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36800.0 | 2021-05-07 00:00:00 UTC | Why Canopy Growth, Aurora Cannabis, and HEXO Stocks Are Glowing Green Today | ACB | https://www.nasdaq.com/articles/why-canopy-growth-aurora-cannabis-and-hexo-stocks-are-glowing-green-today-2021-05-07 | nan | nan | What happened
Friday began on a high note for marijuana stocks, as investment bank Jefferies announced it was turning around its opinion of Tilray (NASDAQ: TLRY) stock 180 degrees, upgrading the shares from underperform all the way to buy.
Tilray stock responded as you'd expect, surging 17% in morning trading, but other marijuana stocks are responding positively as well. As of 11 a.m. EDT, Canopy Growth (NASDAQ: CGC) stock is up a strong 6%, HEXO (NYSE: HEXO) is even better at 7%, and Aurora Cannabis (NYSE: ACB) is best of all with a 7.5% gain. But why is good news for Tilray good news for these rival cannabis companies, too?
Image source: Getty Images.
So what
Well, begin with the analyst comments on Tilray. According to the Jefferies note, which was covered on StreetInsider.com this morning, Tilray is "a clear leader in the Canadian market" and boasts a better growth profile than almost any other cannabis company in Canada, with added optionality in the event of marijuana legalization in the United States and an "attractive positioning to capture an EU upside."
And Europe may be a bigger part of this story than many investors yet think -- for Tilray, but also for Canopy, Aurora, and HEXO, too -- because the market there "is now picking up," notes Jefferies. According to the analyst, Germany alone accounts for 70% of Tilray's European sales. And there's also reason to be optimistic about France. As Marijuana Moment has reported, the French National Assembly just released "a multi-party parliamentary report ... advocating for marijuana legalization," and there's even talk of a national referendum that might approve legalization on a national scale.
Now what
Meanwhile, here in the U.S., the movement to legalize marijuana at the state level continues apace. Over the past 24 hours alone, the Kansas state House of Representatives just passed a bill to legalize medical marijuana by a 79-42 vote, and that bill is now heading to the Kansas Senate. And in Alabama, a 20-9 state Senate vote in favor of legalizing medical marijuana was just followed up by a 68-34 House vote in favor -- and that bill is now off to the governor for signing.
The way things are going at the state level, it seems inevitable that marijuana will eventually become legal at the federal level as well -- throughout the United States, but not only in the United States. No wonder marijuana investors are happy today.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | As of 11 a.m. EDT, Canopy Growth (NASDAQ: CGC) stock is up a strong 6%, HEXO (NYSE: HEXO) is even better at 7%, and Aurora Cannabis (NYSE: ACB) is best of all with a 7.5% gain. According to the Jefferies note, which was covered on StreetInsider.com this morning, Tilray is "a clear leader in the Canadian market" and boasts a better growth profile than almost any other cannabis company in Canada, with added optionality in the event of marijuana legalization in the United States and an "attractive positioning to capture an EU upside." And Europe may be a bigger part of this story than many investors yet think -- for Tilray, but also for Canopy, Aurora, and HEXO, too -- because the market there "is now picking up," notes Jefferies. | As of 11 a.m. EDT, Canopy Growth (NASDAQ: CGC) stock is up a strong 6%, HEXO (NYSE: HEXO) is even better at 7%, and Aurora Cannabis (NYSE: ACB) is best of all with a 7.5% gain. But why is good news for Tilray good news for these rival cannabis companies, too? Over the past 24 hours alone, the Kansas state House of Representatives just passed a bill to legalize medical marijuana by a 79-42 vote, and that bill is now heading to the Kansas Senate. | As of 11 a.m. EDT, Canopy Growth (NASDAQ: CGC) stock is up a strong 6%, HEXO (NYSE: HEXO) is even better at 7%, and Aurora Cannabis (NYSE: ACB) is best of all with a 7.5% gain. What happened Friday began on a high note for marijuana stocks, as investment bank Jefferies announced it was turning around its opinion of Tilray (NASDAQ: TLRY) stock 180 degrees, upgrading the shares from underperform all the way to buy. Tilray stock responded as you'd expect, surging 17% in morning trading, but other marijuana stocks are responding positively as well. | As of 11 a.m. EDT, Canopy Growth (NASDAQ: CGC) stock is up a strong 6%, HEXO (NYSE: HEXO) is even better at 7%, and Aurora Cannabis (NYSE: ACB) is best of all with a 7.5% gain. And Europe may be a bigger part of this story than many investors yet think -- for Tilray, but also for Canopy, Aurora, and HEXO, too -- because the market there "is now picking up," notes Jefferies. The way things are going at the state level, it seems inevitable that marijuana will eventually become legal at the federal level as well -- throughout the United States, but not only in the United States. |
36801.0 | 2021-05-06 00:00:00 UTC | Investors Wonder if the Stench in Canopy Growth Shares Is Gone | ACB | https://www.nasdaq.com/articles/investors-wonder-if-the-stench-in-canopy-growth-shares-is-gone-2021-05-06 | nan | nan | InvestorPlace - Stock Market News, Stock Advice & Trading Tips
The buzz is largely gone. And today’s situation whiffs more of bong water than anything worth sampling. Welcome to Canopy Growth (NYSE:CGC)? Let’s check in with what’s happened of late in CGC stock, then offer a risk-adjusted determination which will help investors avoid getting smoked.
Source: Shutterstock
Marijuana or cannabis stocks. They’ve got their man. Biden. They’ve got the seats. A Democrat majority in the U.S. Senate. States such as New York and Virginia are legalizing. At the same time, jittery neighboring states are likely feeling the burn to catch the green-powered revenue stream.
But for Canada’s and the market’s largest pot producer CGC, these are anything but high times.
CGC Stock and Enthusiasm
After storming higher by as much as 130% this year, CGC shares are up just 3%. At the same time, Canopy’s buoyant year-plus rally off last March’s Covid-induced bottom, which saw a gain of nearly 525%, has been chopped down by more than 55%!
So, what exactly is up or rather, going down in CGC stock?
7 Hot Stocks to Consider for a Greener Future
For one, enthusiasm in early 2021 by investors expectant of federal level legalization of cannabis in the US for CGC and Canadian cannabis operators Aurora Cannabis (NYSE:ACB) and Tilray (NASDAQ:TLRY) has proven a disappointing slog. Maybe not at the government level, where change typically takes glacial-like time to happen. But it’s certainly the case for a market focused on short-term results and where a fiscal quarter is an eternity.
Not helping CGC’s situation, a spike in novel coronavirus cases inside Canada and fresh quarantine measures are also likely impacting the retail grow business within Canopy Growth’s own borders. And then there’s an unwanted and persistent trend in cheaper competing product and associated challenges from the black market that’s weighing on CGC.
Finally, there’s also smaller but first-mover U.S. based competition that can’t be dismissed. Curaleaf (OTCMKTS:CURLF) and Thumb Industries (OTCMKTS:GTBIF) are two operators enjoying the high-times and bringing home revenues in states where cannabis is legal.
Altogether, the operating environment has taken its toll on CGC stock. But there’s always tomorrow and the opportunity for better days ahead, right?
CGC Weekly Price Chart
Source: Charts by TradingView
It’s not all bad news at CGC. The company does have its CBD business with products ranging from gummies and beverages to pet-based products helping chill Fido and other family members. There’s a deal to buy U.S. grow outfit Acreage Holdings (OTCMKTS:ACRHF). But those are still side shows to big picture, right? The CGC stock price chart certainly implies as much.
Aside from Canopy’s barely above water return this year, shares of CGC are demonstrating relative weakness compared to the broader market. It aforementioned competition CURLF and GTBIF shares are each up about 25%. And while even the best stocks do and should be expected to go through corrective periods, CGC stock’s decline in value has turned into a situation where buying on weakness isn’t recommended.
After moving strongly into the right side of CGC’s lifetime corrective base at February’s highs, today’s corrective cycle has broken beneath the 62% retracement level. Ideally and for trend-oriented investors looking to purchase a more ordinary bearish phase, buying shares nearer to the 38% Fibonacci support area with the expectation a resumption of the prior trend is nearby.
The Look of Unwanted Aftermath
But the deeper correction in Canopy has another strike against it.
The action leading into today’s weakness follows a doji decision candle formed in March and bearishly confirmed last month. Note the combined with a sickly-looking stochastics crossover and lack of any pattern price support developing. Even on the weekly time frame. Thus, CGC stock has the look of the unwanted aftermath of a good party.
For today, the recommendation is to keep at arm’s length from CGC. But if you have to be in it to win or already are, hedged protection using Canopy’s options market is seen as the only way to navigate CGC’s foul-looking waters.
On the date of publication, Chris Tyler does not hold, directly or indirectly, positions in any securities mentioned in this article.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. The information offered is based on his professional experience but strictly intended for educational purposes only. Any use of this information is 100% the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
The post Investors Wonder if the Stench in Canopy Growth Shares Is Gone appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | 7 Hot Stocks to Consider for a Greener Future For one, enthusiasm in early 2021 by investors expectant of federal level legalization of cannabis in the US for CGC and Canadian cannabis operators Aurora Cannabis (NYSE:ACB) and Tilray (NASDAQ:TLRY) has proven a disappointing slog. Not helping CGC’s situation, a spike in novel coronavirus cases inside Canada and fresh quarantine measures are also likely impacting the retail grow business within Canopy Growth’s own borders. Ideally and for trend-oriented investors looking to purchase a more ordinary bearish phase, buying shares nearer to the 38% Fibonacci support area with the expectation a resumption of the prior trend is nearby. | 7 Hot Stocks to Consider for a Greener Future For one, enthusiasm in early 2021 by investors expectant of federal level legalization of cannabis in the US for CGC and Canadian cannabis operators Aurora Cannabis (NYSE:ACB) and Tilray (NASDAQ:TLRY) has proven a disappointing slog. InvestorPlace - Stock Market News, Stock Advice & Trading Tips The buzz is largely gone. Welcome to Canopy Growth (NYSE:CGC)? | 7 Hot Stocks to Consider for a Greener Future For one, enthusiasm in early 2021 by investors expectant of federal level legalization of cannabis in the US for CGC and Canadian cannabis operators Aurora Cannabis (NYSE:ACB) and Tilray (NASDAQ:TLRY) has proven a disappointing slog. CGC Stock and Enthusiasm After storming higher by as much as 130% this year, CGC shares are up just 3%. And while even the best stocks do and should be expected to go through corrective periods, CGC stock’s decline in value has turned into a situation where buying on weakness isn’t recommended. | 7 Hot Stocks to Consider for a Greener Future For one, enthusiasm in early 2021 by investors expectant of federal level legalization of cannabis in the US for CGC and Canadian cannabis operators Aurora Cannabis (NYSE:ACB) and Tilray (NASDAQ:TLRY) has proven a disappointing slog. Welcome to Canopy Growth (NYSE:CGC)? So, what exactly is up or rather, going down in CGC stock? |
36802.0 | 2021-05-05 00:00:00 UTC | With Changes Likely in Banking Regulations, Can This Cannabis REIT Still Prosper? | ACB | https://www.nasdaq.com/articles/with-changes-likely-in-banking-regulations-can-this-cannabis-reit-still-prosper-2021-05-05 | nan | nan | Raising money is a challenge for many marijuana producers because they can't easily obtain banking services. Even just getting a checking account is no easy task. In order to set up their manufacturing facilities, some have turned to sale-and-leaseback agreements with a real estate investment trust (REIT) like Innovative Industrial Properties (NYSE: IIPR). And that has allowed the REIT to generate fantastic growth, with sales of $117 million in 2020 more than doubling from the previous year.
But if the Secure and Fair Enforcement (SAFE) Banking Act, which recently passed the House, can make it through the Senate, it would make it easier for cannabis companies to go through the banks to raise money. And if that's the case, would that hurt Innovative Industrial Properties' growth potential?
Image source: Getty Images.
Will companies simply load up on debt if they need cash?
If the SAFE Banking Act passes into law (or a similar provision that provides cannabis companies legal access to the banking industry), one opportunity that would open up is for cannabis producers to take out more loans and raise money through debt. That would potentially lessen their need to raise cash through share issues or sale-and-leaseback agreements.
An easy way to gauge that possibility is by looking north of the border, as cannabis is legal in Canada and companies there have a much easier time accessing the banking industry. Here's a look at the debt-to-equity ratios of some of the bigger names in the Canadian pot sector:
COMPANY DEBT-TO-EQUITY RATIO
Tilray 0.82
Aphria 0.59
Aurora Cannabis 0.23
Canopy Growth 0.16
HEXO 0.11
Data source: Company filings.
Although some companies like Tilray and Aphria (which have now merged into one entity under Tilray's name) are certainly loading up on debt, that doesn't mean it is the preferred course of action for everyone. It ultimately depends on a company's strategy. Debt, after all, will lead to interest payments that weigh down a company's bottom line. Lenders could also impose restrictive debt covenants that may limit what a company can do. And so it's no surprise that a company like Aurora Cannabis that has burned through 281 million Canadian dollars over the past 12 months isn't carrying a ton of debt on its books and prefers to raise money through the equity markets.
Here is a look at how that compares to the other cannabis producers listed earlier, and how they have all preferred to raise cash over the past year:
COMPANY OPERATING CASH FLOW DEBT ISSUED COMMON STOCK ISSUED COMMON STOCK/DEBT ISSUED
Tilray
($159 million)
$57 million $258 million 4.53
Aphria
($77 million)
$130 million $127 million 0.98
Aurora Cannabis
($281 million)
$24 million $748 million 31.17
Canopy Growth
($579 million)
N/A N/A
N/A
HEXO
($23 million)
N/A $139 million
N/A
Data source: Company filings. All figures in Canadian dollars.
Aside from Canopy Growth, which benefits from having loads of money on its books thanks to billions of dollars worth of investments from Constellation Brands, all the companies listed above raised money through the stock market. Aphria was the only one that didn't raise at least as much money through stock raises as it did through debt. And that tell us cannabis companies aren't eager to take on debt even if they can -- both Aurora and HEXO look to have a limited appetite for that.
What does this all mean for Innovative Industrial Properties?
Looking at the numbers from the Canadian cannabis producers above, it is evident that even if multistate operators in the U.S. have access to the full services of the banking sector, that doesn't mean they will become knee-deep in debt. There will likely continue to be a need for sale-and-leaseback agreements because those deals give companies flexibility. By utilizing those agreements, companies can raise cash without the need for debt or equity issues. Plus, they aren't tied down to a location should they want to move their operations in the future.
Although companies may have more options available to them if the SAFE Banking Act passes, Innovative Industrial Properties won't need to worry about running out of tenants anytime soon. The one caveat is that the agreements it makes with cannabis producers may not be as lucrative if its tenants aren't as desperate for cash anymore.
However, a change in banking provisions may make it more attractive for prospective growers to get into the industry if they don't have to worry about handling tons of cash. Passing reform in banking or anywhere else in the cannabis sector is going to be a positive development for the industry as a whole. Anything that stimulates more growth is going to be great news for Innovative Industrial Properties, which is why the stock will continue to be a fantastic investment for many years to come.
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David Jagielski has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Constellation Brands and Innovative Industrial Properties. The Motley Fool recommends HEXO Corp. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | In order to set up their manufacturing facilities, some have turned to sale-and-leaseback agreements with a real estate investment trust (REIT) like Innovative Industrial Properties (NYSE: IIPR). And so it's no surprise that a company like Aurora Cannabis that has burned through 281 million Canadian dollars over the past 12 months isn't carrying a ton of debt on its books and prefers to raise money through the equity markets. Looking at the numbers from the Canadian cannabis producers above, it is evident that even if multistate operators in the U.S. have access to the full services of the banking sector, that doesn't mean they will become knee-deep in debt. | And so it's no surprise that a company like Aurora Cannabis that has burned through 281 million Canadian dollars over the past 12 months isn't carrying a ton of debt on its books and prefers to raise money through the equity markets. Tilray ($159 million) $57 million $258 million 4.53 Aphria ($77 million) $130 million $127 million 0.98 Aurora Cannabis ($281 million) $24 million $748 million 31.17 Canopy Growth ($579 million) Although companies may have more options available to them if the SAFE Banking Act passes, Innovative Industrial Properties won't need to worry about running out of tenants anytime soon. | If the SAFE Banking Act passes into law (or a similar provision that provides cannabis companies legal access to the banking industry), one opportunity that would open up is for cannabis producers to take out more loans and raise money through debt. And so it's no surprise that a company like Aurora Cannabis that has burned through 281 million Canadian dollars over the past 12 months isn't carrying a ton of debt on its books and prefers to raise money through the equity markets. Tilray ($159 million) $57 million $258 million 4.53 Aphria ($77 million) $130 million $127 million 0.98 Aurora Cannabis ($281 million) $24 million $748 million 31.17 Canopy Growth ($579 million) | And so it's no surprise that a company like Aurora Cannabis that has burned through 281 million Canadian dollars over the past 12 months isn't carrying a ton of debt on its books and prefers to raise money through the equity markets. Looking at the numbers from the Canadian cannabis producers above, it is evident that even if multistate operators in the U.S. have access to the full services of the banking sector, that doesn't mean they will become knee-deep in debt. Passing reform in banking or anywhere else in the cannabis sector is going to be a positive development for the industry as a whole. |
36803.0 | 2021-05-04 00:00:00 UTC | The 10 Hottest Weed Stocks On the Market For May | ACB | https://www.nasdaq.com/articles/the-10-hottest-weed-stocks-on-the-market-for-may-2021-05-04 | nan | nan | InvestorPlace - Stock Market News, Stock Advice & Trading Tips
The past few years have been the best of times and the worst of times in the markets, but especially for weed stocks.
The split has been largely geographic. American weed stocks have done exceedingly well. Since 2019, shares of the two largest MSOs (multi-state operators) have nearly tripled and quadrupled. The biggest U.S. retailer and the biggest U.S. REIT (real estate investment trust) have done even better.
Canadian cannabis plays however, have struggled. Over the same period a basket of American cannabis stocks has delivered triple-digit gains, the ETFMG Alternative Harvest ETF (NYSEARCA:MJ) has provided total returns of negative 6%, including dividends. That’s even with some external help for the mostly Canada-focused fund: the current top holding, GW Pharmaceuticals (NASDAQ:GWPH), has more than doubled over the same stretch.
The question, obviously, is whether those geographic diverging fortunes will continue. Hopes for U.S. legalization have buoyed Canadian operators of late — but could be just as important for their American counterparts. Valuations on the U.S. side now look more questionable; there may be more value north of the border, assuming the supply glut in the Canadian market eases and international markets contribute.
7 Consumer Stocks to Buy Before Picnic Season Begins
Here are the top 10 weed stocks:
Canopy Growth (NASDAQ:CGC)
Cronos (NASDAQ:CRON)
Aurora Cannabis (NYSE:ACB)
Tilray (NASDAQ:TLRY)
Hexo (NYSE:HEXO)
Sundial Growers (NASDAQ:SNDL)
GrowGeneration (NASDAQ:GRWG)
Innovative Industrial Properties (NYSE:IIPR)
Curaleaf (OTCMKTS:CURLF)
Green Thumb (OTCMKTS:GTBIF)
Given the wider context, it’s worth considering where the biggest weed stocks sit at the moment. That requires an understanding of where they’ve been to figure out where they might be going. Let’s dive in.
Grading the Top 10 Weed Stocks: Canopy Growth (CGC)
Source: Shutterstock
Canopy Growth brought weed stocks to the mainstream. In 2017, alcohol giant Constellation Brands (NYSE:STZ,NYSE:STZ.B) had invested almost $200 million in Canopy the year before in a bid to create cannabis-infused beverages.
The following year, Constellation went bigger, infusing some $4 billion into Canopy. The deal sent CGC stock soaring and legitimized the entire industry overnight.
The problem has been everything that’s happened since then — which is to say, not enough. For the first nine months of FY2021 (ending March), Canopy posted an Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) loss of $246 million.
That’s roughly 56% of revenue. Canopy’s size and the capital raised from Constellation haven’t prevented the company from enduring same struggles dogging other Canadian operators.
Big losses and disappointing sales have in turn pressured CGC stock. On the day Constellation’s 2018 investment was announced, CGC closed at $32.11. In the nearly three years since, it’s dropped 16%.
But hope is far from lost: Canopy has put its cash to good use. Some has gone to build out a business that does have leading market share in Canada. The company has also positioned itself for U.S. federal legalization through its contingent acquisition of Acreage Holdings (OTCMKTS:ACRHF) and an investment in TerrAscend.
In short, the case for CGC stock unsurprisingly echoes that of the Canadian cannabis industry. The bull case might be simply delayed, rather than broken.
Cronos (CRON)
Source: Shutterstock
Later in 2018, Altria (NYSE:MO) followed Constellation into cannabis with a $1.8 billion investment into Cronos. CRON stock likewise soared on the news, gaining 21%. And it too, has stumbled since, dropping 36% over roughly 27 months.
But the Cronos story actually is an outlier in the industry — which makes the stock’s decline a bit more surprising. Cronos, by choice, sat out the aggressive building of capacity by Canopy and so many others that led to the current glut. Then-chief executive officer Mike Gorenstein said back in 2019 that “our business model is not to be the farmer.”
Instead, Cronos has invested its capital largely in research and development. (The one big acquisition, of CBD manufacturer Lord Jones, has not worked out.) Cronos Device Labs is working on improving vaping devices, while its fermentation efforts are expected to lead to a commercial launch this year. The company also retains plenty of cash to make acquisitions of companies with solid brands yet questionable balance sheets.
7 Consumer Stocks to Buy Before Picnic Season Begins
As a result of that strategy, this remains my pick in cannabis, as I wrote last month. But admittedly, that case has not played out so far.
Aurora Cannabis (ACB)
Source: Shutterstock
Aurora Cannabis executed the completely opposite strategy. Using cash and stock, the company looked to expand as fast as it could in Canada and beyond.
It’s a plan that worked when ACB stock was rising. Once the stock and the sector turned, however, financing dried up and Aurora found itself in trouble.
In response, the company has slashed costs in a bid to near profitability. But those cuts have hurt revenue growth, as seen in the hugely disappointing fiscal Q2 earnings report back in February.
The problem is that Aurora is still in trouble. Even after the cuts, it continues to burn cash. The assets for which Aurora overpaid aren’t enough to fix still-extant balance sheet problems. Capacity cuts haven’t yet moved profit margins to where they need to be.
ACB stock has seen some rallies of late, and there may be more short-term moves ahead. This remains likely the highest-risk and highest-reward play in the sector, as it’s been for some time. From a long-term perspective, the risks still seem greater than the rewards.
Tilray (TLRY)
Source: Shutterstock
Tilray’s merger with Aphria, which closed this week, creates the largest cannabis company in the world — or so Tilray says.
Looking closer, the claim — based on total revenue of the two companies — is a bit thin. Big chunks of that revenue come from Aphria’s ownership of a German distributor (whose sales are not all of cannabis) and Georgia-based brewery Sweetwater Brewing. In terms of cannabis-only revenue, Tilray isn’t quite the leader.
Still, the merger does look intriguing. An estimated $81 million in cost synergies will be important in an industry that still needs to reduce expenses. Scale in Canada matters. Assets in Europe and the U.S. promise greater international growth going forward. Tilray is keeping respected Aphria chief executive officer Irwin Simon as the leader of the combined company, a seemingly smart choice.
As a result, my InvestorPlace colleague Joseph Nograles called Tilray “still the king” of the sector. Personally, I’m a little more circumspect.
I would have rather seen Aphria go it alone, or perhaps consider the acquisition proposal from an unnamed second suitor. Tilray’s business has never really stood out. The post-merger balance sheet is solid, but dry powder for acquisitions is limited relative to Canopy or Cronos. TLRY’s bizarre role in the “Reddit rally” doesn’t help.
7 Consumer Stocks to Buy Before Picnic Season Begins
Certainly, there’s a lot to like in what no doubt will be the first move in broader industry consolidation. But there are risks as well.
Hexo (HEXO)
Source: Shutterstock
Somewhat quietly, the Hexo turnaround has made some progress. On Jan. 31, the company had 129 million CAD in cash against just 59 million CAD in total debt. Fiscal second quarter results were solid, with quarter-over-quarter growth and positive Adjusted EBITDA (even if the figure was just 202,000 CAD).
There’s still a lot of work to do. Positive Adjusted EBITDA still means negative free cash flow, and Hexo’s room for error is somewhat thin. The acquisition of Zenabis (OTCMKTS:ZBISF) makes some sense, but the all-stock deal dilutes current shareholders and adds Zenabis debt to the balance sheet to boot.
Still, in a sector where many smaller companies may fall by the wayside, Hexo now seems to have a real chance. And if the Zenabis deal works and the turnaround continues, consolidation may eventually mean that Hexo becomes the target, rather than the acquirer.
Sundial Growers (SNDL)
Source: Shutterstock
SNDL stock was one of the biggest beneficiaries of the Reddit rally. At one point, it traded just under $4 after opening the year at only 47 cents.
Like pretty much every other Reddit stock, SNDL’s peak was close to ridiculous. Normalcy has returned somewhat, but the stock still needs a corrective pullback.
After all, this is a company that simply put, hasn’t done all that well. It was one of the biggest offenders in borrowing to build out capacity; by early last year the company was at significant risk of bankruptcy. Some smart deals converted much of that debt to equity, but in turn diluted shareholders. The share count has ballooned to nearly 1.7 billion from barely 100 million less than two years ago.
All that borrowing and spending hasn’t built all that big a business: Sundial still has trailing twelve-month revenue of about $55 million. Like many of its Canadian peers, this company remains sharply unprofitable.
But as with many of its Canadian peers, the story isn’t necessarily over. Sundial has taken advantage of the Reddit pop to raise additional cash. Its turnaround has shown some signs of success, as I wrote at the end of last year. Plus Sundial is looking for acquisitions, and indeed made an unconventional run at Zenabis before Hexo stepped in.
7 Consumer Stocks to Buy Before Picnic Season Begins
All said, the turnaround still has a long way to go, which means price is important. With Sundial still sporting a fully diluted market capitalization of nearly $1.5 billion, the post-Reddit price still isn’t quite cheap enough.
GrowGeneration (GRWG)
Source: Jetacom Autofocus / Shutterstock.com
Again, weed stocks in the U.S. have done far better than their Canadian counterparts. And of all the major weed stocks, none have performed better than GRWG.
This operator of hydroponic gardening stores has seen its stock rally 828% over the past year, and a staggering 1,800% since the beginning of 2019. The gains have by no means been the result of a bubble either: GrowGeneration has executed brilliantly.
Quick and successful nationwide expansion has basically crowded out any real competition, yet the company has remained nicely profitable during that expansion. As many have noted, GRWG has been a classic “picks and shovels” play. In the “green rush,” as in the “gold rush,” it’s been the suppliers who have seen the most success.
The only concern at this point is valuation. GRWG trades at a healthy 67x forward earnings multiple. That valuation isn’t obscene for a growing retailer, but barring international expansion there is a ceiling on the company’s footprint and profits.
Of late, GRWG has flatlined — it’s flat to early January levels — which might suggest more investors see the stock as fully valued. There might be some upside left, but investors expecting the torrid appreciation of the past two-plus years to continue will almost certainly be disappointed.
Innovative Industrial Properties (IIPR)
Source: Shutterstock
Another big U.S. cannabis winner has been IIP, the country’s first cannabis-driven real estate investment trust.
IIP builds assets like growhouses, dispensaries and processing facilities. It then leases those assets to medical cannabis producers and retailers.
It’s a smart model. IIP essentially is stepping in where banks still fear to tread, owing to the existing federal prohibition on marijuana. State-level operators don’t have the access to capital to build these properties themselves. IIP has that capital, and uses it to drive long-term revenue that is recurring and highly profitable.
To some degree, investors still are skeptical. IIPR trades at just 27x next year’s Wall Street estimate for AFFO (adjusted funds from operations, a common REIT measure). And the big risk is that the U.S. winds up with the same supply glut as Canada, pushing IIP tenants into bankruptcy and leaving the facilities empty.
7 Consumer Stocks to Buy Before Picnic Season Begins
That risk does seem potentially overwrought, particularly given the company’s focus on medical cannabis, where demand should be more consistent. Even with IIPR up ninefold from its late 2016 initial public offering price, there should be more upside ahead.
Curaleaf (CURLF)
Source: Shutterstock
The bull case for Canadian operators wasn’t (or at least shouldn’t have been) based on the Canadian market being that large or that profitable. Rather, the argument was that Canada provided fertile ground for those companies to establish robust supply chains and valuable brands that could be put to good use in international markets.
But it’s looking increasingly likely that U.S. MSOs will provide stiff competition. Curaleaf is the largest such MSO, using its capital to expand across the country. In fact, outside of Tilray, it’s the largest cannabis company in the world by revenue. Curaleaf is fast-growing and profitable, key reasons why CURLF stock has been a huge outperformer in recent years.
And now it’s Curaleaf that is looking overseas. In March, the company inked a $286 million deal to buy one of Europe’s largest cannabis producers, EMMAC Life Sciences.
That deal alone makes CURLF stock intriguing. After all, it was hopes for global leadership that sent Canopy and Cronos soaring in late 2018 and early 2019. What if it won’t be one of those well-heeled Canadian giants, but a U.S.-based upstart, that winds up leading the way?
Green Thumb (GTBIF)
Source: Shutterstock
Investors in the MSO sector have another option in Green Thumb, the second- or third-largest MSO. Its sales are right in line with those of Trulieve (OTCMKTS:TCNNF).
Green Thumb is coming off a hugely impressive 2020. Revenue rose 157%, albeit with help from acquisitions. Adjusted EBITDA was 32% of sales, an enormous margin. The company even posted a GAAP (generally accepted accounting principles) profit.
7 Consumer Stocks to Buy Before Picnic Season Begins
GTBIF stock isn’t cheap. But it is cheaper than Curaleaf; Green Thumb has a lower market capitalization but actually outperformed Curaleaf in terms of Adjusted EBITDA in 2020. And with hopes for U.S. federal legalization higher than they’ve ever been, GTBIF could continue its winning streak going forward.
On the date of publication, Vince Martin did not have (either directly or indirectly) any positions in the securities mentioned in this article.
After spending time at a retail brokerage, Vince Martin has covered the financial industry for close to a decade for InvestorPlace.com and other outlets.
The post The 10 Hottest Weed Stocks On the Market For May appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | 7 Consumer Stocks to Buy Before Picnic Season Begins Here are the top 10 weed stocks: Canopy Growth (NASDAQ:CGC) Cronos (NASDAQ:CRON) Aurora Cannabis (NYSE:ACB) Tilray (NASDAQ:TLRY) Hexo (NYSE:HEXO) Sundial Growers (NASDAQ:SNDL) GrowGeneration (NASDAQ:GRWG) Innovative Industrial Properties (NYSE:IIPR) Curaleaf (OTCMKTS:CURLF) Green Thumb (OTCMKTS:GTBIF) Given the wider context, it’s worth considering where the biggest weed stocks sit at the moment. Aurora Cannabis (ACB) Source: Shutterstock Aurora Cannabis executed the completely opposite strategy. It’s a plan that worked when ACB stock was rising. | 7 Consumer Stocks to Buy Before Picnic Season Begins Here are the top 10 weed stocks: Canopy Growth (NASDAQ:CGC) Cronos (NASDAQ:CRON) Aurora Cannabis (NYSE:ACB) Tilray (NASDAQ:TLRY) Hexo (NYSE:HEXO) Sundial Growers (NASDAQ:SNDL) GrowGeneration (NASDAQ:GRWG) Innovative Industrial Properties (NYSE:IIPR) Curaleaf (OTCMKTS:CURLF) Green Thumb (OTCMKTS:GTBIF) Given the wider context, it’s worth considering where the biggest weed stocks sit at the moment. Aurora Cannabis (ACB) Source: Shutterstock Aurora Cannabis executed the completely opposite strategy. It’s a plan that worked when ACB stock was rising. | 7 Consumer Stocks to Buy Before Picnic Season Begins Here are the top 10 weed stocks: Canopy Growth (NASDAQ:CGC) Cronos (NASDAQ:CRON) Aurora Cannabis (NYSE:ACB) Tilray (NASDAQ:TLRY) Hexo (NYSE:HEXO) Sundial Growers (NASDAQ:SNDL) GrowGeneration (NASDAQ:GRWG) Innovative Industrial Properties (NYSE:IIPR) Curaleaf (OTCMKTS:CURLF) Green Thumb (OTCMKTS:GTBIF) Given the wider context, it’s worth considering where the biggest weed stocks sit at the moment. Aurora Cannabis (ACB) Source: Shutterstock Aurora Cannabis executed the completely opposite strategy. It’s a plan that worked when ACB stock was rising. | 7 Consumer Stocks to Buy Before Picnic Season Begins Here are the top 10 weed stocks: Canopy Growth (NASDAQ:CGC) Cronos (NASDAQ:CRON) Aurora Cannabis (NYSE:ACB) Tilray (NASDAQ:TLRY) Hexo (NYSE:HEXO) Sundial Growers (NASDAQ:SNDL) GrowGeneration (NASDAQ:GRWG) Innovative Industrial Properties (NYSE:IIPR) Curaleaf (OTCMKTS:CURLF) Green Thumb (OTCMKTS:GTBIF) Given the wider context, it’s worth considering where the biggest weed stocks sit at the moment. Aurora Cannabis (ACB) Source: Shutterstock Aurora Cannabis executed the completely opposite strategy. It’s a plan that worked when ACB stock was rising. |
36804.0 | 2021-05-04 00:00:00 UTC | Will This Canadian Company's Entry Shake Up the U.S. Cannabis Market? | ACB | https://www.nasdaq.com/articles/will-this-canadian-companys-entry-shake-up-the-u.s.-cannabis-market-2021-05-04 | nan | nan | Marijuana legalization in the U.S. could be years away from becoming a reality. However, that isn't stopping Canadian cannabis businesses from staking out positions beforehand. They want to be ready to go when the market opens up, and that is why there has been an uptick on the mergers and acquisitions (M&A) front of late.
Last week, Valens (OTC: VLNCF) became the latest name to announce its entry into the U.S. market with the acquisition of Green Roads, a U.S. company that makes hemp-derived cannabidiol (CBD) products. Let's take a closer look at what it means for Valens, and for the industry in the U.S.
Image source: Getty Images.
What this move does for Valens
On a pro forma basis, Valens says that the combined companies would have brought in 111.6 million Canadian dollars in revenue last year. Over the trailing 12 months, Valens has recorded revenue of CA$72 million, meaning Green Roads generates roughly CA$40 million in sales on an annual basis.
But the deal is more about just increasing revenue for Valens. The big picture is about gaining traction in the U.S. and potentially tapping into Green Roads' distribution network. The company's products -- oils, edibles, softgels, and even coffee -- are sold in 7,000 retail locations in the U.S. The company focuses on wellness, and its online shoppers can choose products based on whether they are looking to improve their sleep, relax, reduce their stress, or relieve pain.
Valens is spending $40 million in a combination of cash and stock on this deal, and it expects the transaction to close as early as next month. It would then be able to incorporate what it says is the largest (privately owned) CBD company south of the border into its operations. The deal is able to go through because it is not against federal laws in the U.S., since Green Roads' products originate from hemp, which the U.S. government legalized in 2018 under the Farm Bill.
Should multistate operators be worried?
Having another Canadian cannabis company enter the U.S. market isn't likely going to concern large multistate cannabis producers like Trulieve Cannabis or Curaleaf. Their focus is on non-hemp products that include high levels of tetrahydrocannabinol (THC), which can reach a broader customer base. (Hemp products cannot contain more than 0.3% THC.) And so while acquiring Green Roads will open up some new opportunities for Valens, it isn't going to be competing in all the same categories that large multistate operators are in.
Brightfield Group projected last year that by 2025, the CBD market in the U.S. (which includes hemp) will be worth $16.8 billion. A forecast from BDSA has the total U.S. pot market (including THC products) reaching $34.5 billion by the same year.
Tapping into the hemp market only gives Valens a small slice of all this. But that's not unlike the moves that other Canadian cannabis companies have been making for the sake of any exposure to the U.S. ahead of legalization. Aurora Cannabis acquired CBD product maker Reliva last year, and in 2019, Cronos acquired Lord Jones, a maker of CBD beauty products.
Valens' acquisition of Green Roads is simply the latest instance of Canadian companies trying to jockey for position ahead of time. And while it won't shake up the industry today, the battle lines are being drawn in what will eventually become a much more competitive cannabis market post-legalization.
Is Valens a buy on this news?
Today, Valens is a decent buy, trading at roughly 7 times its sales. Although that is slightly expensive, given that the average stock in the Horizons Marijuana Life Sciences ETF trades at a multiple of less than 6, it is a bargain compared with big names like Cronos and Canopy Growth, where investors are paying 62 and 25 times sales, respectively. Adding Green Roads into the mix will help bring Valens' multiple down by even more.
In the past year, Valens' stock has risen by 84%, which is in line with how the Horizons ETF has performed. For investors looking for a well-valued stock with exposure to the U.S. market, Valens may be a good option. But investors will want to be careful, because by the time legalization actually takes place, things could look a whole lot different.
In its press release announcing the acquisition, Valens noted that it analyzed more than 100 companies in the CBD space before picking Green Roads. That tells me that there could be a lot more M&A activity out there still to come.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
David Jagielski has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Trulieve Cannabis Corp. and Valens GroWorks Corp. The Motley Fool recommends Valens GroWorks. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Last week, Valens (OTC: VLNCF) became the latest name to announce its entry into the U.S. market with the acquisition of Green Roads, a U.S. company that makes hemp-derived cannabidiol (CBD) products. The company focuses on wellness, and its online shoppers can choose products based on whether they are looking to improve their sleep, relax, reduce their stress, or relieve pain. Although that is slightly expensive, given that the average stock in the Horizons Marijuana Life Sciences ETF trades at a multiple of less than 6, it is a bargain compared with big names like Cronos and Canopy Growth, where investors are paying 62 and 25 times sales, respectively. | Over the trailing 12 months, Valens has recorded revenue of CA$72 million, meaning Green Roads generates roughly CA$40 million in sales on an annual basis. A forecast from BDSA has the total U.S. pot market (including THC products) reaching $34.5 billion by the same year. Aurora Cannabis acquired CBD product maker Reliva last year, and in 2019, Cronos acquired Lord Jones, a maker of CBD beauty products. | Last week, Valens (OTC: VLNCF) became the latest name to announce its entry into the U.S. market with the acquisition of Green Roads, a U.S. company that makes hemp-derived cannabidiol (CBD) products. What this move does for Valens On a pro forma basis, Valens says that the combined companies would have brought in 111.6 million Canadian dollars in revenue last year. Valens' acquisition of Green Roads is simply the latest instance of Canadian companies trying to jockey for position ahead of time. | But that's not unlike the moves that other Canadian cannabis companies have been making for the sake of any exposure to the U.S. ahead of legalization. Valens' acquisition of Green Roads is simply the latest instance of Canadian companies trying to jockey for position ahead of time. But investors will want to be careful, because by the time legalization actually takes place, things could look a whole lot different. |
36805.0 | 2021-05-04 00:00:00 UTC | 3 Pot Stocks to Avoid Like the Plague in May | ACB | https://www.nasdaq.com/articles/3-pot-stocks-to-avoid-like-the-plague-in-may-2021-05-04 | nan | nan | Though most investors are laser-focused on tech stocks, it's actually cannabis that could be one of the greatest growth trends of the 2020s.
According to New Frontier Data, the U.S. pot industry is expected to average an annual growth rate of 21% between 2019 and 2025, ultimately hitting more than $41 billion in sales by mid-decade. Meanwhile, BDSA anticipates Canadian pot sales will more than double from $2.6 billion to $6.4 billion between 2020 and 2026. And let's not forget that Mexico is on the cusp of recreational legalization. All told, North America could become a $50 billion weed market by the midpoint of the decade. That's an investment opportunity not to be ignored.
However, history also tells us that not every company in a next-big-thing industry will be a winner. As the marijuana industry has matured, the line between the haves and have-nots have become more discernable.
As move into May, the following three pot stocks stand out as those that should be avoided like the plague.
Image source: Getty Images.
Sundial Growers
Since the inclusion of Canadian licensed producer Sundial Growers (NASDAQ: SNDL) on April's "avoid like the plague" list, its shares have declined by another 22% and dipped below the $1 minimum listing requirement to remain on the Nasdaq exchange. Even now, with the company close to 80% below its intraday highs set earlier this year, it's still grossly overvalued given how little it's shown to Wall Street and investors.
Part of the problem for Sundial is that the Canadian rollout of legal cannabis has been a disaster. Health Canada delayed approving cultivation and sales licenses, and pushed back the launch of higher-margin derivatives, such as edibles and vapes, by a couple of months. Meanwhile, provincial regulators in key provinces like Ontario have struggled to approve dispensary licenses in a timely manner.
However, most of the weight of Sundial's poor performance falls on the shoulders of the company's management team. Wanting to pay down the company's debt, Sundial's management team began drowning existing shareholders in common stock issuances, debt-to-equity swaps, and warrants in the fourth quarter of 2020. In a five month stretch (Oct. 1, 2020 – Feb. 28, 2021), Sundial's outstanding share count rose by 1.15 billion.
Guess what? Sundial's management team still isn't done drowning its shareholders in dilution. In March, the company filed a prospectus that could see up to $800 million in additonal capital raised via at-the-market offerings. Based on Friday's close, this could add up to 926 million more shares. Sundial might be sitting on a large cash pile, but the company's management team has no concrete plans for it.
And if you needed one more solid reason to avoid Sundial Growers, consider that the company abandoned its wholesale operating model in favor of a higher-margin retail model. This transition has led to substantial year-over-year sales declines and some unsightly writedowns. I don't mince words when I say that Sundial is the worst marijuana stock your money can buy.
Image source: Getty Images.
HEXO
The second marijuana stock to avoid like the plague in May is yet another Canadian licensed producer, HEXO (NYSE: HEXO).
Unlike Sundial, HEXO has been able to put together some reasonably positive operating developments of late. The company's fiscal second-quarter operating results, ended Jan. 31, 2021, showed adult-use net sales rose 10.5%, along with the company eking out positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). A lot of key metrics showed improvement from the prior-year period and the sequential quarter.
So, why avoid HEXO? To begin with, it's drowning its shareholders in dilution much the same way Sundial is, albeit to a lesser degree. Following multiple at-the-market offerings HEXO's share count more than doubled between mid-2019 and the end of 2020. Things could get markedly worse with the company filing for a mixed-shelf prospectus valued at up to $1.2 billion Canadian ($976.4 million). Although HEXO's management team reassured investors that this offering is for financial flexibility purposes, CA$1.2 billion represents 120% the value of the company's current market cap!
I'm also not a big fan of HEXO's announced all-share acquisition of Zenabis Global. HEXO sells the deal by proclaiming that Zenabis gives it instant access to Europe's medical marijuana market, first-year synergies of up to CA$20 million, and more than 111,000 additional kilos of production capacity. But do you remember what happened the last time HEXO made a splashy deal? Not long after acquiring NewStrike Brands, HEXO shuttered and sold the Niagara production facility, which simply wasn't necessary. It ultimately wrote down virtually the entire value of the deal. Once again, HEXO looks to be overpaying for a struggling business.
The icing on the cake is that, even with positive adjusted EBITDA, HEXO remains a ways away from generating an actual profit (at least without the aid of fair-value adjustments). It's a forgettable name in an otherwise rapidly growing industry.
Image source: Getty Images.
Aurora Cannabis
Last, but not least, the marijuana stock that's become a fixture on this list, Aurora Cannabis (NYSE: ACB).
It's hard to believe, but Aurora Cannabis was the most-held stock on online investing app Robinhood for many months prior to its reverse split in May 2020. At one time, it was also expected to lead all pot stocks in annual weed output. But oh how times have changed.
Long before Sundial was destroying shareholder value, Aurora Cannabis was the king of dilution. Between the midpoint of 2014 and late March 2021, the company's share count, on a split-adjusted basis, rose from about 1.3 million to 198 million. Had Aurora not executed a 1-for-12 reverse split, its 16 million outstanding shares in 2014 would be almost 2.4 billion today.
Like Sundial and HEXO, Aurora Cannabis may not be done pulling the rug out from beneath its investors. It, too, filed a $1 billion mixed-shelf offering in March. Though this doesn't guarantee the company will issue shares, its history tells us all we need to know. If fully executed, Aurora's share count could balloon by another 57%.
The even bigger issue here might be Aurora's lack of operational execution. International sales, which should have been the company's bread-and-butter out of the gate, have lagged badly. Meanwhile, forecasts of positive adjusted EBITDA have been pushed further down the line on multiple occasions. That's worrisome considering the company's debt covenant is tied to it reaching positive adjusted EBITDA.
Aurora Cannabis may be popular among young and/or novice investors, but it's shown nothing to merit serious investment. This cannabis stock should be avoided at all costs as long as management continues its nonstop dilutive tactics.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Sean Williams has no position in any of the stocks mentioned. The Motley Fool recommends HEXO Corp. and Nasdaq. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora Cannabis Last, but not least, the marijuana stock that's become a fixture on this list, Aurora Cannabis (NYSE: ACB). Wanting to pay down the company's debt, Sundial's management team began drowning existing shareholders in common stock issuances, debt-to-equity swaps, and warrants in the fourth quarter of 2020. Although HEXO's management team reassured investors that this offering is for financial flexibility purposes, CA$1.2 billion represents 120% the value of the company's current market cap! | Aurora Cannabis Last, but not least, the marijuana stock that's become a fixture on this list, Aurora Cannabis (NYSE: ACB). Sundial Growers Since the inclusion of Canadian licensed producer Sundial Growers (NASDAQ: SNDL) on April's "avoid like the plague" list, its shares have declined by another 22% and dipped below the $1 minimum listing requirement to remain on the Nasdaq exchange. In a five month stretch (Oct. 1, 2020 – Feb. 28, 2021), Sundial's outstanding share count rose by 1.15 billion. | Aurora Cannabis Last, but not least, the marijuana stock that's become a fixture on this list, Aurora Cannabis (NYSE: ACB). Sundial Growers Since the inclusion of Canadian licensed producer Sundial Growers (NASDAQ: SNDL) on April's "avoid like the plague" list, its shares have declined by another 22% and dipped below the $1 minimum listing requirement to remain on the Nasdaq exchange. The second marijuana stock to avoid like the plague in May is yet another Canadian licensed producer, HEXO (NYSE: HEXO). | Aurora Cannabis Last, but not least, the marijuana stock that's become a fixture on this list, Aurora Cannabis (NYSE: ACB). Sundial's management team still isn't done drowning its shareholders in dilution. So, why avoid HEXO? |
36806.0 | 2021-04-30 00:00:00 UTC | Why I'll Never Own Aurora Cannabis Stock | ACB | https://www.nasdaq.com/articles/why-ill-never-own-aurora-cannabis-stock-2021-04-30 | nan | nan | The number of times Canada-based Aurora Cannabis (NYSE: ACB) has failed exceeds the amount of success it had in the past. There was a time when investors believed Aurora would lead the cannabis industry. But those days are long gone. The way this company is performing currently makes it doubtful that it will be back in safe waters any time soon.
Even the pandemic-induced cannabis boom wasn't enough to help Aurora get back on its feet. Its revenue growth remains sluggish, and it is far from achieving profitability. So what is this company doing wrong while its peers and U.S. counterparts are soaring high? Let me tell you the reasons why I am reluctant to own Aurora Cannabis stock.
Image source: Getty Images
Revenue growth is not enough to turn a profit
While U.S. cannabis companies are reporting threefold revenue growth, Aurora's numbers are disappointing. In its fiscal 2021 second quarter (ended Dec. 31), revenue was up just 23% year over year to 67.6 million Canadian dollars.
Regulatory hurdles affected the opening of legal stores in Canada, hampering revenue growth for many companies. But in Aurora's case, its failure to launch innovative products is what stunted its growth. The company won't see a drastic jump until it invests in new, high-margin products -- cannabis derivatives, in particular. Derivatives are additional recreational products that Canada legalized in October 2019. They include vapes, edibles, concentrates, beverages, and more.
Rival Canopy Growth, for example, earned CA$10.5 million in revenue from derivative products alone in its third quarter of fiscal 2021. The company has already captured 34% of the cannabis-infused beverage market share in Canada. Peer HEXO also saw 11% sequential growth in the cannabis-infused beverages segment in its fiscal Q2 2021.
Aurora launched a few derivatives in December 2019, including a range of cannabidiol (or CBD) products, tetrahydrocannabinol (or THC) products, and vape products. It also launched a few edible products, such as gummies, chocolates, baked goods, and mints, but nothing new since then.
The Q2 revenue increase wasn't enough to help it achieve positive earnings before interest, tax, depreciation, and amortization (EBITDA), either. However, losses of CA$16.8 million were an improvement from the CA$69.8 million loss in the year-ago quarter. Management achieved that by cutting costs, which has been its focus all through 2020. Its selling, general, and administrative (SG&A) expenses dipped by 53% to CA$44.4 million from the year-ago period.
No promising growth strategies
Since last year, Aurora's focus has mostly been on reducing costs to achieve positive EBITDA. As a result, it has not been able to focus on the production of any new derivatives. Launching these products is costly. Having failed to raise the necessary amount of capital through other means, Aurora has chosen to dilute its shares. At the end of Q2, it had CA$565 million cash on hand but also CA$493.3 million in total debt.
Meanwhile, peers HEXO and Canopy Growth are ramping up to become market leaders in the cannabis beverage segment. The market for cannabis beverages is expected to generate CA$529 million annually in Canada, according to Deloitte. Meanwhile, the U.S. cannabis beverage market could be worth $2.8 billion by 2025, according to Grand View Research. If Aurora doesn't take any action soon, it may miss out on the early opportunities of this evolving segment. In the U.S., cannabis beverage sales jumped from $67.8 million in 2019 to $95.2 million in 2020.
