|Bid||17.20 x 800|
|Ask||17.33 x 800|
|Day's Range||16.70 - 17.98|
|52 Week Range||15.01 - 83.10|
|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|
Canopy Growth stock roared higher Friday and sparked a broad rally among cannabis stocks, after a better-than-expected earnings report bolstered sentiment on the beaten-down sector.
Canopy Growth's new CEO David Klein delivered first quarter results that topped expectations across the board as shares popped 15%.
U.S.-listed shares of Canadian cannabis companies rallied in premarket trade Friday, after a better-than-expected earnings report from market leader Canopy Growth Corp. bolstered hopes for the beaten-down sector. Canopy reported a narrower-than-expected fiscal third-quarter loss and revenue that rose above forecasts, amid strength in business-to-consumer sales. The report comes a day after Aurora Cannabis reported a more than C$1 billion loss for its latest quarter. MKM analyst Bill Kirk said Canopy's report was a beacon of hope for the sector and should boost sentiment. "We had expected only small improvements from the prior quarter, but Canopy is showing a meaningful progression," Kirk wrote in a note to clients. Still, the path to profitability remains unclear and Kirk is waiting for the earnings call for details on Cannabis 2.0, the second phase of Canadian legalization that allows derivatives, including edibles and beverages. "We doubt early 2.0 sales will be a significant contributor given the lack of activity observed at production facilities two weeks before 2.0 legalization," he wrote. "We continue to rate WEED shares Neutral." Canopy's U.S.-listed shares rose 18% premarket. Aurora was up 7%, Cronos rose 6%, Tilray was up 7%, Aphria was up 8% and Organigram was up 6%. The ETFMG Alternative Harvest ETF has fallen 54% in the last 12 months, while the S&P 500 has gained 23%.
As the vast majority of marijuana stocks have tumbled over the last 11 months, even most bulls have given up on many of the names, including Hexo (NYSE:HEXO), Tilray (NASDAQ:TLRY), and Aurora Cannabis (NYSE:ACB). But the bulls have still been extremely upbeat on Aphria (NYSE:APHA), but it's hard to say why people still like Aphria stock.They tout the company's high exposure to markets outside of Canada, its high production capacity, its large cash reserves, and the strong experience of its CEO, Irwin Simon, who founded successful organic food maker Hain Celestial (NASDAQ:HAIN) and served as its CEO for many years.InvestorPlace - Stock Market News, Stock Advice & Trading TipsMost of all, the bulls love the fact that Aphria, unlike any of its peers, managed to eke out a small quarterly profit, Actually, it managed to eke out two consecutive quarters of small quarterly profits in 2019.But the company's fiscal second-quarter results and guidance, reported on Jan. 14, were not nearly as impressive. They indicate that, despite Aphria's many advantages, its profitability is waning while its growth isn't that impressive in light of its high valuation. Investors appear to recognize that reality, as Aphria stock has lost 19% of its value in the last month and is down nearly 35% over the last year. Analyzing Aphria's ResultsIn the company's fiscal second-quarter (which ended in November) its net revenue fell to CAD$120.6 million from CAD$126.1 million in Q1. * 20 Stocks to Buy From the Law of Accelerating Returns Moreover, Aphria's distribution revenue dropped to CAD$86.4 million from CAD$95.3 million, and the company's bottom line swung to a loss of CAD$7.9 million in Q2, versus a profit of CAD$16.4 million in Q1. Even more discouragingly, Aphria's gross profit dropped toCAD$ 39.589 million in Q2 from CAD$45.42 million in Q1.The gross profit decline suggests that falling demand and/or lower prices, not increased spending on items like R&D or marketing, caused the quarter-over-quarter decline of the company's bottom line.Spending more money on R&D, sales, and marketing can boost companies' results over the longer run. Moreover, companies that are benefiting from high revenue and gross profit increases can raise their spending on R&D, sales, and marketing and still raise their bottom-line profits.But when demand for a company's products is dropping or its average prices are falling, causing its gross profit to decline, it will have a very hard time increasing its bottom line. As a result, Aphria probably won't report another quarterly bottom-line profit for some time.Given Aphria's lackluster Q2 results, it's not surprising that its 2020 guidance was not very impressive. The midpoint of the company's 2020 revenue guidance range was