and the $22.58 average price target suggests a modest upside of just 1%. (See Canopy stock analysis at TipRanks)Tilray (TLRY)Tilray positioned the company to launch CBD products in the U.S. last year via the acquisitions of Manitoba Harvest and Smith & Sinclair. By Q3 alone, the company had products in nearly a thousand retail locations, though sales were minor.The Canadian cannabis company is highly focused on Cannabis 2.O products whether in Canada or the U.S. Their High Park division has innovative products in CBD formats of beverages, edibles and vapes with products under existing brands such as Marley Natural, Goodship and others.The Smith & Sinclair company offers craft edible candy, fragrances and unique consumable products with the intent to launch the Pollen brand for the CBD space. The Manitoba Harvest division already has $15 million quarterly revenue based with connections at thousands of retailers in the U.S. already selling hemp products. The natural move is into the hemp-infused CBD space.In essence, the company has a diverse portfolio of CBD brands to explore sales opportunities in the U.S. As with the other Canadian players, Tilray hopes to eventually utilize established connections in the CBD space to allow for quick expansion in the U.S. once THC products are federally legal.Tilray is the better bet in the sector for a company looking for a purer CBD or Cannabis 2.0 products company. The stock only has a market value of $1.5 billion now and Tilray is less focused on cannabis cultivation.The biggest issue remains the valuation with 2020 revenue expectations of $317 million placing the stock at close to 5x revenues. The stock upside could come from strong sales of higher margin CBD products.According to TipRanks, the consensus on Wall Street is that Tilray stock is a “hold” for investors. But TipRanks might as well have said “buy” — because analysts, on average, think the stock, currently at $16.44, could zoom ahead to $25.56 within a year, delivering 56% profits to new investors. (See Tilray stock analysis at TipRanks)Village Farms International (VFF)Village Farms International is a unique company in the space with a twist due to their existing business in Texas. The company has entered in the CBD market via simply converting greenhouses into hemp cultivation facilities while additionally adding joint ventures for growing hemp outdoors in multiple states to convert into CBD biomass.The company planted 870 acres of hemp in 2019 with the original 625 acres averaging 1,600 pounds of hemp per harvested acre. Village Farms was positioned to commence sales of hemp biomass in Q4.The upside potential comes this year as Village Farms looks to expand into white-labelled and branded CBD products in 2020. The biggest concern with the stock is the drama with joint-venture partner Emerald Health Therapeutics (EMHTF).The companies have a major dispute over the Pure Sunfarms JV ownership. The JV cultivates and sells cannabis in Canada. Without resolution of this dispute, the stock could trend lower. Village Farms has a meager stock valuation of $300 million so any of the moves into branded product sales in either U.S. CBD sales or Canadian cannabis sales would provide a major lift to the stock.TipRanks’ data shows a bullish camp backing this greenhouse firm. The ‘Strong Buy’ stock has amassed 5 ‘buy’ ratings in the last three months, with no "sell" or "hold" ratings. The 12-month average price target stands tall at $20.20, marking nearly 280% in return potential for the stock. (See Village Farms stock analysis at TipRanks)
The hits keep on coming for Aurora Cannabis (NYSE:ACB) stock. Amid earnings disappointments, management changes and sector pressure, Aurora stock continues to slide, reaching its lowest point in over two years this week.Source: Jarretera / Shutterstock.com There's a case to be made that the declines will end at some point. Balance sheet concerns are real but as I detailed last month, bankruptcy is an unlikely near-term outcome. ACB stock isn't "cheap," even below $2: considering Aurora Cannabis's debt and a market capitalization that's still near $2 billion, it trades at more than seven times its fiscal 2020 revenue estimates. But there's a huge