Aurora also lacks a deep-pocketed partner like its peers, which is worrisome. U.S. beverage maker Constellation Brands (NYSE: STZ) has partnered with Canopy Growth, while tobacco company Altria Group holds a stake in Cronos Group, and HEXO also has a partnership deal with beverage company Molson Coors. A strong partnership could help Aurora survive while strategizing for the company's expansion in the U.S. as well as in international markets.
No fire in this pot stock
Despite the challenges of an evolving industry, most pot companies have a fire in them driving their future growth plans. Aurora lacks this fire, and despite CEO Miguel Martin's consistent efforts to reduce costs, Aurora hasn't seen much good news. Moreover, the company's stock-dilution strategies to raise money aren't sitting well with investors. It is usually seen as a sign that the company is failing to raise capital through any other means.
Aurora doesn't give any solid assurances that it could turn things around for the better, which makes it hard to trust this pot company again. Failure to launch new products, sluggish revenue growth, and lack of progress or wise growth strategies under a new management team make it unlikely I will add Aurora Cannabis to my portfolio. Investors should be wary of this pot stock until it shows more consistent positive numbers.
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Sushree Mohanty has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Constellation Brands. The Motley Fool recommends HEXO Corp. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | The number of times Canada-based Aurora Cannabis (NYSE: ACB) has failed exceeds the amount of success it had in the past. Aurora doesn't give any solid assurances that it could turn things around for the better, which makes it hard to trust this pot company again. * David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Aurora Cannabis Inc. wasn't one of them! | The number of times Canada-based Aurora Cannabis (NYSE: ACB) has failed exceeds the amount of success it had in the past. Image source: Getty Images Revenue growth is not enough to turn a profit While U.S. cannabis companies are reporting threefold revenue growth, Aurora's numbers are disappointing. Rival Canopy Growth, for example, earned CA$10.5 million in revenue from derivative products alone in its third quarter of fiscal 2021. | The number of times Canada-based Aurora Cannabis (NYSE: ACB) has failed exceeds the amount of success it had in the past. Image source: Getty Images Revenue growth is not enough to turn a profit While U.S. cannabis companies are reporting threefold revenue growth, Aurora's numbers are disappointing. U.S. beverage maker Constellation Brands (NYSE: STZ) has partnered with Canopy Growth, while tobacco company Altria Group holds a stake in Cronos Group, and HEXO also has a partnership deal with beverage company Molson Coors. | The number of times Canada-based Aurora Cannabis (NYSE: ACB) has failed exceeds the amount of success it had in the past. Rival Canopy Growth, for example, earned CA$10.5 million in revenue from derivative products alone in its third quarter of fiscal 2021. The company has already captured 34% of the cannabis-infused beverage market share in Canada. |
36807.0 | 2021-04-29 00:00:00 UTC | ACB June 11th Options Begin Trading | ACB | https://www.nasdaq.com/articles/acb-june-11th-options-begin-trading-2021-04-29 | nan | nan | Investors in Aurora Cannabis Inc (Symbol: ACB) saw new options begin trading today, for the June 11th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the ACB options chain for the new June 11th contracts and identified one put and one call contract of particular interest.
The put contract at the $8.50 strike price has a current bid of 44 cents. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $8.50, but will also collect the premium, putting the cost basis of the shares at $8.06 (before broker commissions). To an investor already interested in purchasing shares of ACB, that could represent an attractive alternative to paying $8.76/share today.
Because the $8.50 strike represents an approximate 3% discount to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the put contract would expire worthless. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 100%. Stock Options Channel will track those odds over time to see how they change, publishing a chart of those numbers on our website under the contract detail page for this contract. Should the contract expire worthless, the premium would represent a 5.18% return on the cash commitment, or 43.94% annualized — at Stock Options Channel we call this the YieldBoost.
Below is a chart showing the trailing twelve month trading history for Aurora Cannabis Inc, and highlighting in green where the $8.50 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $9.00 strike price has a current bid of 30 cents. If an investor was to purchase shares of ACB stock at the current price level of $8.76/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $9.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 6.16% if the stock gets called away at the June 11th expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if ACB shares really soar, which is why looking at the trailing twelve month trading history for Aurora Cannabis Inc, as well as studying the business fundamentals becomes important. Below is a chart showing ACB's trailing twelve month trading history, with the $9.00 strike highlighted in red:
Considering the fact that the $9.00 strike represents an approximate 3% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 99%. On our website under the contract detail page for this contract, Stock Options Channel will track those odds over time to see how they change and publish a chart of those numbers (the trading history of the option contract will also be charted). Should the covered call contract expire worthless, the premium would represent a 3.42% boost of extra return to the investor, or 29.07% annualized, which we refer to as the YieldBoost.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today's price of $8.76) to be 143%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
Top YieldBoost Calls of the S&P 500 »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Of course, a lot of upside could potentially be left on the table if ACB shares really soar, which is why looking at the trailing twelve month trading history for Aurora Cannabis Inc, as well as studying the business fundamentals becomes important. Below is a chart showing ACB's trailing twelve month trading history, with the $9.00 strike highlighted in red: Considering the fact that the $9.00 strike represents an approximate 3% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. Investors in Aurora Cannabis Inc (Symbol: ACB) saw new options begin trading today, for the June 11th expiration. | Below is a chart showing ACB's trailing twelve month trading history, with the $9.00 strike highlighted in red: Considering the fact that the $9.00 strike represents an approximate 3% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. Investors in Aurora Cannabis Inc (Symbol: ACB) saw new options begin trading today, for the June 11th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the ACB options chain for the new June 11th contracts and identified one put and one call contract of particular interest. | Below is a chart showing ACB's trailing twelve month trading history, with the $9.00 strike highlighted in red: Considering the fact that the $9.00 strike represents an approximate 3% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. Investors in Aurora Cannabis Inc (Symbol: ACB) saw new options begin trading today, for the June 11th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the ACB options chain for the new June 11th contracts and identified one put and one call contract of particular interest. | Below is a chart showing ACB's trailing twelve month trading history, with the $9.00 strike highlighted in red: Considering the fact that the $9.00 strike represents an approximate 3% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. Investors in Aurora Cannabis Inc (Symbol: ACB) saw new options begin trading today, for the June 11th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the ACB options chain for the new June 11th contracts and identified one put and one call contract of particular interest. |
36808.0 | 2021-04-29 00:00:00 UTC | Will 2021 Be a Ray of Hope for HEXO? | ACB | https://www.nasdaq.com/articles/will-2021-be-a-ray-of-hope-for-hexo-2021-04-29 | nan | nan | The popularity of cannabis players like Aurora Cannabis (NYSE: ACB) and Canopy Growth (NASDAQ: CGC) means other good growth stocks in the industry can sometimes be overlooked. Canada-based HEXO (NYSE: HEXO) is basically in the same boat as Aurora Cannabis, but investors remain focused on Aurora, which gained big name recognition when it made some investors millionaires by riding the wave of Canadian cannabis legalization in 2018.
Even though cannabis sales in the country were sky-high in 2020, Canadian companies failed to see a drastic surge in revenue because of various industry headwinds. Regulatory challenges delayed the opening of legal stores, for example. HEXO's lower revenue growth and failure to achieve profitability dragged down its stock price last year to a point that it traded below $1, which is against trading compliance rules. It even received a delisting warning from the New York Stock Exchange in May 2020. Similar to Aurora, HEXO opted for a 1-for-4 reverse stock split to boost its stock price and save itself from getting delisted. (Aurora's 1-for-12 reverse split took place in May.)
Management at HEXO is making an effort to boost its revenue in the calendar year 2021 by taking advantage of the ongoing cannabis boom, as well as the launch of new recreational products that are in huge demand. While many investors remain focused on bigger players like Aurora, recent second-quarter fiscal 2021 results showed some positive signs for HEXO. Let's take a look at how its 2021 is shaping up.
Image source: Getty Images.
HEXO's second-quarter results delivered some surprises
Canadian cannabis companies have been struggling to achieve profitability. Revenue growth hasn't been sufficient to translate to the bottom line. However, HEXO managed to achieve its goal of positive EBITDA in its second quarter (ended Jan. 31), which rang in at 202,000 Canadian dollars from a loss of CA$419,000 in the year-ago quarter. A revenue jump of 94% year over year to CA$32.8 million contributed to this growth. The company was finally successful in achieving positive EBITDA after "seven straight quarters of adjusted EBITDA improvements," according to the management.
Positive EBITDA also reveals how well a company is handling its operating expenses; for HEXO, that's evident in the whopping 91% dip in total operating expenses, to CA$25.5 million, that cleared the way for the good results.
What is HEXO doing differently in 2021?
Needless to say, businesses cannot keep doing the same thing and expect different results. Much of Canada's cannabis sales are dependent on the opening of more legal stores in the country, which tied down Canadian marijuana companies' revenue growth last year. But regulatory challenges are now easing, which will allow more stores to open this year.
We're already seeing some of that take place. As of April 20, the province of Ontario has 613 open legal cannabis stores, while Alberta has 599. That's up significantly from June of last year, when Ontario had less than 100 open stores and Alberta had 483. HEXO can take advantage of this to strengthen its position in the Canadian market.
HEXO is also targeting the international market to keep sales coming. On Feb. 16, it announced an agreement to acquire Zenabis Global for an all-share transaction of about $235 million. This partnership will not only strengthen HEXO's position in the Canadian market but will also open doors to the European medical cannabis market, where Zenabis is a player. HEXO will gain access to Zenabis' licensed cultivation capacity of 111,200 kg of high-quality cannabis annually.
Should you trust this pot stock again?
HEXO had a remarkable 2020, and management seems to be trying their best to regain market position this year -- with some tremendous initial success. In terms of sales, HEXO maintained its No. 1 position in Quebec; it's No. 3 in Alberta and is in the top four in Ontario, according to the management.
HEXO's cannabis-infused beverages segment grew 11% sequentially in the quarter, impressive for an entirely new division. The global marijuana beverage market could grow at a compound annual rate of 18% to be worth $2.8 billion by 2025, according to Grand View Research. Derivatives (vapes, edibles, beverages, and concentrates) were legalized in Canada in October 2019, and HEXO has also launched its cannabidiol, or CBD, infused beverages in the U.S. with its partner Molson Coors under the Truss USA joint venture. This partnership gives HEXO exposure to the U.S. cannabis market.
Hexo's CEO Sebastien St-Louis also discussed in the Q2 2021earnings callthat the company managed to remain the No. 1 performer in the beverages segment with a 43% market share in Canada. Management expects similar success in Colorado, as well, and then will focus on expanding in other legal states. Over the next few years, management believes only a handful of companies will be able to successfully capture a chunk of the global cannabis market, and HEXO is aiming to be one of them.
HEXO will have to focus on growing its domestic medical cannabis sales along with targeting the recreational segment if it wants to achieve its goal. Its domestic medical cannabis net revenue declined from CA$695,000 in Q2 2020 to CA$422,000 in Q2 2021. Luckily, the increase in legal stores in Canada should help that trend reverse. And beverage sales do look promising; HEXO could offer tough competition to Canopy Growth, which also boasts of soon becoming a market leader in the beverage category in Canada. Aphria has also made an entry into the segment with its acquisition of SweetWater Brewing Company, but it could be a while before the company starts to launch products. Over the past 12 months, HEXO's shares have surged 204%, outperforming the industry benchmark Horizons Marijuana Life Sciences ETF's gain of 97%.
HEXO data by YCharts
With revenue growth, positive EBITDA, carefully planned acquisitions and partnerships, innovative products, and a good hold in the Canadian market, the path is clear for HEXO. It appears 2021 could be a fruitful year for the company. This cannabis stock looks like a promising buy and hold to earn some long-term returns.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Sushree Mohanty has no position in any of the stocks mentioned. The Motley Fool recommends HEXO Corp. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | The popularity of cannabis players like Aurora Cannabis (NYSE: ACB) and Canopy Growth (NASDAQ: CGC) means other good growth stocks in the industry can sometimes be overlooked. Management at HEXO is making an effort to boost its revenue in the calendar year 2021 by taking advantage of the ongoing cannabis boom, as well as the launch of new recreational products that are in huge demand. Much of Canada's cannabis sales are dependent on the opening of more legal stores in the country, which tied down Canadian marijuana companies' revenue growth last year. | The popularity of cannabis players like Aurora Cannabis (NYSE: ACB) and Canopy Growth (NASDAQ: CGC) means other good growth stocks in the industry can sometimes be overlooked. Much of Canada's cannabis sales are dependent on the opening of more legal stores in the country, which tied down Canadian marijuana companies' revenue growth last year. HEXO data by YCharts With revenue growth, positive EBITDA, carefully planned acquisitions and partnerships, innovative products, and a good hold in the Canadian market, the path is clear for HEXO. | The popularity of cannabis players like Aurora Cannabis (NYSE: ACB) and Canopy Growth (NASDAQ: CGC) means other good growth stocks in the industry can sometimes be overlooked. Canada-based HEXO (NYSE: HEXO) is basically in the same boat as Aurora Cannabis, but investors remain focused on Aurora, which gained big name recognition when it made some investors millionaires by riding the wave of Canadian cannabis legalization in 2018. Much of Canada's cannabis sales are dependent on the opening of more legal stores in the country, which tied down Canadian marijuana companies' revenue growth last year. | The popularity of cannabis players like Aurora Cannabis (NYSE: ACB) and Canopy Growth (NASDAQ: CGC) means other good growth stocks in the industry can sometimes be overlooked. A revenue jump of 94% year over year to CA$32.8 million contributed to this growth. Much of Canada's cannabis sales are dependent on the opening of more legal stores in the country, which tied down Canadian marijuana companies' revenue growth last year. |
36809.0 | 2021-04-29 00:00:00 UTC | Is Canopy Growth a Buy? | ACB | https://www.nasdaq.com/articles/is-canopy-growth-a-buy-2021-04-29 | nan | nan | Canopy Growth (NASDAQ: CGC) has been a popular cannabis stock over the past year. Investors have enjoyed a return of 60% over the past twelve months, outpacing the S&P 500 and its gains of 45%. It was a sweeter rise for some than others, however. Many investors who didn't cash out at its peak in February were out of luck; the stock has fallen by nearly 50% since then.
The wind at Canopy Growth's back is a CA$5.8 billion investment for 38% of the company by beverage titan Constellation Brands (NYSE: STZ). But despite the huge influx of capital, the company is taking much longer than expected to turn that into bottom-line profits. Can you count on Canopy Growth to head higher if you buy it today?
Image source: Getty Images.
An expensive luxury stock
Over the next two years, Canopy Growth projects it can improve its sales by 45% per year. It also anticipates that it can save up to CA$200 million within the next 18 months due to restructuring and cost-cutting efforts.
Although that's very impressive, the outlook has already been baked into its stock price. Canopy Growth shares are trading at over 16 times price-to-sales (P/S) going forward. That's significantly higher than Aphria (NASDAQ: APHA), Tilray (NASDAQ: TLRY), and Aurora Cannabis (NYSE: ACB), which are trading at 10, 11, and 8 times forward sales, respectively.
Is it worth it?
During the third quarter of 2021 (ended Dec. 31), Canopy Growth's revenue increased by 23% year over year to CA$152.5 million. Simultaneously, its free cash flow improved by 62% to a loss of CA$135.4 million over the same period. It expects to break even by the end of fiscal 2024.
Canopy Growth is launching new THC strains, strawberry gummies, CBD softgels, and THC/CBD-infused beverages to attract more customers. In April, it announced a CA$435 million acquisition of Supreme Cannabis (TSX: FIRE)(OTC: SPRWF).
Supreme is the firm behind 7ACRES, the most popular premium flower brand in Canada, and generates about CA$13 million per quarter in sales. The two pot growers expect to create CA$30 million in cost savings synergies over the next two years. After the deal closes, Canopy Growth and Supreme will hold a combined 13.6% market share in the Canadian cannabis industry, ranking No. 2 after the soon-to-be-joined Aphria and Tilray.
The company's revenue streams are well diversified. About 14% of its sales come from international medical cannabis in Germany, where it holds No. 2 in market share behind Aphria. 16%, 7%, and 2% of its sales come from Stroz + Vapes, This Works skin solutions, and beverages, respectively. What's more, the company is also seeing rapid growth in its Martha Stewart CBD segment. Four months after its launch, the subsidiary is already outselling 94% of CBD brands in the U.S.
Capital-wise, the company has close to CA$2.5 billion in cash, which is more than enough to offset its CA$600 million in liabilities. It does need some of that cash under an agreement to acquire U.S. cannabis operator Acreage Holdings (OTC: ACRGF) once marijuana becomes legal at the federal level.
What's the verdict?
The biggest problem with Canopy Growth is its lack of exposure to the lucrative U.S. THC market until the Acreage deal closes. In addition, provincial and federal lockdowns in Canada and Germany have returned as the two countries struggle to deal with the third wave of the COVID-19 pandemic. I think Canopy Growth is a great long-term buy due to its size and diversification. However, the pot grower will probably run into problems achieving its short-term financial targets.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Zhiyuan Sun has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Constellation Brands. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | That's significantly higher than Aphria (NASDAQ: APHA), Tilray (NASDAQ: TLRY), and Aurora Cannabis (NYSE: ACB), which are trading at 10, 11, and 8 times forward sales, respectively. The wind at Canopy Growth's back is a CA$5.8 billion investment for 38% of the company by beverage titan Constellation Brands (NYSE: STZ). After the deal closes, Canopy Growth and Supreme will hold a combined 13.6% market share in the Canadian cannabis industry, ranking No. | That's significantly higher than Aphria (NASDAQ: APHA), Tilray (NASDAQ: TLRY), and Aurora Cannabis (NYSE: ACB), which are trading at 10, 11, and 8 times forward sales, respectively. During the third quarter of 2021 (ended Dec. 31), Canopy Growth's revenue increased by 23% year over year to CA$152.5 million. After the deal closes, Canopy Growth and Supreme will hold a combined 13.6% market share in the Canadian cannabis industry, ranking No. | That's significantly higher than Aphria (NASDAQ: APHA), Tilray (NASDAQ: TLRY), and Aurora Cannabis (NYSE: ACB), which are trading at 10, 11, and 8 times forward sales, respectively. Canopy Growth (NASDAQ: CGC) has been a popular cannabis stock over the past year. The wind at Canopy Growth's back is a CA$5.8 billion investment for 38% of the company by beverage titan Constellation Brands (NYSE: STZ). | That's significantly higher than Aphria (NASDAQ: APHA), Tilray (NASDAQ: TLRY), and Aurora Cannabis (NYSE: ACB), which are trading at 10, 11, and 8 times forward sales, respectively. During the third quarter of 2021 (ended Dec. 31), Canopy Growth's revenue increased by 23% year over year to CA$152.5 million. After the deal closes, Canopy Growth and Supreme will hold a combined 13.6% market share in the Canadian cannabis industry, ranking No. |
36810.0 | 2021-04-28 00:00:00 UTC | ACB Crosses Above Key Moving Average Level | ACB | https://www.nasdaq.com/articles/acb-crosses-above-key-moving-average-level-2021-04-28 | nan | nan | In trading on Wednesday, shares of Aurora Cannabis Inc (Symbol: ACB) crossed above their 200 day moving average of $9.11, changing hands as high as $9.12 per share. Aurora Cannabis Inc shares are currently trading up about 6.1% on the day. The chart below shows the one year performance of ACB shares, versus its 200 day moving average:
Looking at the chart above, ACB's low point in its 52 week range is $3.71 per share, with $19.68 as the 52 week high point — that compares with a last trade of $9.04.
Click here to find out which 9 other stocks recently crossed above their 200 day moving average »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | In trading on Wednesday, shares of Aurora Cannabis Inc (Symbol: ACB) crossed above their 200 day moving average of $9.11, changing hands as high as $9.12 per share. The chart below shows the one year performance of ACB shares, versus its 200 day moving average: Looking at the chart above, ACB's low point in its 52 week range is $3.71 per share, with $19.68 as the 52 week high point — that compares with a last trade of $9.04. Click here to find out which 9 other stocks recently crossed above their 200 day moving average » The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | In trading on Wednesday, shares of Aurora Cannabis Inc (Symbol: ACB) crossed above their 200 day moving average of $9.11, changing hands as high as $9.12 per share. The chart below shows the one year performance of ACB shares, versus its 200 day moving average: Looking at the chart above, ACB's low point in its 52 week range is $3.71 per share, with $19.68 as the 52 week high point — that compares with a last trade of $9.04. Click here to find out which 9 other stocks recently crossed above their 200 day moving average » The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | In trading on Wednesday, shares of Aurora Cannabis Inc (Symbol: ACB) crossed above their 200 day moving average of $9.11, changing hands as high as $9.12 per share. The chart below shows the one year performance of ACB shares, versus its 200 day moving average: Looking at the chart above, ACB's low point in its 52 week range is $3.71 per share, with $19.68 as the 52 week high point — that compares with a last trade of $9.04. Click here to find out which 9 other stocks recently crossed above their 200 day moving average » The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | In trading on Wednesday, shares of Aurora Cannabis Inc (Symbol: ACB) crossed above their 200 day moving average of $9.11, changing hands as high as $9.12 per share. The chart below shows the one year performance of ACB shares, versus its 200 day moving average: Looking at the chart above, ACB's low point in its 52 week range is $3.71 per share, with $19.68 as the 52 week high point — that compares with a last trade of $9.04. Aurora Cannabis Inc shares are currently trading up about 6.1% on the day. |
36811.0 | 2021-04-28 00:00:00 UTC | Investing in Cannabis Stocks? Check Out This Podcast. | ACB | https://www.nasdaq.com/articles/investing-in-cannabis-stocks-check-out-this-podcast.-2021-04-28 | nan | nan | In this episode of Industry Focus: Consumer Goods, Motley Fool contributor and cannabis expert Keith Speights joins host Emily Flippen as they celebrate April 20 by talking about how investors should (and shouldn't) get invested in marijuana, as well as some of their favorite ideas for all types of investors.
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.
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This video was recorded on April 20, 2021.
Emily Flippen: Welcome to Industry Focus. Today is Tuesday, April 20th, and I'm the host of this consumer goods focused episode, Emily Flippen. Today I'm joined by a very, very special guest, a face and a voice that you maybe haven't heard on Industry Focus for quite some time, at least I haven't since I've been hosting the Consumer Goods show; it is Motley Fool contributor, Keith Speights. Keith, part of the reason why you're on today's because we have a really fun and special episode. Today is April 20th, 4/20, and cool kid lingo and we're going to be talking about the cannabis industry.
Keith Speights: Lots of fun.
Flippen: It's rare that my day job gets to intersect with my podcast works so nicely. As listeners may be aware, in addition to the work that I do here on the podcast, I also moonlight as the advisor for our cannabis focus service here at the Fool and what people may be even less aware, actually maybe more aware of since you mostly work on the free side, you contributed a lot to fool.com articles. Is that Keith, you are a resident cannabis expert here at The Fool and you've been following the industry since the beginning.
Speights: I have, I don't know that I would say I'm the resident cannabis expert.
Flippen: I would.
Speights: But you're right. I have been writing about cannabis since this whole crazy thing started several years ago even before Canada legalized recreational cannabis. It's been a fun ride and I've learned a lot and it's been quite intriguing watching what unfolds with this industry.
Flippen: That's really putting it lightly because it's been eight crazy rollercoasters. I've been following the industry for only a fraction of the time that you have Keith. But when I started paying attention to it, it was during this crazy kind of boom and bust cycle we saw in Canada in 2018 on the rumors that Canada was going to legalize and then the subsequent sell-off once legalization actually happened. It's really been a different experience for investors. You'll hear a lot of people who say they've had such great success investing in the Canada space especially if they only started buying in the past year. Because these cannabis businesses, especially being essential businesses during the pandemic, have actually had pretty good years. On the flip-side, people who bought and especially during that initial high, especially into Canadian players, may have really lost their shot in the space. So it's crazy following this industry, especially having conversations with people because their experience and thoughts about investing in cannabis are so colored by when and how they got involved.
Speights: Yeah, you're exactly right and a lot of it, Emily, the hype was just crazy before Canada's magic date for when recreational marijuana was legalized. There were really some expectations that weren't grounded in reality at the time. People were thinking that that market was going to explode and be a lot bigger than it ultimately has turned out to be. As a result you are right, many investors who got in right at the peak hype ended up taking a bath. Many of the Canadian stocks plummeted and are still not even close to their highs from a few years ago.
Flippen: This was a question I was planning on posing to you later in the show, but it flows so nicely from this conversation. So before we get into some of the fundamentals about cannabis I have to ask, what lessons do you think investors can learn from what we've seen happen in Canada as it applies to the cannabis industries. Personally, I always think about the buy the rumor sell the news phenomenon and while there are differences in the U.S. and Canadian markets, I can't help but feel like we might see a similar rise and then sell off if the U.S. makes substantial movement toward legalization. But before we get into today's show, what should investors be thinking about as far as lessons to pull forward?
Speights: Well, I think you're right. There certainly is this aspect of the rumor that sells the news that occurs with any industry, but especially with the cannabis industry. We saw that in a major way in 2018 with Canadian stocks. But I think there's some clear lessons to learn. First of all, some of these companies are just growing at any cost. I will give you an example, and this is one of those very low cap stocks that we will warn everyone about the risks with MedMen. MedMen is a U.S. based cannabis retailer. I think they bit off way more than they could chew. The stock has performed dismally because they were trying to grow faster than they were able to.
Another company that did the exact same thing was one of the big Canadian players, Aurora Cannabis (NYSE: ACB). Aurora went on a crazy buying spree and spent so much money that they were just acquiring companies left and right and that didn't pay off over the long run. Basically, it caught up with Aurora. Both of these companies spent like crazy and ultimately had to raise a lot of additional capital through issuing new shares that caused dilution in the value of their existing shares. Both companies ended up having to slash costs, cut back staff and saw their stocks implode. There is a definite lesson from looking at companies that are just trying to grow at any cost and not worry about the financial repercussions.
Flippen: What's really frustrating is that, even in, I guess, financial media, really cannabis media, because a lot of financial media follows that trend and these are still the businesses that receive a lot of press, especially the Canadian players. Aurora Cannabis, for instance, is still one of the most widely held cannabis companies among retail investors, despite the fact that it's written off nearly $5 billion Canadian in asset writedowns, goodwill writedowns from acquisition funded with shareholder value. That's more than twice where Aurora's market cap is right now. They haven't generated a single penny in terms of cash flow. These are businesses that really have a strong history of destructive shareholder value that are still getting a lot of financial press and a lot of financial media. It's frustrating because the industry is so driven by retail investors and these retail investors do take financial media at its face value, which I think has really done investors wrong by focusing attention at the most over-hyped and over-pressed businesses. But I'll hold my rant there.
It is to say [laughs] that investors should be really cautious when looking and investing in the cannabis space. I really love having conversations about it. The conversation we'll have today for Industry Focus was a really broad one. I think it's going to be a fun conversation, but I also think it's important to acknowledge that the cannabis industry is still a challenging industry. You can hear a lot of press and media about financial tension around legalization. It doesn't mean that it's going to be an easy place to make money and we'll talk more about that today. But before we do so, I had to ask, this is the consumer goods show, so I have to relate cannabis back to consumer goods somehow. I actually think the two are really highly connected. But when you think about cannabis, Keith, do you view it as a consumer goods business or more as a commodity?
Speights: Well, cannabis is certainly a commodity. It's an agricultural crop, so from that standpoint, yes, it is a commodity. But I do think it's really a consumer goods business. Emily, I like to eat Frosted Flakes for breakfast. I love it. Love Frosted Flakes.
Flippen: Me too.
Speights: I've eaten Frosted Flakes since I was a kid, as Tony the Tiger says, they're great. But if you look at it, that cereal really just consists of commodities. It has corn, it has sugar and other ingredients, but it's really a commodity. But Frosted Flakes are differentiated. Kellogg who makes that cereal, they have their packaging that stands out. They have shelf placement in grocery stores. Don't forget Tony the Tiger, their mascot. So they have things that set that brand apart. I think cannabis is going to be like that, and already is to some degree. I think the winners in this industry are going to be the ones that differentiate what really is a commodity. But they will differentiate through their branding, through their marketing, through things that set them apart from other players in the industry. Sure, there are going to be some low-cost players just as they are that compete with Frosted Flakes. But I think this is an industry that should be viewed with the same lens as other consumer goods businesses because I think that's the future of cannabis.
Flippen: I love that analogy. We hear the beer comparison a lot and I also understand that. We [inaudible] these are commodities as well. This is the first time I've heard Frosted Flakes, and I'm going to steal that from you, Keith, moving forward. I love that analogy. I do think it's also important to highlight the differences in the U.S. landscape as it comes to product differentiation versus that in Canada. This is something that I think I've struggled with as an investor. This is personal. Everybody has their own thoughts and feelings. I tend to gravitate toward U.S. companies because the way that regulations in Canada have started to shake out, it's been really restrictive in terms of marketing and branding, and that shelf space excitement that you see when you look at a bag of Frosted Flakes. There's limitations put on products' abilities to have color, to have sweets or sugar in some provinces, anything that can be appealing, which I think has limited some level of differentiation in the products in Canada and the way that we don't see in the U.S., at least not yet. In part because the U.S. hasn't really regulated the space as much as they could. Either way, it is a consideration. I think all investors should be thinking of when investing in the cannabis space.
Speights: I totally agree with you there, Emily. I think that Canada has done a disservice to its cannabis industry by imposing so many of those regulations and limitations. As a result, they continue to see the black market flourish. That's been really problematic for them. I think if they had it to do over again, they might reconsider what they've done. But like you said, in the United States, it has been more of a piecemeal approach and so you do have some states that have more restrictive guidelines and rules for their cannabis industry. But in the U.S. it's been a much different story than in Canada.
Flippen: Definitely. Another question I get a lot has been, well, why would I ever want to get invested in cannabis? I know I have two reactions when I get this question. The first one is that of course, you don't have to be invested in the cannabis industry. In fact, I'm sure there's a lot of people who pulled up this podcast and clicked away. They never even heard me say this because they just aren't interested. That's totally fine. I don't think anybody is out there holding a gun to your head saying, "If you're not invested in cannabis, you're never going to make any money. You're never going to have a growth portfolio." I think if you have personal or moral objections or you just aren't interested, you can do fine by yourself, by never investing in cannabis. But that being said, the legal U.S. cannabis sales in 2020, so just over the past year, were nearly $18 billion. That was up nearly 50% year-over-year. They have the largest markets here in California, Colorado, Florida, which is only a medical market right now. These are really exciting opportunities and to the extent that you are interested, I do think that cannabis is going to be a burgeoning industry.
Speights: I totally agree. I think you're right. There are plenty of investors who would want to stay away from cannabis just as they might want to stay away from tobacco stocks or other types of stocks. But a lot of investors like getting in on the ground floor of something and we're still in the early innings of the U.S. cannabis market for sure. In a way, you can still get in on the ground floor with cannabis and there's some stocks that have some tremendous growth potential as the market expands. I think for investors who like that excitement, want to make money like any investor does, I think the cannabis market offers some real opportunities.
Flippen: It is rapidly changing though to the extent that anybody is interested in getting invested. I think it's important to have a five to seven, preferably even longer. I know that's asking for a lot, but preferably even longer time horizon for these investments because it will take so long, not only for us to see big movement in terms of federal legalization, which would really open up the landscape for cannabis companies in the U.S., but also just time for competitive landscape to shake out after legalization. These are businesses that will need to find their footing, they're completely new, and they're a completely new emerging industry that didn't exist a decade ago, and it will exist completely differently a decade from now. Give yourself time as an investor. When you look at how legalization is right now, on the U.S. scale, there's 18 states that have legalized cannabis for recreational adult use, and another 37 in total have legalized for medical use. There is a legal market on the state level, but really it comes down to the federal government and when we'll see some decriminalization or preferably legalization on the federal level. We actually got some exciting news, it's not quite decriminalization, not quite legalization, but it's coming on 4/20 this morning, I guess, yesterday evening, I should say. Keith, can you tell us what exciting news that the federal government has for us today?
Speights: All right. Emily, today was announced that the U.S. House of Representatives has passed the SAFE Act. Basically what this act does is it will open up traditional banking services to cannabis companies in the U.S. This is just one step obviously because it has to now go to the Senate and see if it'll pass there. Sometimes there are differences in bills that have to be worked out between the two legislative chambers. But it's exciting news for the industry. They've been hoping for this for quite a while. The cannabis industry in the U.S. has really been handcuffed by its limitation to banking services, and so this is a big story that comes on for 4/20 day.
Flippen: Yes, it was wonderful timing for the house to do that. I will say this has happened before, we saw the safe banking act, I believe it was last year or late 2019, I can't quite remember the timeline. But the House passed the safe banking act prior essentially died and what was at a time a Republican-controlled Senate. Now that the Senate has presumably flipped Democratic, I think there is an assumption that the Senate will attempt to pass the SAFE Banking Act when it reaches its desk, but that's never a guarantee, and it never a guarantee that even if that's something the Senate would want to pass, that they will make it a priority over other pending legislation. All of that's unknown, but it is just a further testament that cogs are moving and the very slow machine, that is the government. Hopefully, those cogs continue to move in the direction of opening up and loosening restrictions on the cannabis industry as they exist today.
SAFE Banking is really critical for allowing access to, as you mentioned, banking services for state-legal cannabis businesses. The next big step, in my opinion, if it wasn't decriminalization or legalization, is reforming tax laws around how U.S.-based cannabis companies are taxed. They can't really deduct anything right now, so they pay outrageous amounts of money in U.S. tax, which doesn't contribute well to increasingly unprofitable business. When you think about the cannabis industry, Keith, we always get questions about, "Well, how do I get started investing?" You're telling me that all this high, all these excitements don't trust what I read. I mean, I might just gross to ignore the cannabis industry, how would you help somebody who is new and interested get started?
Speights: One alternative anyway is you don't have to go with investing in a stock of a company that actually grows cannabis, there are ancillary stocks that you could buy that have ties with the cannabis industry in some way. Going with an ancillary stock is actually a pretty good way to start out investing in cannabis for someone who just wants to get their toes in the water. These stocks usually always make most of their money from non-cannabis revenue sources, but then they also have some connection with the cannabis industry. They have some revenue coming in that's generated from the cannabis market.
Now, I'll note, Emily, at the Fool, we differentiate a little here. We categorize ancillary stocks as those companies that have other primary revenue sources and don't make a lot of money necessarily from cannabis. Then their picks and shovels serve the cannabis industry and provide products and services specifically to the cannabis industry. Of course, that picks and shovels phrase comes from the gold mining days when it was said that the folks making the most money weren't the gold miners themselves, but those who were selling picks and shovels to the miners. There's the ancillary and the picks and shovels, and I think new investors to cannabis could go with either route there. They could invest in companies that have a very indirect tie to cannabis, or they can invest in companies that sell products to the cannabis industry as a good entry point into investing in cannabis stocks.
Flippen: You're being kind with that commentary about the ancillary versus picks and shovels. I think I was the one who confused the two. I like to differentiate between the two. In my mind, ancillary companies are companies that if the cannabis industry goes to zero, they will still be fine. You can own shares of them and still think to yourself this is a good business to own, and I didn't lose a lot of capital as a result. You can think about investing in a company that has investments in the cannabis industry as an example of that. If the investments go to zero, there will still be strong underlying businesses. Whereas picks and shovels. I think, especially as I thought more about the industry, have gotten increasingly very connected to the performance of the cannabis Industry alone. Picks and shovels, in my mind, are businesses that if the cannabis industry were to disappear tomorrow, well, their businesses would be more stable than a pure-play, they would also probably disappear.
There's lots of ways that you can think about risk when setting up your exposure to the cannabis industry for people who want exposure, but don't want the downside risk, I think ancillary plays a great place to go. For other ones who are looking for more upside, but also more probably volatility, pure-plays and picks and shovels are great. We will give you examples of each of these businesses at the end of today's show, we talked about some of our favorite ideas. If this is really a more phase as we're talking about it here, don't worry, we'll provide some examples later on that hopefully color that a little bit better. Keith, in that same vein, when you're looking at a cannabis industry, whether it's ancillary or, pure-plays, what are you looking for when evaluating whether or not you want to buy that business or invest in that business?
Speights: Emily, I can't tell you how many times I've written about cannabis stocks over the last several years and emphasized that every factor you would look for in a stock in another industry still applies. I think it's a mistake to think of cannabis stocks with the emphasis on cannabis instead of on stock. These are stocks of companies and so you want to look at the same things with these companies that you would look at with any other company in any other industry. Look at the financials, look at their cash flow, look at their profitability, or if they're not profitable, maybe, look at their adjusted EBITDA, and look at their trends. Are they making progress toward profitability? Look at their debt levels. Some of these companies have taken on enormous amounts of debt and that makes it more difficult for them to achieve profitability. Look at their management teams. Unfortunately, Emily, they've been, I'm going to phrase this in as politically correct of way as I can, but there have been some characters who were less than exemplary, who've been attracted to the cannabis industry in some cases.
Take a look at the management teams, make sure you understand their backgrounds. Then with any company, you want to look at their competitive advantages. For cannabis companies, sometimes they have some geographic advantages because of the states that they operate in. Look at their cost advantages. Some companies have lower cost structures and so they are better able to compete. I like looking at their partnerships. Sometimes the right connections open doors that aren't open to other companies. Look at all those things that you would look at with any stock when you're looking at a cannabis stock.
Flippen: I love that. I feel like whenever I talk about cannabis businesses, I say all those things you just said, but I never put it in the context of, this is the same thing that you look for when you buy any business. I love that context. There are a couple of things I would add and frequent listeners of Industry Focus have heard me say these words many times in the context of non-cannabis businesses, but to your point, they also apply here. There are two yellow flags that I look for in the cannabis industry. The first one is, everybody is going to know it, I should just not say it, but it's its internal controls. Cannabis companies, because of their small size, don't have to have internal control reporting for the most part, some of them do. You can't always get a lot of insight here. But if you see some red flags there in terms of internal controls, that's a concern for me. We've seen cannabis companies have to restate prior financials, which is never fun and usually never a good thing. They are never restating and they're like, "Oh man, we actually did 50% more revenue." It never happens. It's just something to be aware of. The second thing I'd say is, actually look for related party transactions.
This goes back to what you were saying, Keith, about evaluating your management team. The related party transactions are transactions that the company takes with executives or professionals that work within the company itself and a lot of times these related party transactions can be set up in a way where they reward management even if performance of the business is poor. I'll talk more about that with one of the ideas that I'm going to bring together at the end of the show. It's a big risk. Again, it's a yellow risk, it doesn't necessarily mean that you're not going to invest. But I do think that everybody should be aware of how management is incentivized because with a lot of these small companies, and cannabis companies in general, they can set up incentive structures that reward them when you're losing money, which is not fun. Do you think we've teased everyone enough, Keith? Should we get to our favorite stocks?
Speights: Let's go for it.
Flippen: I'll kick it to you first. I guess, let's think about this in my totally arbitrary framework of ancillary picks and shovels and pure-play, starting with the ancillary first, do you have a favorite ancillary idea? Again, it doesn't have to be your favorite, but one you want to talk about today?
Speights: There are actually two that I really like and that I own.
Flippen: Awesome.
Speights: I love PayPal (NASDAQ: PYPL) and Square (NYSE: SQ). I realize that many people won't connect those with the cannabis industry, but hey, here's the thing. Retail is critical to the cannabis industry and I think these two companies, PayPal and Square, are becoming increasingly more critical to retail. They do have some ties, particularly Square has some ties to the cannabis industry. Of course, like you said earlier, Emily, ancillary stocks are the kind of stock that will be fine even if the cannabis industry disappeared. I would like PayPal and Square even if they had zero ties to cannabis whatsoever. Those are two of my favorites. I also like Constellation Brands (NYSE: STZ). Constellation has a closer connection to cannabis through its stake in Canopy Growth (NASDAQ: CGC), which is one of the leading Canadian cannabis producers. Of course, Constellation makes most of its money from its premium beer brands and its wines and spirits.
Flippen: Seltzer, increasingly. [laughs]
Speights: Seltzer, yeah. That's really a growth opportunity for them there. But I think Canopy gives Constellation Brands a great way to potentially profit from the cannabis boom. Particularly if the doors are open for Canopy to really expand into the U.S. market. Those are three that really jump out to me.
Flippen: I love that. In the context of PayPal and Square, I'm a shareholder in both those companies as well. Square actually has solutions for CBD companies here in the U.S.. If you're not already convinced, they have an entire offering just serving the CBD industry. Then PayPal has actually invested a lot of money, I shouldn't say invest, spend a lot of money lobbying [laughs] the federal government to pass some banking reform. Both management teams, I think, are conscious of the opportunity there. I think my ancillary idea is becoming less of an ancillary idea as every day passes. I'd almost say that this is probably more picks and shovels as I think about it more. But it's actually ScottsMiracle-Gro (NYSE: SMG). ScottsMiracle-Gro, everybody is familiar with as the fertilizer provider, the Miracle-Gro solutions. We all spray it on our plants. If you're watching this live, you can see a very dead plant behind me that has definitely not gotten it's fair dosage of Miracle-Gro. But ScottsMiracle-Gro is actually increasingly focused on a business that it acquired that works in the hydroponics supply space, it's called Hawthorne and this is a No. 1 supplier of hydroponics equipment to professional cannabis growers in the U.S. They have a dominating market share.
Virtually, all of their growth is coming from Hawthorne at ScottsMiracle-Gro. It's crazy. Because if you look back only a few years ago, ScottsMiracle-Gro, the only way it was delivering shareholder value was by buying back shares and issuing dividends. It's fine, but it was a fertilizer provider and that's how they were incentivizing shareholders. Now it's turned into this crazy growth story with Hawthorne projected to grow more than two times the rate of ScottsMiracle-Gro's core business, which is already growing quickly as everybody started gardening during the pandemic. I love this business. I didn't think I'd love this business, but I love this business.
Speights: Actually, Emily, I agree with you there, and if we segue to picks and shovels, ScottsMiracle-Gro was one of the top picks and shovels places that I really like right now for all of the reasons you just mentioned. I did have another pick though, and it's one that I do on Innovative Industrial Properties (NYSE: IIPR). This is a picks and shovels play. Innovative Industrial Properties is a real estate investment trust that focuses on the medical cannabis industry. This company has been highly profitable, it's growing fast, even pays are really great dividends to boot, and so I really like IIP's prospects now. We talked about the SAFE Banking Act passing the House of Representatives today, that could present some issues for innovative industrial properties because basically, they provide real estate capital. So if cannabis companies have more access to traditional banking services, they could have more outlets to go get the cash that they need. But I still think that Innovative Industrial Properties' prospects should still be really good over the long run, and I still like that stock quite a bit.
Flippen: I was actually going to say Innovative Industrial Properties as well. Instead of switching it up, I'm going to double-down because this is a really interesting business and I want to touch on the point that you just mentioned. The question we always get, which is, OK, if and when the SAFE Banking Act changes, what happens to Innovative Industrial Properties? I love the fact that the management team has not only been really transparent with what they expect to happen, but their expectations have not changed since day one when they were asked about this question, which says to me that they are thinking really strongly about, OK, what the future looks like for this business.
One of the things that they have constantly said is, yeah, we expect their cap rate to compress, we're not going to be able to get the same fees that we're getting right now when competition in the market heats up. But in order to prepare for that happening, they're increasing the length of their average term from 15 years to 20 years, so locking down those lucrative customers for longer periods of time. If and when SAFE Banking passes, Innovative Industrial Properties can actually do something that we haven't seen them able to do yet, which is lever up their balance sheet. Typically, that's not a good thing when you see a business taking on a lot of debt. But in the case of Ritz, it's actually great because they have a weird tax status that essentially allows them to pay out virtually, I think, 90% of pre-tax operating income to shareholders. Levering up is actually really beneficial in the context of the tax structure for Ritz, and they haven't been able to do that because of lack of access to banking. I love the fact that they can lever up and provide a little bit more shareholder value that way as well, just from that passage alone. Lastly, and perhaps, maybe save the best for last, maybe save the worst for last, I guess, depending on how you think about it, what are some of your or one of your favorite pure play ideas?
Speights: One pure play that I really like right now is AYR Wellness and they used to be called, I guess, Ayr or Ayr Strategies, but they changed their name. I think this dock is arguably the best bargain among all cannabis stocks, arguably. This company is growing leaps and bounds through acquisitions, has expanded into several new states, Arizona, Florida, Ohio are just a few. It's waiting for the close of a deal that'll get it into New Jersey, which I think presents a great opportunity for the company. AYR Wellness is projecting 2022 revenue of $725 million. They're looking for adjusted EBITDA of around $325 million. I think they're going to meet those goals. By the way, they projected 2022 numbers instead of 2021 because they're undergoing so much change in 2021 with so many acquisitions in the works. This company has a market cap of around $1 billion or so. I think it looks like a really good pick for investors who are like you said earlier, and we're willing to hang in there forfive, seven years or so. I think this could be a real winner.
Flippen: I love that, and when you first said the company name, I thought I didn't recognize it because I've been calling it AYR Wellness. But now that you've mentioned it, it does not have periods in between each of those letters. AYR Wellness may just be as accurate as AYR. I'm not sure, You may know it is either, but I also love that business.
Speights: Actually, I'm going to be honest here, Emily, I had called it AYR because their previous name had caps, AYR. They switched to lower case and I was curious, are they still AYR? Is it Ayr? I saw a video that some of their staff had made and they were pronouncing it Ayr, so I realized, OK, that's how they pronounce it.
Flippen: Well, I'd say that you save me some embarrassment, but I've managed to really put my foot in my mouth as a cannabis analyst now on this podcast by admitting that I hadn't even heard the name spoken yet before investing in it. But either way, I agree with you about AYR Wellness. It's, I think, an underrated player, although admittedly one that I think has probably a bit more execution risks as do all pure play cannabis companies, it all comes down to execution. Mine is one that I think is going to surprise a lot of people who have listened to me talk about cannabis companies in the past, because it's one that I've been a bit of a bear on, and that's actually Trulieve Cannabis. Trulieve Cannabis is the largest player, one of the first movers in the Florida medical market. I have been a huge skeptic of this business and part for a couple of still, for what I perceive to be very good reasons.
The first one is, can they execute on their strategy and financial performance when they attempt to move outside of Florida? Do I trust management, in particular, management's compensation structure? Each of those things, I think, are still big question marks, and going back to related party transactions, I think Trulieve is one of the worst offenders when it comes to looking at management compensation. Their CEO, Kim Rivers, and numerous of their executives have set up their debt financiers to the business. They're getting paid some pretty lofty interest payments, regardless of whether or not Trulieve does well. But in Rivers' defense, she's also a majority shareholder of the business so she's invested alongside [...] and more importantly, I think Trulieve has proven out just how well they understand their core customer. Some of the things I like about this business is that they're one of the only players, the only player that I follow at least that breaks out customer retention rate which has consistently been above 70% in the Florida markets. That's really strong for a consumer packaged goods business. They still only have about 2% of the Florida market penetrated, despite being a market share leader at over 50% in terms of market share, especially for dried flowers.
There's still lots of room to grow. Their average basket size in the last quarter was around $115 a visit with their customers visiting on average nearly three times a month. So customers are spending a ton of money. For context, Planet 13, which is another cannabis business, which is known for its really high basket size, had a basket size last quarter of just over $120. So truly, by pulling in customers left and right, they're retaining those customers pretty well and getting those customers to spend more and more money. I actually think that this business will have trouble expanding outside of Florida. I think they can, but I think they may face some troubles especially with brand recognition outside of their home state. But in my opinion, even if they fail,I think they have such a hole in the Florida market that it may not matter over the long term. Well, with that, I think we have made our investors and listeners hopefully proud by covering candidates today on 4/20 in a way that is foolish and we didn't manage to talk too much about Canadian players. That already puts us a step ahead of Zynga and the other cannabis outlets, at least in my opinion.
Speights: I think you're right on that.
Flippen: Well, Keith, thank you so much for joining with me. I really appreciate you being willing to come on today and give your thoughts. You're clearly an expert and I really appreciate it.
Speights: I enjoyed it. Thanks for having me, Emily.
Flippen: Listeners, that does it for this episode of Industry Focus. If you have any questions or you just want to reach out, feel free to shoot us an email at industryfocus@fool.com or tweet us @MFindustryfocus. As always, people on the program may own companies discussed on the show and The Motley Fool may have formal recommendations for or against any stocks mentioned, so don't buy or sell anything based solely on what you hear. Thanks to Tim Sparks for his work behind the screen today. For Keith Speights, I'm Emily Flippen. Thanks for listening and Fool on!
Emily Flippen owns shares of Constellation Brands, Innovative Industrial Properties, PayPal Holdings, Scotts Miracle-Gro, and Square. Keith Speights owns shares of Innovative Industrial Properties, PayPal Holdings, and Square. The Motley Fool owns shares of and recommends Constellation Brands, Innovative Industrial Properties, PayPal Holdings, Scotts Miracle-Gro, Square, and Zynga. The Motley Fool recommends the following options: long January 2022 $75.0 calls on PayPal Holdings. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Another company that did the exact same thing was one of the big Canadian players, Aurora Cannabis (NYSE: ACB). I tend to gravitate toward U.S. companies because the way that regulations in Canada have started to shake out, it's been really restrictive in terms of marketing and branding, and that shelf space excitement that you see when you look at a bag of Frosted Flakes. We talked about the SAFE Banking Act passing the House of Representatives today, that could present some issues for innovative industrial properties because basically, they provide real estate capital. | Another company that did the exact same thing was one of the big Canadian players, Aurora Cannabis (NYSE: ACB). In this episode of Industry Focus: Consumer Goods, Motley Fool contributor and cannabis expert Keith Speights joins host Emily Flippen as they celebrate April 20 by talking about how investors should (and shouldn't) get invested in marijuana, as well as some of their favorite ideas for all types of investors. Emily Flippen owns shares of Constellation Brands, Innovative Industrial Properties, PayPal Holdings, Scotts Miracle-Gro, and Square. | Another company that did the exact same thing was one of the big Canadian players, Aurora Cannabis (NYSE: ACB). In this episode of Industry Focus: Consumer Goods, Motley Fool contributor and cannabis expert Keith Speights joins host Emily Flippen as they celebrate April 20 by talking about how investors should (and shouldn't) get invested in marijuana, as well as some of their favorite ideas for all types of investors. Speights: One alternative anyway is you don't have to go with investing in a stock of a company that actually grows cannabis, there are ancillary stocks that you could buy that have ties with the cannabis industry in some way. | Another company that did the exact same thing was one of the big Canadian players, Aurora Cannabis (NYSE: ACB). In this episode of Industry Focus: Consumer Goods, Motley Fool contributor and cannabis expert Keith Speights joins host Emily Flippen as they celebrate April 20 by talking about how investors should (and shouldn't) get invested in marijuana, as well as some of their favorite ideas for all types of investors. The first one is that of course, you don't have to be invested in the cannabis industry. |
36812.0 | 2021-04-28 00:00:00 UTC | Why Aurora Cannabis, Hexo, and Aphria Stocks Are On Fire Today | ACB | https://www.nasdaq.com/articles/why-aurora-cannabis-hexo-and-aphria-stocks-are-on-fire-today-2021-04-28 | nan | nan | What happened
Marijuana stocks are lighting up in Wednesday afternoon trading, with shares of Aurora Cannabis (NYSE: ACB) and Aphria (NASDAQ: APHA) both gaining 4.8% through 1 p.m. EDT, and Hexo (NYSE: HEXO) surging more than twice as much, up 11%.