CAD$600 million, down from CAD$675 million in October. And its revenue in the first half of its fiscal year was CAD$246 million.So it now expects its revenue in the second half of the year to be CAD$354 million, or 44% above its first-half total. With Aphria stock still trading at a very high price-sales ratio of nine, a 44% increase isn't very impressive. The Implications of Aphria's GuidanceThe company's guidance suggests that the exponential jump in cannabis companies' financial results that bulls had expected to see from the legalization of cannabis-infused food and drinks in Canada isn't going to materialize in the first half of calendar 2020.Additionally, the reduction of its revenue guidance indicates that it doesn't expect the opening of more stores in Ontario to help its business as much as marijuana stock bulls had hoped. The Bottom Line on Aphria StockThe decline of Aphria's gross profits last quarter indicates that demand for its products is weakening and that its profitability is likely to fall for the foreseeable future. Moreover, its revenue guidance suggests that its shares are overvalued and that the positive catalysts which have been touted by bulls aren't as strong as they think.As I explained in my recent column about Aurora Cannabis, I believe that companies that are providing cannabis to the general public have two fundamental problems.First, cannabis remains socially unacceptable in many situations, making those who believe in following society's rules and norms unlikely to use it much, if at all.Second, most of those who are less compliant with rules and norms will buy cannabis from unauthorized dealers who sell it much more cheaply than legal stores and dispensaries. Aphria's results and guidance indicate that the same situation exists in countries other than Canada.As of this writing, the author did not own shares of any of the aforementioned companies. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 20 Stocks to Buy From the Law of Accelerating Returns * 10 Strong Lottery Ticket Stocks That Could Soar in 2020 * 7 U.S. Stocks to Buy on Coronavirus Weakness The post Aphria Stock Isn't Profitable Enough to Be Worth the Risk appeared first on InvestorPlace.
After a brutal year in 2019, cannabis stocks are off to another rough start so far in 2020. Growth in the Canadian market hasn’t been as robust as previously expected, little progress has been made toward U.S. federal legalization and heavy losses are putting several top cannabis stocks in financial stress. The long-term bull case for cannabis is still intact, but investors may need to continue to be cautious in the cannabis space this year to separate the stocks to buy on the dip and the ones to avoid at all costs.
I'm on record calling the legal marijuana market one of the biggest business booms this century. Despite the extremely turbulent waters that the sector faced last year, I still stand by my bullishness. However, just because the general thesis is strong doesn't mean every participant will prosper. This brings me to Aurora Cannabis (NYSE:ACB), and the frustration behind Aurora stock.Source: Shutterstock At a time when other marijuana players are starting to get exciting again, Aurora Cannabis continues to perplex the bulls. If they don't see the writing on the wall quickly, their bafflement will eventually turn into intractable losses. That said, the loss of about 20% in the market value of Aurora stock is but one of many harbingers.That steep drop came after news that Aurora's CEO and founder Terry Booth will step down and "retire." Booth will still remain a director on the board, and taking his place on an interim basis is Executive Chairman Michael Singer. Interestingly, Singer disclosed the following in a statement:InvestorPlace - Stock Market News, Stock Advice & Trading Tips"I look forward to serving as interim CEO and executing on our short-term plans, which include a rationalization of our cost structure, reduced capital spending and a more conservative and targeted approach to capital deployment."In other words, Aurora is no longer going to want only throw money in dubious projects merely for the pretense of growth. Instead, they're going to get fiscally serious. * 7 U.S. Stocks to Buy on Coronavirus Weakness Whatever.Booth's departure, along with the exit of chief corporate officer Cam Battley, was a long time coming. Despite the potential that legal marijuana offers, you cannot lose sight of core business principles. Unfortunately for Aurora stock, the news is too little, too late to save the underlying organization. Aurora Stock Is a Diluted NightmareAside