opportunity for cannabis plays across the board, with regulatory improvements and "Cannabis 2.0" likely to boost demand in the Canadian market.And of course, the U.S. market looms. The Canadian market is attractive, and Aurora has operations around the world, but it's U.S. consumers who could really move the needle for ACB stock, and for the cannabis sector as a whole.InvestorPlace - Stock Market News, Stock Advice & Trading TipsFederal legalization of cannabis seems likely at some point in the future, given steady progress at the state level. A regulated national market in the U.S. would support years, if not decades, of growth for the likes of Aurora, and justify what still look like reasonably high valuations across the sector. * The Top 15 Stocks to Buy in 2020 But it's becoming increasingly clear that Aurora Cannabis stock is not the play for investors bullish on the U.S. cannabis opportunity -- particularly not right now. That in turn creates a key question: if Aurora Cannabis isn't a U.S. play, are other, smaller, markets enough? The Catalyst Problem for ACB StockThe first issue with treating Aurora stock as a play on U.S. cannabis is that shifts in federal policy are highly unlikely any time soon. "The biggest legislative changes of 2020 will be the enforcement of existing laws," cannabis industry attorney Scot C. Crow of Dickinson Wright told InvestorPlace. And the upcoming presidential election will put a hold on any major changes to federal policy on marijuana."This will be a year of increased friction and enforcement as federal legislation largely stalls due to the presidential election cycle," said Crow. "IRS enforcement actions against legitimate state businesses could increase the possibility of meaningful federal action, but not realistically until after the election cycle."The SAFE Banking Act, which protects banks working with cannabis companies in states with legalized, regulated cannabis, passed the House of Representatives in November, but Senate passage seems unlikely in 2020, if at all. Instead, it's possible that the federal-state battle over cannabis will accelerate, according to Crow's prediction of "increased friction and enforcement" in 2020."Federal and state agencies enforcing existing laws will expose non-compliant state operators," Dickinson Wright Attorney Benton B. Bodamer told InvestorPlace. "Legitimate competition will bring risk of failure in select markets, testing state and federal enforceability of contracts and receivership and bankruptcy protections, even further than last year."If anything, state-level markets may look less attractive by the end of this year. We've already seen massive oversupply in markets like Oregon. As Bodamer notes, it's possible that producers will fail in response. Those failures could expose the issues, such as still-patchwork regulation and unsettled contract law, that persist in state-level markets.On the whole then, the U.S. cannabis market is likely set for a rocky 2020. And so investors buying any cannabis stock based on U.S. opportunities would do well to exercise patience until after the elections at least. Aurora's U.S. ExposureFor Aurora Cannabis in particular, the problem is more significant. Right now, the company simply doesn't have a path to a legitimate presence in the U.S. market.Aurora does have exposure to the American market in two ways. First, the company has an agreement with Australis Capital (OTCMKTS:AUSAF) to buy a significant stake in Australis in the event of U.S. legalization. Australis was spun out from Aurora in 2019, and primarily works in the U.S. cannabis market, including real estate assets. The existing partnership also suggests Australis could be a customer for Canadian-produced cannabis if U.S. regulations end up allowing for imports.Second, Aurora has a partnership with the Ultimate Fighting Championship mixed martial arts league to research the effects of cannabidiol (CBD) on athletes. That partnership, as detailed on Aurora's Q4 conference call, aims to "generate the data required to establish CBD as an accepted therapeutic ingredient."Per management, both efforts are part of a broader strategy focused on the U.S.Aurora Chairman Michael Singer said on the Q1 call that when