You can thank Bank of America for that.
Image source: Getty Images.
So what
Early this morning, Bank of America resumed coverage on a trio of the best-known marijuana stocks: Aurora Cannabis (which is up today), Tilray (NASDAQ: TLRY) (which is merging with Aphria, sending that stock up), and Canopy Growth (NASDAQ: CGC).
Curiously, BofA was most positive about Canopy's chances, resuming coverage of the stock with a buy rating and a prediction that the stock will hit $36 a share within a year -- a 28.5% gain from its current stock price of about $28. As StreetInsider.com reported today, BofA thinks that Canopy's "balance sheet, mgmt team and partnerships position CGC well to enter the US if there is federal legalization ... [and that] CGC's improving EBITDA and cash flow make its shares attractive in the meantime."
But BofA feels broadly positive about the rest of the marijuana industry as well, sparking a stock price rally across the sector. As TheFly.com just reported, BofA believes the United States is on track toward legalizing marijuana use at the federal level (a thesis I agree with, by the way), although the timeline for such legalization still remains uncertain.
Now what
Given the uncertainty about timing, however, investors might want to give special consideration to some of the reservations Bank of America expressed, despite its broad optimism about the marijuana industry.
In particular, the analyst highlights Tilray's low cash balance (the company actually carries more debt than it has cash available to pay it with) as a concern, as well as its "lack of a major CPG investment partner," notes TheFly. Aurora Cannabis is in a similar position, debt-wise, which probably explains why, out of the three stocks on which Bank of America resumed coverage today, Aurora was the only one tagged with a rating lower than buy.
Even if Aurora, Aphria, and Hexo are the stocks gaining the most from Bank of America's comments today, Canopy Growth is still the marijuana stock Bank of America likes best.
10 stocks we like better than Aurora Cannabis Inc.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends HEXO Corp. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | What happened Marijuana stocks are lighting up in Wednesday afternoon trading, with shares of Aurora Cannabis (NYSE: ACB) and Aphria (NASDAQ: APHA) both gaining 4.8% through 1 p.m. EDT, and Hexo (NYSE: HEXO) surging more than twice as much, up 11%. But BofA feels broadly positive about the rest of the marijuana industry as well, sparking a stock price rally across the sector. Now what Given the uncertainty about timing, however, investors might want to give special consideration to some of the reservations Bank of America expressed, despite its broad optimism about the marijuana industry. | What happened Marijuana stocks are lighting up in Wednesday afternoon trading, with shares of Aurora Cannabis (NYSE: ACB) and Aphria (NASDAQ: APHA) both gaining 4.8% through 1 p.m. EDT, and Hexo (NYSE: HEXO) surging more than twice as much, up 11%. So what Early this morning, Bank of America resumed coverage on a trio of the best-known marijuana stocks: Aurora Cannabis (which is up today), Tilray (NASDAQ: TLRY) (which is merging with Aphria, sending that stock up), and Canopy Growth (NASDAQ: CGC). Even if Aurora, Aphria, and Hexo are the stocks gaining the most from Bank of America's comments today, Canopy Growth is still the marijuana stock Bank of America likes best. | What happened Marijuana stocks are lighting up in Wednesday afternoon trading, with shares of Aurora Cannabis (NYSE: ACB) and Aphria (NASDAQ: APHA) both gaining 4.8% through 1 p.m. EDT, and Hexo (NYSE: HEXO) surging more than twice as much, up 11%. So what Early this morning, Bank of America resumed coverage on a trio of the best-known marijuana stocks: Aurora Cannabis (which is up today), Tilray (NASDAQ: TLRY) (which is merging with Aphria, sending that stock up), and Canopy Growth (NASDAQ: CGC). Curiously, BofA was most positive about Canopy's chances, resuming coverage of the stock with a buy rating and a prediction that the stock will hit $36 a share within a year -- a 28.5% gain from its current stock price of about $28. | What happened Marijuana stocks are lighting up in Wednesday afternoon trading, with shares of Aurora Cannabis (NYSE: ACB) and Aphria (NASDAQ: APHA) both gaining 4.8% through 1 p.m. EDT, and Hexo (NYSE: HEXO) surging more than twice as much, up 11%. Aurora Cannabis is in a similar position, debt-wise, which probably explains why, out of the three stocks on which Bank of America resumed coverage today, Aurora was the only one tagged with a rating lower than buy. Even if Aurora, Aphria, and Hexo are the stocks gaining the most from Bank of America's comments today, Canopy Growth is still the marijuana stock Bank of America likes best. |
36813.0 | 2021-04-27 00:00:00 UTC | 4 Canadian Cannabis Companies Poised to Profit from U.S. Legalization | ACB | https://www.nasdaq.com/articles/4-canadian-cannabis-companies-poised-to-profit-from-u.s.-legalization-2021-04-27 | nan | nan | As more and more states legalize marjiuana, federal legalization in the U.S. seems inevitable. Not only are more states passing legislation to permit recreational use, but a vast majority of Americans also support legalization. According to a recent survey, Pew Research found that 91% of people in the U.S. believe marijuana should be legal for either medical or recreational use, with 60% in favor of both. President Joe Biden is in favor of decriminalizing marijuana, while Senate Majority Leader Chuck Schumer is ready to push ahead with full legalization efforts even if Biden isn't completely on board just yet.
When legalization happens, there are many Canadian cannabis producers that will be ready to expand their presence south of the border. Canopy Growth (NASDAQ: CGC), soon-to-be-joined Aphria (NASDAQ: APHA) and Tilray (NASDAQ: TLRY), Cronos (NASDAQ: CRON), and Aurora Cannabis (NYSE: ACB) could be some of the biggest winners if (or, when) the U.S. pot market opens up.
Image source: Getty Images.
1. Canopy Growth
Canopy Growth has partnerships set up so that it can start working on expansion almost immediately after legalization takes place. One of the first things it would be able to do is close on its acquisition of Acreage Holdings. Although the two companies came to an agreement in 2019, the transaction is still pending. The multistate operator has a footprint in 13 states with 29 dispensaries that are up and running. In 2020, it reported sales of $114.5 million, which rose 55% year over year. With Acreage Holdings, Canopy Growth would be ready to rival big names like Curaleaf and Trulieve right off the bat.
Plus, the company is also working with investor Constellation Brands, which owns nearly 40% of the business, to develop cannabis beverages. Tapping into Constellation's distribution network, Canopy Growth will be poised to grab even more potential market share right out of the gate. And that is why this marijuana stock is at the top of this list -- it is easily the best positioned cannabis company in Canada to benefit from U.S. legalization.
2. Aphria and Tilray
The merger between Aphria and Tilray puts these two companies next on this list as together, they will have the next-best opportunities in the U.S. In November, Aphria announced the acquisition of SweetWater Brewing. And although the craft brewer does have the 420 brand, which suggests that it makes cannabis drinks, it actually uses hemp (which is legal in the U.S.) to emulate popular cannabis strains. Legalization would pave the way for the real deal. Tilray has partnered with Anheuser-Busch Inbev since 2018 on developing drinks for the Canadian pot market, and it will also have beverages that are ready to go.
Tilray has also been building out its position in other ways. Hemp plays a big part in its business, generating more than one-third of its revenue in 2020. In 2019, Tilray acquired Manitoba Harvest, a leading hemp business with products that are sold in thousands of retailers across the U.S. and Canada. Through its hemp operations, Tilray can leverage the existing relationships it has with retailers to potentially sell other cannabis products to them post-legalization.
3. Cronos
Cronos acquired cannabidiol (CBD) brand Lord Jones in 2019 from Redwood Holding Group. The company sells a variety of CBD-infused products, including oils and gummies. Last year, sales from the U.S. totaled $9.5 million and accounted for just 20% of its consolidated net revenue. But Cronos is definitely looking to change that. Earlier this year it partnered with actress Kristen Bell to launch a series of CBD products under its Happy Dance brand, which will be available at more than 550 Ulta Beauty locations.
Like Canopy Growth, Cronos also benefits from having a partner that can accelerate its growth in the U.S. Tobacco giant Altria invested $1.8 billion into the cannabis company in 2018. With deep pockets and wide reach across the states, Altria can help Cronos break into more markets after legalization.
4. Aurora Cannabis
Aurora doesn't have a big partner it can lean on, but the company has been making moves to take advantage of opportunities in the U.S. In May 2020, it announced entry into the U.S. market through the acquisition of Reliva, which makes CBD products. The acquisition also brought on board CEO Miguel Martin, who was previously at the helm of Reliva and has 25 years of experience in consumer packaged goods. Reliva's products are in more than 20,000 retail locations and at the time of the acquisition, it claimed to be the "only CBD company in the three largest U.S. wholesale distributors."
Although Aurora doesn't specifically break out U.S.-related sales, it is safe to assume this transaction, which cost the company approximately $40 million worth of shares (potentially up to $45 million), isn't going to put the company into as promising a position as the other pot stocks on this list. Aurora closed on the transaction in May 2020, but even when including Reliva's results into its operations, it has struggled to generate meaningful growth. In its second-quarter earnings report, released on Feb. 11, its net revenue of 67.7 million Canadian dollars for the period ending Dec. 31, 2020 was flat from the previous period.
However, investors shouldn't count the company out. Once pot is legal in the U.S., that may open the door for other potential deals for Aurora. Although billionaire investor Nelson Peltz was unable to broker a transaction, more opportunities could arise once the prohibition of marijuana is over and it no longer deters companies in other industries from jumping into the cannabis sector.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
David Jagielski has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Constellation Brands, Trulieve Cannabis Corp., and Ulta Beauty. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Canopy Growth (NASDAQ: CGC), soon-to-be-joined Aphria (NASDAQ: APHA) and Tilray (NASDAQ: TLRY), Cronos (NASDAQ: CRON), and Aurora Cannabis (NYSE: ACB) could be some of the biggest winners if (or, when) the U.S. pot market opens up. Earlier this year it partnered with actress Kristen Bell to launch a series of CBD products under its Happy Dance brand, which will be available at more than 550 Ulta Beauty locations. The acquisition also brought on board CEO Miguel Martin, who was previously at the helm of Reliva and has 25 years of experience in consumer packaged goods. | Canopy Growth (NASDAQ: CGC), soon-to-be-joined Aphria (NASDAQ: APHA) and Tilray (NASDAQ: TLRY), Cronos (NASDAQ: CRON), and Aurora Cannabis (NYSE: ACB) could be some of the biggest winners if (or, when) the U.S. pot market opens up. Plus, the company is also working with investor Constellation Brands, which owns nearly 40% of the business, to develop cannabis beverages. The Motley Fool owns shares of and recommends Constellation Brands, Trulieve Cannabis Corp., and Ulta Beauty. | Canopy Growth (NASDAQ: CGC), soon-to-be-joined Aphria (NASDAQ: APHA) and Tilray (NASDAQ: TLRY), Cronos (NASDAQ: CRON), and Aurora Cannabis (NYSE: ACB) could be some of the biggest winners if (or, when) the U.S. pot market opens up. Although Aurora doesn't specifically break out U.S.-related sales, it is safe to assume this transaction, which cost the company approximately $40 million worth of shares (potentially up to $45 million), isn't going to put the company into as promising a position as the other pot stocks on this list. Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018. | Canopy Growth (NASDAQ: CGC), soon-to-be-joined Aphria (NASDAQ: APHA) and Tilray (NASDAQ: TLRY), Cronos (NASDAQ: CRON), and Aurora Cannabis (NYSE: ACB) could be some of the biggest winners if (or, when) the U.S. pot market opens up. Like Canopy Growth, Cronos also benefits from having a partner that can accelerate its growth in the U.S. Tobacco giant Altria invested $1.8 billion into the cannabis company in 2018. Although Aurora doesn't specifically break out U.S.-related sales, it is safe to assume this transaction, which cost the company approximately $40 million worth of shares (potentially up to $45 million), isn't going to put the company into as promising a position as the other pot stocks on this list. |
36814.0 | 2021-04-23 00:00:00 UTC | Why Aurora Cannabis, Hexo, and Aphria Stocks Ran Higher Today | ACB | https://www.nasdaq.com/articles/why-aurora-cannabis-hexo-and-aphria-stocks-ran-higher-today-2021-04-23 | nan | nan | What happened
As the trading week winds down, marijuana stocks are moving up once again. In the final 15 minutes of trading Friday, shares of Aurora Cannabis (NYSE: ACB) are up 4.2%, Hexo (NYSE: HEXO) is up 4%, and Aphria (NASDAQ: APHA) is hanging onto a 3.6% gain.
So what
There's no company-specific news on the wires today to explain why these stocks in particular are rising. There is, however, a pretty sizable slew of news about the progress of marijuana legalization in general.
Across the U.S., 17 states and the District of Columbia have legalized marijuana for recreational use, and 36 states permit cannabis to be used for medicinal purposes. This week, Virginia moved to join the legal marijuana party, with Gov. Ralph Northam legalizing recreational marijuana beginning July 1.
Elsewhere in the country, marijuana news aggregator MarijuanaMoment.net reports progress on legalization initiatives in both Louisiana (a positive committee vote on medical marijuana) and Minnesota (with a floor vote in the House expected in May), while in Montana, the state senate is working on a bill "to implement and tax recreational marijuana in Montana."
Image source: Getty Images.
Now what
The news isn't all good on the legalization front. In the U.S. Senate, Banking Committee Chairman Sherrod Brown is said to be "tempering expectations" about Senate passage of a bill to permit banks to provide services to marijuana businesses, in states where the drug is legal, without fear of federal prosecution.
That being said, Brown is said to be consulting with Senate Majority Leader Chuck Schumer -- who supports marijuana legalization. As more and more states jump on the legal marijuana bandwagon, and with a clear majority already on board, the writing is on the wall.
Sooner or later, nationwide legalization is going to happen, and today, investors in the marijuana stocks seem happy to wait for as long as it takes for that to happen.
10 stocks we like better than Aurora Cannabis Inc.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends HEXO Corp. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | In the final 15 minutes of trading Friday, shares of Aurora Cannabis (NYSE: ACB) are up 4.2%, Hexo (NYSE: HEXO) is up 4%, and Aphria (NASDAQ: APHA) is hanging onto a 3.6% gain. That being said, Brown is said to be consulting with Senate Majority Leader Chuck Schumer -- who supports marijuana legalization. As more and more states jump on the legal marijuana bandwagon, and with a clear majority already on board, the writing is on the wall. | In the final 15 minutes of trading Friday, shares of Aurora Cannabis (NYSE: ACB) are up 4.2%, Hexo (NYSE: HEXO) is up 4%, and Aphria (NASDAQ: APHA) is hanging onto a 3.6% gain. Across the U.S., 17 states and the District of Columbia have legalized marijuana for recreational use, and 36 states permit cannabis to be used for medicinal purposes. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market. | In the final 15 minutes of trading Friday, shares of Aurora Cannabis (NYSE: ACB) are up 4.2%, Hexo (NYSE: HEXO) is up 4%, and Aphria (NASDAQ: APHA) is hanging onto a 3.6% gain. Elsewhere in the country, marijuana news aggregator MarijuanaMoment.net reports progress on legalization initiatives in both Louisiana (a positive committee vote on medical marijuana) and Minnesota (with a floor vote in the House expected in May), while in Montana, the state senate is working on a bill "to implement and tax recreational marijuana in Montana." Sooner or later, nationwide legalization is going to happen, and today, investors in the marijuana stocks seem happy to wait for as long as it takes for that to happen. | In the final 15 minutes of trading Friday, shares of Aurora Cannabis (NYSE: ACB) are up 4.2%, Hexo (NYSE: HEXO) is up 4%, and Aphria (NASDAQ: APHA) is hanging onto a 3.6% gain. Across the U.S., 17 states and the District of Columbia have legalized marijuana for recreational use, and 36 states permit cannabis to be used for medicinal purposes. 10 stocks we like better than Aurora Cannabis Inc. |
36815.0 | 2021-04-23 00:00:00 UTC | 3 Under-the-Radar Cannabis Stocks to Buy Right Now | ACB | https://www.nasdaq.com/articles/3-under-the-radar-cannabis-stocks-to-buy-right-now-2021-04-23 | nan | nan | The Horizons Marijuana Life Sciences ETF has been red-hot over the past year, climbing more than 65% and dwarfing the S&P 500's gains of 43%. For cannabis investors, that means many stocks are trading at inflated valuations. But if you are worried about missing out on opportunities in the sector, there are still plenty of stocks flying under the radar that could be great buys.
Auxly (OTC: CBWTF), IM Cannabis (NASDAQ: IMCC), and Clever Leaves (NASDAQ: CLVR) possess some exciting growth opportunities that could make them some of the best buys out there right now. While they likely won't make you rich overnight, if you are willing to remain patient, they have the potential to deliver some great returns for your portfolio.
Image source: Getty Images.
1. Auxly
Canadian cannabis producer Auxly has seen its share price rise just 12% in the past 12 months. But it is slowly building up its business and expanding into dried flower products. Up until now, Auxly has taken a bit of a backwards approach, focusing on the edibles and vapes segment of the market (also known as "cannabis 2.0 products"), which weren't legal until one year after Canada legalized marijuana in flower form. Most cannabis companies started with dried flower products and then moved into the new segment of the market. However, Auxly has been doing a great job there, announcing earlier this year that it led in market share in 2020 for 2.0 products in Canada.
Expanding into more conventional cannabis products will help to diversify the business while also continuing to grow its top line. The company last released its quarterly results on Nov. 30, showing that in the nine-month period ending Sept. 30, its revenue totaled CA$31.9 million. That represented growth of 514% year-over-year, though the company still incurred an adjusted EBITDA loss of CA$24.2 million.
On April 20, the company's stock moved onto Canada's main exchange, the TSX (it was previously on the smaller TSX Venture Exchange). Being on a major exchange could help Auxly's shares gain more traction. And if it also delivers strong sales numbers and its expansion into dried flower products proves to be successful, it may be one of the better-performing pot stocks from here on out. Today it trades at 7 times its revenue, which is a bargain compared with bigger names like Cronos and Canopy Growth, which are at price-to-sales (P/S) multiples of 61 and 25, respectively.
2. IM Cannabis
For those interested in some international exposure, IM Cannabis is another small but intriguing cannabis investment. It also recently moved onto a larger exchange, the Nasdaq, on March 1 (previously it was only listed on the Canadian Securities Exchange). The Israeli-based company is strategically located near Europe. And Israel stands to be one of the next countries to legalize pot, with its justice minister stating in November that a law will permit authorized stores to sell cannabis in nine months.
Research company BDSA projects that the international cannabis market (outside of Canada and the U.S.) will be worth $6.5 billion in 2025 -- more than Canada's, which will be at just $6.1 billion by then. Specifically, the European market is expected to grow at a compounded annual growth rate (CAGR) of 42%, which is a much faster pace than both North American markets (Canada's average CAGR is projected to be 26% during the forecast period, while for the U.S. that number is 18%).
IM Cannabis is still a relatively small company, with sales over its most recent three quarters totaling just CA$11 million and net losses of CA$8.8 million. But the company could get a lot bigger. Last year it announced the acquisition of Trichome Financial, which has helped provide capital for the cannabis industry. Trichome's experience with acquisitions could help pave the way for some more M&A activity, as the combined company has a "common goal of continuing an aggressive, synergistic and accretive acquisition strategy in North America." With Trichome, IM Cannabis expects to achieve positive adjusted EBITDA this year.
With CA$13.5 million in revenue over the trailing 12 months, IM Cannabis is trading at a P/S multiple of more than 24. It isn't a bargain buy given what it has achieved thus far, but that could change given all the opportunities ahead, which is why this could be an underrated investment in the cannabis sector.
3. Clever Leaves
Another global company to add to your list is New York-based Clever Leaves. The business has investments and operations in Europe, North America, and South America, where it has a 1.8 million-square-foot greenhouse in Colombia. Clever Leaves estimates that it has a larger cultivation footprint than big names like Aurora Cannabis and Cresco Labs.
It is banking on a lower cost of production in Colombia, where wages are lower and its production costs of less than $0.20 per gram will be far lower than those of the competition. The average in Canada is approximately $2.07 per gram, and in its most recent quarter for the period ending Feb. 28, low-cost producer Aphria reported all-in costs per gram of approximately $1.23.
Clever Leaves' year-end results, released March 30, showed sales of $12.1 million in 2020, representing growth of 55% year over year. While its gross margin of 61% was strong, the company's operating expenses of $35.9 million dragged on the bottom line, with Clever Leaves incurring a net loss of $36.7 million for the full year. However, the company's operating expenses declined by more than 9% from the previous year. If it can maintain its gross margins while also growing its sales, there could be a path to profitability in the near future.
At a P/S multiple of nearly 22, this isn't a cheap buy right now. But if Clever Leaves can effectively scale its business, it could quickly take off in value, as its low production costs could make profitability a realistic goal for the business and attract many cannabis investors.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
David Jagielski has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Cresco Labs Inc. The Motley Fool recommends Auxly Cannabis Group. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | And if it also delivers strong sales numbers and its expansion into dried flower products proves to be successful, it may be one of the better-performing pot stocks from here on out. Today it trades at 7 times its revenue, which is a bargain compared with bigger names like Cronos and Canopy Growth, which are at price-to-sales (P/S) multiples of 61 and 25, respectively. And Israel stands to be one of the next countries to legalize pot, with its justice minister stating in November that a law will permit authorized stores to sell cannabis in nine months. | IM Cannabis is still a relatively small company, with sales over its most recent three quarters totaling just CA$11 million and net losses of CA$8.8 million. With Trichome, IM Cannabis expects to achieve positive adjusted EBITDA this year. Clever Leaves' year-end results, released March 30, showed sales of $12.1 million in 2020, representing growth of 55% year over year. | Up until now, Auxly has taken a bit of a backwards approach, focusing on the edibles and vapes segment of the market (also known as "cannabis 2.0 products"), which weren't legal until one year after Canada legalized marijuana in flower form. IM Cannabis For those interested in some international exposure, IM Cannabis is another small but intriguing cannabis investment. IM Cannabis is still a relatively small company, with sales over its most recent three quarters totaling just CA$11 million and net losses of CA$8.8 million. | Auxly (OTC: CBWTF), IM Cannabis (NASDAQ: IMCC), and Clever Leaves (NASDAQ: CLVR) possess some exciting growth opportunities that could make them some of the best buys out there right now. With CA$13.5 million in revenue over the trailing 12 months, IM Cannabis is trading at a P/S multiple of more than 24. But if Clever Leaves can effectively scale its business, it could quickly take off in value, as its low production costs could make profitability a realistic goal for the business and attract many cannabis investors. |
36816.0 | 2021-04-22 00:00:00 UTC | Interesting ACB Put And Call Options For June 4th | ACB | https://www.nasdaq.com/articles/interesting-acb-put-and-call-options-for-june-4th-2021-04-22 | nan | nan | Investors in Aurora Cannabis Inc (Symbol: ACB) saw new options begin trading today, for the June 4th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the ACB options chain for the new June 4th contracts and identified one put and one call contract of particular interest.
The put contract at the $8.00 strike price has a current bid of 23 cents. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $8.00, but will also collect the premium, putting the cost basis of the shares at $7.77 (before broker commissions). To an investor already interested in purchasing shares of ACB, that could represent an attractive alternative to paying $8.16/share today.
Because the $8.00 strike represents an approximate 2% discount to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the put contract would expire worthless. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 100%. Stock Options Channel will track those odds over time to see how they change, publishing a chart of those numbers on our website under the contract detail page for this contract. Should the contract expire worthless, the premium would represent a 2.88% return on the cash commitment, or 24.40% annualized — at Stock Options Channel we call this the YieldBoost.
Below is a chart showing the trailing twelve month trading history for Aurora Cannabis Inc, and highlighting in green where the $8.00 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $8.50 strike price has a current bid of 11 cents. If an investor was to purchase shares of ACB stock at the current price level of $8.16/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $8.50. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 5.51% if the stock gets called away at the June 4th expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if ACB shares really soar, which is why looking at the trailing twelve month trading history for Aurora Cannabis Inc, as well as studying the business fundamentals becomes important. Below is a chart showing ACB's trailing twelve month trading history, with the $8.50 strike highlighted in red:
Considering the fact that the $8.50 strike represents an approximate 4% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 99%. On our website under the contract detail page for this contract, Stock Options Channel will track those odds over time to see how they change and publish a chart of those numbers (the trading history of the option contract will also be charted). Should the covered call contract expire worthless, the premium would represent a 1.35% boost of extra return to the investor, or 11.44% annualized, which we refer to as the YieldBoost.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today's price of $8.16) to be 143%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
Top YieldBoost Calls of the S&P 500 »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Of course, a lot of upside could potentially be left on the table if ACB shares really soar, which is why looking at the trailing twelve month trading history for Aurora Cannabis Inc, as well as studying the business fundamentals becomes important. Below is a chart showing ACB's trailing twelve month trading history, with the $8.50 strike highlighted in red: Considering the fact that the $8.50 strike represents an approximate 4% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. Investors in Aurora Cannabis Inc (Symbol: ACB) saw new options begin trading today, for the June 4th expiration. | Below is a chart showing ACB's trailing twelve month trading history, with the $8.50 strike highlighted in red: Considering the fact that the $8.50 strike represents an approximate 4% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. Investors in Aurora Cannabis Inc (Symbol: ACB) saw new options begin trading today, for the June 4th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the ACB options chain for the new June 4th contracts and identified one put and one call contract of particular interest. | Below is a chart showing ACB's trailing twelve month trading history, with the $8.50 strike highlighted in red: Considering the fact that the $8.50 strike represents an approximate 4% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. Investors in Aurora Cannabis Inc (Symbol: ACB) saw new options begin trading today, for the June 4th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the ACB options chain for the new June 4th contracts and identified one put and one call contract of particular interest. | Below is a chart showing ACB's trailing twelve month trading history, with the $8.50 strike highlighted in red: Considering the fact that the $8.50 strike represents an approximate 4% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. Investors in Aurora Cannabis Inc (Symbol: ACB) saw new options begin trading today, for the June 4th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the ACB options chain for the new June 4th contracts and identified one put and one call contract of particular interest. |
36817.0 | 2021-04-22 00:00:00 UTC | Should You Buy Sundial Growers on the Dip? | ACB | https://www.nasdaq.com/articles/should-you-buy-sundial-growers-on-the-dip-2021-04-22 | nan | nan | It has been a volatile year for cannabis producer Sundial Growers (NASDAQ: SNDL). At one point, shares of the company were up more than 400% in 2021. And although they are still up about 90% year to date and have significantly outperformed the S&P 500's gains of just 11%, things have clearly cooled off.
There have been no recent developments to suggest things have gotten any worse for the company; instead, it's likely that the Reddit-fueled hype that sent the stock to highs of nearly $4 a share is simply no longer there. With tons of cash on its books and Sundial looking for a deal, this is a stock that still has plenty of potential to rise in value. But the big question is whether the price is low enough that it is now worth the risk.
Image source: Getty Images.
It still isn't suitable for risk-averse investors
A drop in price doesn't mean investors should ignore the risks involved with Sundial. The company is in the midst of a transition. Not only is it exploring acquisitions, but its business is also moving away from wholesale and toward branded retail. If Sundial doesn't find a good deal out there and the change in strategy doesn't pay off, there could be plenty of room for the pot stock to fall from its $1.5 billion valuation. With a price-to-sales multiple of 5.4, it is slightly more expensive than Aurora Cannabis, which trades at 4.7 times its revenue. But Aurora is a much larger company, with revenue totaling 286 million Canadian dollars over the trailing 12 months, while Sundial has generated just CA$61 million in its past four quarters. Aurora also has a much larger footprint than just Canada, with a presence in 25 countries.
In its most recent quarterly earnings, released March 17, Sundial posted an adjusted EBITDA loss of CA$5.6 million for the period ending Dec. 31. That was 28% higher than the CA$4.4 million loss it incurred in the previous period, despite an 8% increase in revenue. If the company doesn't find a way to improve its financials, the pot stock's losses could continue indefinitely. But despite these challenges, there are reasons investors may still prefer Sundial over other options.
Why Sundial could make a good investment
Sundial is a high-risk, high-reward investment. There are no guarantees of what its business will look like a year from now. And one of its key assets right now is its stockpile of money. With unrestricted cash of CA$719 million as of March 15, there are plenty of options out there for Sundial if it wants to scoop up a competitor and advance its position in the industry.
In a sense, Sundial could make for a safer investment than buying shares of a special purpose acquisition company (SPAC). SPACs, or "blank check" companies, have been popular investments this year, with investors betting that they will land some great deals to send their valuations through the roof. Churchill Capital Corp IV is one of the more popular examples, and its stock has followed a similar path to Sundial's this year. And while Churchill will be merging with Lucid Motors, many other SPACs out there have not secured such deals.
Betting on a SPAC can be dangerous, as there is no underlying business and no guarantee that a deal will happen. With Sundial, at least you are investing in a company that has an existing business it can fall back on if it doesn't find a company to merge with or acquire. And from that angle, it can be a worthwhile investment for investors who are OK with the level of risk involved.
Is Sundial a buy?
Shares of Sundial have cratered by around 40% in just the past month, while the S&P 500 has risen by more than 6%. But despite the discount in price, I would still hesitate to invest in the company right now. This is a stock that was trading below $0.20 less than six months ago, and that should serve as a reminder to investors of just how low shares of Sundial could potentially fall.
Although the business is in a stronger financial position today, I don't see a reason why it should be trading at a higher valuation than Aurora Cannabis. And that is why, despite the drop in value, Sundial is still not cheap enough to buy, especially with so many question marks surrounding the business.
Sundial may be suitable for SPAC investors looking to minimize some of their risk. But beyond that, the pot stock isn't cheap enough to be worth the risk. There are much more promising cannabis investments out there to choose from.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | In its most recent quarterly earnings, released March 17, Sundial posted an adjusted EBITDA loss of CA$5.6 million for the period ending Dec. 31. With unrestricted cash of CA$719 million as of March 15, there are plenty of options out there for Sundial if it wants to scoop up a competitor and advance its position in the industry. SPACs, or "blank check" companies, have been popular investments this year, with investors betting that they will land some great deals to send their valuations through the roof. | It still isn't suitable for risk-averse investors A drop in price doesn't mean investors should ignore the risks involved with Sundial. If Sundial doesn't find a good deal out there and the change in strategy doesn't pay off, there could be plenty of room for the pot stock to fall from its $1.5 billion valuation. Why Sundial could make a good investment Sundial is a high-risk, high-reward investment. | If Sundial doesn't find a good deal out there and the change in strategy doesn't pay off, there could be plenty of room for the pot stock to fall from its $1.5 billion valuation. Why Sundial could make a good investment Sundial is a high-risk, high-reward investment. With Sundial, at least you are investing in a company that has an existing business it can fall back on if it doesn't find a company to merge with or acquire. | It still isn't suitable for risk-averse investors A drop in price doesn't mean investors should ignore the risks involved with Sundial. But Aurora is a much larger company, with revenue totaling 286 million Canadian dollars over the trailing 12 months, while Sundial has generated just CA$61 million in its past four quarters. There are no guarantees of what its business will look like a year from now. |
36818.0 | 2021-04-21 00:00:00 UTC | Why Canopy Growth, Aurora Cannabis, and HEXO Stocks All Popped Today | ACB | https://www.nasdaq.com/articles/why-canopy-growth-aurora-cannabis-and-hexo-stocks-all-popped-today-2021-04-21 | nan | nan | What happened
After a rough Tuesday, shares of marijuana stocks are on fire again today, with both Canopy Growth (NASDAQ: CGC) and Aurora Cannabis (NYSE: ACB) rising 4%, and HEXO (NYSE: HEXO) stock up 6.5% as of 1 p.m. EDT on Wednesday.
In fact, smaller marijuana stocks seem to be doing better than their larger brethren. OrganiGram Holdings (NASDAQ: OGI), for example, is also notching a 6% gain, and Green Thumb Industries (OTC: GTBIF) is tacking on 7%. And you can send your thank-you notes to Senate Majority Leader Chuck Schumer, the New York Democrat.
Image source: Getty Images.
So what
As CNBC reported on Tuesday, Schumer gave marijuana stocks a big boost when he chose the significant date for pot enthusiasts to reiterate his calls for legalizing marijuana in the U.S. at the federal level.
"I believe the time has come to end the federal prohibition on marijuana in this country," Schumer said, adding that "hopefully, the next time this unofficial holiday, 4/20, rolls around, our country will have made progress in addressing the massive overcriminalization of marijuana in a meaningful and comprehensive way."
Now what
On Monday, the U.S. House of Representatives voted 321 to 101 to pass legislation permitting banks to provide financial services to marijuana companies in states where sale of the drug has been legalized. In 16 states and the District of Columbia, it's already legal on a recreational basis, and 36 states allow it for medicinal purposes.
The vote by the House is a clear boost for marijuana companies. The next step will be for the Senate to pass similar legislation, either echoing the House's language or broadening it to provide nationwide permission for banking services -- at which point legislation can head to President Joe Biden's desk for signing.
While passage is not yet certain, the overwhelming support for the legislation in the House, and a strong vote of confidence from the leader of the majority party in the Senate, suggest the chances for legalization this year are indeed improving.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Green Thumb Industries and OrganiGram Holdings. The Motley Fool recommends HEXO Corp. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | What happened After a rough Tuesday, shares of marijuana stocks are on fire again today, with both Canopy Growth (NASDAQ: CGC) and Aurora Cannabis (NYSE: ACB) rising 4%, and HEXO (NYSE: HEXO) stock up 6.5% as of 1 p.m. EDT on Wednesday. OrganiGram Holdings (NASDAQ: OGI), for example, is also notching a 6% gain, and Green Thumb Industries (OTC: GTBIF) is tacking on 7%. Now what On Monday, the U.S. House of Representatives voted 321 to 101 to pass legislation permitting banks to provide financial services to marijuana companies in states where sale of the drug has been legalized. | What happened After a rough Tuesday, shares of marijuana stocks are on fire again today, with both Canopy Growth (NASDAQ: CGC) and Aurora Cannabis (NYSE: ACB) rising 4%, and HEXO (NYSE: HEXO) stock up 6.5% as of 1 p.m. EDT on Wednesday. Now what On Monday, the U.S. House of Representatives voted 321 to 101 to pass legislation permitting banks to provide financial services to marijuana companies in states where sale of the drug has been legalized. The Motley Fool owns shares of and recommends Green Thumb Industries and OrganiGram Holdings. | What happened After a rough Tuesday, shares of marijuana stocks are on fire again today, with both Canopy Growth (NASDAQ: CGC) and Aurora Cannabis (NYSE: ACB) rising 4%, and HEXO (NYSE: HEXO) stock up 6.5% as of 1 p.m. EDT on Wednesday. So what As CNBC reported on Tuesday, Schumer gave marijuana stocks a big boost when he chose the significant date for pot enthusiasts to reiterate his calls for legalizing marijuana in the U.S. at the federal level. See the 10 stocks *Stock Advisor returns as of February 24, 2021 Rich Smith has no position in any of the stocks mentioned. | What happened After a rough Tuesday, shares of marijuana stocks are on fire again today, with both Canopy Growth (NASDAQ: CGC) and Aurora Cannabis (NYSE: ACB) rising 4%, and HEXO (NYSE: HEXO) stock up 6.5% as of 1 p.m. EDT on Wednesday. Now what On Monday, the U.S. House of Representatives voted 321 to 101 to pass legislation permitting banks to provide financial services to marijuana companies in states where sale of the drug has been legalized. While passage is not yet certain, the overwhelming support for the legislation in the House, and a strong vote of confidence from the leader of the majority party in the Senate, suggest the chances for legalization this year are indeed improving. |
36819.0 | 2021-04-20 00:00:00 UTC | Best Stocks To Buy Today? 4 Cannabis Stocks In Focus | ACB | https://www.nasdaq.com/articles/best-stocks-to-buy-today-4-cannabis-stocks-in-focus-2021-04-20 | nan | nan | Top Cannabis Stocks To Watch Right Now
Cannabis stocks remain hot stocks to buy in the stock market so far this year. Now, with the Biden administration championing the legalization of recreational marijuana nationwide. Additionally, more consumers continue turning to the calming substance amidst the pandemic as a means of destressing. With all this in mind, I can understand if investors are looking to expand their U.S. cannabis stocks list.
If anything, the tailwinds for the industry appear to be picking up speed on the pot-smoking holiday of 4/20. Earlier today, the U.S. House of Representatives passed the ground-breaking Secure and Fair Enforcement Banking Act. Why is this important? Well, simply put, the bill protects and enables financial institutions to service cannabis operators. Should the bill make it past the Senate and receive approval from President Biden, this would be a big win for the U.S. cannabis market. The timely approval of this bill would serve to boost investor interest in the best cannabis stocks now.
For instance, we could look at the likes of Green Thumb Industries (OTCMKTS: GTBIF) and Trulieve Cannabis (OTCMKTS: TCNNF). Both of these cannabis sellers are looking at gains of over 280% in the past year. Moreover, BDSA, a cannabis sales data platform, projects that global cannabis sales could grow to $55.9 billion in 2026. If this holds true, could one of these top cannabis stocks be the best stocks to watch in the stock market today?
Cannabis Stocks To Buy [Or Sell] This Week
Tilray Inc. (NASDAQ: TLRY)
Canopy Growth Corporation (NASDAQ: CGC)
Aurora Cannabis (NYSE: ACB)
Innovative Industrial Properties Inc. (NYSE: IIPR)
Tilray Inc.
Tilray is a global leader in the production and distribution of medical cannabis and cannabinoids. The company is also one of the first licensed producers of medical cannabis in the world to have its facility Good Manufacturing Practices (GMP) certified. Impressively, the company serves tens of thousands of patients, physicians, hospitals, and governments in eight countries. Given how the SAFE Act was passed today, Tilray could benefit from it significantly as it eagerly waits to enter the U.S. market. TLRY stock currently trades at $16.14 as of 12:29 p.m. ET and is up by over 140% despite some volatility at the start of the year.
In February, the company announced its fourth-quarter and full-year 2020 financial results. Firstly, its revenue increased by 26% at $210.5 million compared to a year earlier. It generated meaningful revenue growth across its core business. Namely, this would be international medical and Canadian adult use in the fourth quarter.
Secondly, the company has also strengthened its balance sheet and is well-positioned for growth in combination with Aphria (NASDAQ: APHA). The merger with Aphria would make the two companies the world’s largest cannabis company based on pro forma revenue. Given the exciting developments surrounding the company, will you consider adding TLRY stock to your portfolio?
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Canopy Growth Corporation
Canopy Growth is a multi-brand cannabis company that is based in Canada. The company, through its subsidiaries, is engaged in the business of producing and selling legal marijuana in the Canadian medical market. It also sells marijuana in the recreational market and its core brands include Tweed and Bedrocan. CGC currently trades at $26.03 as of 12:30 p.m. ET. Earlier this month, the company announced that it will be acquiring The Supreme Cannabis Company. Notably, following the completion of the acquisition, Canopy will possess a strengthened brand portfolio that includes one of Canada’s leading premium brands, 7ACRES.
The company reported its third-quarter fiscal financial results in February. In it, the company posted a record net revenue of $153 million, a 23% increase year-over-year. Canopy Growth also notes that its business transformation continues to gain traction and it has seen its Canadian recreational market share increase by a commendable amount.
The company also expects to achieve profitability during the second half of FY 2022 while it continues to invest in consumer insights, R&D, and the U.S. market. With that in mind, will you consider adding CGC stock to your watchlist?
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Aurora Cannabis Inc.
Aurora is one of the world’s largest and fastest-growing cannabis companies. It is a leading integrated cannabis company with a robust network of subsidiaries and strategic partnerships. The company also boasts state-of-the-art production facilities and exclusive sales agreements in the European Union.
Today, Aurora sets itself apart through its global reach, high-tech, low-cost production facilities, and science-driven innovations across the entire cannabinoid value chain. ACB stock currently trades at $7.78 as of 12:31 p.m. ET.
The company reported its fiscal 2021 second-quarter financial results in February. In it, Aurora posted a total cannabis net revenue of $70.3 million, up by 11% year-over-year. Medical cannabis net revenue made up a huge chunk of this revenue at $38.9 million, which is a 42% increase compared to a year ago. Impressively, the company also ended the quarter with $565 million in cash. All things considered, will you add ACB stock to your list of cannabis stocks to watch?
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Innovative Industrial Properties Inc.
Following that, we have Innovative Industrial Properties Inc. (IIPR). In the case of IIPR, we are looking at a leading pick-and-shovel play on the U.S. marijuana industry. For the uninitiated, the company acquires and leases medical-use cannabis facilities across the country. As of early April, IIPR owns 68 properties in the U.S., all of which are currently leased. In fact, IIPR also recently reported a weighted average remaining lease term of approximately 16.7 years across its portfolio. Seeing as the marijuana industry is yet again in the spotlight, I could see investors eyeing IIPR stock now. Likewise, the company’s shares are currently sitting on gains of more than 140% over the past year.
Despite its current momentum, IIPR does not seem to be slowing at all. Yesterday, the company acquired a 175,000 square foot property in Michigan for $15.6 million, expanding its portfolio further. On top of that, IIPR also entered into a long-term, triple-net lease agreement with real estate partner Green Peak Industries.
In short, Green Peak is looking to operate the property as a regulated cannabis cultivation facility. Not only is IIPR bolstering its services, but existing partners are more than eager to grow their current partnerships. All in all, with the company firing on all cylinders, could IIPR stock be worth adding to your watchlist now?
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Cannabis Stocks To Buy [Or Sell] This Week Tilray Inc. (NASDAQ: TLRY) Canopy Growth Corporation (NASDAQ: CGC) Aurora Cannabis (NYSE: ACB) Innovative Industrial Properties Inc. (NYSE: IIPR) Tilray Inc. Tilray is a global leader in the production and distribution of medical cannabis and cannabinoids. ACB stock currently trades at $7.78 as of 12:31 p.m. All things considered, will you add ACB stock to your list of cannabis stocks to watch? | Cannabis Stocks To Buy [Or Sell] This Week Tilray Inc. (NASDAQ: TLRY) Canopy Growth Corporation (NASDAQ: CGC) Aurora Cannabis (NYSE: ACB) Innovative Industrial Properties Inc. (NYSE: IIPR) Tilray Inc. Tilray is a global leader in the production and distribution of medical cannabis and cannabinoids. ACB stock currently trades at $7.78 as of 12:31 p.m. All things considered, will you add ACB stock to your list of cannabis stocks to watch? | Cannabis Stocks To Buy [Or Sell] This Week Tilray Inc. (NASDAQ: TLRY) Canopy Growth Corporation (NASDAQ: CGC) Aurora Cannabis (NYSE: ACB) Innovative Industrial Properties Inc. (NYSE: IIPR) Tilray Inc. Tilray is a global leader in the production and distribution of medical cannabis and cannabinoids. ACB stock currently trades at $7.78 as of 12:31 p.m. All things considered, will you add ACB stock to your list of cannabis stocks to watch? | Cannabis Stocks To Buy [Or Sell] This Week Tilray Inc. (NASDAQ: TLRY) Canopy Growth Corporation (NASDAQ: CGC) Aurora Cannabis (NYSE: ACB) Innovative Industrial Properties Inc. (NYSE: IIPR) Tilray Inc. Tilray is a global leader in the production and distribution of medical cannabis and cannabinoids. ACB stock currently trades at $7.78 as of 12:31 p.m. All things considered, will you add ACB stock to your list of cannabis stocks to watch? |
36820.0 | 2021-04-19 00:00:00 UTC | Why Aphria, OrganiGram Holdings, and Aurora Cannabis Rose Today | ACB | https://www.nasdaq.com/articles/why-aphria-organigram-holdings-and-aurora-cannabis-rose-today-2021-04-19 | nan | nan | What happened
Shares of some Canadian cannabis companies jumped Monday morning, before paring those gains. Shares of Aphria (NASDAQ: APHA), OrganiGram Holdings (NASDAQ: OGI), and Aurora Cannabis (NYSE: ACB) all rose between 6% and 8% early in today's session. Those gains faded some, and as of 2 p.m. EDT, Aphria traded up about 1%, Organigram was up 3.2%, and Aurora was up 3.4%.
So what
The biggest recent news among these Canadian growers was the overwhelming shareholder support the proposed merger between Aphria and Tilray (NASDAQ: TLRY) received. Approval of the previously announced combination required a two-thirds majority by voting Aphria shareholders. Late last week, the company revealed that more than 99% of voters approved the plan. Other news in the marijuana sector from last week was OrganiGram Holdings releasing its fiscal 2021 second-quarter financial results.
Image source: Getty Images.
Now what
The most recent quarterly financial results have been a bit of a mixed bag in the cannabis sector. In its report last week, Aphria said it experienced its eighth straight quarter of positive adjusted EBITDA. But much of the focus was on declining revenue from the previous sequential quarter. Net revenue dropped 4.3% quarter over quarter, and net cannabis revenue dropped nearly 24% in the same comparison. With a post-pandemic recovery presumably under way, that's not a trend investors wanted to see.
OrganiGram similarly reported a sharp drop in revenue compared to its previous-year period. Management noted lower average selling prices to help explain the 37% drop in year-over-year net revenue. Aurora, which is in the midst of attempting a business turnaround, had better relative results compared to its previous-year period, aided from strength in international medical marijuana sales and product launches in vapes, edibles, and concentrates.
Future success from the Canadian companies is going to depend somewhat on international business. If the U.S. market opens up with federal legalization, it will be a boon for many Canadian companies. In the meantime, the newly combined Aphria and Tilray business is expanding overseas, and preparing for an open U.S. market. Tilray has been expanding into Europe, having made several recent announcements about new business in the U.K., Spain, and Portugal. Aphria acquired Georgia-based craft brewer SweetWater Brewing late last year in part to add distribution infrastructure in the U.S.
Aphria CEO Irwin Simon told CNBC in a February interview he hopes to see fully legal cannabis in the U.S. within two to three years. Simon will also lead the newly combined company that will use the Tilray name. The CEO said he thinks legalization is likely to happen sooner in Germany, Portugal, and other countries, reinforcing the moves Tilray has been making in the region.
Today's volatility in the stocks is something investors will have to remain accustomed to as they speculate over political outcomes and the future direction of the fledgling industry.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Shares of Aphria (NASDAQ: APHA), OrganiGram Holdings (NASDAQ: OGI), and Aurora Cannabis (NYSE: ACB) all rose between 6% and 8% early in today's session. So what The biggest recent news among these Canadian growers was the overwhelming shareholder support the proposed merger between Aphria and Tilray (NASDAQ: TLRY) received. Aurora, which is in the midst of attempting a business turnaround, had better relative results compared to its previous-year period, aided from strength in international medical marijuana sales and product launches in vapes, edibles, and concentrates. | Shares of Aphria (NASDAQ: APHA), OrganiGram Holdings (NASDAQ: OGI), and Aurora Cannabis (NYSE: ACB) all rose between 6% and 8% early in today's session. Net revenue dropped 4.3% quarter over quarter, and net cannabis revenue dropped nearly 24% in the same comparison. In the meantime, the newly combined Aphria and Tilray business is expanding overseas, and preparing for an open U.S. market. | Shares of Aphria (NASDAQ: APHA), OrganiGram Holdings (NASDAQ: OGI), and Aurora Cannabis (NYSE: ACB) all rose between 6% and 8% early in today's session. Aphria acquired Georgia-based craft brewer SweetWater Brewing late last year in part to add distribution infrastructure in the U.S. Aphria CEO Irwin Simon told CNBC in a February interview he hopes to see fully legal cannabis in the U.S. within two to three years. See the 10 stocks *Stock Advisor returns as of February 24, 2021 Howard Smith owns shares of Aphria Inc. | Shares of Aphria (NASDAQ: APHA), OrganiGram Holdings (NASDAQ: OGI), and Aurora Cannabis (NYSE: ACB) all rose between 6% and 8% early in today's session. Net revenue dropped 4.3% quarter over quarter, and net cannabis revenue dropped nearly 24% in the same comparison. 10 stocks we like better than Aphria Inc. |
36821.0 | 2021-04-18 00:00:00 UTC | 3 Ultra-Popular Stocks Destroying Shareholder Value | ACB | https://www.nasdaq.com/articles/3-ultra-popular-stocks-destroying-shareholder-value-2021-04-18 | nan | nan | There are a lot of ways to raise money on Wall Street. Profitable businesses can use their operating cash flow to fund day-to-day activities and projects. Meanwhile, profitable and unprofitable companies might have the option of turning to the credit market or taking out a traditional loan with a financial institution to raise capital. But another option exists, and it's not the friend of shareholders.
A common way young or struggling businesses will raise capital on Wall Street is by selling stock (occasionally with accompanying warrants) or issuing debt that can be converted into common stock at some point in the future. While this is often an effective way of putting cash on the balance sheet, it can be extremely detrimental to shareholders if abused over time. A company that's continually issuing common stock threatens to dilute the value of its existing shareholders.