from the executive shakeup, Aurora announced some painful cuts. First, the cannabis firm will let go of nearly 500 employees. This includes roughly 25% of corporate positions. Additionally, management intends to reduce quarterly selling, general and administrative (SGA) expenses to a range between 40 million CAD to 45 million CAD.Over the last few quarters, SGA expenses have totaled more than 100 million CAD. Clearly, getting to their new target range will require more than a little belt tightening.Finally, management declared their expectations to record a goodwill write down between 740 million CAD to 775 million CAD, along with impairment charges between 190 million CAD to 225 million CAD in its fiscal second quarter report.One of the reasons why investors took a dim view of Aurora stock is that much of this pain was preventable if good leadership and common sense were present. However, Aurora sealed its fate when management insisted on doubling down on its growth initiatives despite warning signs flashing. Even worse, executives treated their stock as a currency printing press, with disastrous results. Comparing Aurora to Its PeersIn the quarter ending Sep. 30, 2014, Aurora had 40.8 million shares outstanding. But by the end of November 2019, this figure skyrocketed exponentially to 1.12 billion. For comparison, consider Aurora's competitors: * Canopy Growth (NYSE:CGC) has 348.33 million shares outstanding as of Sep. 30, 2019. * Cronos Group (NASDAQ:CRON) has 343.76 million shares outstanding as of Nov. 11, 2019. * Tilray (NASDAQ:TLRY) has 99.69 million shares outstanding as of Dec. 12, 2019.Notably, Canopy and Cronos have big backers in Constellation Brands (NYSE:STZ) and Altria Group (NYSE:MO), respectively. Therefore, there was an incentive not to go fiscally overboard. Tilray had no such oversight, yet, has refused to play the dilution game.As volatile Aurora stock proved, that was the right call. Cannabis Stocks to Suffer an Industry PurgeAs I mentioned earlier, legal cannabis has transformed the consumer retail market. Just a few years ago, you couldn't use cannabis -- even for purely medicinal purposes -- unless you were in a jurisdictionally favorable area or had a license to partake.However, that doesn't mean every cannabis organization is guaranteed a pathway to upside. Although the Street was willing to extend some patience for companies like Aurora Cannabis, at some point, the fundamentals matter.Further, as Wildflower Brands CEO William MacLean explained in an email to InvestorPlace:"In the last few years, large players, brands, operators have been capital hungry -- raising capital on equity financing, and stock for investment. Cut to a few years later, and the deals and agreements have become very weird and unique, which has started to expose companies if the terms or benchmarks can't be met. What we're going to see is lots of these companies suffer tremendously due to this fact."Aurora stock isn't the only investment which MacLean warns is suffering a "time-bomb scenario." Many other overly leveraged cannabis stocks face a wide-scale collapse.My suggestion? Stick with the names that have at least some semblance of fiscal discipline. Although the longer-term outlook is bright for legal cannabis, this sector isn't going to take everyone on the ride up. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Utility Stocks to Buy That Offer Juicy Dividends * 10 Gold and Silver Stocks to Profit Off 2020's Fear Trade * 3 Top Companies That Should Be More Careful With Your Data The post Take a Pass, Not a Hit on Aurora Stock Before Earnings appeared first on InvestorPlace.
Some of the biggest cannabis companies in the U.S. and Canada could burn through their cash balances in a matter of months unless they’re able to raise funds or cut spending, according to research from the boutique investment banking firm Ello Capital. As pot stocks plunged over the past year, big spenders like (WEED) (ticker: CGC), (ACB) (ACB), and (TLRY) (TLRY) have found that capital markets have yanked the welcome mat and forced the pot producers to cut costs. “The cannabis industry is currently entering a new period where companies are focusing on corporate governance and operational efficiency,” says Ello chief executive Hershel Gerson.
The marijuana company is unlikely to have benefited much from sales of new products such as vapes and edibles, according to MKM Partners.
Cannabis Countdown: Top 10 Marijuana Stock News Stories of the Week Welcome to the Cannabis Countdown . In this week’s rendition, we’ll recap and countdown the top 10 Marijuana Stock News stories for ...