the U.S. strategy is announced some time in the future, "it's going to be very clear as to how this ties together." The U.S. Problem for ACB StockBut investors should be highly skeptical of that statement. Aurora Cannabis's current U.S. presence isn't nearly enough. And it's hamstrung in its ability to expand into the U.S. in force.The two announced U.S. efforts are going to have minimal impact on ACB stock. Aurora's option on Australis is being affected by that company's planned merger with privately held Folium Biosciences, a deal that would give Australis just 11% ownership of the combined company. Aurora can only buy a piece of that equity -- or a low single-digit percentage of the merged business. Even if Australis and Folium combine to become a game-changer for the U.S. market, Aurora won't benefit enough to move the needle on ACB stock.As for the CBD opportunity, a research partnership is nothing close to an actual profit-generating operation. And the U.S. CBD market is a mess, with unclear regulation from the Food and Drug Administration (FDA) and a patchwork of state-level regulations. Even industry leader Charlotte's Web (OTCMKTS:CWBHF) has seen its stock decline 71% just since Aug. 5.And even if the market does become clearer, Aurora has no real edge and competition will be intense. Charlotte's Web, Cronos (NASDAQ:CRON), Canopy Growth (NYSE:CGC) and many others have their eye on the market. It's asking a lot for Aurora to outperform so many rivals, including companies that have already established supply and distribution chains when Aurora has not. The Cash IssueThere's another issue, of course: cash. Again, it doesn't seem like Aurora is going bankrupt any time soon, but it does need to conserve capital, and a decent chunk of the cash it's currently holding is going to be burned as the operating business runs at a loss. If Aurora Cannabis wants to enter the U.S. market in earnest, it will either have to spend big and build out its business or acquire an existing operator.Either option would be difficult, since Aurora just doesn't have the balance sheet for a big move, and raising more cash will be exceedingly difficult at this point. The company has already significantly diluted shareholders. Quality sellers are not likely to take risky ACB stock if they can get shares of, say, Cronos, still flush with cash from an investment by Altria Group (NYSE:MO).So it's quite difficult to see how Aurora Cannabis could enter the U.S. market in force any time soon. It doesn't have the leeway to make an acquisition, and it may not even have the capital to invest heavily by 2022 or 2024. Its existing domestic market presence is minimal.That seems like a significant problem for ACB stock going forward, especially when its peers do have U.S. optionality. Most notably, Canopy has a deal with Acreage Holdings (OTCMKTS:ACRGF) to enter the U.S. market in force as soon as federal legalization arrives. Cronos and even Tilray (NASDAQ:TLRY) will have dry powder to make their own moves.Aurora has no such luxury, with its share price depressed and balance sheet stretched. It will take years to fix both problems. And until then, investors bullish on the U.S. simply need to look elsewhere.As of this writing, Vince Martin did not hold a position in any of the securities mentioned above. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * The Top 15 Stocks to Buy in 2020 * The 7 Most Important Companies That Didn't Survive the 2010s * 4 Mega-Tech Stocks Reaching for the Sky The post Aurora Cannabis Stock May Already Have a U.S. Problem appeared first on InvestorPlace.
CALGARY , Jan. 10, 2020 /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 that it achieved more than $29 million in system-wide retail sales1 and served approximately 740,000 customers in 2019. With 43 stores operating to start 2020 and with additional locations set to open, the Company is well poised for future sales and revenue growth as a leading Canadian retailer in the recreational cannabis industry. In addition to the previously planned nine additional franchise locations which the Company anticipates opening in Alberta and British Columbia in 2020, Inner Spirit will also be pursuing expansion in other provinces.