The following trio of ultra-popular stocks are among the market's worst share-based diluters.
Image source: Getty Images.
Sundial Growers
Let's begin with Canadian marijuana stock Sundial Growers (NASDAQ: SNDL), which despite a $0.90 share price boasts a $1.5 billion market cap. That's because the company currently has 1.66 billion shares outstanding.
Of course, it wasn't always this way. When Sundial became a public company in 2019, it had fewer than 100 million shares outstanding. But in an effort to fund its money-losing operations, pay off its debt, and build up a mountain of cash, it's sold stock, issued warrants, and swapped some of its debt for equity. Between Sept. 30, 2020 and Feb. 28, 2021, Sundial issued over 1.15 billion shares of its common stock.
The crazy thing? It's probably not done. In March 2021, the company filed for an $800 million at-the-market share offering. This doesn't mean shares will be sold, but it could give Sundial the green light to issue up to 888.9 million more shares, based on its $0.90 closing share price on April 14.
Even though Sundial's balance sheet now sports $719 million Canadian ($574 million) in cash, which should resolve any of its funding concerns for a very long time to come, management has no concrete plans for what it plans to do with this cash. Plus, this cash only works out to about $0.34 per share. Paying more than $900 million in market cap for Sundial's actual operations, which have featured substantial operating losses, big writedowns, and one of the industry's slowest growth rates, is ludicrous.
As the icing on the cake, having 1.66 billion outstanding shares will make it almost impossible for Sundial to generate meaningful earnings per share or perhaps even stay listed on the Nasdaq stock exchange, without enacting a reverse split.
Image source: Getty Images.
Castor Maritime
Another serial diluter that's constantly crushing shareholder value is dry bulk shipping company Castor Maritime (NASDAQ: CTRM).
With the company not generating much in the way of cash flow, it's turned to selling stock as a way to raise capital to buy dry bulk shipping vessels. After ending 2019 with three vessels, Castor doubled its fleet in 2020 to six, and more than doubled it again during the first 3.5 months of 2021 to 15 vessels. The thinking here is that a rebounding global economy should see an uptick in demand for popular dry goods, such as grains, sugar, steel, and fertilizer.
This might sound like a pretty solid plan, but it's jaw-dropping when you really dig into the details and see how rapidly Castor Maritime's share count has risen. At the end of 2019, the company had only 3.27 million shares outstanding. But as of mid-April 2021, it now has (I hope you're sitting down) 899.6 million shares outstanding. This includes another 192.3 million shares that were sold at $0.65 earlier this month. Even with a minuscule $0.43 share price, Castor still has a $385 million market cap.
Here's the kicker: Some of these registered offerings also included warrants. For instance, each of the 192.3 million shares priced at $0.65 that closed a little over a week ago also came with a warrant that can be executed at $0.65 within the next five years. These warrants effectively cap any significant upside in Castor's share price and threaten to push its outstanding share count above 1 billion.
Like Sundial, Castor Maritime will likely need a reverse split to avoid an eventual delisting from the Nasdaq exchange.
Image source: Getty Images.
Aurora Cannabis
Rounding out the list is yet another Canadian marijuana stock, Aurora Cannabis (NYSE: ACB). If you think Sundial has issued a lot of stock since it went public, let me introduce you to Aurora.
Pretty much since the waving of the green flag, Aurora Cannabis has been selling its stock to fund its day-to-day operations or using it as collateral to make more than a dozen acquisitions. Taking into account the 1-for-12 reverse split that was enacted last May to keep Aurora from being delisted for a sub-$1 share price, the company had roughly 1.35 million shares outstanding in mid-2014. But based on its fiscal second-quarter results, it ended calendar year 2020 with 184.2 million shares outstanding. This works out to around a 13,500% increase in the company's outstanding share count. Put another way, Aurora's share count would have gone from 16 million to 2.21 billion in a little over six years if not for the reverse split.
To make matters worse, Aurora Cannabis has a history of grossly overpaying for pretty much every acquisition it's ever made. As an example, it paid CA$2.64 billion (about $2.11 billion U.S.) to acquire MedReleaf in an all-stock deal in July 2018. This deal was expected to feature 140,000 annual kilos of output and a handful of proprietary brands. What Aurora got out of the deal was 28,000 kilos of annual output, after shuttering or selling other assets, and those aforementioned proprietary brands.
And to keep the theme alive, Aurora Cannabis isn't finished. Last month, the company filed a shelf prospectus with the Securities and Exchange Commission to sell up to $1 billion worth of stock, preferred shares, warrants, and debt securities over the next 25 months. Considering its history, this will almost certainly translate into more shares of stock being issued.
Aurora Cannabis, like Sundial and Castor, is a serial diluter and a destroyer of shareholder value.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora Cannabis Rounding out the list is yet another Canadian marijuana stock, Aurora Cannabis (NYSE: ACB). Meanwhile, profitable and unprofitable companies might have the option of turning to the credit market or taking out a traditional loan with a financial institution to raise capital. The thinking here is that a rebounding global economy should see an uptick in demand for popular dry goods, such as grains, sugar, steel, and fertilizer. | Aurora Cannabis Rounding out the list is yet another Canadian marijuana stock, Aurora Cannabis (NYSE: ACB). Sundial Growers Let's begin with Canadian marijuana stock Sundial Growers (NASDAQ: SNDL), which despite a $0.90 share price boasts a $1.5 billion market cap. Castor Maritime Another serial diluter that's constantly crushing shareholder value is dry bulk shipping company Castor Maritime (NASDAQ: CTRM). | Aurora Cannabis Rounding out the list is yet another Canadian marijuana stock, Aurora Cannabis (NYSE: ACB). This doesn't mean shares will be sold, but it could give Sundial the green light to issue up to 888.9 million more shares, based on its $0.90 closing share price on April 14. As the icing on the cake, having 1.66 billion outstanding shares will make it almost impossible for Sundial to generate meaningful earnings per share or perhaps even stay listed on the Nasdaq stock exchange, without enacting a reverse split. | Aurora Cannabis Rounding out the list is yet another Canadian marijuana stock, Aurora Cannabis (NYSE: ACB). That's because the company currently has 1.66 billion shares outstanding. Put another way, Aurora's share count would have gone from 16 million to 2.21 billion in a little over six years if not for the reverse split. |
36822.0 | 2021-04-13 00:00:00 UTC | Why SNDL Stock Is A Huge Risk | ACB | https://www.nasdaq.com/articles/why-sndl-stock-is-a-huge-risk-2021-04-13 | nan | nan | InvestorPlace - Stock Market News, Stock Advice & Trading Tips
I’m as bullish as any cannabis stock investor. However, Sundial Growers (NASDAQ:SNDL) stock investors are making one of the riskiest possible bets in a very risky space.
Source: Jetacom Autofocus / Shutterstock.com
Back in May 2020, I cautioned cannabis investors about buying Aurora Cannabis (NASDAQ:ACB). At the time, the company was a complete financial mess. I dubbed Aurora the “king of cannabis stock dilution.” Roughly a year later, SNDL has definitely taken over that title. To make matters worse, Sundial’s steep valuation suggests top-tier growth numbers. In reality, Sundial’s growth numbers are headed in the wrong direction.
I see a lot of parallels between SNDL stock today and ACB stock a year ago. A year ago, I called Aurora more of a cannabis “lottery ticket” than an investment. ACB stock is down 45% since that story was published. Today, Sundial may be the new cannabis lottery ticket.
The SNDL Stock Numbers
First, let’s take a look at Sundial’s most recent quarterly numbers. In the fourth quarter of 2020, Sundial reported C$13.9 million in revenue, down 49% from the previous year. For the full year of 2020, Sundial’s revenue was down 20%.
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Sundial reported a net loss of C$63.7 million in Q4 and a net loss of C$239.7 million for the full year. The 2020 net loss was an improvement from its C$271.5 million net loss in 2019. But a loss is a loss.
The losses are palatable for cannabis investors. After all, the cannabis industry is theoretically in the very early stages of a potentially massive long-term global growth phase. However, growth is the problem for Sundial. The reason Sundial’s revenue is shrinking is because the company is selling assets and shutting down production while other companies are growing. Sundial sold its Kamloops, British Columbia, property for $2.1 million in March 2020. It also shut down production in its Merritt, BC, facility, citing lack of consumer demand.
The one thing cannabis stock investors should be able to hang their hat on is growth. The steep valuations, the cash burn and the regulatory risk can all be forgiven if the growth is there. SNDL stock is a growth stock missing its growth.
Management Flooding The Market With SNDL Stock
A year ago, I thought Aurora was the king of cannabis stock dilution. From mid-2014 through the end of 2020, Aurora’s outstanding share count exploded from 1.35 million shares to 184.2 million shares.
The past year has certainly changed my opinion. In the past 12 months, Aurora’s outstanding share count is up 71.8% as the company continues to dilute its shareholders to raise the cash it needs to support its business. But SNDL stock is in a league of its own when it comes to dilution. In the past year, Sundial’s outstanding share count is up 1,490%. Another way of looking at that insane number is that someone who owned 10% of the company a year ago would now own 0.6% of the company.
Now, one can argue that shareholder dilution is just an unfortunate part of the cannabis stock game at this point. Growth requires investment, and investment requires funding. But Aurora’s 71% dilution is fairly extreme in its own right. To me, 1,490% dilution in a single year has only two explanations. The first explanation is that the company is on the brink of disaster. It is throwing its shareholders under the bus in a last ditch effort to avoid bankruptcy. The other possible explanation is that management doesn’t care about shareholders at all. It prints new shares of stock like they’re going out of style to raise money without paying a second thought to its investors. Either way, that’s not the type of stock I want to be a major part of my portfolio.
Analyst Take
Despite all of the red flags I mentioned above about Sundial’s negative growth and its insane dilution, the stock is up 119.6% year-to-date. At one point in February, the stock was up more than 450% year-to-date.
Cantor Fitzgerald analyst Pablo Zuanic has a “neutral” rating for SNDL stock. His commentary on the stock is extraordinarily honest by Wall Street standards. In his most recent note on Sundial, he noted SNDL stock traded (at the time) at 29 times projected 2022 sales.
“Ongoing retail speculation plus the potential for SNDL to make strategic and accretive acquisitions (given the strengthened [balance sheet]), makes the short case risky, in our opinion,” Zuanic says.
In other words, he’s saying not to short SNDL stock even though it has a high valuation. There is simply too much “retail speculation.” On Wall Street, “retail speculation” is code for unsophisticated market gamblers.
Most Wall Street analysts would never admit to this fact, but Zuanic says his $1.40 price target for SNDL stock is largely based on the price action in the stock rather than any fundamental analysis.
“Yes, this is a case where the [price target] chases the stock given our Neutral stance,” he says.
Takeaway
Sundial could have tremendous long-term upside. I see the biggest upside coming from a potential buyout by a bigger company with a more competent management team.
As I said before, I’m extremely bullish on cannabis as a whole. I personally prefer Canopy Growth (NASDAQ:CGC) as my top cannabis stock. But I have been consistently recommending cannabis investors select a basket of at least four or five leading Canadian legal producers and U.S. multi-state operators to diversify their exposure.
If you’re willing to stomach the volatility and risk, SNDL stock has huge long-term upside. But at this point, Sundial is more of a lottery ticket than a sound cannabis investment.
On the date of publication, Wayne Duggan held a long position in CGC.
Wayne Duggan has been a U.S. News & World Report Investing contributor since 2016 and is a staff writer at Benzinga, where he has written more than 7,000 articles. Mr. Duggan is the author of the book Beating Wall Street With Common Sense, which focuses on investing psychology and practical strategies to outperform the stock market.
The post Why SNDL Stock Is A Huge Risk appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Source: Jetacom Autofocus / Shutterstock.com Back in May 2020, I cautioned cannabis investors about buying Aurora Cannabis (NASDAQ:ACB). I see a lot of parallels between SNDL stock today and ACB stock a year ago. ACB stock is down 45% since that story was published. | I see a lot of parallels between SNDL stock today and ACB stock a year ago. Source: Jetacom Autofocus / Shutterstock.com Back in May 2020, I cautioned cannabis investors about buying Aurora Cannabis (NASDAQ:ACB). ACB stock is down 45% since that story was published. | Source: Jetacom Autofocus / Shutterstock.com Back in May 2020, I cautioned cannabis investors about buying Aurora Cannabis (NASDAQ:ACB). I see a lot of parallels between SNDL stock today and ACB stock a year ago. ACB stock is down 45% since that story was published. | Source: Jetacom Autofocus / Shutterstock.com Back in May 2020, I cautioned cannabis investors about buying Aurora Cannabis (NASDAQ:ACB). I see a lot of parallels between SNDL stock today and ACB stock a year ago. ACB stock is down 45% since that story was published. |
36823.0 | 2021-04-12 00:00:00 UTC | Why Marijuana Stocks Went to Pot Monday | ACB | https://www.nasdaq.com/articles/why-marijuana-stocks-went-to-pot-monday-2021-04-12 | nan | nan | Investors came into the new week on a downbeat note, consolidating substantial gains from last week that sent the Dow Jones Industrial Average (DJINDICES: ^DJI) and the S&P 500 (SNPINDEX: ^GSPC) to new record heights. The Dow, S&P, and Nasdaq Composite (NASDAQINDEX: ^IXIC) all gave up ground on Monday, albeit with only minimal declines.
INDEX
PERCENTAGE CHANGE
POINT CHANGE
Dow
(0.16%)
(55)
S&P 500
(0.02%)
(1)
Nasdaq Composite
(0.36%)
(50)
Data source: Yahoo! Finance.
One area that took a relatively large hit on Monday was the cannabis industry. Marijuana stocks were down sharply, giving up a small portion of the big gains that they've enjoyed so far in 2021. One earnings report from Aphria (NASDAQ: APHA) played a key role in triggering the downward move, but the question investors are asking is whether more declines are on the way as earnings season progresses.
Aphria has a tough quarter
Shares of Aphria were down 14% on Monday. The Canadian cannabis company reported fiscal third-quarter results that left investors concerned about the relative lack of growth over the past year.
Image source: Getty Images.
Aphria's revenue rose just 6% during the quarter, and gross profit was also up just mid-single-digit percentages even before taking into account fair value adjustments on inventory and biological assets. Meanwhile, a big boost in share-based compensation caused operating expenses to nearly double from year-ago levels.
It's easy to forget as coronavirus vaccine rollouts continue, but much of Aphria's market in Canada and Germany was subject to COVID-19 lockdown measures throughout quarter. The resulting supply glut also weighed on pricing, which hurt gross margin levels.
Collateral damage across the marijuana sector
The bad news from Aphria hurt the rest of the pot stock industry as well. Tilray (NASDAQ: TLRY), which is just about set to complete its merger with Aphria, saw its stock drop 13%. Other major players in the field also took hits, including Aurora Cannabis (NYSE: ACB) and its 9% decline, an 8% drop for Cronos Group (NASDAQ: CRON), and the 5% fall in shares of Canopy Growth (NASDAQ: CGC).
Marijuana ETFs also felt the brunt of selling pressure. Both ETFMG Alternative Harvest (NYSEMKT: MJ) and AdvisorShares Pure Cannabis (NYSEMKT: YOLO) posted losses of nearly 5% on Monday.
It's unclear just how long the problems for pot stocks could continue. The rollout of vaccines in Canada has gone more slowly than in the U.S., and Canada has seen significant incidence of more easily transmissible strains of the coronavirus. If vaccinations take longer than hoped, then the spike in COVID-19 cases could put a strain on the cannabis industry throughout the middle of 2021.
Dodging the bullet
However, not all cannabis-related stocks were lower. In the U.S., marijuana real estate play Innovative Industrial Properties (NYSE: IIPR) posted a 1% gain, as it continued to offer a pick-and-shovel entry point for would-be cannabis investors. The company specializes in procuring properties for cannabis operators, sometimes engaging in sale-and-leaseback transactions with cultivators to free up capital for them and generate rental income for itself.
For now, U.S. investors don't seem concerned about potential negative impacts on cannabis from the pandemic. Indeed, with more favorable attitudes toward pot in Washington, U.S.-focused cannabis stocks could well keep seeing gains even if major Canadian producers stay under pressure.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Other major players in the field also took hits, including Aurora Cannabis (NYSE: ACB) and its 9% decline, an 8% drop for Cronos Group (NASDAQ: CRON), and the 5% fall in shares of Canopy Growth (NASDAQ: CGC). The Canadian cannabis company reported fiscal third-quarter results that left investors concerned about the relative lack of growth over the past year. In the U.S., marijuana real estate play Innovative Industrial Properties (NYSE: IIPR) posted a 1% gain, as it continued to offer a pick-and-shovel entry point for would-be cannabis investors. | Other major players in the field also took hits, including Aurora Cannabis (NYSE: ACB) and its 9% decline, an 8% drop for Cronos Group (NASDAQ: CRON), and the 5% fall in shares of Canopy Growth (NASDAQ: CGC). The Canadian cannabis company reported fiscal third-quarter results that left investors concerned about the relative lack of growth over the past year. It's easy to forget as coronavirus vaccine rollouts continue, but much of Aphria's market in Canada and Germany was subject to COVID-19 lockdown measures throughout quarter. | Other major players in the field also took hits, including Aurora Cannabis (NYSE: ACB) and its 9% decline, an 8% drop for Cronos Group (NASDAQ: CRON), and the 5% fall in shares of Canopy Growth (NASDAQ: CGC). Collateral damage across the marijuana sector The bad news from Aphria hurt the rest of the pot stock industry as well. In the U.S., marijuana real estate play Innovative Industrial Properties (NYSE: IIPR) posted a 1% gain, as it continued to offer a pick-and-shovel entry point for would-be cannabis investors. | Other major players in the field also took hits, including Aurora Cannabis (NYSE: ACB) and its 9% decline, an 8% drop for Cronos Group (NASDAQ: CRON), and the 5% fall in shares of Canopy Growth (NASDAQ: CGC). Aphria has a tough quarter Shares of Aphria were down 14% on Monday. 10 stocks we like better than Aphria Inc. |
36824.0 | 2021-04-12 00:00:00 UTC | CANADA STOCKS - TSX falls 0.14% to 19,201.28 | ACB | https://www.nasdaq.com/articles/canada-stocks-tsx-falls-0.14-to-19201.28-2021-04-12 | nan | nan | * The Toronto Stock Exchange's TSX falls 0.14 percent to 19,201.28
* Leading the index were Stantec Inc , up 3.4%, Imperial Oil Ltd IMO.TO, up 3.3%, and Corus Entertainment Inc CJRb.TO, higher by 2.9%.
* Lagging shares were Aphria Inc APHA.TO, down 14.2%, Village Farms International Inc VFF.TO, down 9.9%, and Aurora Cannabis Inc ACB.TO, lower by 9.4%.
* On the TSX 91 issues rose and 134 fell as a 0.7-to-1 ratio favored decliners. There were 24 new highs and no new lows, with total volume of 228.0 million shares.
* The most heavily traded shares by volume were Toronto-dominion Bank TD.TO, Royal Bank Of Canada RY.TO and Suncor Energy Inc SU.TO.
* The TSX's energy group .SPTTEN fell 0.32 points, or 0.3%, while the financials sector .SPTTFS climbed 2.46 points, or 0.7%.
* West Texas Intermediate crude futures CLc1 rose 0.52%, or $0.31, to $59.63 a barrel. Brent crude LCOc1 rose 0.4%, or $0.25, to $63.2 O/R
* The TSX is up 10.1% for the year.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | * Lagging shares were Aphria Inc APHA.TO, down 14.2%, Village Farms International Inc VFF.TO, down 9.9%, and Aurora Cannabis Inc ACB.TO, lower by 9.4%. * The Toronto Stock Exchange's TSX falls 0.14 percent to 19,201.28 * Leading the index were Stantec Inc , up 3.4%, Imperial Oil Ltd IMO.TO, up 3.3%, and Corus Entertainment Inc CJRb.TO, higher by 2.9%. * On the TSX 91 issues rose and 134 fell as a 0.7-to-1 ratio favored decliners. | * Lagging shares were Aphria Inc APHA.TO, down 14.2%, Village Farms International Inc VFF.TO, down 9.9%, and Aurora Cannabis Inc ACB.TO, lower by 9.4%. * On the TSX 91 issues rose and 134 fell as a 0.7-to-1 ratio favored decliners. * The most heavily traded shares by volume were Toronto-dominion Bank TD.TO, Royal Bank Of Canada RY.TO and Suncor Energy Inc SU.TO. | * Lagging shares were Aphria Inc APHA.TO, down 14.2%, Village Farms International Inc VFF.TO, down 9.9%, and Aurora Cannabis Inc ACB.TO, lower by 9.4%. * On the TSX 91 issues rose and 134 fell as a 0.7-to-1 ratio favored decliners. * The most heavily traded shares by volume were Toronto-dominion Bank TD.TO, Royal Bank Of Canada RY.TO and Suncor Energy Inc SU.TO. | * Lagging shares were Aphria Inc APHA.TO, down 14.2%, Village Farms International Inc VFF.TO, down 9.9%, and Aurora Cannabis Inc ACB.TO, lower by 9.4%. * The Toronto Stock Exchange's TSX falls 0.14 percent to 19,201.28 * Leading the index were Stantec Inc , up 3.4%, Imperial Oil Ltd IMO.TO, up 3.3%, and Corus Entertainment Inc CJRb.TO, higher by 2.9%. * On the TSX 91 issues rose and 134 fell as a 0.7-to-1 ratio favored decliners. |
36825.0 | 2021-04-12 00:00:00 UTC | Why Canopy Growth, Aurora Cannabis, and Hexo Stocks Went Up in Smoke Today | ACB | https://www.nasdaq.com/articles/why-canopy-growth-aurora-cannabis-and-hexo-stocks-went-up-in-smoke-today-2021-04-12 | nan | nan | What happened
It's Monday, and marijuana stocks are vaporizing. In 11:30 a.m. EDT trading, Canopy Growth (NASDAQ: CGC) stock is down a depressing 4.4%, and cannabis rivals Aurora Cannabis (NYSE: ACB) and Hexo (NYSE: HEXO) have both tumbled about 8% each.
And if you want to know why, ask Aphria (NASDAQ: APHA).
Image source: Getty Images.
So what
Yes, unfair as it may feel, the stock to blame for Canopy's, Aurora's, and Hexo's declines today is none of the above, but rather their cannabis-growing rival Aphria, which reported its fiscal Q3 2021 earnings results this morning.
Suffice it to say that the news was not good.
Sales at the Canadian cannabis company grew a respectable 6% to CA$153.6 million in Q3 2021, but that was well below the CA$166.2 million that analysts had predicted. Worse, Aphria reported a CA$1.14-per-share loss for the quarter, versus the tiny profit (calculated according to generally accepted accounting principles or GAAP) reported a year ago. In terms of U.S. dollars, Aphria lost $0.91 per share.
Now what
Aphria blamed "the duration and impact of lockdowns across many of the regions we operate in, particularly in Canada" for its disappointing results, but insisted that it "remains well-positioned with our leading brands and market share to experience a robust increase in our top-line as the market improves" and said it is still "excited about the strategic opportunities for incremental growth," particularly in the U.S. market.
Regardless, the fact that Aphria's gross profits on its sales declined by nearly half in the quarter suggests that demand for the product isn't necessarily Aphria's (or Canopy's or Aurora's or Hexo's) biggest problem going forward. Shrinking profit on growing sales speaks to declining pricing power in the industry as oversupply continues to weigh on profitability for medical marijuana and recreational marijuana alike.
That's not good news for Aphria's future. It's not good news for Canopy Growth, Aurora Cannabis, or Hexo, either.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | In 11:30 a.m. EDT trading, Canopy Growth (NASDAQ: CGC) stock is down a depressing 4.4%, and cannabis rivals Aurora Cannabis (NYSE: ACB) and Hexo (NYSE: HEXO) have both tumbled about 8% each. So what Yes, unfair as it may feel, the stock to blame for Canopy's, Aurora's, and Hexo's declines today is none of the above, but rather their cannabis-growing rival Aphria, which reported its fiscal Q3 2021 earnings results this morning. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market. | In 11:30 a.m. EDT trading, Canopy Growth (NASDAQ: CGC) stock is down a depressing 4.4%, and cannabis rivals Aurora Cannabis (NYSE: ACB) and Hexo (NYSE: HEXO) have both tumbled about 8% each. So what Yes, unfair as it may feel, the stock to blame for Canopy's, Aurora's, and Hexo's declines today is none of the above, but rather their cannabis-growing rival Aphria, which reported its fiscal Q3 2021 earnings results this morning. It's not good news for Canopy Growth, Aurora Cannabis, or Hexo, either. | In 11:30 a.m. EDT trading, Canopy Growth (NASDAQ: CGC) stock is down a depressing 4.4%, and cannabis rivals Aurora Cannabis (NYSE: ACB) and Hexo (NYSE: HEXO) have both tumbled about 8% each. So what Yes, unfair as it may feel, the stock to blame for Canopy's, Aurora's, and Hexo's declines today is none of the above, but rather their cannabis-growing rival Aphria, which reported its fiscal Q3 2021 earnings results this morning. Regardless, the fact that Aphria's gross profits on its sales declined by nearly half in the quarter suggests that demand for the product isn't necessarily Aphria's (or Canopy's or Aurora's or Hexo's) biggest problem going forward. | In 11:30 a.m. EDT trading, Canopy Growth (NASDAQ: CGC) stock is down a depressing 4.4%, and cannabis rivals Aurora Cannabis (NYSE: ACB) and Hexo (NYSE: HEXO) have both tumbled about 8% each. It's not good news for Canopy Growth, Aurora Cannabis, or Hexo, either. 10 stocks we like better than Canopy Growth Corp. |
36826.0 | 2021-04-12 00:00:00 UTC | Aphria's bleak start to earnings triggers slump in pot stocks | ACB | https://www.nasdaq.com/articles/aphrias-bleak-start-to-earnings-triggers-slump-in-pot-stocks-2021-04-12 | nan | nan | Updates shares, adds rival stocks, comments from conf call, background
April 12 (Reuters) - Canada's Aphria Inc APHA.TO, APHA.O reported a loss for the third quarter on Monday as it reeled from fresh coronavirus lockdowns in parts of Canada and Germany, sending its shares down 14% and weighing on other pot producers.
While the pandemic has lifted demand for weed from customers staying at home, sales of cannabis producers suffered during the latest round of restrictions in key markets such as Ontario and Alberta as pot stores were forced to shut.
"The provincial lockdowns were more impactful, particularly in Canada, than we initially expected," Aphria Chief Financial Officer Carl Merton said on a postearnings call
The company's revenue fell 4.3% sequentially to C$153.6 million ($122.32 million), missing a Stifel estimate of C$162.8 million.
Aphria's earnings are "setting the tone for what is going to be a difficult earnings season for the Canadian producers," Stifel analyst Andrew Carter wrote in a note.
Shares of rivals Canopy Growth Corp WEED.TO, Aurora Cannabis Inc ACB.TO and Cronos Group Inc CRON.TO fell between 4% and 8%. Tilray Inc TLRY.O, which is being bought by Aphria, slid 13%.
Aphria said provincial cannabis boards, which buy cannabis from private companies for sales at government-run retail stores, have also been lowering their inventory - a practice known as "destocking".
It said provincial governments had lowered their orders for cannabis and returned product worth around C$5 million, signaling that market growth is expected to be weaker than previously forecast.
The Ontario-based company also said that customers' buying preferences had shifted to cheaper products, such as cannabis flower and oils, which hit the price for its adult-use products and margins.
It posted a net loss of C$361 million for the quarter ended Feb. 28, compared with a profit of C$5.7 million a year earlier.
($1 = 1.2557 Canadian dollars)
(Reporting by Arunima Kumar in Bengaluru; Editing by Aditya Soni)
((Arunima.Kumar@thomsonreuters.com;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Shares of rivals Canopy Growth Corp WEED.TO, Aurora Cannabis Inc ACB.TO and Cronos Group Inc CRON.TO fell between 4% and 8%. Updates shares, adds rival stocks, comments from conf call, background April 12 (Reuters) - Canada's Aphria Inc APHA.TO, APHA.O reported a loss for the third quarter on Monday as it reeled from fresh coronavirus lockdowns in parts of Canada and Germany, sending its shares down 14% and weighing on other pot producers. While the pandemic has lifted demand for weed from customers staying at home, sales of cannabis producers suffered during the latest round of restrictions in key markets such as Ontario and Alberta as pot stores were forced to shut. | Shares of rivals Canopy Growth Corp WEED.TO, Aurora Cannabis Inc ACB.TO and Cronos Group Inc CRON.TO fell between 4% and 8%. "The provincial lockdowns were more impactful, particularly in Canada, than we initially expected," Aphria Chief Financial Officer Carl Merton said on a postearnings call The company's revenue fell 4.3% sequentially to C$153.6 million ($122.32 million), missing a Stifel estimate of C$162.8 million. Aphria said provincial cannabis boards, which buy cannabis from private companies for sales at government-run retail stores, have also been lowering their inventory - a practice known as "destocking". | Shares of rivals Canopy Growth Corp WEED.TO, Aurora Cannabis Inc ACB.TO and Cronos Group Inc CRON.TO fell between 4% and 8%. Updates shares, adds rival stocks, comments from conf call, background April 12 (Reuters) - Canada's Aphria Inc APHA.TO, APHA.O reported a loss for the third quarter on Monday as it reeled from fresh coronavirus lockdowns in parts of Canada and Germany, sending its shares down 14% and weighing on other pot producers. "The provincial lockdowns were more impactful, particularly in Canada, than we initially expected," Aphria Chief Financial Officer Carl Merton said on a postearnings call The company's revenue fell 4.3% sequentially to C$153.6 million ($122.32 million), missing a Stifel estimate of C$162.8 million. | Shares of rivals Canopy Growth Corp WEED.TO, Aurora Cannabis Inc ACB.TO and Cronos Group Inc CRON.TO fell between 4% and 8%. Updates shares, adds rival stocks, comments from conf call, background April 12 (Reuters) - Canada's Aphria Inc APHA.TO, APHA.O reported a loss for the third quarter on Monday as it reeled from fresh coronavirus lockdowns in parts of Canada and Germany, sending its shares down 14% and weighing on other pot producers. "The provincial lockdowns were more impactful, particularly in Canada, than we initially expected," Aphria Chief Financial Officer Carl Merton said on a postearnings call The company's revenue fell 4.3% sequentially to C$153.6 million ($122.32 million), missing a Stifel estimate of C$162.8 million. |
36827.0 | 2021-04-10 00:00:00 UTC | 3 Distressed Stocks for Contrarian Investors to Buy in April | ACB | https://www.nasdaq.com/articles/3-distressed-stocks-for-contrarian-investors-to-buy-in-april-2021-04-10 | nan | nan | Despite a rather overvalued market, there are a surprising number of good companies in trouble trading at bargain valuations. Many are still up for grabs, as investors would rather pay a high price for companies that are steadily growing their cash flows than pay for ones having temporary problems with theirs.
People can, however, be just as profitable with their investments when they bet against a trend rather than go with it. Today, let's look at why brave investors can benefit from going long on shares of AMC Entertainment Holdings (NYSE: AMC), Bausch Health (NYSE: BHC), and Aurora Cannabis (NYSE: ACB).
Image source: Getty Images.
1. AMC Entertainment Holdings
Theater chain AMC Entertainment Holdings has had a rough time after it had to cease operations for months because of COVID-19-related restrictions. Last year, its revenue decreased by 77.3% from 2019, to $1.24 billion, while its net loss increased by a stunning 4,440.3% over the same period to $4.59 billion.
At this point, investors are probably wondering why this isn't a stock to stay away from at all costs. The answer is that AMC has a market cap of just $4.3 billion. When theaters reopen to full capacity and AMC sees its sales and earnings return to pre-pandemic levels, its stock would be grossly undervalued.
With the rapid pace of vaccination programs, AMC has already reopened 99% of its theaters and is operating them between 25% and 100% capacity. What's more, the company recently raised $2.8 billion in cash while securing another $1 billion in debt concessions from theater landlords and creditors. That's good news, as it offsets much of its $5 billion in long-term debt.
The company also plans a sale of 500 million shares of stock, which would be enough to give it another year of liquidity at current stock prices and cash burn rate. While no shareholders want to see stock dilutions, AMC was a solid business before the pandemic and really needs the cash to push through. In 2019, it had as much as $5.47 billion in sales and $579 million in cash flow from operations. Hence, this is probably the top contrarian stock to buy now.
2. Bausch Health
Trading at just 14 times free cash flow and 1.4 times revenue, Bausch Health is one of the cheapest healthcare stocks out there. However, one can easily see why this is, as it currently has a staggering $24.185 billion in long-term debt on its balance sheet. In comparison, the company generated only $8.027 billion in revenue and $3.294 billion in operating income less non-cash items (EBITDA) last year.
The company formed as a result of leveraged acquisitions of its contact lens subsidiary Bausch & Lomb, gastroenterology drugmaker Salix, and various dermatological and neurology firms. Healthcare platform companies were popular in the mid-2010s, as drug prices were soaring then. However, when they stopped increasing, firms like Bausch Health were left with substantial debt piles and declining revenue.
Bausch Health projects it will return to growth this year, with yearly revenue and EBITDA growth of 8.4% and 5.5%, respectively. Despite the odds, the company still paid back $900 million in debt last year with cash flow from operations. In addition, it recently announced the sale of subsidiary Amoun Pharmaceuticals for $740 million. Amoun is the largest manufacturer of generic drugs and animal health products in Egypt.
As long as the company continues to deleverage, it can simply refinance its debts when they come due and continue business as usual. Moreover, Bausch Health announced it would spin off Bausch & Lomb into a separately traded public entity by the end of this year. That should further separate the company's debt obligations. For all these reasons, Bausch Health is definitely one bargain healthcare stock to be on the lookout for.
3. Aurora Cannabis
Aurora Cannabis has been struggling for some time, after the company badly overforecast pot demand in Canada. It invested in state-of-the-art facilities to become the No. 1 Canadian cannabis producer by volume and saw massive losses when the market it anticipated never arrived. Last year, the company had to close down many of its growing operations, taking billions in losses.
The company's operations have stabilized somewhat. In the six months ended Dec. 31, Aurora's revenue increased by 5% year over year to CA$135.49 million. At the same time, its net loss narrowed to CA$89.374 million from CA$201.446 million during the same period last year.
That's not all: Aurora Cannabis has become the No. 1 supplier of medical marijuana. The company also has a robust international segment that is growing its sales by 84% year over year. In the U.S., Aurora's CBD brands rank No. 2 in the country by consumer popularity, with the first spot going to Charlotte's Web (OTC: CWBHF).
Right now, Aurora Cannabis stock is trading at only 5 times revenue. It's a relatively reasonable price to pay, considering the company improved its sales by 22.73% in the most recent quarter. In addition, the company is doing well with its capital management, with about CA$565 million in cash and equivalents to offset CA$493.37 million in debt and convertibles. Overall, this is a marijuana company on the brink of a turnaround that you don't want to miss.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Zhiyuan Sun has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Bausch Health Companies and Charlotte's Web Holdings. The Motley Fool recommends Charlotte's Web. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Today, let's look at why brave investors can benefit from going long on shares of AMC Entertainment Holdings (NYSE: AMC), Bausch Health (NYSE: BHC), and Aurora Cannabis (NYSE: ACB). When theaters reopen to full capacity and AMC sees its sales and earnings return to pre-pandemic levels, its stock would be grossly undervalued. The company formed as a result of leveraged acquisitions of its contact lens subsidiary Bausch & Lomb, gastroenterology drugmaker Salix, and various dermatological and neurology firms. | Today, let's look at why brave investors can benefit from going long on shares of AMC Entertainment Holdings (NYSE: AMC), Bausch Health (NYSE: BHC), and Aurora Cannabis (NYSE: ACB). Bausch Health Trading at just 14 times free cash flow and 1.4 times revenue, Bausch Health is one of the cheapest healthcare stocks out there. The Motley Fool owns shares of and recommends Bausch Health Companies and Charlotte's Web Holdings. | Today, let's look at why brave investors can benefit from going long on shares of AMC Entertainment Holdings (NYSE: AMC), Bausch Health (NYSE: BHC), and Aurora Cannabis (NYSE: ACB). The company also plans a sale of 500 million shares of stock, which would be enough to give it another year of liquidity at current stock prices and cash burn rate. Bausch Health Trading at just 14 times free cash flow and 1.4 times revenue, Bausch Health is one of the cheapest healthcare stocks out there. | Today, let's look at why brave investors can benefit from going long on shares of AMC Entertainment Holdings (NYSE: AMC), Bausch Health (NYSE: BHC), and Aurora Cannabis (NYSE: ACB). In 2019, it had as much as $5.47 billion in sales and $579 million in cash flow from operations. Despite the odds, the company still paid back $900 million in debt last year with cash flow from operations. |
36828.0 | 2021-04-07 00:00:00 UTC | Why Cannabis Stocks Aphria, Aurora Cannabis, Charlotte's Web, and Tilray Slid Today | ACB | https://www.nasdaq.com/articles/why-cannabis-stocks-aphria-aurora-cannabis-charlottes-web-and-tilray-slid-today-2021-04-07 | nan | nan | What happened
Several cannabis stocks slid lower on Wednesday. Shares of Aphria (NASDAQ: APHA) were down 6.4% as of 3:19 p.m. Tilray (NASDAQ: TLRY) stock was falling 6.7%. Charlotte's Web Holdings (OTC: CWBHF) shares were tumbling 6.4%. Aurora Cannabis (NYSE: ACB) stock was slipping 5.7%. Other top pot stocks were posting smaller declines.
When so many stocks in the same industry sink, there's usually a common denominator. In this case, one potential culprit is Vice President Kamala Harris' comments in an interview with the San Francisco Chronicle published yesterday. The vice president stated that the Biden administration has been too busy with other priorities to address marijuana decriminalization or other major cannabis reforms. This relegation of cannabis-related efforts to the back burner could be increasing investors' doubts that any action will be forthcoming in the near future.
However, marijuana stocks really began to slide on Wednesday after Natalie Fertig with Politico tweeted that the Treasury Department's Alcohol and Tobacco Tax and Trade Bureau has been meeting with various cannabis advocacy groups to discuss cannabis regulations. Investors could be more worried about the possibility that cannabis reform measures won't meet expectations than they are that no reform will happen at all.
Image source: Getty Images.
So what
What does all of this really mean? Nothing.
Concerns that the Biden administration won't fulfill its campaign pledge to decriminalize marijuana are premature. After all, President Biden has been in office less than three months. Worries about what final regulations might look like if significant cannabis reform moves forward are also a waste of time. It's better to wait to see what changes are ultimately proposed.
More than anything, what we're seeing with cannabis stocks today reflects their inherent volatility. These stocks tend to swing either higher or lower on mere speculation.
You probably noticed that most of the stocks falling the hardest are Canadian cannabis producers -- Aphria, Aurora Cannabis, and Tilray. These companies are especially anxious about the opportunity to enter the lucrative U.S. cannabis market.
Charlotte's Web, on the other hand, is already a leader in the U.S. hemp CBD market. However, the company hopes to expand into the marijuana market once cannabis is legalized at the federal level.
Now what
The best thing that investors can do right now is to wait and see what happens with regard to U.S. cannabis reform. In the meantime, the U.S. cannabis market continues to expand even without changes at the federal level. Several U.S. multistate cannabis operators are already benefiting from this growth.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Keith Speights has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Charlotte's Web Holdings. The Motley Fool recommends Charlotte's Web. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora Cannabis (NYSE: ACB) stock was slipping 5.7%. In this case, one potential culprit is Vice President Kamala Harris' comments in an interview with the San Francisco Chronicle published yesterday. The vice president stated that the Biden administration has been too busy with other priorities to address marijuana decriminalization or other major cannabis reforms. | Aurora Cannabis (NYSE: ACB) stock was slipping 5.7%. You probably noticed that most of the stocks falling the hardest are Canadian cannabis producers -- Aphria, Aurora Cannabis, and Tilray. The Motley Fool owns shares of and recommends Charlotte's Web Holdings. | Aurora Cannabis (NYSE: ACB) stock was slipping 5.7%. However, marijuana stocks really began to slide on Wednesday after Natalie Fertig with Politico tweeted that the Treasury Department's Alcohol and Tobacco Tax and Trade Bureau has been meeting with various cannabis advocacy groups to discuss cannabis regulations. You probably noticed that most of the stocks falling the hardest are Canadian cannabis producers -- Aphria, Aurora Cannabis, and Tilray. | Aurora Cannabis (NYSE: ACB) stock was slipping 5.7%. Investors could be more worried about the possibility that cannabis reform measures won't meet expectations than they are that no reform will happen at all. However, the company hopes to expand into the marijuana market once cannabis is legalized at the federal level. |
36829.0 | 2021-04-06 00:00:00 UTC | CANADA STOCKS-TSX gains as oil prices jump on recovery hopes | ACB | https://www.nasdaq.com/articles/canada-stocks-tsx-gains-as-oil-prices-jump-on-recovery-hopes-2021-04-06 | nan | nan | Updates prices, adds sector details
April 6 (Reuters) - Canada's main stock index gained on Tuesday, boosted by stronger oil prices as robust economic data from China and the United States raised hopes of a faster pace of economic recovery.
A survey from the Institute for Supply Management on Monday showed activity in the U.S. services industry reached its highest level on record in March, while China's service sector also gathered steam with the sharpest increase in sales in three months.
* At 9:41 a.m. ET (1341 GMT), the Toronto Stock Exchange's S&P/TSX composite index .GSPTSE was up 34.3 points, or 0.18%, at 19,061.09.
* The energy sector .SPTTEN rose 1.7% as U.S. crude CLc1 prices were up 2.5% a barrel, while Brent crude LCOc1 added 2.2%. O/R
* The financials sector .SPTTFS remain unchanged. The industrials sector .GSPTTIN rose 0.1%.
* The materials sector .GSPTTMT, which includes precious and base metals miners and fertilizer companies, added 1.4% as gold futures GCc1 rose 0.6% to $1,737.9 an ounce. GOL/MET/L
* On the TSX, 132 issues were higher, while 95 issues declined for a 1.39-to-1 ratio favouring gainers, with 18.31 million shares traded.
* The largest percentage gainers on the TSX were Hudbay Minerals HBM.TO, which jumped 6.2%, and OceanaGold Corp OGC.TO, which rose 4.7%.
* Aphria Inc APHA.TO fell 2.6%, the most on the TSX, while the second biggest decliner was Aurora Cannabis ACB.TO, down 1.9%.
* The most heavily-traded shares by volume were Toronto-Dominion Bank TD.TO, up 0.1%, Bank of Nova Scotia BNS.TO, down 0.1%, and Zenabis Global Inc ZENA.TO, down 4.2%.
* The TSX posted 12 new 52-week highs and no new lows.
* Across all Canadian issues, there were 64 new 52-week highs and two new lows, with total volume of 35.28 million shares.
(Reporting by Shashank Nayar in Bengaluru; Editing by Maju Samuel and Krishna Chandra Eluri)
((Shashank.Nayar@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 6182 2256;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | * Aphria Inc APHA.TO fell 2.6%, the most on the TSX, while the second biggest decliner was Aurora Cannabis ACB.TO, down 1.9%. Updates prices, adds sector details April 6 (Reuters) - Canada's main stock index gained on Tuesday, boosted by stronger oil prices as robust economic data from China and the United States raised hopes of a faster pace of economic recovery. * The materials sector .GSPTTMT, which includes precious and base metals miners and fertilizer companies, added 1.4% as gold futures GCc1 rose 0.6% to $1,737.9 an ounce. | * Aphria Inc APHA.TO fell 2.6%, the most on the TSX, while the second biggest decliner was Aurora Cannabis ACB.TO, down 1.9%. A survey from the Institute for Supply Management on Monday showed activity in the U.S. services industry reached its highest level on record in March, while China's service sector also gathered steam with the sharpest increase in sales in three months. * The energy sector .SPTTEN rose 1.7% as U.S. crude CLc1 prices were up 2.5% a barrel, while Brent crude LCOc1 added 2.2%. | * Aphria Inc APHA.TO fell 2.6%, the most on the TSX, while the second biggest decliner was Aurora Cannabis ACB.TO, down 1.9%. Updates prices, adds sector details April 6 (Reuters) - Canada's main stock index gained on Tuesday, boosted by stronger oil prices as robust economic data from China and the United States raised hopes of a faster pace of economic recovery. A survey from the Institute for Supply Management on Monday showed activity in the U.S. services industry reached its highest level on record in March, while China's service sector also gathered steam with the sharpest increase in sales in three months. | * Aphria Inc APHA.TO fell 2.6%, the most on the TSX, while the second biggest decliner was Aurora Cannabis ACB.TO, down 1.9%. The industrials sector .GSPTTIN rose 0.1%. GOL/MET/L * On the TSX, 132 issues were higher, while 95 issues declined for a 1.39-to-1 ratio favouring gainers, with 18.31 million shares traded. |
36830.0 | 2021-04-06 00:00:00 UTC | Thinking About Buying Pot Stocks? Do This First | ACB | https://www.nasdaq.com/articles/thinking-about-buying-pot-stocks-do-this-first-2021-04-06 | nan | nan | Are Aurora Cannabis' (NYSE: ACB) cost problems too big for the business to ever reach profitability? Is a pick-and-shovel play like GrowGeneration (NASDAQ: GRWG) really going to give me access to all of the growth potential of the cannabis industry? For new and experienced investors alike, picking pot stocks comes with new sets of challenging questions like these.
Before you start scooping up shares of companies in the red hot sector, it's important to do your research. Dr. Chanda Macias is a medical cannabis advocate, research, and dispensary owner. Dr. Macias joined Olivia Zitkus and Corinne Cardina of the Healthcare and Cannabis Bureau on a March 19 episode of Fool Live, where she gave advice to investors looking to put their money into pot.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Corinne Cardina: My last question is about investing because at The Motley Fool, we are investors. I would love to hear one piece of advice that you might give generally, it could be about trends, to any investors thinking about putting their money into marijuana, cannabis, pot stocks, whatever you want to call them. What might you say to investors?
Dr. Chanda Macias: I'm going to have say the same thing that I say to everyone, "You have to do your research." Cannabis is definitely a lucrative industry, but it can be volatile at different times. But my thing is that if you understand the business model that the different companies have engaged in and also know the rate of returns that they have, whether they're public or private, I think you can make an informed decision. But you definitely need to do your research and be careful you understand social equity, social justice reform, or social corporate responsibility when it comes to the cannabis industry to make sure that you're working with companies that reflect that narrative. It has definitely impacted a lot of MSOs, and they're adapting to the new way of cannabis doing good in our communities and not hurting patients anymore. So do your research, jump in if we need our investors. I'm constantly looking for investors myself. If there's any questions, feel free to reach me at doctorchanda.com, which is D-O-C-T-O-R Chanda, C-H-A-N-D-A, .com. I'm here to help out in any way necessary.
Corinne Cardina has no position in any of the stocks mentioned. Olivia Zitkus owns shares of GrowGeneration Corp. The Motley Fool owns shares of and recommends GrowGeneration Corp. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Are Aurora Cannabis' (NYSE: ACB) cost problems too big for the business to ever reach profitability? Dr. Macias joined Olivia Zitkus and Corinne Cardina of the Healthcare and Cannabis Bureau on a March 19 episode of Fool Live, where she gave advice to investors looking to put their money into pot. I would love to hear one piece of advice that you might give generally, it could be about trends, to any investors thinking about putting their money into marijuana, cannabis, pot stocks, whatever you want to call them. | Are Aurora Cannabis' (NYSE: ACB) cost problems too big for the business to ever reach profitability? I would love to hear one piece of advice that you might give generally, it could be about trends, to any investors thinking about putting their money into marijuana, cannabis, pot stocks, whatever you want to call them. Olivia Zitkus owns shares of GrowGeneration Corp. | Are Aurora Cannabis' (NYSE: ACB) cost problems too big for the business to ever reach profitability? Dr. Macias joined Olivia Zitkus and Corinne Cardina of the Healthcare and Cannabis Bureau on a March 19 episode of Fool Live, where she gave advice to investors looking to put their money into pot. I would love to hear one piece of advice that you might give generally, it could be about trends, to any investors thinking about putting their money into marijuana, cannabis, pot stocks, whatever you want to call them. | Are Aurora Cannabis' (NYSE: ACB) cost problems too big for the business to ever reach profitability? Learn more Corinne Cardina: My last question is about investing because at The Motley Fool, we are investors. What might you say to investors? |
36831.0 | 2021-04-05 00:00:00 UTC | 3 Pot Stocks to Avoid Like the Plague in April | ACB | https://www.nasdaq.com/articles/3-pot-stocks-to-avoid-like-the-plague-in-april-2021-04-05 | nan | nan | This could very well be the decade that has cannabis investors seeing green.
In the U.S., pot sales are expected to grow by an annualized rate of 21% through 2025, according to New Frontier Data. Meanwhile, marijuana-focused analytics company BDSA is counting on Canada's weed revenue to more than double to $6.4 billion by 2026. All told, the North American pot industry could be bringing in $50 billion a year by the middle of the decade.
However, one of the constants of next-big-thing investments is that not every company can be a winner. The cannabis industry is highly competitive, and quite a few businesses simply aren't in great shape. As we move headlong into April, the following three pot stocks stand out like a sore thumb as those investors should avoid like the plague.
Image source: Getty Images.
Sundial Growers
After recently referring to Canadian licensed producer Sundial Growers (NASDAQ: SNDL) as the "absolute worst marijuana stock money can buy," it should come as no surprise that it's a no-brainer avoid in April.
The bulk of Sundial Growers' gains since the year began are the result of the Reddit frenzy. Without (pardon the pun) getting too far into the weeds, retail investors on Reddit's WallStreetBets chat room have essentially banded together to buy shares and out-of-the-money call options in stocks with high levels of short interest. The goal for these predominantly young retail investors is to create a short squeeze -- i.e., an event where pessimists hoping for a share price decline feel trapped by a rapidly rising stock and rush for the exit. Sundial underwent a short squeeze two months ago, but has since tailed off.