It was a turbulent week, with both Tilray Inc (NASDAQ: TLRY) and Aurora Cannabis Inc (NYSE: ACB) announcing mass layoffs, each getting rid of approximately 10% of employees. Aurora experienced an ever bigger shakeup, which included the retirement of its CEO Terry Booth, who will be replaced by interim CEO Michael Singer.
The cannabis market enters 2020 with plenty of catalysts for higher sales and profits. A lot of companies have made changes in executive leadership to handle the next phase of growth as legalization in cannabis markets slowly progresses and public market veterans are more apt to join the sector.Due to a wide-open market opportunity and readily available capital, most industry participants have gone guns blazing into nearly every segment of the cannabis market. The global cannabis market is expected to be worth $200 billion, but industry participants must deal with the current environment in order to survive and thrive.The executive leadership team best equipped to focus on particular market strengths will reward shareholders. The company able to streamline operations while maintaining growth should see the biggest stock rebounds as capital requirements disappear in a tough funding environment. Not to mention the stronger companies can utilize available capital, whether equity or cash, to snap up beaten-down players, helping consolidate the industry and eliminate competition.While Canopy Growth (CGC) made headlines after replacing its CEO with a Constellation Brands (STZ) executive, we wanted to look into three other Canadian companies that could see their big corporate pivots reward shareholders:Tilray (TLRY)On January 15, Tilray, which has seen dramatic highs and lows, announced a new COO and CFO. Current CFO Mark Castaneda will transition to Strategic Business Development after leading Tilray on the wild IPO ride to $300 back in 2018. Ever since, the company has failed to impress the market due to substantial operating losses.The two new executives come with impressive backgrounds. New CFO Michael Kruteck was the CFO of Pharmaca Integrative Pharmacy, with prior senior financial roles at beverage giant Molson Coors (TAP).COO Jon Levin came from Revlon (REV), where he was responsible for consumer products sold through major retailers in the U.S. Both executives have the crucial experience in the beverages and CPG segments, areas Tilray wants to expand in 2020 and beyond.As with most of the other cannabis stocks, the founding CEO remains in the leadership role. The big question is whether anything changes at Tilray with the moves at the top.When Tilray reports Q4 results, the market will eagerly pay attention to whether the company undergoes any type of restructuring. For Q3, the company reported revenues of $51.0 million, but the net loss was $49.1 million, and the EBITDA loss was a rather large $23.5 million.The market cap is down to below $2.0 billion, so the new executives will need to work wonders to justify the market value on only $310 million in 2020 revenues.When it comes to Wall Street, analysts are taking a cautious approach. In the last three months, the stock has received 3 Buy ratings, 7 Holds and 1 Sell, making the Street consensus a Hold. However, the $25.88 average price target implies that shares could climb 53% higher in the next twelve months. (See Tilray price targets and analyst ratings on TipRanks) Sundial (SNDL)Sundial hasn’t gotten a lot of media attention after going public back in August when the cannabis industry was already struggling. On January 30, the CEO and COO both left the company. Very few companies see several top executives exit within six months of the IPO.Along with the executive departures, Sundial will implement a cost-cutting initiative to generate C$10-$15 million in savings for 2020. Back in November, the company reported that in Q3, revenues hit C$33 million and it boosted production nearly 10-fold within two quarters to 11,700 kg of premium cannabis.For the quarter, adjusted EBITDA loss was C$7.9 million as the company scaled production and expanded into Europe with the purchase of agricultural indoor producer Bridge Farm. The market most likely isn’t fond of Sundial boosting EBITDA losses and building out operations in the UK.Additionally, the stock took a big hit at the end of the week due to the executive shuffle. However, the interim CEO’s cost-cutting initiative is a positive first step for a company whose $140 million in cash on the balance sheet from the IPO makes a turnaround a very real possibility.The rest of the Street is bearish on SNDL, with 1 Buy call and 2 Sells adding up to a