Last year, the cannabis trade was an absolute nightmare. Just about every company came under the crush of heavy selling like Cronos Group (NASDAQ:CRON), Tilray (NASDAQ:TLRY) and Aurora Cannabis (NYSE:ACB).Source: Shutterstock The main reason for this? Simply put, the legalization of cannabis in Canada was overhyped. It also did not help that there were problems with getting retail permits and that black market activities got worse.Despite all this, I think much of this has been baked into the valuations. In other words, there are some interesting opportunities for investors.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 8 of the Strangest Stocks Worth Your Time One that is a standout is Canopy Growth (NYSE:CGC) stock. It is a clear leader in the space, with advantages like the following: * The company has roughly $2.7 billion in the bank. This puts CGC in a strong position as funding has been drying up for cannabis operators. * Canopy has leading market share positions - of over 35% -- in Alberta, which is the most developed recreational market in Canada. There are also supply agreements with government agencies in ten Canadian provinces and territories. * The Spectrum Therapeutics medical subsidiary is a major player in the medical cannabis space, with about 75,600 patients. * There is about 5.4 million square feet of licensed capacity in operation in Canada.All in all, Canopy Growth stock has the benefit of tremendous scale, diversification and liquidity. Because of this, it seems like a pretty good bet that - even if the shakeout continues in the industry - the company will be a long-term winner. The Drivers for 2020One of the many dramas for Canopy Growth stock during 2019 was the termination of CEO Bruce Linton. The company's largest shareholder, Constellation Brands (NYSE:STZ), simply got fed up with the losses that were piling.So, the replacement for Linton will take the helm in mid-January. He is David Klein, who has served in senior leadership roles for the past 14 years at STZ. According to the press release:His capabilities include extensive CPG and beverage alcohol industry experience, strong financial orientation, and experience operating in highly regulated markets in the U.S., Canada, Mexico and Europe. David is an experienced strategist with a deep understanding of how to build enduring consumer brands while leveraging operational scale across a dispersed production footprint. He is a strong leader with a proven track record of developing diverse and high performing teams.Yes, these are the kinds of skill sets that will be crucial for the success of Canopy Growth stock. Initially, Klein is likely to focus on streamlining the organization to get on a path to profitability. But in the meantime, there are some catalysts that should help bolster growth.For example, the U.S. market is looking more promising. Because of the Agriculture Improvement Act of 2018, CGC has been able to introduce hemp and CBD offerings into the market (such as the First & Free line). This has been the result of investments in building a supply chain for hemp cultivation, processing and production.And if there is legalization on a federal level in the U.S., Canopy will be positioned to benefit as it has a partnership agreement with Acreage Holdings.That said, the Cannabis 2.0 opportunity is probably the most important catalyst for the company. This has legalized edibles in the Canadian market, which could be worth $2.7 billion based on research from Deloitte.CGC is definitely prepared. Keep in mind that it already has more than 30 SKUs submitted to Health Canada for vapes, chocolates and beverages. Bottom Line on CGC StockSince mid-November, Canopy Growth stock has staged a nice rally, going from $14 to $20. True, given the swirling uncertainty and continued problems in Canada, this gain could prove temporary. For the most part, volatility will probably continue.So, it's still advisable to not be too aggressive with Canopy Growth Stock. But if you have a longer-term perspective on things, I think gradually building a position does make sense right now.Tom Taulli is the author of the 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 * 8 of the Strangest Stocks Worth Your Time * 7 Stocks to Buy That Trump's Tax Cut Truly Rewarded * 5 Stocks That Could Double in 2020 The post Has the Smoke Finally Cleared for Canopy Growth Stock? appeared first on InvestorPlace.
Tilray, Inc., ("Tilray" or "the Company") (Nasdaq: TLRY), a global leader in medical cannabis research, cultivation, production and distribution, today announced that Brendan Kennedy, President and Chief Executive Officer, will present at the 2020 ICR Conference.
Though 2019 was a brutal year for weed stocks in Canada and the U.S., that meant it was a stellar year for short sellers, who harvested nearly $1 billion from shorting the top 20 cannabis companies.
The legalization of weed in Illinois has been well received by consumer spending with nearly $20 million on marijuana products being sold in the first 12 days. High Times CEO Stormy Simon joins On The Move to discuss.
Aurora's stockis climbing as Cowen expects the cannabis company to focus on controlling capital spending and restructuring its debt. Yahoo Finance's Emily McCormick joins Seana Smith on The Ticker to discuss.
Legalized weed is proving a boon to midwest coffers. Yahoo Finance's Julie Hyman, Adam Shapiro, Dan Roberts, Constance Hunter KPMG Chief Economist and Stormy Simon High Times CEO discuss.