Optimists in Sundial will also point to the company's $719 million Canadian ($571 million U.S.) in cash and no debt as part of the buy thesis. However, this capital was raised by diluting the daylights out of existing shareholders. This is a company that had 509 million shares outstanding on Sept. 30, 2020, but was lugging around 1.66 billion shares five months later. A combination of share offerings, debt-to-equity swaps, and warrant exercising drove its share count into the stratosphere.
Think about this for a moment: With 1.66 billion shares outstanding, the company would need to generate close to $25 million in net income just to produce a rounded-up $0.02 per share profit. Because Sundial is one of the slowest-growing marijuana stocks, it's not expected to become profitable until 2023, or top $0.01 in per-share earnings when it does become profitable. Wall Street also isn't counting on $100 million in sales until at least 2024.
What's more, the company's outstanding share count is going to make delisting a constant threat. Sundial's only true asset is its cash, which equates to just $0.34 per share. Above $0.34, investors are purely speculating on a company that's losing money and has no defined game plan.
Suffice it to say, Sundial really is the worst pot stock money can buy.
Image source: Getty Images.
MedMen Enterprises
In terms of worst U.S. marijuana stock, multistate operator MedMen Enterprises (OTC: MMNFF) would be in strong contention.
MedMen is a penny stock, and retail investors love penny stocks almost as much as they love a good short squeeze. With cannabis stocks soaring earlier this year after Democrats won back the U.S. Senate by the narrowest of margins, MedMen caught fire. The prospects for cannabis reform at the federal level proved more than enough for speculators to dive in. However, with shares of the company up nearly 200% year-to-date, it's pretty hard to overlook how poorly MedMen has been run.
This is a company that tried to be one of the premier national players, but its previous management team was far too overzealous. MedMen was forced to back out of its PharmaCann acquisition in October 2019, a year after it was announced, and it's been scrambling to cut costs and control its cash burn ever since. Even with significant cost-cutting, MedMen is nowhere near profitability and its funding situation is precarious, at best.
According to the company's fiscal second-quarter results (ended Dec. 26, 2020), it had just $7.5 million in cash, yet lost $68.9 million for the quarter, including a $24 million tax provision expense. Worse yet, revenue was flat from the sequential quarter (up 0.3%).
Even with a handful of supportive capital partners, MedMen has turned to direct share offerings to raise cash. In February, the company sold $5.8 million shares at $0.3713, with accompanying warrants that can be exercised at $0.4642. A month later, it sold another CA$20 million at CA$0.40. These shares also came with warrants. The point is, MedMen's only hope of survival looks to be to dilute its shareholders. And should the company survive, the potential exercising of these warrants will severely hamper its upside.
Image source: Getty Images.
Aurora Cannabis
Finally, as if there was any doubt, Canadian licensed producer Aurora Cannabis (NYSE: ACB) takes its regular spot on the avoid list.
Aurora generated a bit of buzz during the Reddit frenzy in the first quarter, but didn't have the right factors in place -- its short interest wasn't high enough, and its large daily volume made short covering easy -- for a sustained short squeeze. It was also buoyed by the hope of cannabis reform in the U.S at the federal level. Aurora won't enter the lucrative U.S. market until the federal government legalizes cannabis.
But the big issue with Aurora has always been its complete disregard for improving shareholder value. It's been leaning on selling its common stock to fund its day-to-day operations, and has used its shares as collateral for its roughly one dozen acquisitions over the past five years. Between June 2014 and the end of 2020, Aurora's share count rose by more than 13,500%!
And just like Sundial, Aurora Cannabis isn't done yet. Less than four weeks ago, the company filed a shelf prospectus that would allow it to sell a combination of shares, warrants, or debt securities over the coming 25 months totaling (drum roll) up to $1 billion. If Aurora does sell up to $1 billion more in stock, we could be talking about its share count rising from 1.35 million in June 2014 to potentially close to 300 million.
The company's management hasn't inspired confidence, either. Aurora's finish line to hit positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) has been pushed back a number of times. Since hitting positive EBITDA is a requirement of the company's debt covenant, this failure isn't something that can be swept under the rug.
As has been the case for years, Aurora Cannabis is firmly in the avoid column.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Sean Williams has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora Cannabis Finally, as if there was any doubt, Canadian licensed producer Aurora Cannabis (NYSE: ACB) takes its regular spot on the avoid list. Without (pardon the pun) getting too far into the weeds, retail investors on Reddit's WallStreetBets chat room have essentially banded together to buy shares and out-of-the-money call options in stocks with high levels of short interest. The goal for these predominantly young retail investors is to create a short squeeze -- i.e., an event where pessimists hoping for a share price decline feel trapped by a rapidly rising stock and rush for the exit. | Aurora Cannabis Finally, as if there was any doubt, Canadian licensed producer Aurora Cannabis (NYSE: ACB) takes its regular spot on the avoid list. Sundial Growers After recently referring to Canadian licensed producer Sundial Growers (NASDAQ: SNDL) as the "absolute worst marijuana stock money can buy," it should come as no surprise that it's a no-brainer avoid in April. MedMen Enterprises In terms of worst U.S. marijuana stock, multistate operator MedMen Enterprises (OTC: MMNFF) would be in strong contention. | Aurora Cannabis Finally, as if there was any doubt, Canadian licensed producer Aurora Cannabis (NYSE: ACB) takes its regular spot on the avoid list. This is a company that had 509 million shares outstanding on Sept. 30, 2020, but was lugging around 1.66 billion shares five months later. Think about this for a moment: With 1.66 billion shares outstanding, the company would need to generate close to $25 million in net income just to produce a rounded-up $0.02 per share profit. | Aurora Cannabis Finally, as if there was any doubt, Canadian licensed producer Aurora Cannabis (NYSE: ACB) takes its regular spot on the avoid list. This is a company that had 509 million shares outstanding on Sept. 30, 2020, but was lugging around 1.66 billion shares five months later. Suffice it to say, Sundial really is the worst pot stock money can buy. |
36832.0 | 2021-04-05 00:00:00 UTC | Could Aurora Cannabis Be a Millionaire-Maker Stock? | ACB | https://www.nasdaq.com/articles/could-aurora-cannabis-be-a-millionaire-maker-stock-2021-04-05 | nan | nan | Some investors still believe that Canada-based Aurora Cannabis (NYSE: ACB) can make a comeback. Its cost-cutting efforts under a new CEO, Miguel Martin, who took the reins in September, haven't gone unnoticed. The hope is that these measures, along with a pandemic-induced boom in cannabis demand, could help Aurora achieve profitability soon. But there are other challenges involved, such as handling expenses, procuring capital, and launching new products to drive revenue growth.
Aurora performed dreadfully throughout the calendar year 2020. But its results in its recent fiscal 2021 second quarter, which ended Dec. 31, appeared to improve a little. Has that put Aurora back in safe waters? The company has made investors millionaires in the past, but does it still have the potential to do that again? Let's take a look at its progress so far this year, and determine if that is possible.
Image source: Getty Images.
Revenue growth was good in Q2, but was it enough?
Total revenue in the second quarter increased 23% year over year to 67.6 million Canadian dollars. Total medical cannabis net revenue surged 42% to CA$39 million. Most encouragingly, a 562% year-over-year increase in international medical cannabis sales proved demand for Aurora's products worldwide. Canadian medical revenue also jumped, but only by 6% to CA$27 million.
However, on the recreational front, total consumer cannabis revenue increased just 25% to CA$28.5 million. Sales of the still limited selection of derivatives products (vapes, edibles, and concentrates), which Aurora launched in December 2019, increased by CA$1.7 million sequentially. If Aurora wants to grow its revenue at a high rate, it has to focus more on derivatives -- high-margin products that offer a good opportunity for Aurora to achieve profitability. That said, to launch new products, capital is required -- something the company is short of.
Aurora's earnings before interest, tax, depreciation, and amortization (EBITDA) loss decreased drastically in the second quarter, to CA$16.8 million from CA$69.8 million. The credit goes to its "business transformation plan," which helped cut down its selling, general, and administrative (SG&A) expenses by 53% to CA$44.4 million from the year-ago period.
Still, a shrinking EBITDA loss isn't a green light for an investment. Aurora has been failing to deliver on its promise of profitability for a while now. Last year, management said they planned to achieve positive EBITDA by its fiscal 2020 fourth quarter, which ended in June. But that didn't happen. Management again promised the company would achieve that goal by Dec. 31, but that didn't happen either.
In fact, way back in May 2019, management was making assurances that the company would achieve positive EBITDA by the fourth quarter of fiscal 2019. It didn't, and its losses just kept mounting after that. Aurora seems to have developed a disturbing pattern here of promising and not delivering. All this makes it hard to have faith in this pot company.
Still a long way to go for Aurora
There is still a rocky path ahead for this company to turn into a true growth stock. Given that U.S. cannabis companies are rapidly expanding with the prospect of federal legalization on the horizon, Aurora is not in a position to thrive among the competition. A strong partnership would have helped -- for instance, in the way that U.S. beverage giant Constellation Brands (NYSE: STZ) is doing some heavy financial lifting for its partner, Canopy Growth (NASDAQ: CGC).
Lacking a strong partnership and the necessary financial resources, it will be close to impossible for Aurora to expand in the U.S. market. Aurora stated in a press release that at the end of Q2, its year-over-year cash use declined by 74% to $70.5 million, and it now has $565 million cash on hand. I wouldn't get too excited about that increase. It also has CA$493.3 million in total debt.
Also, most of the financing Aurora has raised is from diluting its stock, which doesn't sit well with investors. It usually means the business couldn't raise capital through any other means. The dilution started in May 2020 when Aurora consolidated its shares into a 1-for-12 reverse stock split. Its stock price stayed below $1 for long enough to put it at risk for being delisted from the New York Stock Exchange.
When Aurora went public in July 2017, its shares outstanding were 30.5 million. As of January, it had close to 165 million shares outstanding. On Nov. 16, Aurora closed a $150 million public offering that offered 20 million of its shares priced at $7.50. On Jan. 21, Aurora announced another $125 million bought-deal financing at $10.45 a share.
Not a millionaire-maker now, or anytime soon
At this point, it looks impossible for Aurora to become a millionaire-maker anytime soon. It could take a couple of years before the company starts turning a profit. Industry optimism drove the stock sky-high earlier this year, but so far Aurora has returned just 10% overall in 2021, whereas the industry benchmark Horizons Marijuana Life Sciences ETF has seen a dramatic gain of 57%.
ACB Total Return Level data by YCharts
If you still have faith in Aurora and can stomach the risk, it may not hurt to initiate a small stake. But going big with this pot stock and hoping it turns into millions probably isn't a wise decision at this stage in its story.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
The Motley Fool owns shares of and recommends Constellation Brands. The Motley Fool has a disclosure policy. Sushree Mohanty has no position in any of the stocks mentioned.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Some investors still believe that Canada-based Aurora Cannabis (NYSE: ACB) can make a comeback. ACB Total Return Level data by YCharts If you still have faith in Aurora and can stomach the risk, it may not hurt to initiate a small stake. Sales of the still limited selection of derivatives products (vapes, edibles, and concentrates), which Aurora launched in December 2019, increased by CA$1.7 million sequentially. | Some investors still believe that Canada-based Aurora Cannabis (NYSE: ACB) can make a comeback. ACB Total Return Level data by YCharts If you still have faith in Aurora and can stomach the risk, it may not hurt to initiate a small stake. The hope is that these measures, along with a pandemic-induced boom in cannabis demand, could help Aurora achieve profitability soon. | Some investors still believe that Canada-based Aurora Cannabis (NYSE: ACB) can make a comeback. ACB Total Return Level data by YCharts If you still have faith in Aurora and can stomach the risk, it may not hurt to initiate a small stake. If Aurora wants to grow its revenue at a high rate, it has to focus more on derivatives -- high-margin products that offer a good opportunity for Aurora to achieve profitability. | Some investors still believe that Canada-based Aurora Cannabis (NYSE: ACB) can make a comeback. ACB Total Return Level data by YCharts If you still have faith in Aurora and can stomach the risk, it may not hurt to initiate a small stake. Total revenue in the second quarter increased 23% year over year to 67.6 million Canadian dollars. |
36833.0 | 2021-04-01 00:00:00 UTC | CANADA STOCKS - TSX rises 1.55% to 18,990.32 | ACB | https://www.nasdaq.com/articles/canada-stocks-tsx-rises-1.55-to-18990.32-2021-04-01 | nan | nan | * The Toronto Stock Exchange's TSX rises 1.55 percent to 18,990.32
* Leading the index were Denison Mines Corp , up 8.0%, Colliers International Group Inc CIGI.TO, up 7.7%, and AcuityAds Holdings Inc AT.TO, higher by 7.3%.
* Lagging shares were Maple Leaf Foods Inc MFI.TO, down 1.7%, Aurora Cannabis Inc ACB.TO, down 1.7%, and Aphria Inc APHA.TO, lower by 1.5%.
* On the TSX 209 issues rose and 21 fell as a 10-to-1 ratio favored advancers. There were 12 new highs and no new lows, with total volume of 216.0 million shares.
* The most heavily traded shares by volume were Bank Of Nova Scotia BNS.TO, Power Corporation Of Canada POW.TO and Canadian Natural Resources Ltd CNQ.TO.
* The TSX's energy group .SPTTEN rose 3.76 points, or 3.2%, while the financials sector .SPTTFS climbed 2.10 points, or 0.6%.
* West Texas Intermediate crude futures CLc1 rose 3.52%, or $2.08, to $61.24 a barrel. Brent crude LCOc1 rose 3.08%, or $1.93, to $64.67 O/R
* The TSX is up 8.9% for the year.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | * Lagging shares were Maple Leaf Foods Inc MFI.TO, down 1.7%, Aurora Cannabis Inc ACB.TO, down 1.7%, and Aphria Inc APHA.TO, lower by 1.5%. * The Toronto Stock Exchange's TSX rises 1.55 percent to 18,990.32 * Leading the index were Denison Mines Corp , up 8.0%, Colliers International Group Inc CIGI.TO, up 7.7%, and AcuityAds Holdings Inc AT.TO, higher by 7.3%. * The most heavily traded shares by volume were Bank Of Nova Scotia BNS.TO, Power Corporation Of Canada POW.TO and Canadian Natural Resources Ltd CNQ.TO. | * Lagging shares were Maple Leaf Foods Inc MFI.TO, down 1.7%, Aurora Cannabis Inc ACB.TO, down 1.7%, and Aphria Inc APHA.TO, lower by 1.5%. * On the TSX 209 issues rose and 21 fell as a 10-to-1 ratio favored advancers. * The TSX's energy group .SPTTEN rose 3.76 points, or 3.2%, while the financials sector .SPTTFS climbed 2.10 points, or 0.6%. | * Lagging shares were Maple Leaf Foods Inc MFI.TO, down 1.7%, Aurora Cannabis Inc ACB.TO, down 1.7%, and Aphria Inc APHA.TO, lower by 1.5%. * The Toronto Stock Exchange's TSX rises 1.55 percent to 18,990.32 * Leading the index were Denison Mines Corp , up 8.0%, Colliers International Group Inc CIGI.TO, up 7.7%, and AcuityAds Holdings Inc AT.TO, higher by 7.3%. * The most heavily traded shares by volume were Bank Of Nova Scotia BNS.TO, Power Corporation Of Canada POW.TO and Canadian Natural Resources Ltd CNQ.TO. | * Lagging shares were Maple Leaf Foods Inc MFI.TO, down 1.7%, Aurora Cannabis Inc ACB.TO, down 1.7%, and Aphria Inc APHA.TO, lower by 1.5%. * The Toronto Stock Exchange's TSX rises 1.55 percent to 18,990.32 * Leading the index were Denison Mines Corp , up 8.0%, Colliers International Group Inc CIGI.TO, up 7.7%, and AcuityAds Holdings Inc AT.TO, higher by 7.3%. * On the TSX 209 issues rose and 21 fell as a 10-to-1 ratio favored advancers. |
36834.0 | 2021-03-31 00:00:00 UTC | Why Aphria, Aurora Cannabis, and Green Thumb Industries Stocks Jumped Wednesday | ACB | https://www.nasdaq.com/articles/why-aphria-aurora-cannabis-and-green-thumb-industries-stocks-jumped-wednesday-2021-03-31 | nan | nan | What happened
Shares of both Canadian and U.S. cannabis companies moved higher Wednesday morning after New York became the latest state to vote to legalize recreational marijuana use. At 11:30 a.m. EDT, shares of Canadian growers Aphria (NASDAQ: APHA) and Aurora Cannabis (NYSE: ACB) had gained 5.8% and 4.6%, respectively. Shares of U.S.-based Green Thumb Industries (OTC: GTBIF) had jumped 7.6%.
So what
New York's governor, Andrew Cuomo, said he would sign the legislation, which will make New York the 15th U.S. state to legalize adult recreational marijuana use. (The District of Columbia has also done so.) Green Thumb Industries is based in Chicago and has manufacturing facilities plus licenses for 97 retail locations and operations across 12 U.S. markets. The Canadian companies won't immediately benefit from the state's legalizing pot and will need federal legalization to transact across the border. But the Canadian companies are preparing for it and are also growing business elsewhere.
Image source: Getty Images.
Now what
Green Thumb already has retail locations in New York for medical cannabis distribution and should be able to quickly add offerings once legal recreational sales begin. It's not clear yet when that will be, but CNBC reports it should be within one or two years after the bill is signed by the governor. In a statement after the New York legislation passed, Gov. Cuomo said, "This landmark legislation provides justice for long-marginalized communities, embraces a new industry that will grow the economy, and establishes substantial safety guards for the public."
Green Thumb reported strong fourth-quarter and full-year 2020 results two weeks ago. The company grew revenue more than 157% for the full year versus 2019. It also reported a profit of $15 million for the year.
Aphria entered the U.S. market last year with the acquisition of Georgia-based SweetWater Brewing Company. Part of the strategy for the $300 million deal was to provide the company with "a platform and infrastructure within the U.S. to enable it to access the U.S. market more quickly in the event of federal legalization," management said in a statement. Aphria will also soon be merging with Tilray (NASDAQ: TLRY) pending shareholder approval. The combined company will be one of the largest global cannabis producers, and Tilray has been expanding into Europe, having made several recent announcements about new business in the U.K., Spain, and Portugal. Aphria will announce its next fiscal quarterly results on April 12, 2021.
Aurora made its initial entry into Europe with medical cannabis in Nov. 2020. Though overall still unprofitable, Aurora did report 42% year-over-year growth for its medical cannabis products in its fiscal quarter ended Dec. 31, 2020. Aurora has been consolidating its operations to better manage cash flow and work toward profitability.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | At 11:30 a.m. EDT, shares of Canadian growers Aphria (NASDAQ: APHA) and Aurora Cannabis (NYSE: ACB) had gained 5.8% and 4.6%, respectively. What happened Shares of both Canadian and U.S. cannabis companies moved higher Wednesday morning after New York became the latest state to vote to legalize recreational marijuana use. Cuomo said, "This landmark legislation provides justice for long-marginalized communities, embraces a new industry that will grow the economy, and establishes substantial safety guards for the public." | At 11:30 a.m. EDT, shares of Canadian growers Aphria (NASDAQ: APHA) and Aurora Cannabis (NYSE: ACB) had gained 5.8% and 4.6%, respectively. Now what Green Thumb already has retail locations in New York for medical cannabis distribution and should be able to quickly add offerings once legal recreational sales begin. The Motley Fool owns shares of and recommends Green Thumb Industries. | At 11:30 a.m. EDT, shares of Canadian growers Aphria (NASDAQ: APHA) and Aurora Cannabis (NYSE: ACB) had gained 5.8% and 4.6%, respectively. What happened Shares of both Canadian and U.S. cannabis companies moved higher Wednesday morning after New York became the latest state to vote to legalize recreational marijuana use. Now what Green Thumb already has retail locations in New York for medical cannabis distribution and should be able to quickly add offerings once legal recreational sales begin. | At 11:30 a.m. EDT, shares of Canadian growers Aphria (NASDAQ: APHA) and Aurora Cannabis (NYSE: ACB) had gained 5.8% and 4.6%, respectively. So what New York's governor, Andrew Cuomo, said he would sign the legislation, which will make New York the 15th U.S. state to legalize adult recreational marijuana use. It also reported a profit of $15 million for the year. |
36835.0 | 2021-03-31 00:00:00 UTC | ACB Makes Bullish Cross Above Critical Moving Average | ACB | https://www.nasdaq.com/articles/acb-makes-bullish-cross-above-critical-moving-average-2021-03-31 | nan | nan | In trading on Wednesday, shares of Aurora Cannabis Inc (Symbol: ACB) crossed above their 200 day moving average of $9.52, changing hands as high as $9.66 per share. Aurora Cannabis Inc shares are currently trading up about 5.1% on the day. The chart below shows the one year performance of ACB shares, versus its 200 day moving average:
Looking at the chart above, ACB's low point in its 52 week range is $3.71 per share, with $19.68 as the 52 week high point — that compares with a last trade of $9.48.
Free Report: Top 7%+ Dividends (paid monthly)
Click here to find out which 9 other stocks recently crossed above their 200 day moving average »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | In trading on Wednesday, shares of Aurora Cannabis Inc (Symbol: ACB) crossed above their 200 day moving average of $9.52, changing hands as high as $9.66 per share. The chart below shows the one year performance of ACB shares, versus its 200 day moving average: Looking at the chart above, ACB's low point in its 52 week range is $3.71 per share, with $19.68 as the 52 week high point — that compares with a last trade of $9.48. Free Report: Top 7%+ Dividends (paid monthly) Click here to find out which 9 other stocks recently crossed above their 200 day moving average » The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | In trading on Wednesday, shares of Aurora Cannabis Inc (Symbol: ACB) crossed above their 200 day moving average of $9.52, changing hands as high as $9.66 per share. The chart below shows the one year performance of ACB shares, versus its 200 day moving average: Looking at the chart above, ACB's low point in its 52 week range is $3.71 per share, with $19.68 as the 52 week high point — that compares with a last trade of $9.48. Free Report: Top 7%+ Dividends (paid monthly) Click here to find out which 9 other stocks recently crossed above their 200 day moving average » The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | In trading on Wednesday, shares of Aurora Cannabis Inc (Symbol: ACB) crossed above their 200 day moving average of $9.52, changing hands as high as $9.66 per share. The chart below shows the one year performance of ACB shares, versus its 200 day moving average: Looking at the chart above, ACB's low point in its 52 week range is $3.71 per share, with $19.68 as the 52 week high point — that compares with a last trade of $9.48. Free Report: Top 7%+ Dividends (paid monthly) Click here to find out which 9 other stocks recently crossed above their 200 day moving average » The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | In trading on Wednesday, shares of Aurora Cannabis Inc (Symbol: ACB) crossed above their 200 day moving average of $9.52, changing hands as high as $9.66 per share. The chart below shows the one year performance of ACB shares, versus its 200 day moving average: Looking at the chart above, ACB's low point in its 52 week range is $3.71 per share, with $19.68 as the 52 week high point — that compares with a last trade of $9.48. Aurora Cannabis Inc shares are currently trading up about 5.1% on the day. |
36836.0 | 2021-03-30 00:00:00 UTC | This Surprising Development Suggests Cannabis Legalization Under Biden May Be a Pipe Dream | ACB | https://www.nasdaq.com/articles/this-surprising-development-suggests-cannabis-legalization-under-biden-may-be-a-pipe-dream | nan | nan | When U.S. President Joe Biden won the election in November 2020, it lit a fuse under the marijuana industry as optimism grew that significant reform could be on the way. Odds are, if you invested in any pot stock after election day, you would be sitting on a nice profit right now. The Horizons Marijuana Life Sciences ETF has doubled in value during that period while the S&P 500 has risen by a more modest 20% in value.
But are investors getting too far ahead of themselves? The Republicans may not be in power anymore but that doesn't mean that legalization will take place anytime soon. And based on some recent developments, there is even more reason to scale back those expectations.
Image source: Getty Images.
White House staffers disciplined or fired due to past marijuana use
Last week, the White House confirmed that it let go of five staffers as a result of marijuana use. But a report from the Daily Beast suggests that even more people were disciplined, with some having to work remotely. Press secretary Jen Psaki said other factors also played a role in the decisions and noted that marijuana "is still illegal federally." There's no denying that it is illegal but on the president's very own website, joebiden.com, it states that "getting caught for smoking marijuana shouldn't deny you a good-paying job and career, a loan, or ability to rent an apartment." Although Psaki states "rules were actually far more stringent" under Obama's administration (which she served under) than they are now, these decisions are still in contrast with what the industry was expecting from the current administration. Vice President Kamala Harris said in an October 2020 debate that under Biden, the federal government would decriminalize marijuana.
Now, just because the White House let go of staff that smoked pot in the past doesn't mean marijuana reform won't happen. But the fact that there are still rules in place relating to marijuana and Psaki alluding to the prohibition of pot still being an obstacle suggests that cannabis investors shouldn't expect a smooth ride for the industry under Biden. Sure, you can say the new president has only been on the job for a couple of months now, but on day one he signed 17 executive orders -- and not a single one of them was related to marijuana.
What does this mean for cannabis investors?
If you hold cannabis stocks in your portfolio, now might be a good time to take a second look and see whether their valuations are inflated due to the hype surrounding the election. One stock that I would definitely drop in a hurry is Canopy Growth (NASDAQ: CGC). Its shares have soared more than 70% since the election. While the CEO's extreme bullishness that the company will be operating in the U.S. within the next year likely helped the stock ascend in value, it also brings with it some lofty expectations.
Canopy Growth is one of the companies that will benefit the most from marijuana legalization as it has a deal in place to acquire Acreage Holdings when that happens (or earlier, if the exchanges permit it). It also has a big investor in Constellation Brands, which owns a 38.6% stake in its business.
Leveraging both of those companies, Canopy Growth could take off when legalization happens. It's an exciting prospect and sure to get investors excited -- except there's one really big problem: Biden never promised that legalization will happen, and neither did Harris. Decriminalization is as far as anyone has gone and many investors are likely getting ahead of themselves. Until legalization takes place, the company won't be able to sell anything but hemp in the U.S. (which is legal federally).
The danger is that the cannabis industry could again be due for a correction as a result of this recent hype. Investors only need to look back at the year after Canada legalized marijuana to see what can happen when reality doesn't mesh with forecasts and expectations. Here's what some of the top pot stocks did in the 12 months following legalization (which took place Oct. 17, 2018):
Data by YCharts.
Even a stock like Aphria, which looks like a much safer buy today, had an abysmal performance as legalization stumbled out of the gate. Not enough stores were open, and supply issues caused many problems for the industry.
But it wasn't just the government's fault, as those pie-in-the-sky forecasts proved to be a joke. Canopy Growth's former CEO Bruce Linton previously forecasted that in 2020 his company would generate one billion Canadian dollars in revenue. Today, the company is nowhere near that mark, reporting just over half of that amount (CA$506 million) over the past four quarters. HEXO also once forecasted it would generate CA$400 million in annual revenue for its 2020 fiscal year. It quickly withdrew that guidance and over the past four quarters, its sales sit at just CA$112 million.
What politicians promise and what companies and CEOs forecast should be taken with a grain of salt, especially when it relates to the cannabis industry. Until marijuana reform actually happens, investors shouldn't assume that it will. Doing so could set you up for some big losses in your portfolio.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
David Jagielski has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Constellation Brands. The Motley Fool recommends HEXO Corp.. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | When U.S. President Joe Biden won the election in November 2020, it lit a fuse under the marijuana industry as optimism grew that significant reform could be on the way. But the fact that there are still rules in place relating to marijuana and Psaki alluding to the prohibition of pot still being an obstacle suggests that cannabis investors shouldn't expect a smooth ride for the industry under Biden. Canopy Growth is one of the companies that will benefit the most from marijuana legalization as it has a deal in place to acquire Acreage Holdings when that happens (or earlier, if the exchanges permit it). | White House staffers disciplined or fired due to past marijuana use Last week, the White House confirmed that it let go of five staffers as a result of marijuana use. Now, just because the White House let go of staff that smoked pot in the past doesn't mean marijuana reform won't happen. The Motley Fool owns shares of and recommends Constellation Brands. | But the fact that there are still rules in place relating to marijuana and Psaki alluding to the prohibition of pot still being an obstacle suggests that cannabis investors shouldn't expect a smooth ride for the industry under Biden. Investors only need to look back at the year after Canada legalized marijuana to see what can happen when reality doesn't mesh with forecasts and expectations. Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018. | What does this mean for cannabis investors? Investors only need to look back at the year after Canada legalized marijuana to see what can happen when reality doesn't mesh with forecasts and expectations. Here's what some of the top pot stocks did in the 12 months following legalization (which took place Oct. 17, 2018): |
36837.0 | 2021-03-29 00:00:00 UTC | This Billionaire-Backed Cannabis Company Could Be the Next Big Pot Stock | ACB | https://www.nasdaq.com/articles/this-billionaire-backed-cannabis-company-could-be-the-next-big-pot-stock-2021-03-29 | nan | nan | If you're worried that you've missed the boat on the cannabis industry, fear not -- the sector is still in its early growth stages, and as more states and countries legalize marijuana, more opportunities will open up. This also means that more companies will go public, giving investors the ability to buy early and potentially secure some great returns later on. The key, then, is finding the right business to invest in.
One company investors will want to keep an eye on is Parallel, which owns Florida dispensary line Surterra Wellness. And one thing that makes its business stand out from other cannabis companies is the big name behind it: Wrigley.
Image source: Getty Images.
Billionaire believes his cannabis company could be bigger than his family's business
William ("Beau") Wrigley is the CEO of Parallel. His family built a fortune making chewing gum, including brands like Juicy Fruit and Doublemint. The company is now part of Mars Inc., and Wrigley has set his sights on another business venture: cannabis. In a recent interview with Forbes magazine, he admits that marijuana isn't something his family company might seem likely to be associated with. However, he is drawn to the opportunities there, saying cannabis "can be bigger than the Wrigley company."
He's right -- the market potential for marijuana is a lot bigger than for chewing gum. It's not that gum is a bad choice; one analysis estimates that the global chewing gum market will be worth $22.2 billion in 2024, growing at a rate of 4.3% between now and then. That's a good, steady growth rate -- except when you compare it to marijuana. For that, the U.S. market alone could be worth $34.5 billion in 2025, marking a growth rate of more than 18%. On a global scale, its value may top $47.2 billion by that time, an even higher growth rate of 22%.
Parallel is going public via SPAC
On Feb. 22, Parallel announced that it will go public by combining with Ceres Acquisition Corp, which is a special purpose acquisition corporation (SPAC) that currently trades over the counter and on Canada's NEO Exchange. The deal values Parallel at roughly $1.9 billion and could potentially put it at a higher valuation than industry giant Aurora Cannabis, which has a market cap of $1.8 billion. Once the deal is complete, the combined company should have $430 million in cash on hand, and Wrigley will stay on as the CEO.
The business will continue to focus on growing its operations via mergers and acquisitions. One of the companies it is looking to partner with is Cookies, a popular Las Vegas-based cannabis company that plans to expand its reach in Nevada. Parallel currently has 42 dispensaries in the U.S., with operations in five states: Florida, Pennsylvania, Massachusetts, Texas, and Nevada.
Should you invest?
The deal is expected to close sometime this summer, so investors don't have too much time to decide whether to buy shares before Parallel goes public. For 2021, the company projects that its net revenue will hit $447 million. Based on its anticipated valuation, that would put the stock at a forward price-to-sales multiple of about 4.3. Here is how that compares against other multistate operators, including Curaleaf, Green Thumb Industries, and Trulieve (OTC: TCNNF):
CURLF PS Ratio (Forward) data by YCharts
Based on those comparables, Parallel looks to be an attractive buy. Like Trulieve, the company has strong exposure to the Florida market. As of the week ending March 25, the Surterra Wellness line had 39 dispensary locations in the state, just ahead of Curaleaf's tally of 37 but nowhere near Trulieve's 79.
Although investors may be concerned about diversity, given that only three of Parallel's 42 locations are outside Florida, Trulieve is a good example of why that isn't a problem. Despite all the competition in its home state, Trulieve still reported impressive numbers in its year-end results earlier this month. Sales in 2020 totaled $521.5 million -- more than double what the company generated in the previous year. And of its 83 dispensaries, 78 are located in the Sunshine State. In 2020, only Washington, Colorado, and California generated more legal cannabis sales than Florida's $1.3 billion. But those markets have an advantage, as marijuana is legal for recreational use in those states, while Florida's government has only approved medicinal use thus far.
With some deep pockets, a strong base in Florida, and many opportunities still to come, Parallel could become one of the hottest new pot stocks to buy this year.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
David Jagielski has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Green Thumb Industries. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | If you're worried that you've missed the boat on the cannabis industry, fear not -- the sector is still in its early growth stages, and as more states and countries legalize marijuana, more opportunities will open up. As of the week ending March 25, the Surterra Wellness line had 39 dispensary locations in the state, just ahead of Curaleaf's tally of 37 but nowhere near Trulieve's 79. With some deep pockets, a strong base in Florida, and many opportunities still to come, Parallel could become one of the hottest new pot stocks to buy this year. | One company investors will want to keep an eye on is Parallel, which owns Florida dispensary line Surterra Wellness. It's not that gum is a bad choice; one analysis estimates that the global chewing gum market will be worth $22.2 billion in 2024, growing at a rate of 4.3% between now and then. Here is how that compares against other multistate operators, including Curaleaf, Green Thumb Industries, and Trulieve (OTC: TCNNF): CURLF PS Ratio (Forward) data by YCharts Based on those comparables, Parallel looks to be an attractive buy. | Billionaire believes his cannabis company could be bigger than his family's business William ("Beau") Wrigley is the CEO of Parallel. The deal values Parallel at roughly $1.9 billion and could potentially put it at a higher valuation than industry giant Aurora Cannabis, which has a market cap of $1.8 billion. Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018. | The key, then, is finding the right business to invest in. Parallel currently has 42 dispensaries in the U.S., with operations in five states: Florida, Pennsylvania, Massachusetts, Texas, and Nevada. The deal is expected to close sometime this summer, so investors don't have too much time to decide whether to buy shares before Parallel goes public. |
36838.0 | 2021-03-28 00:00:00 UTC | Can Canopy Growth Dominate the Cannabis Beverage Market? | ACB | https://www.nasdaq.com/articles/can-canopy-growth-dominate-the-cannabis-beverage-market-2021-03-28 | nan | nan | Well-known Canadian pot company Canopy Growth (NASDAQ: CGC) has been holding its ground despite sectorwide hurdles for the past few years. While the coronavirus pandemic did boost marijuana sales in both the U.S. and Canada, that wasn't enough for Canopy to make a profit, in part because regulatory hurdles in Canada are still delaying the opening of legal stores. That said, things seem to be improving now.
Moreover, Canopy's strong partnership with U.S. beverage giant Constellation Brands (NYSE: STZ) has been keeping its pockets deep enough to survive any crisis.
That said, the company did have to make some harsh cost-cutting decisions recently under new CEO David Klein to reduce operating expenses. But all hope is not lost for Canopy. Its stock is up 27% so far this year, versus the Horizons Marijuana Life Sciences ETF's gain of 63%. The company is making a mark with its cannabis derivatives products, beverages in particular, and management believes they can dominate that market. Let's take a look at its progress and determine whether this pot stock is a worthwhile investment for the long term.
Image source: Getty Images.
Cannabis beverages could give the alcohol industry a challenge
Experts believe cannabis beverages could soon be moving in on the alcohol industry. Drinkable cannabis is an entirely new and different form of the drug -- one of the "derivative" forms Canada legalized in October 2019 as part of "Cannabis 2.0" -- and many customers who do not like the traditional method of smoking cannabis are using derivatives as a substitute (including vapes, chocolates, edibles, concentrates, and more).
The global marijuana beverage market is expected to grow at a compound annual growth rate (CAGR) of 18% to reach $2.8 billion by 2025, according to Grand View Research. Leading the beverage market could turn out to be a plus for Canopy.
But peers are catching up
Canopy had an early mover's advantage with derivatives that allowed it to capture a good chunk of the beverage market in Canada. It has already successfully become the market share leader in the cannabidiol (CBD)-infused ready-to-drink beverages category in Canada, according to management, and its beverages captured 34% market share in the third quarter.
The only company besides Canopy that's launched cannabis beverages is peer HEXO. But it appears that Aphria (NASDAQ: APHA) is getting ready to give Canopy a tough fight. That company recently acquired U.S. craft brewer SweetWater Brewing Company as a way to enter the cannabis beverage segment when federal legalization takes place. While it has yet to launch any products, Aphria plans to get started even before legalization, leveraging SweetWater's innovative expertise with its craft beers and other beverages to introduce its own brands to the market. Aphria also intends to sell SweetWater's 420 brand and other beverage offerings in the Canadian sector. All that said, despite the competition, Canopy still holds the top three brands in the beverage marketplace.
The U.S. derivatives market has tremendous potential beyond beverages, but Canopy cannot make a mark here until the status of legalization changes. And when that does happen, Canopy could also face tough competition from its U.S. counterparts, which are ramping up their production for derivatives.
But Canopy has an upper hand thanks to Constellation and another U.S. partner, Acreage Holdings, which also has networks in the U.S. that can help it dominate in the beverage category. Constellation invested 245 million Canadian dollars ($191 million) in Canopy in October 2017 and currently holds a 38.6% stake in the company, with the right to acquire more if it chooses to exercise its warrants. In April 2019, Canopy entered into an agreement to acquire U.S.-based hemp company Acreage Holdings. However, Canopy and Acreage's partnership is contingent on the federal legalization of marijuana in the U.S.
While Canadian companies cannot legally introduce products with tetrahydrocannabinol (THC, the psychoactive compound found in cannabis) in the U.S., no such restriction exists for the non-psychoactive compound cannabidiol (CBD). To take advantage of this, Canopy recently made an entry into the U.S. CBD beverage market, launching Quatreau, a premium ready-to-drink CBD-infused sparkling water, with partner Acreage. This product will be sold online for now before it is launched in retail stores. We will have to wait and see how U.S. consumers respond to Canopy's strategy of no-THC, low-calorie beverages.
Image source: Getty Images.
Canopy Growth's future looks bright
Even though Canopy hasn't achieved positive EBITDA (earnings before income, tax, depreciation, and amortization) yet, it shouldn't be long before its efforts start showing results. Constellation's backing is one big advantage: Having access to cash is helping Canopy sail through the rough waters smoothly, while other companies like Aurora Cannabis are battling to survive. Canopy's recent Q3 fiscal 2021 results are proof of that. Its net revenue jumped 23% from the year-ago period to CA$153 million -- not a drastic increase, but it is steadily growing, which helped reduce EBITDA losses in the quarter. A 15% year-over-year dip in total SG&A (or selling, general and administrative) expenses to CA$144 million also helped lower the EBITDA losses, which came in at CA$68 million, compared to CA$97 million in Q3 2020.
Canopy is safe for now because of Constellation's investment. However, the continued EBITDA losses could drag down its financial position, so it's imperative now for the company to achieve positive EBITDA by increasing its revenue. The derivatives products can help with this, given the high demand.
CGC data by YCharts
If federal legalization happens in the next few years, Canopy has all the capabilities to march ahead and capture the U.S. cannabis market. A strong balance sheet, steadily growing revenue, reducing operating expenses, and an innovative product portfolio make this pot stock an exciting candidate for your portfolio.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Sushree Mohanty has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Constellation Brands. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | While it has yet to launch any products, Aphria plans to get started even before legalization, leveraging SweetWater's innovative expertise with its craft beers and other beverages to introduce its own brands to the market. To take advantage of this, Canopy recently made an entry into the U.S. CBD beverage market, launching Quatreau, a premium ready-to-drink CBD-infused sparkling water, with partner Acreage. Constellation's backing is one big advantage: Having access to cash is helping Canopy sail through the rough waters smoothly, while other companies like Aurora Cannabis are battling to survive. | Well-known Canadian pot company Canopy Growth (NASDAQ: CGC) has been holding its ground despite sectorwide hurdles for the past few years. It has already successfully become the market share leader in the cannabidiol (CBD)-infused ready-to-drink beverages category in Canada, according to management, and its beverages captured 34% market share in the third quarter. A strong balance sheet, steadily growing revenue, reducing operating expenses, and an innovative product portfolio make this pot stock an exciting candidate for your portfolio. | The only company besides Canopy that's launched cannabis beverages is peer HEXO. That company recently acquired U.S. craft brewer SweetWater Brewing Company as a way to enter the cannabis beverage segment when federal legalization takes place. The U.S. derivatives market has tremendous potential beyond beverages, but Canopy cannot make a mark here until the status of legalization changes. | The company is making a mark with its cannabis derivatives products, beverages in particular, and management believes they can dominate that market. The only company besides Canopy that's launched cannabis beverages is peer HEXO. Here's The Marijuana Stock You've Been Waiting For A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom. |
36839.0 | 2021-03-27 00:00:00 UTC | 1 Under-the-Radar Marijuana Stock Investors Need to Know | ACB | https://www.nasdaq.com/articles/1-under-the-radar-marijuana-stock-investors-need-to-know-2021-03-27 | nan | nan | All marijuana stock investors are familiar with the top names in the sector, like Canopy Growth or Aurora Cannabis. But one company worth getting to know doesn't have that kind of fame... at least not yet.
In this segment from Motley Fool Live, longtime Fool contributor Eric Volkman and healthcare and cannabis bureau chief Corinne Cardina identify that operator, and briefly discuss its business and prospects. This video was recorded on March 12.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Corrine Cardina: Let's talk about Virginia. Any stocks already have a presence there, planning a presence there? If I'm just super optimistic about Virginia being the next cannabis market. What should I buy?
Eric Volkman: Well, one interesting play that we've zeroed in on, generally, here at The Motley Fool is a company called Jushi Holdings (OTC: JUSHF), which is an interesting name. I like that. It sounds so zen doesn't it?
Cardina: It sounds like candy to me for some reason. Something I want to eat.
Volkman: Yeah. You're going to get a big tube of Jushi. Anyway, Jushi, they're a multi-state operator, they are fairly small. They had been off the radar, but they're developing and they're developing pretty quickly.
They have one dispensary in Virginia. Of course, they don't sell recreational weed. They have a dispensary in the town of Manassas which fans of the American Civil War -- and who's not a fan of the American Civil War? -- will know from the two battles that took place near there. Anyway, [the dispensary] is near relatively affluent municipalities and there's a good demographic there.
Jushi altogether has 16 dispensaries, most of these are in Pennsylvania. The interesting thing about Jushi and the thing that sets it apart is their strategy is to go into limited license environments.
What does that mean? Simply, it's places like Pennsylvania, for example, that put strict caps on the number of dispensaries that can operate either on a state level or in a particular municipality. So if there's one city that's rewarding only one or two licenses, that would be attractive to something like Jushi. So the idea behind that is to enter an environment where there is automatically little or almost no competition, which is an interesting and sideways way to approach this [market]. You establish yourself, and you're either almost automatically be top or the only dispensary, the only game in town, the only action.
As a result of their pretty ambitious expansion plans, [Jushi's] revenue has been cranking up. They also, let's see if I have some numbers... yeah. I think they came to prominence mostly because in their most recently reported quarter, Q3 back in November, for the first time they posted an adjusted EBITDA number, which is the preferred profitability metric for marijuana companies -- not least because there's a lot of stuff that goes into the net result that doesn't end up in adjusted EBITDA, so it's easier to post positive number.
Anyway, that aside, that's a good sign. It wasn't a big EBITDA positive number but still it was positive, and the revenue was almost $25 million for that quarter. Again, not an awful lot if you compare it to some of the bigger American or Canadian names. But that was up 67% quarter over quarter, which is impressive, and on a year-over-year basis, it's nearly seven times higher.
So this is a company on rocket fuel. Going forward, I don't see those numbers staying that high. But it's an ambitious company, they want to expand more and they're definitely worth watching for anybody in the marijuana space.
Again, they've been discovered. They're not the sleeper stock they used to be, but they still have growth ahead of it and their valuations are attractive compared to some of the more famous names in the sector.
Corinne Cardina has no position in any of the stocks mentioned. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Jushi Holdings. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks. Simply, it's places like Pennsylvania, for example, that put strict caps on the number of dispensaries that can operate either on a state level or in a particular municipality. I think they came to prominence mostly because in their most recently reported quarter, Q3 back in November, for the first time they posted an adjusted EBITDA number, which is the preferred profitability metric for marijuana companies -- not least because there's a lot of stuff that goes into the net result that doesn't end up in adjusted EBITDA, so it's easier to post positive number. | In this segment from Motley Fool Live, longtime Fool contributor Eric Volkman and healthcare and cannabis bureau chief Corinne Cardina identify that operator, and briefly discuss its business and prospects. As a result of their pretty ambitious expansion plans, [Jushi's] revenue has been cranking up. It wasn't a big EBITDA positive number but still it was positive, and the revenue was almost $25 million for that quarter. | Here's The Marijuana Stock You've Been Waiting For A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom. Eric Volkman: Well, one interesting play that we've zeroed in on, generally, here at The Motley Fool is a company called Jushi Holdings (OTC: JUSHF), which is an interesting name. I think they came to prominence mostly because in their most recently reported quarter, Q3 back in November, for the first time they posted an adjusted EBITDA number, which is the preferred profitability metric for marijuana companies -- not least because there's a lot of stuff that goes into the net result that doesn't end up in adjusted EBITDA, so it's easier to post positive number. | Eric Volkman: Well, one interesting play that we've zeroed in on, generally, here at The Motley Fool is a company called Jushi Holdings (OTC: JUSHF), which is an interesting name. Simply, it's places like Pennsylvania, for example, that put strict caps on the number of dispensaries that can operate either on a state level or in a particular municipality. It wasn't a big EBITDA positive number but still it was positive, and the revenue was almost $25 million for that quarter. |
36840.0 | 2021-03-26 00:00:00 UTC | Could Sundial Growers Be a Millionaire-Maker Stock? | ACB | https://www.nasdaq.com/articles/could-sundial-growers-be-a-millionaire-maker-stock-2021-03-26 | nan | nan | Here's a pot pop quiz for you: Name the most popular marijuana stock on the Robinhood trading platform. If you answered Aphria, Aurora Cannabis, or Canopy Growth, you're close but no cigar.
The correct answer is Sundial Growers (NASDAQ: SNDL). It's not surprising why the Canadian pot stock is so popular with Robinhood investors. Sundial's shares have skyrocketed more than 440% over the last six months.
Some investors have made a lot of money with Sundial. Others hope to do so. But could Sundial Growers even be a millionaire-maker stock?
Image source: Getty Images.
What it would take
Let's be purely analytical here. Exactly what would it take for Sundial to make you a cool $1 million? We first have to start with the size of the initial position in the marijuana stock.
Obviously, if you start out owning $900,000 worth of Sundial Growers shares, the stock wouldn't have to increase all that much to make you a millionaire. That's not realistic for most investors, of course.
Let's instead assume an initial stake of $10,000. While that's more than some investors can afford, it at least gives us a reasonable starting point.
To turn that $10,000 investment into $1 million, Sundial's market cap would have to grow from around $1.9 billion to close to $190 billion. Is the cannabis market even big enough to support a company that size? Maybe.
A stock with a price-to-sales multiple of 5 would need to have annual revenue of $38 billion to sport a market cap of $190 billion. Grand View Research projects that the global legal cannabis market will reach $84 billion by 2028. That means Sundial would have to snag a 45% market share.
Of course, we don't have to limit our time horizon to the next seven years. When Constellation Brands bought a major stake in Canopy Growth in 2018, the beverage alcohol giant estimated that the global cannabis market could top $250 billion within the next 15 years. That projection lowers the needed market share for Sundial to be a millionaire-maker to around 15%.
Reality check
Now for a reality check: Sundial Growers isn't anywhere close to raking in sales of $38 billion per year. In 2020, the company's gross revenue totaled 73.3 million in Canadian dollars. That's around $58 million U.S. dollars.
Sundial's market share in Canada during the fourth quarter of 2020 was 2.7%. But that number trended in the wrong direction. In the third quarter, the company's market share stood at 3.5%.
Even if Sundial begins capturing a larger market share, generating strong sales growth won't be a piece of cake. The company expects cannabis prices to fall in 2021 because of intense competition and an oversupply of cannabis in Canada.
More important (and more daunting), Sundial only operates in Canada right now. The only way for it to have a chance of claiming a 15%global marketshare is to enter the U.S. and European cannabis markets. The bad news is that the U.S. remains off-limits as long as marijuana is illegal at the federal level.
That situation could very well change in the not-too-distant future. However, Sundial faces a decidedly uphill battle to win against companies that are stronger financially and already have operations in the U.S.
A possibility?
Is it possible that Sundial Growers could be a millionaire-maker stock? Sure, theoretically. However, it's also possible that a meteor will land 10 feet away as you read this. Possible, but highly improbable.
Sundial isn't likely to turn $10,000 into $1 million. With the prospects of more dilution on the way, the stock could more easily turn $10,000 into $5,000. If you're looking to get rich by investing in marijuana stocks, there are other alternatives with much more attractive risk-reward profiles. They might not make you a millionaire, either, but they're safer bets than Sundial.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Keith Speights has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Constellation Brands. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | When Constellation Brands bought a major stake in Canopy Growth in 2018, the beverage alcohol giant estimated that the global cannabis market could top $250 billion within the next 15 years. Even if Sundial begins capturing a larger market share, generating strong sales growth won't be a piece of cake. Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks. | Obviously, if you start out owning $900,000 worth of Sundial Growers shares, the stock wouldn't have to increase all that much to make you a millionaire. To turn that $10,000 investment into $1 million, Sundial's market cap would have to grow from around $1.9 billion to close to $190 billion. Reality check Now for a reality check: Sundial Growers isn't anywhere close to raking in sales of $38 billion per year. | Obviously, if you start out owning $900,000 worth of Sundial Growers shares, the stock wouldn't have to increase all that much to make you a millionaire. To turn that $10,000 investment into $1 million, Sundial's market cap would have to grow from around $1.9 billion to close to $190 billion. Here's The Marijuana Stock You've Been Waiting For A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom. | We first have to start with the size of the initial position in the marijuana stock. Obviously, if you start out owning $900,000 worth of Sundial Growers shares, the stock wouldn't have to increase all that much to make you a millionaire. To turn that $10,000 investment into $1 million, Sundial's market cap would have to grow from around $1.9 billion to close to $190 billion. |
36841.0 | 2021-03-23 00:00:00 UTC | The Right Cannabis ETF Can Ease Your Investment Pain | ACB | https://www.nasdaq.com/articles/the-right-cannabis-etf-can-ease-your-investment-pain-2021-03-23 | nan | nan | Investing in cannabis can be exciting, but daunting. Valuations have risen, deregulation could be on the way, and predicted market growth is promising. The U.S. legal cannabis market is projected to climb to upwards of $41.5 billion by 2025. That number would be up from just $13 billion in 2019.