Moderate Sell consensus rating. It should be noted, though, that the $4 average price target puts the upside potential at 231%. (See Sundial stock analysis on TipRanks) HEXO (HEXO)HEXO replaced the CFO just prior to announcing a massive cut to FY20 guidance. The company had the least impressive executive shuffle, promoting the VP of Strategic Finance to the new role and keeping the founding CEO at the helm of the company.Since the CFO’s replacement, HEXO has launched the Original Stash cannabis value brand and raised over $100 million in cash to fund operations. The biggest issue remains the reorganization to cut costs, with the prior CFO’s efforts not anywhere near enough for the company to reach positive EBITDA in the near term.In its most recent quarter, HEXO gross margins were only 31% and the company had several impairment charges. Prior CFO Michael Monahan, who previously worked at Nutrisystem, was highly regarded, but the issues were blamed on him not working at the Canadian facilities during this ramp up period.Under the new CFO, HEXO will have to show that more dedicated leadership will lead to better product development and cost containment to match a more realistic market opportunity as 2020 progresses.The Canadian cannabis company can’t maintain C$33 million quarterly losses when revenues are only C$14.5 million and not forecasted to top C$26 million well into 2020. Even strong 50% gross margins won’t solve their current financial predicament.As with the above stocks, any sign the new executive is leading the charge to a turnaround could present a unique buying opportunity. Since the company is streamlining the business on top of cutting cultivation capacity, a move to exit certain business lines while doubling down on the promising value brand or cannabis-infused beverages would be bullish indications.Looking at the consensus breakdown, a single Buy rating, 5 Holds and 4 Sells coalesce into a Moderate Sell. Should the $1.83 average price target be met, a 44% twelve-month gain could be in the cards. (See HEXO price targets and analyst ratings on TipRanks) Disclosure: No position. Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.
Investors are bracing for more job cuts and writedowns at Canadian cannabis producers before the industry stabilizes and becomes profitable, after two of the biggest weed companies, Aurora Cannabis and Tilray announced cost reductions this week. Canada legalized recreational cannabis in October 2018 but profits have proven elusive for most marijuana companies as fewer-than-expected retail stores, higher prices than on the black market and slow overseas growth resulted in oversupply. "The Aurora story will be much more common in 2020," said Hap Sneddon, founder and chief portfolio manager at Castlemoore.
Newer traders might not remember a time when cannabis stocks were few and far between and volumes were thin. Today, it's much easier to find popular marijuana stocks to trade and perhaps you've seen the explosive price moves to the upside -- along with the painful moves to the downside.Source: Shutterstock Many cannabis stocks have struggled lately, but the prospect of legalization in America and abroad continues to draw newcomers into the pot-stock trade. Still, the legalization issue remains complex; in an e-mail to InvestorPlace, Andrew Schnackenberg, professor of management at the University of Denver Daniels College of Business, notes that there are no easy answers surrounding the "when" and the "where" of cannabis decriminalization:"This is a very difficult question to answer from a systematic scholarly perspective, as the laws are in a perpetual state of flux within many states and municipalities. Perhaps the biggest market for recreational use that has the potential to open up in 2020 is New York (and to a lesser extent, New Jersey). Investors should also strongly consider the headwinds being created for cannabis companies that are spilling over from emerging health risks associated with vaping."InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Utility Stocks to Buy That Offer Juicy Dividends If you're prepared to accept those headwinds, then the following selection of cannabis stocks could be ripe for the picking. I've chosen these three personal favorites because they have something -- financial or otherwise -- that puts them in a position to flourish regardless of whether decriminalization moves forward or not in 2020; in the final analysis, great companies can succeed even in the most challenging of regulatory environments. Cannabis Stocks to Buy: Aphria (APHA)Like the majority of cannabis contenders, Aphria (NYSE:APHA) stock has floundered since the summer of last year under the vaping controversy and the disappointment of Cannabis 2.0 (a catchall term for the commencement of Canadian sales of cannabis edibles, topicals, and vape products).These are industry-wide issues, but Aphria has what many cannabis companies don't: positive cash flow. With 600 million CAD on its balance sheet and just 490 million CAD in outstanding debt, Aphria is net positive -- and a recent 100 million CAD cash infusion from a "mystery investor" certainly doesn't hurt, either.Not only that, but Aphria recently secured highly coveted GMP status in the European Union. This will allow the company to sell marijuana for medical purposes to pharmacies in cannabis-friendly and heavily populated countries like Germany. So if America drags its feet on legalization, the impact won't be as bad for Aphria. Tilray (TLRY)Source: Jarretera / Shutterstock.com As I've been known to do, I'm going to take a strictly contrarian position here in recommending Tilray (NASDAQ:TLRY) stock. I'll be the first to admit that the share price went up too much in 2018 and wasn't meant to be trading at $200, but I see it as an overreaction for the market to push it below $20 as there's nothing so horrendous about this company that warrants such a downdraft.Even the layoff of 10% of Tilray's workforce, which many traders view as a sign of trouble, is a positive in my book. In fact, I would assert that more marijuana companies ought to consider similar cost-cutting measures: to quote Tilray's CEO, Brendan Kennedy, "By reducing headcount and cost, Tilray will be better positioned to achieve profitability and be one of the clear winners in the cannabis industry, which will drive value for our investor and employee shareholders." * 7 Utility Stocks to Buy That Offer Juicy Dividends Kennedy added, "Tilray restructured its global organization to meet the needs of the current industry environment and for continued growth in 2020 and beyond." While I feel bad for those who lost their jobs, I respect the CEO's willingness to reduce expenditures when times get tough for the cannabis market -- remember, Tilray can always hire again when the market improves. Canopy Growth (CGC)Source: Jarretera / Shutterstock.com I saved the best for last as the (comparatively) old standby, Canopy Growth (NYSE:CGC) stock, ought to be big enough to withstand any set of cannabis-market conditions. While it is true that governments in Quebec and Alberta have banned vape sales, Canopy CEO Mark Zekulin prepared for such hurdles back in September, saying, "I think the key part for us is to focus on the Canadian model… [W]e should be looking to where there's regulations, there's systems in place."The proof will be in the pudding, though (not necessarily cannabis-infused pudding, though I have seen it sold somewhere) as Canopy will report its earnings for 2020's fiscal third quarter on Valentine's Day. This event is highly anticipated as analysts collectively predict that Canopy will reveal a reduction in GAAP losses per diluted share - a key metric indicating, hopefully, a more positive-leaning cash flow.The analyst community is also expecting an increase in Canopy's quarterly revenues, something that hasn't occurred since the fiscal fourth quarter of 2019, as well as an 11% year-over-year revenue increase. I the current cannabis-market environment, any positive surprise could push stock prices much higher - and if any company can beat expectations and lead the way out of this bear market, I'd say it's the one and only Canopy Growth Corp.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 * 7 Utility Stocks to Buy That Offer Juicy Dividends * 10 Gold and Silver Stocks to Profit Off 2020's Fear Trade * 3 Top Companies That Should Be More Careful With Your Data The post 3 Cannabis Stocks Ready to Break Away From the Crowd appeared first on InvestorPlace.
Aurora Cannabis CEO Terry Booth reportedly plans to step down from that position, and the company is planning layoffs.
Aurora Cannabis shares slid 3.3% Thursday, after a report that the company is about to announce plans to lay off 10% of its workforce, becoming the latest company in the sector to move to cut costs.
In the latest moves of this kind, Tilray Inc (NASDAQ: TLRY) announced this week it fired more than 140 people, or 10% of its workforce. The following day, BNN Bloomberg reported Aurora Cannabis Inc (NYSE: ACB) would be doing the same, cutting approximately 340 jobs. “By reducing headcount and cost, Tilray will be better positioned to achieve profitability,” he said in a statement.