So, you've decided that you want to get in on the action but don't want to bet the farm on a risky investment. There are so many options out there, and so many ways to become confused by the field and its players. Do I go with U.S domestic cannabis stocks, Canadian, or other international brands? Legalized medical cannabis or recreational? Growers or retail? I think I have just the solution.
Image source: Getty Images
The ABCs of ETFs
There's no such thing as a sure thing -- especially in the stock market. But there are ways to minimize the risk that comes with investing in just one or two cannabis stocks. Investing in an ETF is one of those ways. An ETF, or Exchange Traded Fund, acts much like a mutual fund, and allows investors to buy multiple stocks at once. The main difference between the two is that ETFs can be traded like stocks, throughout the day, whereas mutual funds are traded based on price at the end of the day.
Let's say you've started your research by figuring out which individual stocks you like. But you have hesitation about which group of stocks, or which ETF, will give you the best shot at making some money. Let's dive into three top cannabis ETFs and learn how to make the best selection.
Digging into ETF allocation
The table below consists of three different ETFs that focus on the cannabis market. In the left column are the top stocks held the most within the various ETFs. Under each column header lists the asset weight (%) that the ETF holds for that respective stock. As an example: Horizons Marijuana Life Sciences Index ETF (OTC: HMLSF) has 13.2% of its total holdings in Aphria and Global X Cannabis ETF (NASDAQ: POTX) has 9.3% of holdings dedicated to the company's shares. The AdvisorShares Pure Cannabis ETF (NYSEMKT: MSOS) doesn't dedicate any of its assets to Aphria stock.
COMPANY HORIZONS MARIJUANA LIFE SCIENCES INDEX ETF ADVISORSHARES PURE US CANNABIS ETF GLOBAL X CANNABIS ETF
Aphria (NASDAQ: APHA) 21.6% 9.9%
Canopy Growth Corp. (NASDAQ: CGC) 13.5% 5.4%
Innovative Industrial Properties (NYSE: IIPR) 8.1% 4.6%
Green Thumb Industries (OTC: GTBIF) 11%
Cresco Labs (OTC: CRLBF) 9%
Trulieve Cannabis (OTC: TCNNF) 11.5%
Curaleaf Holdings (OTC: CURLF) 11.3%
Cronos Group (NASDAQ: CRON) 10% 6.1%
GW Pharmaceuticals (NASDAQ: GWPH) 10.7% 9.1%
Aurora Cannabis (NYSE: ACB) 5.6%
Tilray (NASDAQ: TLRY) 8.7% 8.5%
Data source: Horizons ETFs, AdvisorShares, Global X ETFs
Below are a few examples of how various investors would use the table above to reference the data, as well as to form a decision based on the information.
Investor No. 1 is Steve. Steve's own research has brought him to the conclusion that he likes Green Thumb Industries and Cresco Labs, while also acknowledging that Innovative Industrial Properties has shown success in its sale lease-back program to support real estate capital for the medical-use cannabis industry. Based on these three stocks, combined with his interest in a Pure U.S. play, a solid ETF for Steve to explore is AdvisorShares Pure U.S. Cannabis.
Investor No. 2's name is Jenna. Jenna's research has led her to Aphria, Innovative Industrial, and Cronos Group. The right ETF for Jenna to invest in might be Horizons Marijuana Life Sciences. By doing so, she gets an ETF with three of its top four holdings meeting her needs, which also represents almost 40% of its total asset weight.
Let's call investor No. 3, Nathan. Nathan wants in on Aphria, Canopy Growth, Aurora Cannabis, and Tilray. He is also aware of the proposed merger of Aphria and Tilray. The best bet for him is Global X Cannabis ETF. Choosing Global X will get him 4 of its top 5 favorite stocks, which make up about 30% of its total weight.
All have selected individual stocks that have potential, but it gives the investor single source risk in each area of focus if invested in individually. In order to minimize this risk, choosing a best fit ETF covers all bases with a single source investment.
The trade-offs of ETF investing
In any of the scenarios above, the growth potential of each stock remains, though it may be a bit watered down via the inclusion of multiple stocks in an ETF. However, it also minimizes the risk of investing in those three to four individual stocks alone, while also providing a possible stock that may not have been on your radar, and could be the next to take off unexpectedly. Rumors are swirling around potential mergers and acquisitions (M&A) in the industry (Tilray and Aphria announced a merger on Dec. 16, 2020), and we as individual investors are usually the last to know. However, an ETF manager, whose job it is to keep a close eye on these investments, may be quicker to learn of such activity and take asset allocation action as necessary.
Great for the new cannabis investor
If you're interested in the growing cannabis market, but simply don't have the time to research individual stocks, an ETF could work for you as well. And the method of digging deeper into asset allocation could help investors understand which companies the ETF managers think will produce results.
Investing in stocks always comes with a level of risk. If you've got your mind set on investing in the cannabis market and realize that it's still early in the game, investing in an ETF can give you exposure to this budding market without the risk of individual stock price swings, until we all find out who the real leaders are going to be. It also gives us some time to see if the Biden administration will work toward decriminalization in the U.S.
As with any investment, it is always best to do your due diligence. And when it comes to ETFs, setting your top individual stocks against how various ETFs have allocated their funds is a great place to start.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Jeff Little owns shares of Aurora Cannabis Inc., Canopy Growth Corp., Green Thumb Industries, AdvisorShares Pure US Cannabis ETF, and Horizons Marijuana Life ETF. The Motley Fool owns shares of and recommends Cresco Labs Inc., Green Thumb Industries, and Innovative Industrial Properties. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aphria (NASDAQ: APHA) 21.6% 9.9% Canopy Growth Corp. (NASDAQ: CGC) 13.5% 5.4% Innovative Industrial Properties (NYSE: IIPR) 8.1% 4.6% Green Thumb Industries (OTC: GTBIF) 11% Cresco Labs (OTC: CRLBF) 9% Trulieve Cannabis (OTC: TCNNF) 11.5% Curaleaf Holdings (OTC: CURLF) 11.3% Cronos Group (NASDAQ: CRON) 10% 6.1% GW Pharmaceuticals (NASDAQ: GWPH) 10.7% 9.1% Aurora Cannabis (NYSE: ACB) 5.6% Tilray (NASDAQ: TLRY) 8.7% 8.5% Data source: Horizons ETFs, AdvisorShares, Global X ETFs Below are a few examples of how various investors would use the table above to reference the data, as well as to form a decision based on the information. However, an ETF manager, whose job it is to keep a close eye on these investments, may be quicker to learn of such activity and take asset allocation action as necessary. And the method of digging deeper into asset allocation could help investors understand which companies the ETF managers think will produce results. | Aphria (NASDAQ: APHA) 21.6% 9.9% Canopy Growth Corp. (NASDAQ: CGC) 13.5% 5.4% Innovative Industrial Properties (NYSE: IIPR) 8.1% 4.6% Green Thumb Industries (OTC: GTBIF) 11% Cresco Labs (OTC: CRLBF) 9% Trulieve Cannabis (OTC: TCNNF) 11.5% Curaleaf Holdings (OTC: CURLF) 11.3% Cronos Group (NASDAQ: CRON) 10% 6.1% GW Pharmaceuticals (NASDAQ: GWPH) 10.7% 9.1% Aurora Cannabis (NYSE: ACB) 5.6% Tilray (NASDAQ: TLRY) 8.7% 8.5% Data source: Horizons ETFs, AdvisorShares, Global X ETFs Below are a few examples of how various investors would use the table above to reference the data, as well as to form a decision based on the information. Learn more Jeff Little owns shares of Aurora Cannabis Inc., Canopy Growth Corp., Green Thumb Industries, AdvisorShares Pure US Cannabis ETF, and Horizons Marijuana Life ETF. The Motley Fool owns shares of and recommends Cresco Labs Inc., Green Thumb Industries, and Innovative Industrial Properties. | Aphria (NASDAQ: APHA) 21.6% 9.9% Canopy Growth Corp. (NASDAQ: CGC) 13.5% 5.4% Innovative Industrial Properties (NYSE: IIPR) 8.1% 4.6% Green Thumb Industries (OTC: GTBIF) 11% Cresco Labs (OTC: CRLBF) 9% Trulieve Cannabis (OTC: TCNNF) 11.5% Curaleaf Holdings (OTC: CURLF) 11.3% Cronos Group (NASDAQ: CRON) 10% 6.1% GW Pharmaceuticals (NASDAQ: GWPH) 10.7% 9.1% Aurora Cannabis (NYSE: ACB) 5.6% Tilray (NASDAQ: TLRY) 8.7% 8.5% Data source: Horizons ETFs, AdvisorShares, Global X ETFs Below are a few examples of how various investors would use the table above to reference the data, as well as to form a decision based on the information. Great for the new cannabis investor If you're interested in the growing cannabis market, but simply don't have the time to research individual stocks, an ETF could work for you as well. Learn more Jeff Little owns shares of Aurora Cannabis Inc., Canopy Growth Corp., Green Thumb Industries, AdvisorShares Pure US Cannabis ETF, and Horizons Marijuana Life ETF. | Aphria (NASDAQ: APHA) 21.6% 9.9% Canopy Growth Corp. (NASDAQ: CGC) 13.5% 5.4% Innovative Industrial Properties (NYSE: IIPR) 8.1% 4.6% Green Thumb Industries (OTC: GTBIF) 11% Cresco Labs (OTC: CRLBF) 9% Trulieve Cannabis (OTC: TCNNF) 11.5% Curaleaf Holdings (OTC: CURLF) 11.3% Cronos Group (NASDAQ: CRON) 10% 6.1% GW Pharmaceuticals (NASDAQ: GWPH) 10.7% 9.1% Aurora Cannabis (NYSE: ACB) 5.6% Tilray (NASDAQ: TLRY) 8.7% 8.5% Data source: Horizons ETFs, AdvisorShares, Global X ETFs Below are a few examples of how various investors would use the table above to reference the data, as well as to form a decision based on the information. Nathan wants in on Aphria, Canopy Growth, Aurora Cannabis, and Tilray. All have selected individual stocks that have potential, but it gives the investor single source risk in each area of focus if invested in individually. |
36842.0 | 2021-03-22 00:00:00 UTC | The 5 Most Popular Pot Stocks on Robinhood: Are They Buys? | ACB | https://www.nasdaq.com/articles/the-5-most-popular-pot-stocks-on-robinhood%3A-are-they-buys-2021-03-22 | nan | nan | Short-squeeze plays and tech stocks appear to be the favorites for Robinhood investors right now. However, there's another group of stocks high on the list as well.
Investors on the free trading platform definitely appear to be enamored with marijuana stocks these days. Here are the top five most popular pot stocks on Robinhood -- and whether any of them are great picks to buy.
Image source: Getty Images.
Robinhood's top five pot stocks
Robinhood regularly updates its list of the 100 most popular stocks. This list is based on which stocks are most widely held by its customers. The following five pot stocks ranked the highest:
STOCK
MARKET CAP
OVERALL POPULARITY RANK
Sundial Growers (NASDAQ: SNDL) $2.4 billion 4
Aphria (NASDAQ: APHA) $6.5 billion 12
Aurora Cannabis (NYSE: ACB) $2.1 billion 19
OrganiGram (NASDAQ: OGI) $943 million 25
Canopy Growth (NASDAQ: CGC) $12.7 billion 32
Data source: Robinhood. All data as of March 19, 2021.
These aren't the only cannabis stocks in Robinhood's top 100, by the way. Tilray (NASDAQ: TLRY) currently ranks at No. 39. Cronos Group is No. 51 on the list. And Hexo lags behind at No. 70.
It's not a coincidence that all of these stocks are Canadian cannabis producers. U.S.-based cannabis companies can't list their shares on major U.S. stock exchanges. Since Robinhood doesn't support trading for most over-the-counter stocks, these U.S. marijuana stocks can't be bought or sold on the platform.
How they compare
Another thing that all five of the most popular pot stocks on Robinhood have in common is that they've performed quite well so far in 2021. Three of them have been sizzling hot.
SNDL data by YCharts
All five companies have the same opportunities in the Canadian cannabis market. However, Canopy Growth and Aphria appear to be in the strongest position. Canopy's market share in the Canadian recreational market stands at 15.7%. After Aphria's merger with Tilray, which is expected to close in the second quarter, the combined company anticipates having a market share of 17.3%.
There's a wide gap between the companies in international markets. Aphria's wholesale operations in Germany give it a big advantage. Canopy Growth and Aurora are also major players in European medical cannabis markets. Sundial and OrganiGram, on the other hand, don't have international operations at this point.
The biggest opportunity of all is in the United States. None of these Canadian companies can enter the U.S. cannabis market as long as marijuana remains illegal at the federal level. However, it's possible that major cannabis reform could change this status in the not-too-distant future.
Canopy Growth stands out from the pack in readiness to expand into the U.S. cannabis market. The company has options to acquire Acreage Holdings and a stake in Terrascend, both of which have U.S. cannabis operations. Canopy also has a close partnership with its largest shareholder, Constellation Brands, a leader in U.S. adult beverage markets.
Are they buys?
Ironically, the least attractive of these top five Robinhood stocks in my view is the most popular one. Sundial Growers faces the steepest challenge. The company's revenue fell year-over-year in the fourth quarter. Sundial also posted another big net loss.
Aurora Cannabis isn't in a great financial position, either. It was once the biggest cannabis stock in the world based on market cap. However, Aurora continues to lose a lot of money. Like Sundial, the company has also diluted its stock significantly to raise additional cash.
My view is that OrganiGram is definitely a Canadian pot stock to watch. It has generated positive cash flow in two of its past three quarters. I'm not ready to call the stock a solid buy just yet, though.
There are two of these popular pot stocks that could be buys for some investors, in my opinion. I think Canopy Growth has what it takes to be successful over the long run, especially if the door opens to enter the U.S. cannabis market.
If you like arbitrage plays, Aphria could be one to consider over the short term. Because of the structure of its merger agreement with Tilray, there's a pretty good possibility the stock could rise some in the near future.
However, I think the best cannabis stocks of all to buy aren't included in the Robinhood top 100 list. Several U.S. pot stocks offer even better risk-reward propositions than any of their Canadian counterparts.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Keith Speights has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Constellation Brands and OrganiGram Holdings. The Motley Fool recommends HEXO. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Sundial Growers (NASDAQ: SNDL) $2.4 billion 4 Aphria (NASDAQ: APHA) $6.5 billion 12 Aurora Cannabis (NYSE: ACB) $2.1 billion 19 OrganiGram (NASDAQ: OGI) $943 million 25 Canopy Growth (NASDAQ: CGC) $12.7 billion 32 Data source: Robinhood. After Aphria's merger with Tilray, which is expected to close in the second quarter, the combined company anticipates having a market share of 17.3%. Canopy also has a close partnership with its largest shareholder, Constellation Brands, a leader in U.S. adult beverage markets. | Sundial Growers (NASDAQ: SNDL) $2.4 billion 4 Aphria (NASDAQ: APHA) $6.5 billion 12 Aurora Cannabis (NYSE: ACB) $2.1 billion 19 OrganiGram (NASDAQ: OGI) $943 million 25 Canopy Growth (NASDAQ: CGC) $12.7 billion 32 Data source: Robinhood. U.S.-based cannabis companies can't list their shares on major U.S. stock exchanges. Canopy's market share in the Canadian recreational market stands at 15.7%. | Sundial Growers (NASDAQ: SNDL) $2.4 billion 4 Aphria (NASDAQ: APHA) $6.5 billion 12 Aurora Cannabis (NYSE: ACB) $2.1 billion 19 OrganiGram (NASDAQ: OGI) $943 million 25 Canopy Growth (NASDAQ: CGC) $12.7 billion 32 Data source: Robinhood. Robinhood's top five pot stocks Robinhood regularly updates its list of the 100 most popular stocks. Since Robinhood doesn't support trading for most over-the-counter stocks, these U.S. marijuana stocks can't be bought or sold on the platform. | Sundial Growers (NASDAQ: SNDL) $2.4 billion 4 Aphria (NASDAQ: APHA) $6.5 billion 12 Aurora Cannabis (NYSE: ACB) $2.1 billion 19 OrganiGram (NASDAQ: OGI) $943 million 25 Canopy Growth (NASDAQ: CGC) $12.7 billion 32 Data source: Robinhood. SNDL data by YCharts All five companies have the same opportunities in the Canadian cannabis market. However, Canopy Growth and Aphria appear to be in the strongest position. |
36843.0 | 2021-03-20 00:00:00 UTC | This Is the Absolute Worst Marijuana Stock Money Can Buy | ACB | https://www.nasdaq.com/articles/this-is-the-absolute-worst-marijuana-stock-money-can-buy-2021-03-20 | nan | nan | Marijuana projects as one of the fastest-growing industries over the next decade.
According to a recent report by New Frontier Data, cannabis sales in the U.S. are expected to grow by 21% annually between 2019 and 2025, ultimately reaching $41.5 billion by mid-decade. Meanwhile, cannabis industry analytics company BDSA is looking for Canada to generate as much as $6.4 billion in annual weed sales by 2026, up from $2.6 billion in 2020 sales. Add in Mexico, which is now waving the green flag on recreational cannabis, and it's easy to see how the North American marijuana market could hit $50 billion in sales by 2025.
With legal cannabis sales expected to grow by a double-digit annualized percentage throughout the decade, marijuana stocks are a natural favorite among investors.
Image source: Getty Images.
Not all cannabis stocks are going to be winners
On the flip side, we also know that not every company involved in a next-big-thing investment will be a winner. If you asked me six months ago to rattle off a list of pot stocks worth avoiding, I would not have struggled to come up with candidates.
Canadian licensed producer Aurora Cannabis (NYSE: ACB) has long been a marijuana stock that I've stressed investors should avoid. Aurora's management team has a nasty habit of relying on its common stock as collateral when making acquisitions and funding its day-to-day operations. Between mid-June 2014 and the end of 2020, Aurora's outstanding share count ballooned by more than 13,500%.
To boot, Aurora Cannabis isn't anywhere near profitability, despite some hefty cost-cutting that's seen facilities closed and jobs lost. Management has also pushed its goal of positive adjusted EBITDA down the line on a number of occasions.
And it's not just Canadian licensed producers that can be bad news for investors. U.S. multistate operator MedMen Enterprises (OTC: MMNFF) has emerged as one of the worst-run cannabis companies. MedMen's previous management proved far too overzealous with the company's expansion plans and wrecked its balance sheet. Without capital infusions from Gotham Green Partners, it's unlikely that MedMen would even be solvent today.
Even cash-rich pot stocks would make the list. Despite landing a $1.8 billion equity investment from tobacco giant Altria Group in March 2019, Cronos Group (NASDAQ: CRON) has mostly been a money pit for investors. It looks to have grossly overpaid to acquire the Lord Jones cannabidiol-based beauty brand in 2019, and its cultivation activity is so minimal, relative to its market cap, that it only recently had its first quarter of more than $10 million in net sales.
Image source: Getty Images.
This is the unquestioned worst pot stock you can buy
The point is, there are a lot of bad marijuana stocks -- but one stands head and shoulders above the pack. In my view, the absolute worst pot stock that money can buy is penny stock Sundial Growers (NASDAQ: SNDL).
Shares of Sundial, a Canadian licensed producer, are up about 1,000% since late October on three developments. First, there was the victory of Joe Biden in November and the subsequent retaking of the Senate by Democrats in early January. Democrats have a considerably more favorable view of cannabis than Republicans do, making it more likely that we see some sort of cannabis reform enacted at the federal level in the months or years to come. Sundial investors are crossing their fingers for U.S. legalization, which would allow all Canadian growers to enter the U.S. weed market.
Second, investors seem pleased with Sundial cleaning up its balance sheet. As of March 15, the company had 719 million in Canadian dollars (about $580 million) in unrestricted cash. This implies that Sundial has more than enough capital to execute on its growth initiatives.
And third, Sundial has benefited from being a core holding of the retail-investor-focused Reddit frenzy. It's consistently been one of the most short-sold stocks of 2021, making it a perceived candidate for a short squeeze among Reddit traders.
Though all three of these factors explain why Sundial Growers has tacked on a quadruple-digit gain in six months, they don't come close to justifying the move.
Image source: Getty Images.
Before Sundial, I thought Aurora Cannabis was one of the worst serial diluters I'd ever seen, but Sundial takes the cake. Although I'm still waiting for the company's official share count via its annual report filing in Canada at the time of this writing, I'd estimate that, following the exercising of 98.3 million warrants last month, Sundial has at least 1.66 billion shares outstanding. This implies the company increased its outstanding share count by over 1.15 billion shares in roughly five months. I know its CA$719 million cash figure looks attractive, but understand that it's been built by burying its most faithful followers under an avalanche of new stock.
With such overwhelming dilution, here are two things to consider. First, if and when Sundial does turn the corner to profitability, it's going to need to generate CA$17 million in profit (about $13.7 million ) just to produce a single penny in earnings per share. Considering that the company yielded only CA$60.9 million in net sales ($49.1 million) last year, it's highly unlikely that we're ever going to see a meaningful per-share profit from Sundial.
Second, with the company also having a $1 billion mixed shelf offering at its disposal, this dilution is almost assured to continue. The thing to realize is that share price is irrelevant and market cap is what matters. At the moment, we're looking at a company with a $2.6 billion (that's U.S.) market cap that didn't even generate $50 million in net sales last year. Sure, it may have a share price that's perceived to be low. But investors are paying roughly $2 billion (sans cash) for a company that's nowhere near profitable, saw net sales go in reverse in 2020, and continues to dilute its shareholders. In other words, Sundial is a good candidate to once again dip well below the $1 minimum share price required for continued listing on the Nasdaq exchange.
Emotions from young retail investors appear to be the only thing keeping Sundial Growers' stock above $1. If investors were to really dig into this company's operating performance and balance sheet, I'm convinced they'd come to the same conclusion: Sundial is the absolute worst marijuana stock your money can buy.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Sean Williams has no position in any of the stocks mentioned. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Canadian licensed producer Aurora Cannabis (NYSE: ACB) has long been a marijuana stock that I've stressed investors should avoid. Add in Mexico, which is now waving the green flag on recreational cannabis, and it's easy to see how the North American marijuana market could hit $50 billion in sales by 2025. It looks to have grossly overpaid to acquire the Lord Jones cannabidiol-based beauty brand in 2019, and its cultivation activity is so minimal, relative to its market cap, that it only recently had its first quarter of more than $10 million in net sales. | Canadian licensed producer Aurora Cannabis (NYSE: ACB) has long been a marijuana stock that I've stressed investors should avoid. With legal cannabis sales expected to grow by a double-digit annualized percentage throughout the decade, marijuana stocks are a natural favorite among investors. In my view, the absolute worst pot stock that money can buy is penny stock Sundial Growers (NASDAQ: SNDL). | Canadian licensed producer Aurora Cannabis (NYSE: ACB) has long been a marijuana stock that I've stressed investors should avoid. In my view, the absolute worst pot stock that money can buy is penny stock Sundial Growers (NASDAQ: SNDL). Although I'm still waiting for the company's official share count via its annual report filing in Canada at the time of this writing, I'd estimate that, following the exercising of 98.3 million warrants last month, Sundial has at least 1.66 billion shares outstanding. | Canadian licensed producer Aurora Cannabis (NYSE: ACB) has long been a marijuana stock that I've stressed investors should avoid. Meanwhile, cannabis industry analytics company BDSA is looking for Canada to generate as much as $6.4 billion in annual weed sales by 2026, up from $2.6 billion in 2020 sales. Even cash-rich pot stocks would make the list. |
36844.0 | 2021-03-16 00:00:00 UTC | 5 Stocks That Were Once the Most Held on Robinhood | ACB | https://www.nasdaq.com/articles/5-stocks-that-were-once-the-most-held-on-robinhood-2021-03-16 | nan | nan | Volatility isn't something that the typical investor looks forward to. But over the past year, we've learned that millennials aren't like typical investors.
Online investing app Robinhood, which is well-known for offering commission-free trades, fractional share investing, and gifts free shares of stock to new members, gained 3 million new users last year. With an average age of 31 for its user base, Robinhood's investing platform has acted as lightning rod for young investors.
Perhaps the most interesting aspect of Robinhood is the relative transparency of its platform. Nearly every day, Robinhood updates its leaderboard, which is a snapshot of the 100 most-held stocks on the platform. This gives Wall Street and Main Street an under-the-hood look at what stocks have the attention of millennial investors.
Over the past year, five stocks have, at one time, held the No. 1 position on Robinhood's leaderboard. Let's take a brief look at each one.
Image source: Getty Images.
Aurora Cannabis
Your eyes are not deceiving you. Through May 11, 2020, Canadian marijuana stock Aurora Cannabis (NYSE: ACB) was a fixture as the most-held stock on Robinhood. It should be noted that Aurora had a single-digit share price, making it a likely candidate to be gifted to new members. This, I believe, played a big role in keeping the company at No. 1 for so long.
Furthermore, since Robinhood investors can't buy over-the-counter (OTC)-listed stocks, they had little choice but to focus on New York Stock Exchange (NYSE) or Nasdaq-listed Canadian pot stocks like Aurora. Since marijuana is illegal in the U.S. at the federal level, cannabis companies that directly deal with the plant in the U.S. aren't able to list their shares on the NYSE or Nasdaq. You could rightly say that Robinhood investors are missing out on some serious green.
Interestingly, Aurora Cannabis didn't lose the coveted top spot because it drowned its investors in share-based dilution (which would have been a very good reason for investors to sell). Since mid-2014, the company's outstanding share count is up by more than 13,500%. Rather, Aurora enacted a 1-for-12 reverse split to avoid being delisted from the NYSE on May 11, 2020. This split ultimately liquidated investors who held fewer than 12 shares, thusly booting it from Robinhood's No. 1 spot on the leaderboard.
The electric 2021 Mustang Mach-E. Image source: Ford.
Ford Motor
After Aurora Cannabis got the boot, Detroit automaker Ford Motor (NYSE: F) became the head honcho on Robinhood. Like Aurora, it had a single-digit share price, making it a candidate to be gifted to new members.
But unlike Aurora, Ford Motor had history -- and lots of it. Ford has been making vehicles for more than 100 years. It's a brand-name that transcends generations and can create emotional attachments with drivers young and old. Although it's traditionally been a slow-growing company, and it doesn't fit the mold of the investments that young investors usually seek out, Ford is also a cyclical play that typically shines during periods of economic recovery.
Even though it's no longer the most-held stock on Robinhood, Ford has consistently remained a top-six holding on the platform. The company's commitment to spend $22 billion on electric vehicles (EV) and an additional $7 billion on autonomous vehicles between 2018 and 2025 has the market enthused about its prospects. Ford's rich history and existing infrastructure may give it an edge in gobbling up early stage EV market share.
Image source: Apple.
Apple
For the vast majority of the past 10 months, technology kingpin Apple (NASDAQ: AAPL) has been the most-held stock on the Robinhood platform. Though it's been dethroned for two very short periods in 2021 -- I'll cover this in a moment -- it's otherwise been a rock-steady presence as the most-held stock.
The "Why Apple?" argument is simple. Apple is one of the most-recognized brands in the world, and its iPhone is the undisputed most-popular smartphone in the United States. Having introduced its first 5G-capable phone last year, Apple generated record revenue from iPhone sales in its most-recent quarter. You could rightly say that it has a cult-like following, both for its products and its stock.
What makes Apple such an intriguing long-term investment is the operating shift that's under way. CEO Tim Cook is overseeing Apple's transition to a services company. With subscriptions offering juicier margins and more predictable revenue than the products the company sells, the expectation is Apple will see its operating margin and cash flow expand over time. It's one of only a handful of stocks investors can buy and completely forget about for a long time.
A Tesla Model S plugged in for charging. Image source: Tesla.
Tesla Motors
For a couple of days in mid-January, EV giant Tesla Motors (NASDAQ: TSLA) surpassed Apple to become the most-held stock on Robinhood. It's no secret that young investors love chasing after momentum stocks, and Tesla's nearly 1,000% gain on a trailing 12-month basis, as of mid-January, made it an insatiable lure for young investors.
Tesla's track record is impressive for having been built from the ground up. It's the first successful auto stock in over five decades to reach mass production. Last year, the company came within a whisker of hitting CEO Elon Musk's delivery goal of 500,000 EVs, although it did produce its first full year of adjusted profits. The expectation is that Tesla's superior battery technology and first-mover advantages will allow it secure a sizable portion of the U.S. and China EV markets.
Then again, the current No. 2 on Robinhood's leaderboard has some concerning holes in its long-term story. It's yet to generate a full-year profit without the help of selling renewable energy credits, and it's unclear if the company's competitive advantages can stand up to the likes of Ford Motor shelling out $29 billion in a seven-year stretch. Tesla is a game-changer, but its premium is enough to make even the most aggressive growth investors blush.
Image source: Getty Images.
AMC Entertainment
Fifth and finally, for a period of about two days in early February, movie theater chain AMC Entertainment (NYSE: AMC) rocketed to the No. 1 spot on the Robinhood leaderboard. AMC has since fallen to the No. 3 slot, behind Apple and Tesla.
AMC quickly rose the ranks to become the most-held stock among millennial investors because it was a core part of the Reddit rally that took shape in late January. Retail investors on Reddit's WallStreetBets (WSB) chatroom banded together to buy shares and out-of-the-money call options in heavily short-sold companies and/or penny stocks. Aside from GameStop, AMC was arguably the most popular play among the WSB community. With young investors loving momentum stocks, they chased after AMC Entertainment.
Of all the most-held Robinhood stocks over the past year, AMC is, without question, the worst. It's a company that narrowly avoided bankruptcy in mid-January, and it isn't even certain to have enough cash to make it through 2021.
What's more, the company's operating model looks to have shifted for the worse. In the wake of theater closures, select streaming services have been releasing new movies. This could ultimately shorten the exclusivity period given to movie theaters, or perhaps even cut them out of the loop entirely. AMC is not a stock that investors should have in their portfolios.
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*Stock Advisor returns as of February 24, 2021
Sean Williams has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple and Tesla. The Motley Fool recommends Nasdaq and recommends the following options: short March 2023 $130 calls on Apple and long March 2023 $120 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Through May 11, 2020, Canadian marijuana stock Aurora Cannabis (NYSE: ACB) was a fixture as the most-held stock on Robinhood. Although it's traditionally been a slow-growing company, and it doesn't fit the mold of the investments that young investors usually seek out, Ford is also a cyclical play that typically shines during periods of economic recovery. It's yet to generate a full-year profit without the help of selling renewable energy credits, and it's unclear if the company's competitive advantages can stand up to the likes of Ford Motor shelling out $29 billion in a seven-year stretch. | Through May 11, 2020, Canadian marijuana stock Aurora Cannabis (NYSE: ACB) was a fixture as the most-held stock on Robinhood. AMC Entertainment Fifth and finally, for a period of about two days in early February, movie theater chain AMC Entertainment (NYSE: AMC) rocketed to the No. With young investors loving momentum stocks, they chased after AMC Entertainment. | Through May 11, 2020, Canadian marijuana stock Aurora Cannabis (NYSE: ACB) was a fixture as the most-held stock on Robinhood. Furthermore, since Robinhood investors can't buy over-the-counter (OTC)-listed stocks, they had little choice but to focus on New York Stock Exchange (NYSE) or Nasdaq-listed Canadian pot stocks like Aurora. Tesla Motors For a couple of days in mid-January, EV giant Tesla Motors (NASDAQ: TSLA) surpassed Apple to become the most-held stock on Robinhood. | Through May 11, 2020, Canadian marijuana stock Aurora Cannabis (NYSE: ACB) was a fixture as the most-held stock on Robinhood. But over the past year, we've learned that millennials aren't like typical investors. Ford has been making vehicles for more than 100 years. |
36845.0 | 2021-03-16 00:00:00 UTC | Why These Top Marijuana Stocks Got Slammed Today | ACB | https://www.nasdaq.com/articles/why-these-top-marijuana-stocks-got-slammed-today-2021-03-16 | nan | nan | What happened
It was a terrible Tuesday for most marijuana stocks, particularly the Canadian ones. Tilray (NASDAQ: TLRY) sank by nearly 12%, while its partner-to-be Aphria (NASDAQ: APHA) fell by 9%. Canopy Growth (NASDAQ: CGC), Aurora Cannabis (NYSE: ACB), Organigram Holdings (NASDAQ: OGI), and HEXO (NYSE: HEXO) were close behind, sliding at rates from 4% to 7%.
So what
If there's one thing investors despise, it's uncertainty. Tuesday's big question mark was New York, which is considered by many weed-watchers to be the next likely state to legalize recreational marijuana.
Image source: Getty Images.
Yet on Tuesday, there were conflicting media reports about the state government's decision to flip the switch.
The Albany-based Times Union, for example, published an article that day headlined "Legislature nears deal on recreational marijuana legalization." Yet Marijuana Moment quoted state Senate majority leader Andrea Stewart-Cousins as saying negotiations over such legislation "reached a little bit of an impasse."
Now what
Much of this uncertainty can be attributed to the usual political horse-trading that goes into any significant piece of legislation. Most sensible New Yorkers -- even the politicians -- realize that the state is facing a budgetary chasm and desperately needs good tax revenue sources.
At the end of the day, for all the political noise, New York seems to be barreling straight toward recreational legalization. This might ultimately be the factor driving the prices of Canadian pot companies down; after all, it's their American peers that will be able to immediately pounce on the New York market, not them.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends OrganiGram Holdings. The Motley Fool recommends HEXO. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Canopy Growth (NASDAQ: CGC), Aurora Cannabis (NYSE: ACB), Organigram Holdings (NASDAQ: OGI), and HEXO (NYSE: HEXO) were close behind, sliding at rates from 4% to 7%. The Albany-based Times Union, for example, published an article that day headlined "Legislature nears deal on recreational marijuana legalization." Yet Marijuana Moment quoted state Senate majority leader Andrea Stewart-Cousins as saying negotiations over such legislation "reached a little bit of an impasse." | Canopy Growth (NASDAQ: CGC), Aurora Cannabis (NYSE: ACB), Organigram Holdings (NASDAQ: OGI), and HEXO (NYSE: HEXO) were close behind, sliding at rates from 4% to 7%. Tuesday's big question mark was New York, which is considered by many weed-watchers to be the next likely state to legalize recreational marijuana. The Motley Fool recommends HEXO. | Canopy Growth (NASDAQ: CGC), Aurora Cannabis (NYSE: ACB), Organigram Holdings (NASDAQ: OGI), and HEXO (NYSE: HEXO) were close behind, sliding at rates from 4% to 7%. Here's The Marijuana Stock You've Been Waiting For A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom. Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018. | Canopy Growth (NASDAQ: CGC), Aurora Cannabis (NYSE: ACB), Organigram Holdings (NASDAQ: OGI), and HEXO (NYSE: HEXO) were close behind, sliding at rates from 4% to 7%. Tuesday's big question mark was New York, which is considered by many weed-watchers to be the next likely state to legalize recreational marijuana. And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution. |
36846.0 | 2021-03-16 00:00:00 UTC | CANADA STOCKS - TSX falls 0.43% to 18,874.01 | ACB | https://www.nasdaq.com/articles/canada-stocks-tsx-falls-0.43-to-18874.01-2021-03-16 | nan | nan | * The Toronto Stock Exchange's TSX falls 0.43 percent to 18,874.01
* Leading the index were Rogers Communications Inc , up 5.7%, Kinaxis Inc KXS.TO, up 5.3%, and Morneau Shepell Inc MSI.TO, higher by 2.8%.
* Lagging shares were Aphria Inc APHA.TO, down 9.3%, Aurora Cannabis Inc ACB.TO, down 6.8%, and First Quantum Minerals Ltd FM.TO, lower by 6.1%.
* On the TSX 96 issues rose and 118 fell as a 0.8-to-1 ratio favored decliners. There were 19 new highs and no new lows, with total volume of 264.0 million shares.
* The most heavily traded shares by volume were Canadian Natural Resources Ltd CNQ.TO, Barrick Gold Corp ABX.TO and Suncor Energy Inc SU.TO.
* The TSX's energy group .SPTTEN fell 4.00 points, or 3.2%, while the financials sector .SPTTFS climbed 0.33 points, or 0.1%.
* West Texas Intermediate crude futures CLc1 fell 0.69%, or $0.45, to $64.94 a barrel. Brent crude LCOc1 fell 0.49%, or $0.34, to $68.54 O/R
* The TSX is up 8.3% for the year.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | * Lagging shares were Aphria Inc APHA.TO, down 9.3%, Aurora Cannabis Inc ACB.TO, down 6.8%, and First Quantum Minerals Ltd FM.TO, lower by 6.1%. * The Toronto Stock Exchange's TSX falls 0.43 percent to 18,874.01 * Leading the index were Rogers Communications Inc , up 5.7%, Kinaxis Inc KXS.TO, up 5.3%, and Morneau Shepell Inc MSI.TO, higher by 2.8%. * The most heavily traded shares by volume were Canadian Natural Resources Ltd CNQ.TO, Barrick Gold Corp ABX.TO and Suncor Energy Inc SU.TO. | * Lagging shares were Aphria Inc APHA.TO, down 9.3%, Aurora Cannabis Inc ACB.TO, down 6.8%, and First Quantum Minerals Ltd FM.TO, lower by 6.1%. * The most heavily traded shares by volume were Canadian Natural Resources Ltd CNQ.TO, Barrick Gold Corp ABX.TO and Suncor Energy Inc SU.TO. * The TSX's energy group .SPTTEN fell 4.00 points, or 3.2%, while the financials sector .SPTTFS climbed 0.33 points, or 0.1%. | * Lagging shares were Aphria Inc APHA.TO, down 9.3%, Aurora Cannabis Inc ACB.TO, down 6.8%, and First Quantum Minerals Ltd FM.TO, lower by 6.1%. * The most heavily traded shares by volume were Canadian Natural Resources Ltd CNQ.TO, Barrick Gold Corp ABX.TO and Suncor Energy Inc SU.TO. * The TSX's energy group .SPTTEN fell 4.00 points, or 3.2%, while the financials sector .SPTTFS climbed 0.33 points, or 0.1%. | * Lagging shares were Aphria Inc APHA.TO, down 9.3%, Aurora Cannabis Inc ACB.TO, down 6.8%, and First Quantum Minerals Ltd FM.TO, lower by 6.1%. * The Toronto Stock Exchange's TSX falls 0.43 percent to 18,874.01 * Leading the index were Rogers Communications Inc , up 5.7%, Kinaxis Inc KXS.TO, up 5.3%, and Morneau Shepell Inc MSI.TO, higher by 2.8%. * On the TSX 96 issues rose and 118 fell as a 0.8-to-1 ratio favored decliners. |
36847.0 | 2021-03-15 00:00:00 UTC | Why Canopy Growth, Hexo, Tilray, and Other Pot Stocks Soared Today | ACB | https://www.nasdaq.com/articles/why-canopy-growth-hexo-tilray-and-other-pot-stocks-soared-today-2021-03-15 | nan | nan | What happened
Several pot stocks soared on Monday as the state of New York moved closer to legalizing recreational marijuana. Tilray (NASDAQ: TLRY) was the biggest mover, with shares jumping 12% as of 3:24 p.m. EDT. Aurora Cannabis (NYSE: ACB) shares were up 5.1%. Canopy Growth (NASDAQ: CGC) and Hexo (NYSE: HEXO) weren't too far behind, with the stocks rising 4.1% and 4.5%, respectively.
The momentum wasn't limited only to Canadian marijuana stocks. Shares of U.S.-based CBD pioneer Charlotte's Web Holdings (OTC: CWBHF) moved 2.1% higher after jumping as much as 5.5% earlier in the day.
Image source: Getty Images.
So what
New York Gov. Andrew Cuomo stated in a press conference that he and Assembly Majority Leader Crystal Peoples-Stokes talked throughout the weekend about legalizing recreational marijuana. He noted that they are "very close" to reaching an agreement.
However, Canadian cannabis producers such as Aurora, Canopy Growth, Hexo, and Tilray won't be able to sell products in New York even if the state legalizes adult-use marijuana in the near future. These companies can't retain their listings on major U.S. stock exchanges or market cannabis products in the U.S. as long as marijuana remains illegal at the federal level.
Charlotte's Web wouldn't be a direct beneficiary from the legalization of recreational pot in New York, either. The company's CBD products are derived from hemp, which is already legal throughout the U.S.
So why did these cannabis stocks rise? Investors are no doubt hoping that U.S. cannabis reform will pass that would clear the way for Canadian cannabis producers to enter the U.S. market. Canopy Growth would arguably be in the best position in the group to expand into the U.S. because of its option to acquire Acreage Holdings and its option to acquire a significant stake in TerrAscend.
As for Charlotte's Web, probably the most likely reason for its move higher is that a rising tide lifts all boats. The increasing prospect that New York will legalize recreational marijuana is causing nearly every cannabis stock to move higher because it would greatly expand the addressable U.S. market.
Now what
Reporter Zack Fink with NY1 News tweeted on Monday that his sources expect that a final version of legislation to legalize recreational pot will be ready "in the next day or so." He predicted that this would then set the stage for a vote in both chambers of the New York state legislature next week.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Keith Speights has no position in any of the stocks mentioned. The Motley Fool recommends Charlotte's Web and HEXO. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora Cannabis (NYSE: ACB) shares were up 5.1%. However, Canadian cannabis producers such as Aurora, Canopy Growth, Hexo, and Tilray won't be able to sell products in New York even if the state legalizes adult-use marijuana in the near future. These companies can't retain their listings on major U.S. stock exchanges or market cannabis products in the U.S. as long as marijuana remains illegal at the federal level. | Aurora Cannabis (NYSE: ACB) shares were up 5.1%. Canopy Growth (NASDAQ: CGC) and Hexo (NYSE: HEXO) weren't too far behind, with the stocks rising 4.1% and 4.5%, respectively. Shares of U.S.-based CBD pioneer Charlotte's Web Holdings (OTC: CWBHF) moved 2.1% higher after jumping as much as 5.5% earlier in the day. | Aurora Cannabis (NYSE: ACB) shares were up 5.1%. However, Canadian cannabis producers such as Aurora, Canopy Growth, Hexo, and Tilray won't be able to sell products in New York even if the state legalizes adult-use marijuana in the near future. The increasing prospect that New York will legalize recreational marijuana is causing nearly every cannabis stock to move higher because it would greatly expand the addressable U.S. market. | Aurora Cannabis (NYSE: ACB) shares were up 5.1%. What happened Several pot stocks soared on Monday as the state of New York moved closer to legalizing recreational marijuana. However, Canadian cannabis producers such as Aurora, Canopy Growth, Hexo, and Tilray won't be able to sell products in New York even if the state legalizes adult-use marijuana in the near future. |
36848.0 | 2021-03-12 00:00:00 UTC | Interesting ACB Put And Call Options For June 2022 | ACB | https://www.nasdaq.com/articles/interesting-acb-put-and-call-options-for-june-2022-2021-03-12 | nan | nan | Investors in Aurora Cannabis Inc (Symbol: ACB) saw new options begin trading today, for the June 2022 expiration. One of the key data points that goes into the price an option buyer is willing to pay, is the time value, so with 462 days until expiration the newly trading contracts represent a possible opportunity for sellers of puts or calls to achieve a higher premium than would be available for the contracts with a closer expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the ACB options chain for the new June 2022 contracts and identified one put and one call contract of particular interest.
The put contract at the $10.00 strike price has a current bid of $2.12. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $10.00, but will also collect the premium, putting the cost basis of the shares at $7.88 (before broker commissions). To an investor already interested in purchasing shares of ACB, that could represent an attractive alternative to paying $10.22/share today.
Because the $10.00 strike represents an approximate 2% discount to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the put contract would expire worthless. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 100%. Stock Options Channel will track those odds over time to see how they change, publishing a chart of those numbers on our website under the contract detail page for this contract. Should the contract expire worthless, the premium would represent a 21.20% return on the cash commitment, or 16.75% annualized — at Stock Options Channel we call this the YieldBoost.
Below is a chart showing the trailing twelve month trading history for Aurora Cannabis Inc, and highlighting in green where the $10.00 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $12.00 strike price has a current bid of $3.50. If an investor was to purchase shares of ACB stock at the current price level of $10.22/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $12.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 51.66% if the stock gets called away at the June 2022 expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if ACB shares really soar, which is why looking at the trailing twelve month trading history for Aurora Cannabis Inc, as well as studying the business fundamentals becomes important. Below is a chart showing ACB's trailing twelve month trading history, with the $12.00 strike highlighted in red:
Considering the fact that the $12.00 strike represents an approximate 17% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 99%. On our website under the contract detail page for this contract, Stock Options Channel will track those odds over time to see how they change and publish a chart of those numbers (the trading history of the option contract will also be charted). Should the covered call contract expire worthless, the premium would represent a 34.25% boost of extra return to the investor, or 27.06% annualized, which we refer to as the YieldBoost.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today's price of $10.22) to be 147%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
Top YieldBoost Calls of the S&P 500 »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Of course, a lot of upside could potentially be left on the table if ACB shares really soar, which is why looking at the trailing twelve month trading history for Aurora Cannabis Inc, as well as studying the business fundamentals becomes important. Below is a chart showing ACB's trailing twelve month trading history, with the $12.00 strike highlighted in red: Considering the fact that the $12.00 strike represents an approximate 17% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. Investors in Aurora Cannabis Inc (Symbol: ACB) saw new options begin trading today, for the June 2022 expiration. | Below is a chart showing ACB's trailing twelve month trading history, with the $12.00 strike highlighted in red: Considering the fact that the $12.00 strike represents an approximate 17% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. Investors in Aurora Cannabis Inc (Symbol: ACB) saw new options begin trading today, for the June 2022 expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the ACB options chain for the new June 2022 contracts and identified one put and one call contract of particular interest. | Below is a chart showing ACB's trailing twelve month trading history, with the $12.00 strike highlighted in red: Considering the fact that the $12.00 strike represents an approximate 17% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. Investors in Aurora Cannabis Inc (Symbol: ACB) saw new options begin trading today, for the June 2022 expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the ACB options chain for the new June 2022 contracts and identified one put and one call contract of particular interest. | At Stock Options Channel, our YieldBoost formula has looked up and down the ACB options chain for the new June 2022 contracts and identified one put and one call contract of particular interest. Below is a chart showing ACB's trailing twelve month trading history, with the $12.00 strike highlighted in red: Considering the fact that the $12.00 strike represents an approximate 17% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. Investors in Aurora Cannabis Inc (Symbol: ACB) saw new options begin trading today, for the June 2022 expiration. |
36849.0 | 2021-03-11 00:00:00 UTC | Can Aurora Cannabis Grow Into Its Valuation? | ACB | https://www.nasdaq.com/articles/can-aurora-cannabis-grow-into-its-valuation-2021-03-11 | nan | nan | Aurora Cannabis (ACB) was once the darling of the cannabis industry. In 2018, after having built Canada’s largest production capabilities, the company was eager to take on the newly legalized cannabis world. Unfortunately, success fell short and the latest earnings release sums up its inability achieve profitability.
During the past two months, there have been large swings in ACB stock price. I wanted to break down the financial numbers to get a sense of what a true value of the stock could be and show what Aurora needs to accomplish to get to profitability.
When we look at earnings, we try to determine future price levels based upon forward earnings multiples. Aurora Cannabis is not earning a profit, and is unlikely to become so any time soon. However, by projecting a few numbers it is possible to work through the losses and potentially glean enough information to calculate a valuation.
Here is a look at the most recent revenues for Aurora:
(Chart Data Source: Company Data - Author’s Chart)
In Canada, where Aurora primarily operates, total retail sales for the past three months is CAD ~$750M. At the same time, the latest quarter’s revenues for Aurora were some CAD $70M. That means Aurora is producing approximately 8.5% of all of Canada’s cannabis.
But, Canada’s total retail sales have increased some 130% YoY from October 2019 to October 2020. Aurora has struggled to gain momentum despite being one of Canada’s largest cannabis producers.
At the same time, while Aurora has produced very large amounts of cannabis, the margins the company is receiving are not competitive with the most competitive cannabis companies. After having reviewed so many cannabis companies, I can tell you that the very best companies have gross margins of ~60% or more. Here are Aurora’s gross margins over the past two years:
(Chart Data Source: Company Data - Author’s Chart)
The smallish boutique companies tend to produce smaller amounts of cannabis but have higher gross margins. However, there are exceptions to this where there are some "boutique" cannabis companies selling comparable amounts of cannabis every quarter but, with higher margins.
Aurora could feasibly maintain its current revenue levels while simultaneously increase its margins. Aurora's business model was to produce very large quantities of wholesale cannabis. Nearly every single company that has attempted that is now on its way to finishing its restructuring phase of moving away from the wholesale side of the business and into premium branding.
Aurora's new stated goal is to achieve significant growth in its premium brands. And, with enough time, the company just might pull it off.
First, if Aurora were to maintain its market share of wholesale and increase margins, this will add to the bottom line. I have looked at some 350 cannabis companies and it is difficult to find a producer who is sticking to the wholesale model. That may be an opportunity for Aurora since largely most of the other players in this field have left the game entirely.
If margins from the wholesale business were to improve from their lows of 25% and push back upwards to 50%, this adds an additional $17M to gross profits. At the same time, if Aurora's premium branding continues to increase in sales and can add some $25M to the topline, this will add an additional $15M to gross profits.