Cannabis stocks like Aurora Cannabis (NYSE:ACB) are starting to stabilize. Aurora stock has bounced over 40% from last month's lows, and has managed to hold early December lows. Canopy Growth (NYSE:CGC), still the sector's most valuable play, has rallied over 50% since selling off following earnings in November.Source: ElRoi / Shutterstock.com To be sure, pot stocks still sit well below past highs, and it's possible recent trading is a so-called "dead cat bounce." But at the least sentiment toward the sector doesn't seem quite as negative as it was just a few months ago. Expectations may be more reasonable, with a better understanding that the Canadian market alone can't drive the upside investors modeled in at the highs.The problem for Aurora stock is even that outlook isn't quite bright enough. A slow, measured recovery simply may not come quickly enough -- and likely would be more beneficial for other major cannabis companies. The case for buying ACB stock at this point, and choosing it over other cannabis plays, requires a much steeper recovery in sentiment and in sales. And I'm skeptical a recovery of that kind is on the way.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Are Cannabis Stocks Bottoming?Again, there is at least a hint of optimism toward the cannabis sector at the moment. The relentless pot stock selloff that began last spring has ended. Executive and investor focus has turned away from plunging production margins to "Cannabis 2.0" products like vapes and edibles. The regulatory backlog at Health Canada is starting to ease. * 7 Utility Stocks to Buy That Offer Juicy Dividends 2020 should at worst be a better year for the industry, and its stocks, even if that admittedly is a low bar to clear. Looking further out, the long-term opportunity remains expansive. Legalization at the federal level in the U.S. could arrive at some point. Aurora Cannabis itself has an extensive international reach.To be sure, risks remain. Valuations in the sector may be cheaper -- but they're not cheap. Cannabis companies as a whole still have tens of billions in combined market capitalization. Price-to-revenue multiples remain dear: ACB stock, including debt, trades around 5x the fiscal 2021 consensus revenue estimate.Still, there's a sense both in the stock market and in listening to cannabis executives that normalcy has returned. Investors aren't expecting cannabis names to triple in a matter of months. Executives are adapting to the new reality on the ground: Tilray (NASDAQ:TLRY) even announced layoffs this week. A recovery, if it comes, will take some time, but industry participants at least have hope for a recovery after a difficult 2019. The Problem for Aurora StockThe catch for Aurora stock, however, is that hopes for a modest recovery simply aren't good enough. This still is a company with significant balance sheet questions. And though I've argued that dilution, not bankruptcy, is the key risk, Aurora will need capital to get by in a slow-recovery scenario. That probably suggests more share issuances -- and further pressure on the ACB stock price.Meanwhile, rivals have that capital -- and plenty of it. Canopy raised billions from Constellation Brands (NYSE:STZ,NYSE:STZ.B), and Cronos (NASDAQ:CRON) received a huge infusion from Altria (NYSE:MO).In a scenario where cannabis revenues grow at a reasonable pace, and profitability is a few years out, those majors have the edge. Their capital may allow them to buy assets of smaller distressed or bankrupt producers. Instead of focusing on cost-cutting, Canopy and Cronos can ramp marketing spending to capture share in higher-margin branded products. Capital allows for flexibility -- and flexibility will be valuable in a market that takes years to develop. The Case for ACBThere is one case for Aurora stock, however. In an environment where cannabis sales, and cannabis stocks, soar, ACB is the play.After all, that leveraged balance sheet amplifies both downside and upside. Aurora's debt is a key reason why Aurora shares have fallen even further than those of most peers. But in an upside scenario, ACB stock should outperform.A similar dynamic applies to Aurora's business. Few companies have Aurora's existing reach. If sales suddenly take off -- in the recreational market in Canada or in medical markets overseas -- Aurora is best-positioned to capitalize.For those investors still hugely bullish on cannabis -- and bullish on the near-term opportunity in particular -- Aurora stock is the right choice. A rally in its stock can ease financing worries. A spike in Canadian demand will improve margins and get the company closer to profitability quicker. At this point, that's the only case left. Personally, I don't think it's near enough.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Utility Stocks to Buy That Offer Juicy Dividends * 10 Gold and Silver Stocks to Profit Off 2020's Fear Trade * 3 Top Companies That Should Be More Careful With Your Data The post There's Only One Bull Case Left for Aurora Cannabis Stock appeared first on InvestorPlace.
Tilray said it would focus on international medical cannabis, science and research, Canadian recreational use, and its Manitoba Harvest hemp foods. “The tough decision to eliminate roles has not been taken lightly,” Kennedy continued.