With operating costs as low as $30M, Aurora Cannabis has the opportunity to start adding to the bottom line.
For now, the restructuring costs are adding significant losses to the bottom line. But, even that will end shortly and the bottom line can begin to improve.
So, where could that put Aurora's stock price?
Using a forward look, we can look towards total revenues, margins, and operating costs to find a possible price target. Given a future potential of $75M in revenues with an approximate 14% net profits and 168M in outstanding shares, this puts ACB at ~$5.00 per share. Then, given a future growth rate of revenues and earnings, Aurora can then begin the long process of increasing shareholder value.
The majority on the Street remain Aurora skeptics. The stock has a Moderate Sell consensus rating, based on 4 Holds, and 7 Sells. Although the analysts see only ~6% downside, given the average price target currently stands at US$9.98. (See ACB stock analysis 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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora Cannabis (ACB) was once the darling of the cannabis industry. During the past two months, there have been large swings in ACB stock price. Given a future potential of $75M in revenues with an approximate 14% net profits and 168M in outstanding shares, this puts ACB at ~$5.00 per share. | Aurora Cannabis (ACB) was once the darling of the cannabis industry. During the past two months, there have been large swings in ACB stock price. Given a future potential of $75M in revenues with an approximate 14% net profits and 168M in outstanding shares, this puts ACB at ~$5.00 per share. | Aurora Cannabis (ACB) was once the darling of the cannabis industry. During the past two months, there have been large swings in ACB stock price. Given a future potential of $75M in revenues with an approximate 14% net profits and 168M in outstanding shares, this puts ACB at ~$5.00 per share. | Aurora Cannabis (ACB) was once the darling of the cannabis industry. During the past two months, there have been large swings in ACB stock price. Given a future potential of $75M in revenues with an approximate 14% net profits and 168M in outstanding shares, this puts ACB at ~$5.00 per share. |
36850.0 | 2021-03-11 00:00:00 UTC | Why These Marijuana Stocks Blasted Higher Today | ACB | https://www.nasdaq.com/articles/why-these-marijuana-stocks-blasted-higher-today-2021-03-11 | nan | nan | What happened
Many marijuana stocks saw market-crushing gains on Thursday.
These included Aphria (NASDAQ: APHA), with a 12% jump, HEXO (NYSE: HEXO) climbing 11%, and Aurora Cannabis (NYSE: ACB) and cannabidiol (CBD) specialist Charlotte's Web Holdings (OTC: CWBHF) both shooting almost 8% skyward. Big news from a peer inspired those pops.
Image source: Getty Images.
So what
Relatively small Organigram Holdings (NASDAQ: OGI) announced that a subsidiary of tobacco mainstay British American Tobacco has bought a nearly 20% stake in its equity for roughly 221 million Canadian dollars ($175 million).
That's reminiscent of Marlboro maker Altria's approximately $1.8 billion purchase of a 45% chunk of Cronos Group in 2018.
While the British American/Organigram deal is taking place well after the heady days of multi-billion-dollar cannabis arrangements, it's encouraging nevertheless. Here are two reasons why:
First, British American's investment implies a premium of nearly 40% over Organigram's previous day closing price. Perhaps this sets a kind of standard for buy-ins -- or even potential buyouts -- in an industry that has been lively on the mergers and acquisitions (M&A) front recently.
Second, it shows that well-capitalized companies outside of the weed business remain keenly interested in marijuana, buttressing the bullish view that the cannabis industry has a glowing future.
Now what
Given all of the above, if I were a marijuana stock investor, I'd keep my eye on companies like Organigram that have comparatively low market caps. HEXO, for one, is still under $1 billion, while Charlotte's Web might be an attractive and affordable dance partner at roughly $667 million.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Organigram Holdings. The Motley Fool recommends Charlotte's Web and HEXO. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | These included Aphria (NASDAQ: APHA), with a 12% jump, HEXO (NYSE: HEXO) climbing 11%, and Aurora Cannabis (NYSE: ACB) and cannabidiol (CBD) specialist Charlotte's Web Holdings (OTC: CWBHF) both shooting almost 8% skyward. Here are two reasons why: First, British American's investment implies a premium of nearly 40% over Organigram's previous day closing price. Perhaps this sets a kind of standard for buy-ins -- or even potential buyouts -- in an industry that has been lively on the mergers and acquisitions (M&A) front recently. | These included Aphria (NASDAQ: APHA), with a 12% jump, HEXO (NYSE: HEXO) climbing 11%, and Aurora Cannabis (NYSE: ACB) and cannabidiol (CBD) specialist Charlotte's Web Holdings (OTC: CWBHF) both shooting almost 8% skyward. So what Relatively small Organigram Holdings (NASDAQ: OGI) announced that a subsidiary of tobacco mainstay British American Tobacco has bought a nearly 20% stake in its equity for roughly 221 million Canadian dollars ($175 million). The Motley Fool recommends Charlotte's Web and HEXO. | These included Aphria (NASDAQ: APHA), with a 12% jump, HEXO (NYSE: HEXO) climbing 11%, and Aurora Cannabis (NYSE: ACB) and cannabidiol (CBD) specialist Charlotte's Web Holdings (OTC: CWBHF) both shooting almost 8% skyward. 10 stocks we like better than OrganiGram Holdings When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. See the 10 stocks *Stock Advisor returns as of February 24, 2021 Eric Volkman has no position in any of the stocks mentioned. | These included Aphria (NASDAQ: APHA), with a 12% jump, HEXO (NYSE: HEXO) climbing 11%, and Aurora Cannabis (NYSE: ACB) and cannabidiol (CBD) specialist Charlotte's Web Holdings (OTC: CWBHF) both shooting almost 8% skyward. Here are two reasons why: First, British American's investment implies a premium of nearly 40% over Organigram's previous day closing price. Now what Given all of the above, if I were a marijuana stock investor, I'd keep my eye on companies like Organigram that have comparatively low market caps. |
36851.0 | 2021-03-11 00:00:00 UTC | April 30th Options Now Available For Aurora Cannabis (ACB) | ACB | https://www.nasdaq.com/articles/april-30th-options-now-available-for-aurora-cannabis-acb-2021-03-11 | nan | nan | Investors in Aurora Cannabis Inc (Symbol: ACB) saw new options begin trading today, for the April 30th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the ACB options chain for the new April 30th contracts and identified one put and one call contract of particular interest.
The put contract at the $10.00 strike price has a current bid of $1.19. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $10.00, but will also collect the premium, putting the cost basis of the shares at $8.81 (before broker commissions). To an investor already interested in purchasing shares of ACB, that could represent an attractive alternative to paying $10.10/share today.
Because the $10.00 strike represents an approximate 1% discount to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the put contract would expire worthless. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 100%. Stock Options Channel will track those odds over time to see how they change, publishing a chart of those numbers on our website under the contract detail page for this contract. Should the contract expire worthless, the premium would represent a 11.90% return on the cash commitment, or 86.94% annualized — at Stock Options Channel we call this the YieldBoost.
Below is a chart showing the trailing twelve month trading history for Aurora Cannabis Inc, and highlighting in green where the $10.00 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $11.00 strike price has a current bid of 91 cents. If an investor was to purchase shares of ACB stock at the current price level of $10.10/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $11.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 17.92% if the stock gets called away at the April 30th expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if ACB shares really soar, which is why looking at the trailing twelve month trading history for Aurora Cannabis Inc, as well as studying the business fundamentals becomes important. Below is a chart showing ACB's trailing twelve month trading history, with the $11.00 strike highlighted in red:
Considering the fact that the $11.00 strike represents an approximate 9% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 99%. On our website under the contract detail page for this contract, Stock Options Channel will track those odds over time to see how they change and publish a chart of those numbers (the trading history of the option contract will also be charted). Should the covered call contract expire worthless, the premium would represent a 9.01% boost of extra return to the investor, or 65.83% annualized, which we refer to as the YieldBoost.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today's price of $10.10) to be 148%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
Top YieldBoost Calls of the S&P 500 »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Of course, a lot of upside could potentially be left on the table if ACB shares really soar, which is why looking at the trailing twelve month trading history for Aurora Cannabis Inc, as well as studying the business fundamentals becomes important. Below is a chart showing ACB's trailing twelve month trading history, with the $11.00 strike highlighted in red: Considering the fact that the $11.00 strike represents an approximate 9% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. Investors in Aurora Cannabis Inc (Symbol: ACB) saw new options begin trading today, for the April 30th expiration. | Below is a chart showing ACB's trailing twelve month trading history, with the $11.00 strike highlighted in red: Considering the fact that the $11.00 strike represents an approximate 9% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. Investors in Aurora Cannabis Inc (Symbol: ACB) saw new options begin trading today, for the April 30th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the ACB options chain for the new April 30th contracts and identified one put and one call contract of particular interest. | Below is a chart showing ACB's trailing twelve month trading history, with the $11.00 strike highlighted in red: Considering the fact that the $11.00 strike represents an approximate 9% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. Investors in Aurora Cannabis Inc (Symbol: ACB) saw new options begin trading today, for the April 30th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the ACB options chain for the new April 30th contracts and identified one put and one call contract of particular interest. | Below is a chart showing ACB's trailing twelve month trading history, with the $11.00 strike highlighted in red: Considering the fact that the $11.00 strike represents an approximate 9% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. Investors in Aurora Cannabis Inc (Symbol: ACB) saw new options begin trading today, for the April 30th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the ACB options chain for the new April 30th contracts and identified one put and one call contract of particular interest. |
36852.0 | 2021-03-11 00:00:00 UTC | Weed Stocks: ACB, CGC, TLRY, GRWG, APHA, CRON Light Up on Mexico Marijuana Legalization News | ACB | https://www.nasdaq.com/articles/weed-stocks%3A-acb-cgc-tlry-grwg-apha-cron-light-up-on-mexico-marijuana-legalization-news | nan | nan | InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Mexico is getting closer to legalizing marijuana and the news has shares of several weed stocks heading higher on Thursday.
Source: Yarygin / Shutterstock.com
This news comes after Mexico’s lower chamber approved a bill that would legalize the recreational use of marijuana. The bill now needs approval from the Senate and then the signature of Mexico’s President before it becomes law.
There’s a strong chance that this new bill will lead to the legalization of marijuana in Mexico. Mexican President Andrés Manuel López Obrador supports legalization and his part is in control of the Senate. The country’s Supreme Court is also pushing for laws and regulations legalizing the drug, reports Reuters.
7 Stocks to Buy That Are Cheering for March Madness
All of this news is great for weed stocks as it means a potential growing customer base for their business. Here are the biggest winners today on the news.
Aurora Cannabis (NYSE:ACB) — Shares of ACB stock are up 1.7% as of Thursday morning.
Canopy Growth (NASDAQ:CGC) — CGC stock was up 3.2% in the early hours of the day.
Tilray (NASDAQ:TLRY) — TLRY stock saw a 3.1% increase as of this writing.
GrowGeneration (NASDAQ:GRWG) — GRWG stock got a 4.9% boost from the news.
Aphria (NASDAQ:APHA) — APHA stock rose 3.1% higher in morning trading.
Cronos Group (NASDAQ:CRON) — Shares of CRON stock jumped 2.6% this morning.
Investors will want to keep an eye on these weed stocks over the next few days as the Mexico marijuana legalization story develops. More good news from the country could continue to push these stocks higher.
On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article.
The post Weed Stocks: ACB, CGC, TLRY, GRWG, APHA, CRON Light Up on Mexico Marijuana Legalization News appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | The post Weed Stocks: ACB, CGC, TLRY, GRWG, APHA, CRON Light Up on Mexico Marijuana Legalization News appeared first on InvestorPlace. Aurora Cannabis (NYSE:ACB) — Shares of ACB stock are up 1.7% as of Thursday morning. Source: Yarygin / Shutterstock.com This news comes after Mexico’s lower chamber approved a bill that would legalize the recreational use of marijuana. | The post Weed Stocks: ACB, CGC, TLRY, GRWG, APHA, CRON Light Up on Mexico Marijuana Legalization News appeared first on InvestorPlace. Aurora Cannabis (NYSE:ACB) — Shares of ACB stock are up 1.7% as of Thursday morning. InvestorPlace - Stock Market News, Stock Advice & Trading Tips Mexico is getting closer to legalizing marijuana and the news has shares of several weed stocks heading higher on Thursday. | The post Weed Stocks: ACB, CGC, TLRY, GRWG, APHA, CRON Light Up on Mexico Marijuana Legalization News appeared first on InvestorPlace. Aurora Cannabis (NYSE:ACB) — Shares of ACB stock are up 1.7% as of Thursday morning. InvestorPlace - Stock Market News, Stock Advice & Trading Tips Mexico is getting closer to legalizing marijuana and the news has shares of several weed stocks heading higher on Thursday. | The post Weed Stocks: ACB, CGC, TLRY, GRWG, APHA, CRON Light Up on Mexico Marijuana Legalization News appeared first on InvestorPlace. Aurora Cannabis (NYSE:ACB) — Shares of ACB stock are up 1.7% as of Thursday morning. InvestorPlace - Stock Market News, Stock Advice & Trading Tips Mexico is getting closer to legalizing marijuana and the news has shares of several weed stocks heading higher on Thursday. |
36853.0 | 2021-03-11 00:00:00 UTC | Here's the Most Compelling Reason to Buy Aphria Stock Right Now | ACB | https://www.nasdaq.com/articles/heres-the-most-compelling-reason-to-buy-aphria-stock-right-now-2021-03-11 | nan | nan | For a long time, Aphria (NASDAQ: APHA) was overshadowed by its rivals Canopy Growth and Aurora Cannabis. That's changed. Aphria is now arguably at the center of attention in the Canadian cannabis industry, thanks to its pending merger with Tilray (NASDAQ: TLRY). Aphria's shares are up over 180% so far this year.
But neither the attention nor the tremendous gains are good reasons to buy the marijuana stock. Here's the most compelling reason to buy Aphria right now.
Image source: Getty Images.
An A for arbitrage
Arbitrage usually involves taking advantage of a price difference of a given stock (or other investment) between multiple markets. But every now and then, an opportunity for a different kind of arbitrage arises. That's what's happened with the merger of Aphria and Tilray.
First of all, this merger isn't one of equals. Aphria is, without question, the dominant company in the deal. Its shareholders will control around 62% of the combined company, and its chairman and CEO Irwin Simon will retain his current roles in the new entity. Aphria will also hold seven of the nine spots on the board of directors.
More important for potentially buying Aphria stock, though, are the specific terms of the merger. Aphria shareholders will receive 0.8381 shares of Tilray for each of their Aphria shares. Tilray shareholders will keep the current shares.
Currently, Aphria is trading at close to 0.73 times Tilray's share price. The single most compelling reason to buy Aphria stock right now is that this ratio absolutely must increase to the 0.8381 ratio included in the merger agreement.
But just buying Aphria stock by itself isn't enough to effectively capitalize on the merger arbitrage opportunity. There are three ways that the ratio between Aphria's and Tilray's share prices could get to the agreement ratio:
Aphria stock could rise
Tilray stock could fall
Both of the above could occur
The best way to take advantage of the current pricing discrepancy is to buy Aphria and short Tilray. You won't make a huge profit, but arbitrage can be the closest to a sure thing you'll find with investing.
Long-term opportunities
Are there other reasons to consider buying Aphria that don't involve arbitrage? Sure.
For one thing, the company is set to soon become the biggest cannabis company in the world based on revenue after the Tilray merger closes. This large scale could be important as the main players compete for market share in a rapidly expanding global cannabis market.
Aphria, which will operate under the Tilray name after the transaction wraps up, will hold the leading market share in the Canadian retail cannabis market. Although this market has faced headwinds, the reopening of the economy amid the easing of COVID-19 restrictions should fuel stronger growth going forward.
The combination of Aphria and Tilray will also establish a formidable competitor in European medical-cannabis markets. Aphria's CC Pharma is already a leading medical-cannabis distributor in Germany. Tilray operates a large-scale cannabis-production operation in Portugal.
Of course, the biggest prize is the U.S. cannabis market. Both Aphria and Tilray already have U.S. operations, albeit not in cannabis. Aphria recently acquired SweetWater Brewing, a craft-beer maker that focuses on cannabis lifestyle brands. Tilray owns Manitoba Harvest, the largest hemp foods producer. The combined company will look to leverage these existing businesses to enter the U.S. cannabis market as soon as they're legally allowed to do so.
Not so compelling
Should investors rush out to buy Aphria stock? I don't think so.
My view is that the U.S. market will determine which cannabis companies have staying power. However, I'm not convinced that Aphria, as it stands now or after it merges with Tilray, will be among the biggest winners in the U.S.
The CEOs of both companies confidently predict full legalization of marijuana within the next two or three years. Although I think marijuana decriminalization is likely within the next year, I don't look for full federal legalization anytime soon.
Even if the "new" Tilray (which, again, will be more Aphria than Tilray) is able to enter the U.S. market, my hunch is that the established multistate cannabis operators will have a major competitive advantage. Manitoba Harvest and SweetWater Brewing aren't the strongest launching pads for moving into the U.S. cannabis market.
I'll readily admit that Aphria could deliver solid returns for investors even after the arbitrage opportunity goes away. However, I think there are other cannabis stocks that are even better picks for investors right now.
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Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aphria is now arguably at the center of attention in the Canadian cannabis industry, thanks to its pending merger with Tilray (NASDAQ: TLRY). Although this market has faced headwinds, the reopening of the economy amid the easing of COVID-19 restrictions should fuel stronger growth going forward. Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks. | Currently, Aphria is trading at close to 0.73 times Tilray's share price. There are three ways that the ratio between Aphria's and Tilray's share prices could get to the agreement ratio: Aphria stock could rise Tilray stock could fall Both of the above could occur The best way to take advantage of the current pricing discrepancy is to buy Aphria and short Tilray. Aphria, which will operate under the Tilray name after the transaction wraps up, will hold the leading market share in the Canadian retail cannabis market. | Aphria shareholders will receive 0.8381 shares of Tilray for each of their Aphria shares. There are three ways that the ratio between Aphria's and Tilray's share prices could get to the agreement ratio: Aphria stock could rise Tilray stock could fall Both of the above could occur The best way to take advantage of the current pricing discrepancy is to buy Aphria and short Tilray. Aphria, which will operate under the Tilray name after the transaction wraps up, will hold the leading market share in the Canadian retail cannabis market. | But just buying Aphria stock by itself isn't enough to effectively capitalize on the merger arbitrage opportunity. Aphria, which will operate under the Tilray name after the transaction wraps up, will hold the leading market share in the Canadian retail cannabis market. The CEOs of both companies confidently predict full legalization of marijuana within the next two or three years. |
36854.0 | 2021-03-11 00:00:00 UTC | 5 Robinhood Stocks to Avoid Like the Plague in March | ACB | https://www.nasdaq.com/articles/5-robinhood-stocks-to-avoid-like-the-plague-in-march-2021-03-11 | nan | nan | At this time last year, the stock market was being whipsawed in a way that investors had never seen before. In roughly one month, the benchmark S&P 500 shed over a third of its value, while the CBOE Volatility Index (a measure of expected volatility in S&P 500 options contracts over the coming 30 days) hit an all-time high.
Yet amid this chaos, millennials and novice investors flocked to invest. We know this because online investing app Robinhood, which is known for its commission-free trades and gifting of free shares of stock to new users, gained approximately 3 million new members last year.
On one hand, it's fantastic to see young people putting their money to work in the world's greatest wealth creator. Then again, it's equally terrifying to see what millennials and novice investors have been buying.
In many instances, they're chasing penny stocks or momentum plays that are wildly detached from their underlying fundamentals. As of March, the following five Robinhood stocks fit the bill as investments that should be avoided like the plague.
Image source: Getty Images.
GameStop
Let's not beat around the bush: The list of companies that have skyrocketed on the heels of the retail-investor-fueled Reddit rally contains few winners. Video game and accessories retailer GameStop (NYSE: GME) definitely isn't in the winners column.
GameStop caught fire in January after retail investors on Reddit's WallStreetBets chatroom agreed to band together to buy shares and out-of-the-money call options in the company. At the time, GameStop was the most short-sold stock of all publicly traded companies, making it the perfect target for a short squeeze. Take a quick glance at the company's three-month chart and you'll see that this short squeeze was effective.
The issue is that GameStop isn't a very good company. It's been brick-and-mortar based for more than two decades, which is a problem when gaming has shifted to digital platforms. Even with a more-than-quadrupling in e-commerce sales during the holiday season, GameStop's total sales still declined by 3%. Closing stores to reduce its expenses in an effort to backpedal into profitability isn't exactly a long-term strategy that'll pay off for investors.
Image source: Getty Images.
AMC Entertainment
If GameStop is the Batman of the Reddit-fueled frenzy, movie-theater operator AMC Entertainment (NYSE: AMC) is assuredly its Robin. AMC has been lifted by many of the same young investors that piled into GameStop, with its high short interest acting as a lure. Unfortunately, AMC's outlook might be even bleaker than GameStop's.
To begin with, AMC had to raise $917 million at the beginning of the year just to avoid bankruptcy. While it's possible that the administration of coronavirus vaccines could help life get back to normal sooner than later, this vaccination campaign will depend on the number of coronavirus variants in play, as well as how many Americans choose to get vaccinated. It wouldn't be a surprise if herd immunity and a return to normal life were pushed back into 2022. AMC may not have the capital to last that long.
Plus, even if AMC Entertainment survives this ordeal, the movie-theater operating model, as we know it, may not. AT&T subsidiary WarnerMedia is releasing all of its new movies in 2021 on HBO Max the same day they'll hit theaters. Likewise, Walt Disney is debuting some of its releases on Disney+ the same day they'll hit theaters. It's possible that convenience will trump the theater experience going forward.
Image source: Getty Images.
Aurora Cannabis
Once the most-held stock on the entire Robinhood platform, Canadian marijuana stock Aurora Cannabis (NYSE: ACB) is now the 18th most-held company. But that's still far too high for a company that's continually disappointed its shareholders.
Between June 2014 and the end of 2020, Aurora Cannabis increased its outstanding share count by more than 13,500%! It's financed more than a dozen acquisitions with its common stock, and its board has regularly approved at-the-market offerings that allow Aurora to raise capital by selling its stock. Even though the company's market cap has increased 39% over the trailing 12 months, its share price is down 32%. This disparity can be explained by three separate at-the-market programs being executed over the past year.
Aurora Cannabis is also an operational disaster. Part of the problem lies with Canadian federal and provincial regulators who have been slow to approve cultivation and retail licenses. But a lot of the blame also lies with Aurora grossly overestimating the industry's capacity needs and wildly overpaying for all of its acquisitions. With management moving the profitability goalposts further down the line on a handful of occasions, it has all the hallmarks of a Robinhood stock worth avoiding.
Image source: Getty Images.
Riot Blockchain
Few investments are hotter right now than cryptocurrency Bitcoin (CRYPTO: BTC). While there are no shortage of ways to invest in the crypto craze, I've argued that the worst possible way to invest in Bitcoin is to buy the companies that are mining it. That makes Riot Blockchain (NASDAQ: RIOT), one of the market's top-performing stocks over the trailing year, a stock to avoid like the plague.
To begin with, the cryptocurrency mining space is growing more crowded with each passing day, and the block rewards associated with validating groups of transactions on Bitcoin's network will halve every couple of years. Instead of an increased rate of return, Riot's growth outlook will almost certainly deteriorate over time.
What's more, Bitcoin has undergone three separate bear market corrections of at least 80% over the past decade. Cryptocurrency mining companies are essentially absent of innovation and entirely reliant on the rising price of Bitcoin to sustain their operations. If the world's largest cryptocurrency were to decline by 80% again, it's not even certain that Riot Blockchain would survive.
Image source: Getty Images.
Sundial Growers
Finally, investors should avoid Robinhood favorite Sundial Growers (NASDAQ: SNDL), which has replaced Aurora Cannabis as the most-held marijuana stock on the platform.
Sundial has rallied for many of the same reasons as GameStop and AMC. It has a lot of short interest and just so happens to be a penny stock, which makes it even more of a target in the eyes of young investors. But just like Aurora Cannabis, Sundial is full of shortcomings.
If you thought Aurora Cannabis' management needed to be placed in the corner and put on a time-out for its rampant dilution, you should take a closer look at Sundial. It's raised more than $600 million in cash since the end of September, but has issued over 1.1 billion shares of stock in the process. Sundial now has an estimated 1.66 billion shares outstanding, which'll make generating a meaningful per-share profit almost impossible.
To boot, Sundial's shift away from wholesale cannabis in favor of retail sales will lead to ugly year-over-year comparisons for the next couple of quarters. This comes as other North American pot stocks are turning the corner to profitability. Like Aurora, Sundial simply isn't a well-run company.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora Cannabis Once the most-held stock on the entire Robinhood platform, Canadian marijuana stock Aurora Cannabis (NYSE: ACB) is now the 18th most-held company. We know this because online investing app Robinhood, which is known for its commission-free trades and gifting of free shares of stock to new users, gained approximately 3 million new members last year. GameStop caught fire in January after retail investors on Reddit's WallStreetBets chatroom agreed to band together to buy shares and out-of-the-money call options in the company. | Aurora Cannabis Once the most-held stock on the entire Robinhood platform, Canadian marijuana stock Aurora Cannabis (NYSE: ACB) is now the 18th most-held company. AMC Entertainment If GameStop is the Batman of the Reddit-fueled frenzy, movie-theater operator AMC Entertainment (NYSE: AMC) is assuredly its Robin. That makes Riot Blockchain (NASDAQ: RIOT), one of the market's top-performing stocks over the trailing year, a stock to avoid like the plague. | Aurora Cannabis Once the most-held stock on the entire Robinhood platform, Canadian marijuana stock Aurora Cannabis (NYSE: ACB) is now the 18th most-held company. That makes Riot Blockchain (NASDAQ: RIOT), one of the market's top-performing stocks over the trailing year, a stock to avoid like the plague. Sundial Growers Finally, investors should avoid Robinhood favorite Sundial Growers (NASDAQ: SNDL), which has replaced Aurora Cannabis as the most-held marijuana stock on the platform. | Aurora Cannabis Once the most-held stock on the entire Robinhood platform, Canadian marijuana stock Aurora Cannabis (NYSE: ACB) is now the 18th most-held company. That makes Riot Blockchain (NASDAQ: RIOT), one of the market's top-performing stocks over the trailing year, a stock to avoid like the plague. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market. |
36855.0 | 2021-03-10 00:00:00 UTC | How Much Is Sundial Growers Really Worth? | ACB | https://www.nasdaq.com/articles/how-much-is-sundial-growers-really-worth-2021-03-10 | nan | nan | What a wild ride Sundial Growers (NASDAQ: SNDL) has taken investors on. Last year, the Canadian cannabis producer lost 84% of its valuation. At one point, Sundial's shares were down nearly 95% year to date.
But it's been a completely different story in 2021. The marijuana stock is now up more than 160% so far this year. Sundial peaked in early February with a 523% year-to-date gain.
All of this volatility raises an important question: Just how much is Sundial Growers really worth?
Image source: Getty Images.
A simple approach
Sundial Growers, like many of its peers, isn't profitable yet. Therefore, we can't try to determine the company's valuation based on earnings. However, we can use another well-known metric -- price-to-sales (P/S).
The approach is simple. We look at the average P/S multiples for other companies that operate in the Canadian cannabis industry. Then we use multiply that average times Sundial's sales to get an idea of what the stock arguably should be worth.
There's one major wrinkle with this valuation method, though. Canadian cannabis producers' P/S multiples are all over the map. For example, Canopy Growth's shares currently trade at a whopping 31.7 times sales. Tilray's P/S multiple is around 14.5. Meanwhile, Aurora Cannabis trades at nearly six times sales, while Village Farms' P/S multiple is close to 5.2.
The average P/S ratio for these companies is around 14.3. If Sundial traded at that multiple, the company's market cap would top $12 billion -- roughly 6.5 times greater than the current level.
Of course, Canopy's sky-high P/S multiple skews the average. And Tilray is about to merge with Aphria, a move that has inflated its valuation in recent months. What if we only used the P/S multiples for Aurora and Village Farms to calculate Sundial's worth? The good news is that Sundial should still trade more than double its current level, putting its projected market cap in the ballpark of $5 billion.
It's more complicated
Using the P/S of multiples of Sundial's peers, the stock is still dirt cheap even after its huge gains this year. Time to go buy shares? Not so fast. Calculating how much Sundial is actually worth is more complicated than just applying other companies' P/S multiples to Sundial's sales.
The reason why is that different companies have different growth prospects. Investors don't value stocks based on past performance (which is what P/S ratios do); they instead look to how much the companies will be able to grow in the future.
And that's where the situation gets murky for Sundial. The company's net cannabis revenue in the third quarter of 2020 plunged 36% from the previous quarter. Aurora Cannabis and Village Farms generated solid revenue growth in their latest quarters. Village Farms even posted its seventh consecutive profitable quarter.
The reality is that using these other companies' P/S multiples with Sundial is a flawed approach. Sundial simply isn't in as strong of a position as its peers.
Granted, that could change. Sundial is in a period of transition from relying on wholesale to moving toward branded sales. The company could deliver much better growth when it reports its Q4 results next week. However, there's no guarantee that will happen.
Analysts get paid big bucks to pore over financial numbers and growth prospects to try to figure out what a stock is worth. So what do they say about Sundial? The good news is that analysts are more bullish about the stock, with the consensus one-year price target up 20% from where it was previously. The bad news is that target is still 70% below Sundial's current share price.
Could the analysts be wrong? Sure. However, they believe that Sundial faces steeper challenges than many of its competitors do. That's a fair assessment.
Another take
An old adage says that "beauty is in the eye of the beholder." We could apply that idea to Sundial as well. Maybe the stock's real worth is whatever investors are willing to pay for it. The main problem with this idea is that investors sometimes pay way more than what a stock is really worth and sometimes pay way less than what it's worth.
My take is that there's a better question to pose than asking what Sundial Growers is worth. Instead, ask if Sundial is the best stock to buy to generate strong returns with an acceptable level of risk. I think for most investors, the answer to that question will be "no." There are too many other stocks, including marijuana stocks, that provide more attractive risk-reward propositions than Sundial does.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Keith Speights has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Village Farms International Inc. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | If Sundial traded at that multiple, the company's market cap would top $12 billion -- roughly 6.5 times greater than the current level. The good news is that Sundial should still trade more than double its current level, putting its projected market cap in the ballpark of $5 billion. Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks. | Meanwhile, Aurora Cannabis trades at nearly six times sales, while Village Farms' P/S multiple is close to 5.2. If Sundial traded at that multiple, the company's market cap would top $12 billion -- roughly 6.5 times greater than the current level. Aurora Cannabis and Village Farms generated solid revenue growth in their latest quarters. | Then we use multiply that average times Sundial's sales to get an idea of what the stock arguably should be worth. If Sundial traded at that multiple, the company's market cap would top $12 billion -- roughly 6.5 times greater than the current level. Calculating how much Sundial is actually worth is more complicated than just applying other companies' P/S multiples to Sundial's sales. | Last year, the Canadian cannabis producer lost 84% of its valuation. A simple approach Sundial Growers, like many of its peers, isn't profitable yet. So what do they say about Sundial? |
36856.0 | 2021-03-09 00:00:00 UTC | Why Investors Shouldn't Get Too Excited About Canopy Growth's Latest Move | ACB | https://www.nasdaq.com/articles/why-investors-shouldnt-get-too-excited-about-canopy-growths-latest-move-2021-03-09 | nan | nan | Cannabis investors have grown accustomed to splashy, exciting announcements by companies in the sector. But sometimes, a well written press release makes much more of the announcement than what it really is. You can't blame a company for trying to help generate some bullishness around its stock, but the savviest investors can read between the lines.
Recently, Canopy Growth (NASDAQ: CGC) made the announcement that it was entering the cannabidiol (CBD) beverage category in the U.S. with the launch of a new product. However, before you rush to buy the pot stock on this news, there are some important things to consider.
Image source: Getty Images.
This is still the hemp business
Canopy Growth didn't enter the federally illegal marijuana market. The company's new Quatreau drink technically does contain CBD, but this is different from non-hemp products which contain higher levels of tetrahydrocannabinol (THC), which gives users a high. CBD is often associated with the plant's health benefits. Currently, hemp is legal in the U.S. after the federal government passed the Farm Bill in 2018.
If you don't know the difference between hemp and pot, that's okay. Even law enforcement has struggled with the difference in the past, arresting many people they mistakenly thought were transporting marijuana rather than hemp. The one way to tell the difference is by the THC content. If the substance contains more than 0.3% THC, it can be classified as marijuana and is federally prohibited.
For consumers, this is an important distinction. At 0.3% THC, there isn't going to be much of a buzz from drinking a hemp-based beverage. Yet, some low-THC products have found massive success. According to data from Headset, the top-selling beverage in California (the top market in not just the U.S., but in the world) is Hi-Fi Hops Hoppy Reverb Sparkling Water, which contains 0mg of CBD and 10mg of THC (per 12 fluid ounces).
The market still isn't that big -- yet
Canopy Growth is banking on what it calls a "proven strategy" in the Canadian market, where it claims it is "the market share leader in CBD-infused ready-to-drink beverages." That is a very specific claim, but it's also important to note that the cannabis 2.0 market in Canada (which includes beverages) only became legal in December 2019 -- with a limited selection of products.
Rival Aurora Cannabis didn't even think the segment was worth getting into, instead deciding to focus on other areas. While Canopy Growth has partnered with beer maker Constellation Brands and a few other companies have been following suit in partnering with the beverage industry, that segment of the market still isn't a large one right now. According to Fortune Business Insights, the global cannabis beverage market was worth just $367.4 million in 2019 (California's entire pot market was worth around $3 billion that year), but it could be worth more than $8.5 billion by 2027.
Green Thumb may be the better option for you
If you want to take advantage of the potential in the cannabis beverage market, you may be better off investing in a company that is based in the U.S. with a better path to success in that segment. Last week, on March 3, Green Thumb Industries (OTC: GTBIF) announced that it was partnering with Cann, a company that sells CBD-infused sparkling water. Green Thumb will help launch the products in Illinois as early as this spring. New Jersey, which recently legalized marijuana for recreational use, is also on the radar of the two new partners. Headset's data shows that Cann's Social Tonic products account for three of the top 10 selling CBD beverage products in California.
As more markets open up, Green Thumb and Cann have the potential to dominate the cannabis beverage segment. Meanwhile, Canopy Growth will be restricted to hemp products until federal legalization of marijuana occurs -- which could be years away. Multistate operators like Green Thumb will be able to build their brands during that time and could put themselves well ahead of the Canadian cannabis producer by the time it can fully penetrate the market.
Over the past three quarters, Green Thumb has generated $379.3 million in sales -- more than double the $140.6 million it reported in the same period a year ago. By tapping into new markets and opportunities, the stock could continue to become a hot buy. In the past 12 months, its shares are up an incredible 355% while Canopy Growth's stock is up 102%. But both investments are doing better than the Horizons Marijuana Life Sciences ETF, which has climbed 74% during that time frame.
Should you buy shares of Canopy Growth or Green Thumb?
Canopy Growth is an expensive pot stock to buy right now, especially when comparing it to Green Thumb on a price-to-sales (P/S) basis, which is a useful multiple for evaluating companies in an industry in which net losses are still the norm.
GTBIF PS Ratio data by YCharts
If you want to bet on the fast-growing beverage segment, then Green Thumb is the stock to go with today. Even with its astronomical gains over the past year, it looks like a bargain compared to the overpriced Canopy Growth.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
David Jagielski has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Constellation Brands and Green Thumb Industries. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | According to data from Headset, the top-selling beverage in California (the top market in not just the U.S., but in the world) is Hi-Fi Hops Hoppy Reverb Sparkling Water, which contains 0mg of CBD and 10mg of THC (per 12 fluid ounces). Last week, on March 3, Green Thumb Industries (OTC: GTBIF) announced that it was partnering with Cann, a company that sells CBD-infused sparkling water. Canopy Growth is an expensive pot stock to buy right now, especially when comparing it to Green Thumb on a price-to-sales (P/S) basis, which is a useful multiple for evaluating companies in an industry in which net losses are still the norm. | This is still the hemp business Canopy Growth didn't enter the federally illegal marijuana market. According to Fortune Business Insights, the global cannabis beverage market was worth just $367.4 million in 2019 (California's entire pot market was worth around $3 billion that year), but it could be worth more than $8.5 billion by 2027. Last week, on March 3, Green Thumb Industries (OTC: GTBIF) announced that it was partnering with Cann, a company that sells CBD-infused sparkling water. | The market still isn't that big -- yet Canopy Growth is banking on what it calls a "proven strategy" in the Canadian market, where it claims it is "the market share leader in CBD-infused ready-to-drink beverages." While Canopy Growth has partnered with beer maker Constellation Brands and a few other companies have been following suit in partnering with the beverage industry, that segment of the market still isn't a large one right now. Canopy Growth is an expensive pot stock to buy right now, especially when comparing it to Green Thumb on a price-to-sales (P/S) basis, which is a useful multiple for evaluating companies in an industry in which net losses are still the norm. | As more markets open up, Green Thumb and Cann have the potential to dominate the cannabis beverage segment. Meanwhile, Canopy Growth will be restricted to hemp products until federal legalization of marijuana occurs -- which could be years away. Should you buy shares of Canopy Growth or Green Thumb? |
36857.0 | 2021-03-08 00:00:00 UTC | Aurora Cannabis Stock: Not Too Late to Cash Out | ACB | https://www.nasdaq.com/articles/aurora-cannabis-stock%3A-not-too-late-to-cash-out-2021-03-08 | nan | nan | InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Back on Jan. 22, I urged investors to cash out some of their huge gains in Aurora Cannabis (NYSE:ACB). Since that time, ACB stock surged another 75% higher before giving up all of those gains. At this point, the stock is down about 1.7% from where it was when I wrote that story in January. And I’m right back giving the same advice I did then.
Source: Shutterstock
If you’ve held onto your Aurora shares, you’ve definitely left some profits on the table in the past month. But nothing major has changed from a fundamental standpoint for Aurora since January. With the stock up 179% since the beginning of November, it’s not too late to be taking some of your ACB stock profits off the table.
ACB Stock News
The biggest news for ACB stock since I wrote that story in January was Aurora’s fiscal second-quarter earnings report on Feb. 11.
Aurora reported 11% revenue growth for the quarter. The company reported an earnings before interest, taxes, depreciation and amortization (EBITDA) loss of C$12.1 million, or about $9.6 million.
The good news is that a C$12.1 million loss is a marked improvement over the C$53.1 million loss Aurora reported in the same quarter a year ago. The bad news is that a loss is still a loss.
7 Hot Stocks Ready to Ride Retail Growth
Perhaps the most bullish part of Aurora’s report is that it is no longer hemorrhaging cash. Its cash burn in the quarter was down 74% to just C$70.5 million. Aurora’s dried cannabis sales came in at 15,253 kilograms, up 61% from a year ago.
Cantor Fitzgerald analyst Pablo Zuanic says underlying business trends for Aurora are on a positive trajectory.
“We believe the company has international optionality more than the Canadian [legal producer] average,” Zuanic says. “That said, the sector downdraft may provide better entry points for those wanting to make use of the ACB relative valuation discount.”
Cantor Fitzgerald has a “neutral” rating and $14.20 price target for ACB stock.
Same Old Problems
Things may be looking much brighter for Aurora than they were a year ago. But that’s not really saying much. Aurora still has plenty of problems.
For years, Aurora has been the king of cannabis stock dilution. From mid-2014 to the end of 2020, Aurora’s outstanding share count increased from 1.35 million to around 184.2 million. That’s roughly a 13,500% increase. Quarter after quarter, ACB stock investors have to watch management chip away at their ownership stakes.
Until Aurora can reach profitability, the company will be forced to continue cranking out shares and selling them for whatever price they can get. Unfortunately, investors have no idea if and when Aurora will be profitable. Management originally said it would be profitable in 2020, but it has now pushed back that target multiple times.
At the same time Aurora is struggling with its funding, other Canadian LPs have financial backing from investors with deep pockets. Canopy Growth Corp (NASDAQ:CGC) has the backing of international alcohol giant Constellation Brands (NYSE:STZ). Tobacco giant Altria (NYSE:MO) has a 45% ownership stake in Cronos (NASDAQ:CRON). Aphria (NASDAQ:APHA) and Tilray (NASDAQ:TLRY) are in the process of a blockbuster merger. The combined company will have roughly $456 million in cash, a big initial cushion to work with.
How to Play It
Not only have Aurora’s cash flow problems produced massive dilution, it may cause an even bigger problem down the road. The biggest long-term catalyst for the cannabis industry is potential U.S. federal legalization. That legalization may happen sooner than many investors previously expected. Aurora’s constant struggle to fund its operations leave it with limited resources to invest in the U.S. market. When the U.S. floodgates open, Aurora may be left in the dust as other Canadian LPs go all-in on investing in establishing a first-mover advantage.
I fully believe ACB stock may have tremendous long-term upside. But don’t put all your eggs in the ACB stock basket. There is simply too much risk and uncertainty in the cannabis space to identify the biggest long-term winner at this point.
I continue to recommend cannabis investors hold a basket of at least four or five of the best Canadian LPs and U.S. multi-state operators. Prioritize factors like positive cash flow, low debt levels and growth rates, none of which are particularly appealing when it comes to ACB stock.
It may feel like you’ve missed out by not selling at least some of your Aurora shares when they were near $19 in early February. But try to keep some perspective. When ACB stock was trading under $4 back in October, most investors would have jumped at the opportunity to take some profits off the table at the current price of around $10.
On the date of publication, Wayne Duggan held a long position in CGC.
Wayne Duggan has been a U.S. News & World Report Investing contributor since 2016 and is a staff writer at Benzinga, where he has written more than 7,000 articles. Mr. Duggan is the author of the book Beating Wall Street With Common Sense, which focuses on investing psychology and practical strategies to outperform the stock market.
The post Aurora Cannabis Stock: Not Too Late to Cash Out appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Prioritize factors like positive cash flow, low debt levels and growth rates, none of which are particularly appealing when it comes to ACB stock. When ACB stock was trading under $4 back in October, most investors would have jumped at the opportunity to take some profits off the table at the current price of around $10. InvestorPlace - Stock Market News, Stock Advice & Trading Tips Back on Jan. 22, I urged investors to cash out some of their huge gains in Aurora Cannabis (NYSE:ACB). | InvestorPlace - Stock Market News, Stock Advice & Trading Tips Back on Jan. 22, I urged investors to cash out some of their huge gains in Aurora Cannabis (NYSE:ACB). ACB Stock News The biggest news for ACB stock since I wrote that story in January was Aurora’s fiscal second-quarter earnings report on Feb. 11. Since that time, ACB stock surged another 75% higher before giving up all of those gains. | InvestorPlace - Stock Market News, Stock Advice & Trading Tips Back on Jan. 22, I urged investors to cash out some of their huge gains in Aurora Cannabis (NYSE:ACB). ACB Stock News The biggest news for ACB stock since I wrote that story in January was Aurora’s fiscal second-quarter earnings report on Feb. 11. Since that time, ACB stock surged another 75% higher before giving up all of those gains. | ACB Stock News The biggest news for ACB stock since I wrote that story in January was Aurora’s fiscal second-quarter earnings report on Feb. 11. InvestorPlace - Stock Market News, Stock Advice & Trading Tips Back on Jan. 22, I urged investors to cash out some of their huge gains in Aurora Cannabis (NYSE:ACB). Since that time, ACB stock surged another 75% higher before giving up all of those gains. |
36858.0 | 2021-03-05 00:00:00 UTC | Why Marijuana Stocks Wilted Today | ACB | https://www.nasdaq.com/articles/why-marijuana-stocks-wilted-today-2021-03-05 | nan | nan | What happened
Shares of major marijuana stocks including Canopy Growth (NASDAQ: CGC), Aurora Cannabis (NYSE: ACB), HEXO (NYSE: HEXO), Charlotte's Web (OTC: CWBHF), and Aphria (NASDAQ: APHA) dropped amid the tech stock sell-off this morning. (Yes, even though they're not tech stocks themselves.)
And here's the curious thing: In early afternoon trading, circa 1:20 p.m. EST, the techs have largely recovered, with the Nasdaq actually up 0.7%. But the marijuana stocks have not:
Canopy is down 1%;
Aurora dropped 4.8%; and
HEXO, Charlotte's Web, and Aphria fell 5.1%, 8%, and 8.1%, respectively.
Image source: Getty Images.
So what
So what's the bad news that's still weighing on weed stocks but no longer affecting tech stocks? Actually, there doesn't seem to be any bad news. If you scan the feeds at marijuana news site marijuanamoment.com, for example, everywhere you look, good news is blooming:
There's legislation to legalize marijuana in Maryland and a medical marijuana law in the works in Tennessee. Connecticut just released a poll showing "majority support" for legalization there, too -- and no wonder. Michigan is apparently rolling in cash from taxes on its legalized marijuana law -- so much so that the state treasury is remitting extra money back to its cities and localities.
Now what
And yet, despite all the good news, despite America seemingly lighting up in unanimity, one fact remains glaringly obvious: None of the marijuana stocks has yet figured out a way to profit from this most popular of products. In 2020, with much of the America, and Canada, locked down and smoking up, Canopy Growth still managed to lose $1.8 billion, and Aurora lost $1.9 billion, for example.
And until these companies can figure out a way to earn a profit from their product, I fear that the dominant direction of their stock prices must be down.
10 stocks we like better than Aurora Cannabis Inc.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Charlotte's Web and HEXO. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | What happened Shares of major marijuana stocks including Canopy Growth (NASDAQ: CGC), Aurora Cannabis (NYSE: ACB), HEXO (NYSE: HEXO), Charlotte's Web (OTC: CWBHF), and Aphria (NASDAQ: APHA) dropped amid the tech stock sell-off this morning. Michigan is apparently rolling in cash from taxes on its legalized marijuana law -- so much so that the state treasury is remitting extra money back to its cities and localities. Now what And yet, despite all the good news, despite America seemingly lighting up in unanimity, one fact remains glaringly obvious: None of the marijuana stocks has yet figured out a way to profit from this most popular of products. | What happened Shares of major marijuana stocks including Canopy Growth (NASDAQ: CGC), Aurora Cannabis (NYSE: ACB), HEXO (NYSE: HEXO), Charlotte's Web (OTC: CWBHF), and Aphria (NASDAQ: APHA) dropped amid the tech stock sell-off this morning. But the marijuana stocks have not: Canopy is down 1%; Aurora dropped 4.8%; and HEXO, Charlotte's Web, and Aphria fell 5.1%, 8%, and 8.1%, respectively. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market. | What happened Shares of major marijuana stocks including Canopy Growth (NASDAQ: CGC), Aurora Cannabis (NYSE: ACB), HEXO (NYSE: HEXO), Charlotte's Web (OTC: CWBHF), and Aphria (NASDAQ: APHA) dropped amid the tech stock sell-off this morning. So what So what's the bad news that's still weighing on weed stocks but no longer affecting tech stocks? See the 10 stocks *Stock Advisor returns as of February 24, 2021 Rich Smith has no position in any of the stocks mentioned. | What happened Shares of major marijuana stocks including Canopy Growth (NASDAQ: CGC), Aurora Cannabis (NYSE: ACB), HEXO (NYSE: HEXO), Charlotte's Web (OTC: CWBHF), and Aphria (NASDAQ: APHA) dropped amid the tech stock sell-off this morning. But the marijuana stocks have not: Canopy is down 1%; Aurora dropped 4.8%; and HEXO, Charlotte's Web, and Aphria fell 5.1%, 8%, and 8.1%, respectively. If you scan the feeds at marijuana news site marijuanamoment.com, for example, everywhere you look, good news is blooming: There's legislation to legalize marijuana in Maryland and a medical marijuana law in the works in Tennessee. |
36859.0 | 2021-03-05 00:00:00 UTC | Here’s What Makes Canopy Growth Stock a Solid, Long-Term Cannabis Play | ACB | https://www.nasdaq.com/articles/heres-what-makes-canopy-growth-stock-a-solid-long-term-cannabis-play-2021-03-05 | nan | nan | InvestorPlace - Stock Market News, Stock Advice & Trading Tips
In 2019, Canopy Growth (NASDAQ:CGC) stock hit a high of $52, but that was the end of the good news. The Canadian market would quickly go south as would CGC stock, which lost more than 70% of its value.
Source: Shutterstock
The bearish move hit most of the cannabis industry, such as with stocks like Tilray (NASDAQ:TLRY), Aurora Cannabis (NYSE:ACB) and Cronos Group (NASDAQ:CRON).
But lately, things have gotten much better for the company. Since September, CGC stock has gone from $14 to a high of $56. It trades around $31 now with a $13.4 billion market capitalization.
Of course, one of the catalysts is the election of President Biden. This may signal more loosening of the laws regarding cannabis. But there are also notable improvements in the fundamentals of Canopy.
9 Cheap Stocks That Look Like a Bargain
So let’s take a closer look:
The Comeback
When Canopy was starting to deteriorate, the company’s largest equity holder, Constellation Brands (NYSE:STZ), took swift action, placing one of its own executives, David Klein, as the new CEO. Klein turned out to be the right choice. He brought much-needed financial discipline to Canopy but also deep experience with the CPG (consumer-packaged goods) and beverage alcohol industries.
The latest earnings report definitely shows the progress. Net revenues jumped by 23% on a year-over-year basis – marking three quarters in a row of sequential growth. Adjusted gross margins came to 26%, up from 19% in the prior quarter. The SG&A (Selling, General and Administrative) costs fell by about 15%.
The efficiency efforts are far from over, though. For the next 12 to 18 months, the company expects to see cost savings of between $150 million to $200 million.
Yet Klein has also focused on investing in the product line. For example, the Martha Stewart health and wellness CBD products have seen lots of traction. It has outsold 94% of CBD brands in the U.S. in only four months of the launch.
“Our consumer research shows that 1/3 of Martha gummy purchases were first time CBD consumers, indicating that we are already achieving our ambition with Martha to bring new consumers into the category,” Klein said on the most recent earnings call. “The Martha Stewart CBD collection is now sold in over 580 Vitamin Shoppe locations across the U.S., and we’re focused on further expanding distribution into other brick-and-mortar locations.”
Then there are other products like: Biosteel, a beverage within the Constellation network that has signed sponsorships with the Dallas Mavericks, Toronto Raptors and Philadelphia 76ers; Thisworks, is a set of vaporizer products. There has been strong demand from e-commerce channels; and Suritypro, a line of CBD products for dog health.
Canopy’s strong brands have meant that the company has continued to gain market share in the Canadian recreational market. On a sequential basis, there was a 30 basis improvement to 15.7%, which is the highest in the category.
Bottom Line on CGC Stock
With the runup in CGC stock, the valuation is not cheap. But there should be a premium for the company’s strong market position.
Keep in mind that Canopy expects growth to start ramping up. For fiscal 2022 to 2024, the net revenues are forecast to increase by 40% to 50%. The company also expects to reach positive adjusted EBITDA in the second half of fiscal 2022.
It’s true that the Canadian market has its challenges. There remain supply issues and there are ongoing black market activities, but Canopy has the benefit of top-notch brands and strong distribution. The backing of Constellation is also a huge factor.
So all in all, for investors looking for a long-term play on the cannabis trade, CGC stock looks like a good choice right now.
On the date of publication, Tom Taulli did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Tom Taulli (@ttaulli) is the author of various books on investing and technology, including Artificial Intelligence Basics, High-Profit IPO Strategies and All About Short Selling. He is also the author of courses on topics like the Python language and COBOL.
The post Here’s What Makes Canopy Growth Stock a Solid, Long-Term Cannabis Play appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Source: Shutterstock The bearish move hit most of the cannabis industry, such as with stocks like Tilray (NASDAQ:TLRY), Aurora Cannabis (NYSE:ACB) and Cronos Group (NASDAQ:CRON). 9 Cheap Stocks That Look Like a Bargain So let’s take a closer look: The Comeback When Canopy was starting to deteriorate, the company’s largest equity holder, Constellation Brands (NYSE:STZ), took swift action, placing one of its own executives, David Klein, as the new CEO. He brought much-needed financial discipline to Canopy but also deep experience with the CPG (consumer-packaged goods) and beverage alcohol industries. | Source: Shutterstock The bearish move hit most of the cannabis industry, such as with stocks like Tilray (NASDAQ:TLRY), Aurora Cannabis (NYSE:ACB) and Cronos Group (NASDAQ:CRON). InvestorPlace - Stock Market News, Stock Advice & Trading Tips In 2019, Canopy Growth (NASDAQ:CGC) stock hit a high of $52, but that was the end of the good news. So all in all, for investors looking for a long-term play on the cannabis trade, CGC stock looks like a good choice right now. | Source: Shutterstock The bearish move hit most of the cannabis industry, such as with stocks like Tilray (NASDAQ:TLRY), Aurora Cannabis (NYSE:ACB) and Cronos Group (NASDAQ:CRON). InvestorPlace - Stock Market News, Stock Advice & Trading Tips In 2019, Canopy Growth (NASDAQ:CGC) stock hit a high of $52, but that was the end of the good news. 9 Cheap Stocks That Look Like a Bargain So let’s take a closer look: The Comeback When Canopy was starting to deteriorate, the company’s largest equity holder, Constellation Brands (NYSE:STZ), took swift action, placing one of its own executives, David Klein, as the new CEO. | Source: Shutterstock The bearish move hit most of the cannabis industry, such as with stocks like Tilray (NASDAQ:TLRY), Aurora Cannabis (NYSE:ACB) and Cronos Group (NASDAQ:CRON). Yet Klein has also focused on investing in the product line. But there should be a premium for the company’s strong market position. |
36860.0 | 2021-03-05 00:00:00 UTC | 7 Marijuana Stocks That Look Way Too Expensive Here | ACB | https://www.nasdaq.com/articles/7-marijuana-stocks-that-look-way-too-expensive-here-2021-03-05 | nan | nan | InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Marijuana stocks moved higher after November’s U.S. elections on renewed hopes that federal legalization could become reality. Although legalization has happened in a patchwork manner on a state-by-state basis, federal action remains elusive.
Senate majority leader Chuck Schumer and other senators have stated that they will push legislation this year. Broader sentiment is that now is the tipping point to end federal prohibition. The cannabis sector had moved higher on such hopes.
Yet, marijuana stocks themselves have yet to uphold their promise of being the next ‘it’ sector. Revenues haven’t been as high as pundits predicted, and profitability has been elusive.
Since early February, the sector has lost that post-election momentum. The Global X Cannabis ETF (NASDAQ:POTX), with its 26 pot-stock portfolio, is down 41.7% since Feb. 10.
9 Cheap Stocks That Look Like a Bargain
The result are cannabis names that could look enticing on price alone. However, more analysis is needed. Fortunately, we’ve done some of that for you, dear reader, on the following seven marijuana stocks:
HEXO (NYSE:HEXO)
Canopy Growth (NASDAQ:CGC)
Tilray (NASDAQ:TLRY)
Cronos Group (NASDAQ:CRON)
Aurora Cannabis (NYSE:ACB)
OrganiGram (NASDAQ:OGI)
Sundial Growers (NASDAQ:SNDL)
Marijuana Stocks: HEXO (HEXO)
HEXO) logo with marijuana plants in the foreground" width="300" height="200">Source: Shutterstock
HEXO is arguably a company that marijuana investors might say deserves a better rap. After all the company has made some positive strides. In the three months that ended Oct. 31, 2019, the Canadian company racked up a net loss exceeding 60 million CAD (then $45.6 million). Fast forward a year later, and HEXO had nearly broken even. Its most-current net loss was a much more manageable 4.197 million CAD.
Yet, despite that fact, HEXO is still plagued by the same issue that haunts so many other operators in the marijuana industry: a lack of profits. The marijuana industry is still very nascent. However, HEXO is a company which has been operating in Canada since 2013. It remains in a state of limbo that is common in the marijuana sector: it’s ready to pop on prohibition news but it’s hampered by a lack of profits. As a result, analysts simply consider it a hold.
HEXO stock might look relatively cheap at around $7 per share. But the shares are underpinned by a return on equity of -84.55%. All of this indicates to me that even $7 per share is too expensive for HEXO stock.
Canopy Growth (CGC)
CGC) website is open in an internet browser tab." width="300" height="169">Source: Jarretera / Shutterstock.com
Canopy Growth is one of the biggest names in cannabis. But the Canadian company still looks to be overpriced. It is accelerating its U.S. strategy on optimism surrounding renewed hope around legalization.
However, analysts at Jefferies still chose to downgrade it following Canopy Growth’s revelation about the accelerated strategy. Part of their thinking was that while Canopy is best positioned among Canadian growers, U.S. operators are stronger.
Canopy Growth has the option to acquire Acreage Holdings which operates across multiple states. The option will be exercised if and when federal prohibition is lifted. The argument from Jefferies is that while this gives Canopy Growth direct U.S. exposure, it is not enough. The firm believes Canopy remains overvalued in either scenario due to the lack of profitability out of both companies.
7 Great Dividend Stocks Outside the Energy Sector
Canopy Growth revealed that it anticipates profitability sometime in FY 2022. That can’t come soon enough as the company lost 829.3 million CAD in Q3.
Even though CGC stock has fallen 37% in the past three weeks there is little reason to buy the dip.
Tilray (TLRY)
TLRY) logo on a web browser." width="300" height="169">Source: Jarretera / Shutterstock.com
Tilray is a leader in the medical cannabis and hemp industry. The Canadian company has operations not only in Canada, but across the globe. Tilray has subsidiaries in Australia and New Zealand, Europe and in Latin America.
Tilray looks overpriced like the majority of the marijuana stocks. Profitability remains non-existent, so investors who scrutinize the company through profit metrics often come to the conclusion that it is indeed not worth its price. TLRY stock carries an ROE of -116.07% which ought to cause potential investors to think twice.
The company’s financial strength isn’t stellar either. Investors should ask always themselves whether the company behind a stock is value creating or value destroying. Based on the company’s trailing 12-month income statement, investors can expect Tilray to be value destroying. That’s because it has a weighted average cost of capital of 7.04% and an ROIC of -18.11%. Effectively that means $1 of capital costs Tilray $1.0704. Then, after the company invests that $1.0704 it realizes a return of 81.89 cents.
Tilray increased revenues and only lost $3 million in Q4 of 2020, as opposed to $219.8 million in Q4 2019. Although the company is still in the red, it deserves some credit. It will merge with Aphria (NASDAQ:APHA) soon, creating the world’s largest cannabis company by revenue.
Cronos Group (CRON)
Source: Shutterstock
Cronos Group stock has already come down significantly from the Feb. 10 highs that swept across the marijuana industry. CRON stock has dipped 30% in that period. It is another case of whether to buy the dip, or stay away. I still believe it is too expensive.
For one, Cronos Group has proven very unsteady over the past three years. In 2018 it recorded a net loss of $21.817 million, in 2019, a net income of $1.165 billion, and then a net loss of $75.27 million at year end 2020. Volatility is the norm in nascent industries. The marijuana industry is no different.
Cronos recorded a gross loss of $25.8 million in 2020 which was an increase of $8.2 million over 2019. Wall Street won’t be much of a help for investors considering whether to purchase CRON stock. The analysts covering the stock give it a “hold” rating. This phenomenon holds true across the marijuana industry by and large. Again, there’s an overarching feeling that the industry can explode, but results remain elusive.
9 Cheap Stocks That Look Like a Bargain
The two buy ratings analysts had given CRON stock a few months ago are gone. Not that much has fundamentally changed for Cronos Group, but there is an overarching sentiment in the markets that marijuana stocks represent a bubble.
Aurora Cannabis (ACB)
ACB) logo in green" width="300" height="169">Source: ElRoi / Shutterstock.com
Aurora Cannabis is a Canadian company that has seen some positives yet remains mired in the same problems plaguing the industry. The company’s most recent earnings press release paints a rosy picture, as press releases tend to do.
The company highlighted increasing revenues. It specifically highlighted rising medical cannabis revenues which jumped by 42% over the previous year’s period. And the company saw an increase in international medical sales of 562% in Q2 2021.
That said, Aurora Cannabis reported a net loss from continuing operations of $292.8 million. This led to an adjusted EBITDA loss of $16.8 million in the quarter. That’s down from a loss of $69.9 a year earlier during the same period.
Aurora Cannabis has poor profitability metrics. Operating margin, net margin, return on equity and return on assets are all in the negative. Further, Aurora Cannabis is value destroying in terms of capital use. Its return on invested capital is -10.84 % while its weighted average cost of capital is high at 20.79%.
OrganiGram (OGI)
Source: Shutterstock
OrganiGram is a company that has undergone a lot of turnover recently. That turnover related to its poor operations. The company recently replaced its SVP of operations. The company faces the double-edged sword of decreasing sales and an increasing cost of sales.
It cost the company 47% more to make sales in Q1 2021 compared to the previous year’s period. Unfortunately, OrganiGram also saw 11% fewer sales during that period. This in part due to its inventory issues.
7 Great Dividend Stocks Outside the Energy Sector
OrganiGram is a company with operational issues that got pulled upward by recent excitement around marijuana stocks in early February. The fact is that it has problems and on closer inspection, investors should stay away.
There were indications that turnover could set the company in the right direction, but I believe OGI stock is one to clearly avoid. It still looks too expensive to me even at current prices.
Sundial Growers (SNDL)
Source: Shutterstock
Sundial Growers has seen a lot of price movement of late. In late January it traded below $1. It ended up rising to around $3 within a few weeks. Now it sits at $1.38. I believe it is too expensive even at this penny stock price. If the stock goes where I believe it should, it will fall below $1 and face listing issues again.
When I last wrote about Sundial Growers, I noted that “Through the first nine months of 2020 Sundial Growers did manage to sell a bit more. Revenue grew to $50.7 million CAD. That isn’t stellar, but improvement is improvement. Unfortunately, the losses really ballooned in 2020. That 2019 net loss of $126.54 million CAD grew to a whopping $175.8 million CAD.” The company has those same problems now.
The company has really serious inventory issues which make it problematic. It was one of the stocks caught up in Robinhood trading due to short interest in shares. There’s not much to like about SNDL, and I’d argue that it is too expensive even at current prices. This is a company that may not exist too long from now.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.
The post 7 Marijuana Stocks That Look Way Too Expensive Here appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Canopy Growth (NASDAQ:CGC) Tilray (NASDAQ:TLRY) Cronos Group (NASDAQ:CRON) Aurora Cannabis (NYSE:ACB) OrganiGram (NASDAQ:OGI) Sundial Growers (NASDAQ:SNDL) Marijuana Stocks: HEXO (HEXO) HEXO) logo with marijuana plants in the foreground" width="300" height="200">Source: Shutterstock HEXO is arguably a company that marijuana investors might say deserves a better rap. Aurora Cannabis (ACB) ACB) logo in green" width="300" height="169">Source: ElRoi / Shutterstock.com Aurora Cannabis is a Canadian company that has seen some positives yet remains mired in the same problems plaguing the industry. It remains in a state of limbo that is common in the marijuana sector: it’s ready to pop on prohibition news but it’s hampered by a lack of profits. | Canopy Growth (NASDAQ:CGC) Tilray (NASDAQ:TLRY) Cronos Group (NASDAQ:CRON) Aurora Cannabis (NYSE:ACB) OrganiGram (NASDAQ:OGI) Sundial Growers (NASDAQ:SNDL) Marijuana Stocks: HEXO (HEXO) HEXO) logo with marijuana plants in the foreground" width="300" height="200">Source: Shutterstock HEXO is arguably a company that marijuana investors might say deserves a better rap. Aurora Cannabis (ACB) ACB) logo in green" width="300" height="169">Source: ElRoi / Shutterstock.com Aurora Cannabis is a Canadian company that has seen some positives yet remains mired in the same problems plaguing the industry. InvestorPlace - Stock Market News, Stock Advice & Trading Tips Marijuana stocks moved higher after November’s U.S. elections on renewed hopes that federal legalization could become reality. | Canopy Growth (NASDAQ:CGC) Tilray (NASDAQ:TLRY) Cronos Group (NASDAQ:CRON) Aurora Cannabis (NYSE:ACB) OrganiGram (NASDAQ:OGI) Sundial Growers (NASDAQ:SNDL) Marijuana Stocks: HEXO (HEXO) HEXO) logo with marijuana plants in the foreground" width="300" height="200">Source: Shutterstock HEXO is arguably a company that marijuana investors might say deserves a better rap. Aurora Cannabis (ACB) ACB) logo in green" width="300" height="169">Source: ElRoi / Shutterstock.com Aurora Cannabis is a Canadian company that has seen some positives yet remains mired in the same problems plaguing the industry. InvestorPlace - Stock Market News, Stock Advice & Trading Tips Marijuana stocks moved higher after November’s U.S. elections on renewed hopes that federal legalization could become reality. | Canopy Growth (NASDAQ:CGC) Tilray (NASDAQ:TLRY) Cronos Group (NASDAQ:CRON) Aurora Cannabis (NYSE:ACB) OrganiGram (NASDAQ:OGI) Sundial Growers (NASDAQ:SNDL) Marijuana Stocks: HEXO (HEXO) HEXO) logo with marijuana plants in the foreground" width="300" height="200">Source: Shutterstock HEXO is arguably a company that marijuana investors might say deserves a better rap. Aurora Cannabis (ACB) ACB) logo in green" width="300" height="169">Source: ElRoi / Shutterstock.com Aurora Cannabis is a Canadian company that has seen some positives yet remains mired in the same problems plaguing the industry. Tilray looks overpriced like the majority of the marijuana stocks. |
36861.0 | 2021-03-04 00:00:00 UTC | Why Marijuana Stocks Like Canopy Growth and Aphria Got Trashed on Thursday | ACB | https://www.nasdaq.com/articles/why-marijuana-stocks-like-canopy-growth-and-aphria-got-trashed-on-thursday-2021-03-04 | nan | nan | What happened
Thursday was a day to forget for most stock market investors, particularly holders of marijuana titles. Industry bellwethers Canopy Growth (NASDAQ: CGC), Aurora Cannabis (NYSE: ACB), Aphria (NASDAQ: APHA), HEXO (NYSE: HEXO), and Organigram Holdings (NASDAQ: OGI) all fell harder than the S&P 500 index at declines ranging from 6.1% (Aurora) to just over 8% (Aphria).
So what
The outlook for the marijuana industry has brightened significantly of late thanks largely to both a new presidential administration and a Senate leadership that are more amenable to federal marijuana reform.
Image source: Getty Images.
However, this has obscured the fact that cannabis companies remain speculative investments. Weed has only been legalized/decriminalized on a piecemeal, state-by-state basis, and weed companies face many other challenges, including lack of access to basic financial services, price-dampening black market competition, etc. Even the most successful operators struggle to turn a profit and limit cash burn.
So, because they are speculative stocks, they tend to be on the firing line during market downturns. At such times, investors typically embrace better established, and/or more reliable cash and profit generators, and are more tempted to sell their perceived "long-shot" holdings.
Now what
This shouldn't dissuade investors of marijuana stocks which, despite those challenges, have a promising future. Among other positive developments, Aphria's coming merger with Tilray will make a powerful company, and HEXO is bulking up with the looming acquisition of Zenabis Global. Thursday's declines could very well present good "buy-on-weakness" openings for cannabis bulls.
10 stocks we like better than Aphria Inc.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends OrganiGram Holdings. The Motley Fool recommends HEXO. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Industry bellwethers Canopy Growth (NASDAQ: CGC), Aurora Cannabis (NYSE: ACB), Aphria (NASDAQ: APHA), HEXO (NYSE: HEXO), and Organigram Holdings (NASDAQ: OGI) all fell harder than the S&P 500 index at declines ranging from 6.1% (Aurora) to just over 8% (Aphria). What happened Thursday was a day to forget for most stock market investors, particularly holders of marijuana titles. At such times, investors typically embrace better established, and/or more reliable cash and profit generators, and are more tempted to sell their perceived "long-shot" holdings. | Industry bellwethers Canopy Growth (NASDAQ: CGC), Aurora Cannabis (NYSE: ACB), Aphria (NASDAQ: APHA), HEXO (NYSE: HEXO), and Organigram Holdings (NASDAQ: OGI) all fell harder than the S&P 500 index at declines ranging from 6.1% (Aurora) to just over 8% (Aphria). However, this has obscured the fact that cannabis companies remain speculative investments. The Motley Fool recommends HEXO. | Industry bellwethers Canopy Growth (NASDAQ: CGC), Aurora Cannabis (NYSE: ACB), Aphria (NASDAQ: APHA), HEXO (NYSE: HEXO), and Organigram Holdings (NASDAQ: OGI) all fell harder than the S&P 500 index at declines ranging from 6.1% (Aurora) to just over 8% (Aphria). After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market. See the 10 stocks *Stock Advisor returns as of February 24, 2021 Eric Volkman has no position in any of the stocks mentioned. | Industry bellwethers Canopy Growth (NASDAQ: CGC), Aurora Cannabis (NYSE: ACB), Aphria (NASDAQ: APHA), HEXO (NYSE: HEXO), and Organigram Holdings (NASDAQ: OGI) all fell harder than the S&P 500 index at declines ranging from 6.1% (Aurora) to just over 8% (Aphria). Now what This shouldn't dissuade investors of marijuana stocks which, despite those challenges, have a promising future. 10 stocks we like better than Aphria Inc. |
36862.0 | 2021-03-03 00:00:00 UTC | A Hot Cannabis Stock Backed by a Retail Giant Is About to Hit the NASDAQ | ACB | https://www.nasdaq.com/articles/a-hot-cannabis-stock-backed-by-a-retail-giant-is-about-to-hit-the-nasdaq-2021-03-03 | nan | nan | Are you looking for the next big cannabis stock to invest in? Then you'll want to keep a close eye on Fire & Flower (OTC: FFLW.F). The top Canadian cannabis retailer has a lot of promise, and it could join the NASDAQ soon -- it filed an application in February.
While its market cap is still a relatively modest $240 million or so, it has been growing at a rapid clip, and with a big investor backing the business, the sky could be the limit. Here's a closer look at the company and why it may be one of the best pot stocks to buy right now.
Image source: Getty Images.
Support from a retail giant puts it in a great position
One reason cannabis company Canopy Growth is viewed as a relatively safe investment is its partnership with Constellation Brands, which offers stability and will also create opportunities down the road thanks to its distribution network. Fire & Flower likewise has a great strategic partner in Alimentation Couche-Tard (OTC: ANCU.F), a convenience store giant with more than 14,000 locations across the globe. Americans will likely be most familiar with its Circle K brand. By comparison, Fire & Flower currently lists just 63 locations on its website.
Alimentation Couche-Tard knows how to grow a business, and it could help Fire & Flower expand its sales into other parts of the world. The company first invested in the pot retailer in 2019, when it acquired just under 10% of the business. A year later, it exercised options to expand that stake to 15%, and it has the potential to become a majority owner by exercising more warrants. With that larger stake comes a greater incentive to see Fire & Flower succeed. And Alimentation Couche Tard could use the extra revenue. In its fiscal 2020, it generated $54.1 billion in sales, down 8.4% from the previous year.
One way to tap into that growth potential would be for the companies to operate their stores in close proximity to one another. In July 2020, Fire & Flower announced the launch of a pilot program that opened two pot shops adjacent to Circle K convenience stores, where they could benefit from high levels of foot traffic. According to Fire & Flower's website, it has not yet expanded on that program -- but that's what makes the opportunity so exciting. These two companies have only scratched the surface in terms of taking advantage of their potential synergies. And in the meantime, Fire & Flower's business still looks great.
Fire & Flower has been growing at a great rate, and it's profitable
On Dec. 15, Fire & Flower released the results for its fiscal third quarter, which ended Oct. 31. Its sales came in at 33.1 million Canadian dollars, up 142% from the CA$13.7 million it generated in the prior-year period. That was also a quarter-over-quarter increase of 16%. And although it incurred a loss of CA$25.7 million during the quarter, that was largely a result of a loss on debt extinguishment, which saddled it with CA$53.9 million in expenses. After factoring out other income and expenses along with other non-cash items, the company's adjusted EBITDA was CA$1.2 million. Achieving positive adjusted EBITDA is no small feat for a pot company -- in fact, it's something even top cannabis producer Aurora Cannabis is still striving for.
Is Fire & Flower a buy?
If it moves to the NASDAQ, Fire & Flower will become more accessible to investors, and that could help give the stock a boost. In the past 12 months, its shares have doubled in value -- outperforming the Horizons Marijuana Life Sciences ETF, which was up by about 80% over the same period. With a small market cap, a great growth partner in Alimentation Couche-Tard, and an already-profitable business, Fire & Flower looks to be an underrated buy right now that could be poised for even greater returns in the years ahead.
FFLWF PS Ratio data by YCharts
At a price-to-sales ratio of just over 2 -- much cheaper than riskier pot producers Aurora Cannabis and Canopy Growth -- this stock is a steal.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
David Jagielski has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Constellation Brands. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Support from a retail giant puts it in a great position One reason cannabis company Canopy Growth is viewed as a relatively safe investment is its partnership with Constellation Brands, which offers stability and will also create opportunities down the road thanks to its distribution network. In July 2020, Fire & Flower announced the launch of a pilot program that opened two pot shops adjacent to Circle K convenience stores, where they could benefit from high levels of foot traffic. With a small market cap, a great growth partner in Alimentation Couche-Tard, and an already-profitable business, Fire & Flower looks to be an underrated buy right now that could be poised for even greater returns in the years ahead. | Fire & Flower likewise has a great strategic partner in Alimentation Couche-Tard (OTC: ANCU.F), a convenience store giant with more than 14,000 locations across the globe. With a small market cap, a great growth partner in Alimentation Couche-Tard, and an already-profitable business, Fire & Flower looks to be an underrated buy right now that could be poised for even greater returns in the years ahead. FFLWF PS Ratio data by YCharts At a price-to-sales ratio of just over 2 -- much cheaper than riskier pot producers Aurora Cannabis and Canopy Growth -- this stock is a steal. | Support from a retail giant puts it in a great position One reason cannabis company Canopy Growth is viewed as a relatively safe investment is its partnership with Constellation Brands, which offers stability and will also create opportunities down the road thanks to its distribution network. Fire & Flower has been growing at a great rate, and it's profitable On Dec. 15, Fire & Flower released the results for its fiscal third quarter, which ended Oct. 31. With a small market cap, a great growth partner in Alimentation Couche-Tard, and an already-profitable business, Fire & Flower looks to be an underrated buy right now that could be poised for even greater returns in the years ahead. | Achieving positive adjusted EBITDA is no small feat for a pot company -- in fact, it's something even top cannabis producer Aurora Cannabis is still striving for. Is Fire & Flower a buy? The Motley Fool owns shares of and recommends Constellation Brands. |
36863.0 | 2021-03-03 00:00:00 UTC | Tilray Beats Canopy Growth and Aurora Cannabis to Profitability | ACB | https://www.nasdaq.com/articles/tilray-beats-canopy-growth-and-aurora-cannabis-to-profitability-2021-03-03 | nan | nan | In its earlier stages, the pot industry was all about growth. But now, as investors have become more concerned with cash flow, companies are also focusing on improving their bottom lines and staying out of the red. The latest cannabis company to turn a profit was Tilray (NASDAQ: TLRY), achieving that mark earlier than both Aurora Cannabis (NYSE: ACB) and Canopy Growth (NASDAQ: CGC).
But does that mean Tilray is a safer business or that it is in better shape than those two companies? Let's take a look at what changed for Tilray this quarter and whether it is a better buy than two of its key rivals.
Image source: Getty Images.
Tilray comes through on its promise -- but should investors be impressed?
On Nov. 9, when Tilray posted its third-quarter earnings, the company's CEO, Brendan Kennedy, projected that in the next period, the company would hit positive adjusted EBITDA. While that technically isn't true accounting net income, it has become the benchmark for cannabis companies when talking about profitability. Either way, Tilray followed through on its promise on Feb. 17, posting fourth-quarter results that featured an adjusted EBITDA profit of $2.2 million. That was an improvement from Q3 and its loss of $1.5 million.
Tilray's overall net loss in Q3, at $2.3 million, was actually lower than the $2.9 million loss it posted this past period. The company simply reclassified more expenses out of its adjusted EBITDA than it did in Q3. That doesn't mean those weren't legitimate changes, but it does mean there was more noise. The problem is that since adjusted EBITDA is a non-GAAP (adjusted) number, it can be difficult to compare one company to another on this basis.
This is part of the reason I prefer to look further up the income statement at operating income instead. Since it comes before all the non-operating items show up, it can give investors a better picture of how a company actually performed during the period at an operational level. And in Q4, Tilray's operating loss totaled $21.3 million -- which was a significant improvement from the $32.8 million loss it reported in Q3.
In short, while Tilray did post a profit on an adjusted EBITDA basis, it wasn't by much and there are no guarantees it will continue. For example, some of the items included in the adjusted calculation were changes in fair value, gains, and losses due to foreign exchange and equity investments. These items aren't easy for a company to forecast, and that's why simply achieving positive adjusted EBITDA doesn't mean the company will continue to stay out of the red.
Why do Aurora and Canopy continue to struggle?
Canopy Growth released its most recent results Feb. 9, and for the third quarter ending Dec. 31, its adjusted EBITDA loss totaled 68.4 million Canadian dollars. Management expects that number to become positive next year, but it will be a tall order given the company's reported operating loss of CA$553.6 million in Q3. A big problem is its gross margin, which at CA$24.6 million was just 16% of its top line -- not enough to cover its selling, general, and administrative expenses of CA$144.1 million, let alone the rest of its operating costs. By comparison, Tilray's gross margin sits at just under 30%.
A few days later, on Feb. 11, it was Aurora's turn to posit its second-quarter results, and its adjusted EBITDA loss of CA$16.8 million was a lot closer to breakeven. Aurora does have a bit of a better gross margin at 26%, but the company is also bloated with expenses. In the second quarter, its operating expenses of CA$64.4 million were nearly as high as its net revenue of CA$67.7 million. However, the company anticipates that expenses will come down as it has made reductions to headcount, which should help improve its prospects for profitability in the near future.
Is Tilray the better buy?
Hitting positive adjusted EBITDA is great for Tilray -- but it isn't a reason to invest in the stock. Future quarters could be volatile, especially as the company continues its merger with Aphria, which will mean more costs to trim and redundancies to eliminate. The merger will, however, make the business better over the long term; Aphria is a low-cost producer that has posted seven straight profitable (adjusted EBITDA) quarters.
While Aurora and Canopy may reach breakeven soon, that's by no means a guarantee. Given the risk in the cannabis industry, I would go with more of a sure thing -- and today, that's Tilray.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
David Jagielski has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | The latest cannabis company to turn a profit was Tilray (NASDAQ: TLRY), achieving that mark earlier than both Aurora Cannabis (NYSE: ACB) and Canopy Growth (NASDAQ: CGC). Canopy Growth released its most recent results Feb. 9, and for the third quarter ending Dec. 31, its adjusted EBITDA loss totaled 68.4 million Canadian dollars. A few days later, on Feb. 11, it was Aurora's turn to posit its second-quarter results, and its adjusted EBITDA loss of CA$16.8 million was a lot closer to breakeven. | The latest cannabis company to turn a profit was Tilray (NASDAQ: TLRY), achieving that mark earlier than both Aurora Cannabis (NYSE: ACB) and Canopy Growth (NASDAQ: CGC). These items aren't easy for a company to forecast, and that's why simply achieving positive adjusted EBITDA doesn't mean the company will continue to stay out of the red. Canopy Growth released its most recent results Feb. 9, and for the third quarter ending Dec. 31, its adjusted EBITDA loss totaled 68.4 million Canadian dollars. | The latest cannabis company to turn a profit was Tilray (NASDAQ: TLRY), achieving that mark earlier than both Aurora Cannabis (NYSE: ACB) and Canopy Growth (NASDAQ: CGC). On Nov. 9, when Tilray posted its third-quarter earnings, the company's CEO, Brendan Kennedy, projected that in the next period, the company would hit positive adjusted EBITDA. These items aren't easy for a company to forecast, and that's why simply achieving positive adjusted EBITDA doesn't mean the company will continue to stay out of the red. | The latest cannabis company to turn a profit was Tilray (NASDAQ: TLRY), achieving that mark earlier than both Aurora Cannabis (NYSE: ACB) and Canopy Growth (NASDAQ: CGC). In short, while Tilray did post a profit on an adjusted EBITDA basis, it wasn't by much and there are no guarantees it will continue. Hitting positive adjusted EBITDA is great for Tilray -- but it isn't a reason to invest in the stock. |
36864.0 | 2021-03-02 00:00:00 UTC | 3 Pot Stocks to Avoid Like the Plague in March | ACB | https://www.nasdaq.com/articles/3-pot-stocks-to-avoid-like-the-plague-in-march-2021-03-02 | nan | nan | Over the next decade, cannabis chronicles as one of the fastest-growing industries in North America. Although estimates vary wildly, as we'd expect from an industry that's existed for decades in the black market, North American pot sales have the opportunity to reach $75 billion annually by the end of the decade. That's growth Wall Street and retail investors should rightly not ignore.
However, we also know that not every company in next-big-thing investment industries will be a winner. As the pot industry has matured a bit over the past four years, we've witnessed clear separation between the haves and have-nots.
As we move headlong into March and look forward to warmer weather, investors would be wise to avoid the following three pot stocks like the plague.
Image source: Getty Images.
Sundial Growers
Among millennial investors, there's not a more popular marijuana stock than Sundial Growers (NASDAQ: SNDL). This cannabis penny stock has been as high as No. 3 on Robinhood's leaderboard (a ranking of the most-held stocks on the platform). Unfortunately, there looks to be little substance behind its recent rally.
Sundial has quickly become one of the favorites of retail investors on Reddit's WallStreetBets (WSB) chatroom. As a refresher, retail traders on WSB are usually looking for heavily short-sold companies or penny stocks that can quickly be driven higher. In few instances are there are genuine fundamental reasons behind a move higher in a Reddit-rally stock.
The biggest issue with Sundial is that management has walked all over its shareholders in an effort to improve its balance sheet. Since the end of September, the company issued more than 1.1 billion shares via a combination of direct share offerings and debt-to-equity swaps. This more than tripled Sundial's outstanding share count to about 1.66 billion shares. Worse yet, it's probably not done. Sundial issued new warrants last month, and its board recently OK'd a shelf offering that would allow for the sale of up to $1 billion in new shares. The dilution here is off the scales.
Sundial Growers is also going to be late to the retail party. The company has made the decision to shift its focus from low-margin wholesale cannabis to higher-margin retail. While potentially a smart move over the longer-term, it's going to produce some ugly year-over-year sales and bottom-line comparisons at a time when most cannabis stocks are turning the corner to profitability.
The only thing driving Sundial higher in recent weeks is social media chatter. Without significant top-and-bottom-line improvements, there's little reason for it to trade over its cash value (about $0.41 per share).
Image source: Getty Images.
Cronos Group
Another pot stock that should be cordoned offer with yellow caution tape is Canadian licensed producer Cronos Group (NASDAQ: CRON).
Cronos does have some redeeming qualities that have made it a popular selection among young investors. It ended 2020 with close to $1.3 billion in cash and cash equivalents, and it has a powerful equity investor in Altria Group (NYSE: MO). Altria, the tobacco giant behind the premium Marlboro brand, owns a 45% stake in Cronos, and is expected to aid in product development, marketing, and perhaps even distribution efforts.
The bad news for investors is that these selling points are overshadowed by miscues and poor operating performance, as seen in the company's fourth-quarter and full-year results last week.
Although the company's sales rocketed higher to $17 million in Q4 (its highest quarter of sales on record), just $1.93 million of its $13.54 million in rest-of-world sales (this primarily means Canada) came from higher-margin extracts. That was only up 3% from the prior-year period, despite the fact that high-margin derivatives were legalized for sale in mid-December 2019. Between regulatory hurdles and poor execution, Cronos Group has badly missed the mark with these higher-margin sales channels.
Cronos is also losing money hand over fist. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) widened by more than $13 million in 2020 to negative $98.3 million. Further, cash and cash equivalents declined by $216 million last year. This means the $1.8 billion equity investment received from Altria is almost 30% gone because of operating losses and an overpriced acquisition.
Aside from its cash, Cronos simply isn't the major cannabis player Wall Street has tried to make it out to be. At a valuation of $3.74 billion, Cronos is trading at more than 40 times Wall Street's sales projection for 2021. That's insanely high for a company that's struggling from an operating perspective.
Image source: Getty Images.
Aurora Cannabis
You almost thought I wasn't going to include Canadian licensed producer Aurora Cannabis (NYSE: ACB) this month, didn't you? You should know by now that Aurora is a veritable fixture in the monthly pot stock avoidance column -- and for very good reason.
For a brief period in February, Aurora Cannabis found itself rallying side-by-side with the likes of Cronos and Sundial. Aurora's short interest made it one of the many candidates the WSB community bought into. Additionally, speculation has been ongoing that the U.S. could legalize cannabis at the federal level, thereby rolling out the green carpet for Canadian licensed producers. But Aurora is a company so poorly managed that even these catalysts can't hold a candle to its long-running issues.
Before Sundial unleashed a cascade of dilution on its shareholders, Aurora Cannabis was the kingpin of share-based dilution. Between June 2014 and the end of 2020, Aurora's outstanding share count rose from 1.35 million to about 184.2 million. That's close to 13,500%. With the company continuing to lose money, its board has had little choice but to approve at-the-market share offerings on a regular basis.
Something else I've previously pointed out is that its management team keeps moving the goalposts. Originally, the company was expected to generate positive EBITDA last year. However, this goal has moved a couple of times now. Even with substantial cost-cutting and higher sales, Aurora is nowhere near recurring profitability, and it's yet to satisfy the covenant (i.e., positive EBITDA) tied to its outstanding debt.
In the company's December-ended quarter, international sales fell off a cliff, and gross margin was down in all segments. Having to feature value-brand cannabis and compete in price wars with illicit product has wrecked any chance of Aurora being profitable anytime soon.
It's a popular pot stock among retail traders, but it's a poor investment.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora Cannabis You almost thought I wasn't going to include Canadian licensed producer Aurora Cannabis (NYSE: ACB) this month, didn't you? While potentially a smart move over the longer-term, it's going to produce some ugly year-over-year sales and bottom-line comparisons at a time when most cannabis stocks are turning the corner to profitability. Altria, the tobacco giant behind the premium Marlboro brand, owns a 45% stake in Cronos, and is expected to aid in product development, marketing, and perhaps even distribution efforts. | Aurora Cannabis You almost thought I wasn't going to include Canadian licensed producer Aurora Cannabis (NYSE: ACB) this month, didn't you? Sundial Growers Among millennial investors, there's not a more popular marijuana stock than Sundial Growers (NASDAQ: SNDL). Cronos Group Another pot stock that should be cordoned offer with yellow caution tape is Canadian licensed producer Cronos Group (NASDAQ: CRON). | Aurora Cannabis You almost thought I wasn't going to include Canadian licensed producer Aurora Cannabis (NYSE: ACB) this month, didn't you? Cronos Group Another pot stock that should be cordoned offer with yellow caution tape is Canadian licensed producer Cronos Group (NASDAQ: CRON). Although the company's sales rocketed higher to $17 million in Q4 (its highest quarter of sales on record), just $1.93 million of its $13.54 million in rest-of-world sales (this primarily means Canada) came from higher-margin extracts. | Aurora Cannabis You almost thought I wasn't going to include Canadian licensed producer Aurora Cannabis (NYSE: ACB) this month, didn't you? Although the company's sales rocketed higher to $17 million in Q4 (its highest quarter of sales on record), just $1.93 million of its $13.54 million in rest-of-world sales (this primarily means Canada) came from higher-margin extracts. It's a popular pot stock among retail traders, but it's a poor investment. |
36865.0 | 2021-03-01 00:00:00 UTC | Why Aphria, Canopy Growth, and Aurora Cannabis Stocks Jumped Today | ACB | https://www.nasdaq.com/articles/why-aphria-canopy-growth-and-aurora-cannabis-stocks-jumped-today-2021-03-01 | nan | nan | What happened
Shares of cannabis growers jumped Monday after another U.S. state voted for legalization over the weekend. As of 11:45 a.m. EST, shares of several traded higher:
Aphria (NASDAQ: APHA), up 6.7%;
Canopy Growth (NASDAQ: CGC), up 6.6%; and
Aurora Cannabis (NYSE: ACB), up 7.6%.
So what
Any news of progress on marijuana legalization typically drives shares of pot companies higher. On Saturday, Virginia became the 16th U.S. state, plus the District of Columbia, to approve marijuana legalization for adult recreational use. Gov. Ralph Northam still needs to sign the bill, but he supports legalization, which will allow for sales to begin in 2024.
Image source: Getty Images.
Now what
Canadian marijuana businesses aren't going to be directly affected by state legalization in the U.S. But the stocks are rising because investors see a path toward federal legalization as more states vote for it. Canadian pot growers need federal legalization to be able to enter the U.S. market, but Aphria and Canopy Growth have been actively preparing for the possibility.
Aphria acted on its strategy to make inroads in the U.S. last fall when it acquired U.S. craft brewer SweetWater Brewing Company for about $300 million. SweetWater is currently available in 27 states plus Washington, D.C., and Aphria said the plan was to have "a platform and infrastructure within the U.S. to enable it to access the U.S. market more quickly in the event of federal legalization."
Canopy Growth has a path into the U.S. market through beverage company Constellation Brands. Constellation added to its initial $4 billion investment in Canopy Growth with another almost $200 million invested through warrants last year.
Aurora Cannabis doesn't yet have any distribution framework set up for potential U.S. sales. But investors have been looking for something to help turn the troubled grower around. Shares are down almost 90% in the last three years, and the company has acknowledged it is working on a business transformation.
Marijuana stocks have attracted speculative interest from investors since Canada legalized recreational use more than two years ago. The potential of the U.S. market drives even more interest, even for the Canadian companies. Investors should realize that federal legalization will be required for the companies to perform business transactions across the border. But news of another state legislature voting to legalize pot use gives investors more hope that the companies will eventually have a huge new market in which to compete.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | As of 11:45 a.m. EST, shares of several traded higher: Aphria (NASDAQ: APHA), up 6.7%; Canopy Growth (NASDAQ: CGC), up 6.6%; and Aurora Cannabis (NYSE: ACB), up 7.6%. Canadian pot growers need federal legalization to be able to enter the U.S. market, but Aphria and Canopy Growth have been actively preparing for the possibility. SweetWater is currently available in 27 states plus Washington, D.C., and Aphria said the plan was to have "a platform and infrastructure within the U.S. to enable it to access the U.S. market more quickly in the event of federal legalization." | As of 11:45 a.m. EST, shares of several traded higher: Aphria (NASDAQ: APHA), up 6.7%; Canopy Growth (NASDAQ: CGC), up 6.6%; and Aurora Cannabis (NYSE: ACB), up 7.6%. So what Any news of progress on marijuana legalization typically drives shares of pot companies higher. Canadian pot growers need federal legalization to be able to enter the U.S. market, but Aphria and Canopy Growth have been actively preparing for the possibility. | As of 11:45 a.m. EST, shares of several traded higher: Aphria (NASDAQ: APHA), up 6.7%; Canopy Growth (NASDAQ: CGC), up 6.6%; and Aurora Cannabis (NYSE: ACB), up 7.6%. But the stocks are rising because investors see a path toward federal legalization as more states vote for it. But news of another state legislature voting to legalize pot use gives investors more hope that the companies will eventually have a huge new market in which to compete. | As of 11:45 a.m. EST, shares of several traded higher: Aphria (NASDAQ: APHA), up 6.7%; Canopy Growth (NASDAQ: CGC), up 6.6%; and Aurora Cannabis (NYSE: ACB), up 7.6%. But the stocks are rising because investors see a path toward federal legalization as more states vote for it. Canadian pot growers need federal legalization to be able to enter the U.S. market, but Aphria and Canopy Growth have been actively preparing for the possibility. |
36866.0 | 2021-03-01 00:00:00 UTC | Aurora Cannabis’ Altman Z-Score Suggests Investors Look Elsewhere | ACB | https://www.nasdaq.com/articles/aurora-cannabis-altman-z-score-suggests-investors-look-elsewhere-2021-03-01 | nan | nan | InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Jefferies analyst Owen Bennett reiterated his underperform rating for Aurora Cannabis (NYSE:ACB) on Feb. 24 while raising his target price on ACB stock to $7.51 from $3.65.
Source: Shutterstock
That’s partially good news. No. No, it’s not. Here’s why.
Aurora Cannabis Is in Distress
It’s been a few months since I last wrote about Aurora in December. I struck a fairly optimistic tone in my article by suggesting that it does own some good assets that will help it grow.
I also felt like its choice as the new Chief Executive Officer (CEO) was a good one given it needed someone that could hit the ground running. Then Chief Commercial Officer (CCO) Miguel Martin was the correct call.
Trading for slightly more than $10 at the time, I recommended that aggressive investors look to buy around $7, while investors interested in a long-term hold look elsewhere. Since that time, the closest it got was $8.31 on the final day of 2020.
As recently as mid-February, its share price was as high as $18.98. As I write this, it’s bouncing above and below $11.
Given Aurora has an Altman Z-Score of -1.93, an indication that the company is in duress and could go bankrupt within the next 24 months, I really like the analyst’s target price.
If you want to own ACB stock, I wouldn’t touch it above $7.50.
What’s the Problem?
In one word. Debt.
Investors, especially those owning Canadian cannabis stocks, are patiently waiting for the likes of Aurora and Canopy Growth (NASDAQ:CGC) to capture U.S. market share. To do that, you need lots of capital and a little help from the U.S. federal government. Canopy’s got it; Aurora doesn’t. That’s something the Jefferies’ analyst pointed out in his letter to clients.
7 Stocks to Sell for March
“[G]iven the near-term debt overhang and its high cash burn rate, we raise question marks on whether Aurora’s balance sheet is strong enough to support a potential US push,” Bennett wrote.
Aurora finished Q2 2021 with 490 million CAD ($385.8 million) in debt, 390 million CAD ($307.1 million) in cash for net debt of $78.7 million. Interestingly, when I wrote about Aurora and some of its Canadian peers in November 2019, it had net debt of 243.2 million CAD, 2.4x as much as it has today.
Its sales haven’t grown much in the 16 months since, but Aurora’s Altman Z-Score is likely in better shape than it was back then. Yet its stock is trading at one-third the price.
So, from that angle, an aggressive investor might consider an investment in Aurora at this point to be a smart move given the general direction of cannabis stocks — ETFMG Alternative Harvest ETF (NYSEARCA:MJ) is up 60.3% over the past three months through Feb. 25.
I, on the other hand, would look at that last stat and immediately think about reallocating what I might have considered dumping into ACB into the ETF. Aurora has a 3.25% weighting.
That’s because I’m always thinking about options that reduce the risk of your investment.
The Bottom Line
When it comes to Canadian cannabis stocks, I continue to like Canopy Growth, Aphria (NASDAQ:APHA), and Cronos Group (NASDAQ:CRON) in that order.
Very few of my InvestorPlace colleagues like Aurora at this point. Faisal Humayun is the exception. At the beginning of February, he put Aurora on a list of four undervalued marijuana stocks.
“A key reason to be bullish on ACB stock is the business transformation plan undertaken by the management. The company has been able to successfully reduce selling, general and administrative costs. In the coming quarters, cash burn is likely to decline significantly,” Humayun wrote on Feb. 3.
His argument for buying is that Aurora, under its CEO, is making progress. Using my illustration earlier, its balance sheet is actually stronger than in the past. However, it’s got to deliver more growth on the top line.
For this reason, I wouldn’t recommend its stock until the margin of safety increased and it was trading between $7 and $8.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.
The post Aurora Cannabis’ Altman Z-Score Suggests Investors Look Elsewhere appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | InvestorPlace - Stock Market News, Stock Advice & Trading Tips Jefferies analyst Owen Bennett reiterated his underperform rating for Aurora Cannabis (NYSE:ACB) on Feb. 24 while raising his target price on ACB stock to $7.51 from $3.65. If you want to own ACB stock, I wouldn’t touch it above $7.50. I, on the other hand, would look at that last stat and immediately think about reallocating what I might have considered dumping into ACB into the ETF. | InvestorPlace - Stock Market News, Stock Advice & Trading Tips Jefferies analyst Owen Bennett reiterated his underperform rating for Aurora Cannabis (NYSE:ACB) on Feb. 24 while raising his target price on ACB stock to $7.51 from $3.65. If you want to own ACB stock, I wouldn’t touch it above $7.50. I, on the other hand, would look at that last stat and immediately think about reallocating what I might have considered dumping into ACB into the ETF. | InvestorPlace - Stock Market News, Stock Advice & Trading Tips Jefferies analyst Owen Bennett reiterated his underperform rating for Aurora Cannabis (NYSE:ACB) on Feb. 24 while raising his target price on ACB stock to $7.51 from $3.65. If you want to own ACB stock, I wouldn’t touch it above $7.50. I, on the other hand, would look at that last stat and immediately think about reallocating what I might have considered dumping into ACB into the ETF. | InvestorPlace - Stock Market News, Stock Advice & Trading Tips Jefferies analyst Owen Bennett reiterated his underperform rating for Aurora Cannabis (NYSE:ACB) on Feb. 24 while raising his target price on ACB stock to $7.51 from $3.65. If you want to own ACB stock, I wouldn’t touch it above $7.50. I, on the other hand, would look at that last stat and immediately think about reallocating what I might have considered dumping into ACB into the ETF. |
36867.0 | 2021-03-01 00:00:00 UTC | The Top 50 Robinhood Stocks in March | ACB | https://www.nasdaq.com/articles/the-top-50-robinhood-stocks-in-march-2021-03-01 | nan | nan | Recently, the investment community marked one year since stock market volatility went off the charts. We witnessed the fastest decline of at least 30% in the S&P 500's history, as well as a brief period where West Texas Intermediate crude oil futures turned negative.
While much of the investment community stood in awe at these historic moves, this volatility acted as an insatiable lure for millennial and novice investors.
Image source: Getty Images.
Robinhood investors can't stop buying these 50 stocks
Online investing app Robinhood, which known best for its commission-free trades and gifting of free shares of stock to new members, attracted some 3 million new users last year. What's notable about this figure is the average age of Robinhood's member base is only 31. This means millennial and/or novice investors flocked to the platform at a time when volatility soared.
On one hand, it's a great thing to see young investors putting their money to work in the greatest wealth creator on the planet. Over the last 40 years, the total return of the S&P 500 (i.e., including dividends) is slightly above 10%. In other words, investors have been doubling their money about once every 7 years since the beginning of 1981, inclusive of dividend reinvestment.
On the other hand, Robinhood's millennial/novice investors don't appear to understand the importance of long-term investing or the benefits of compounding. We know this, because Robinhood's leaderboard (a published list of the most-held stocks on the platform) is filled with penny stocks, momentum plays, and a number of others awful businesses.
If you don't believe me, here's a snapshot of the 50 most-held Robinhood stocks as we enter March.
COMPANY COMPANY
1. Apple 26. Snap
2. Tesla Motors 27. Castor Maritime
3. AMC Entertainment (NYSE: AMC) 28. Alibaba
4. Sundial Growers (NASDAQ: SNDL) 29. Moderna
5. Ford 30. Bank of America
6. General Electric 31. Netflix
7. NIO (NYSE: NIO) 32. BlackBerry
8. Microsoft 33. Canopy Growth
9. Walt Disney 34. FuelCell Energy
10. Amazon 35. Ideanomics
11. Nokia 36. Advanced Micro Devices
12. Aphria 37. Tilray
13. GameStop (NYSE: GME) 38. Facebook
14. Zomedica 39. Twitter
15. American Airlines Group (NASDAQ: AAL) 40. Norwegian Cruise Line
16. Plug Power 41. AT&T
17. Pfizer 42. General Motors
18. Aurora Cannabis (NYSE: ACB) 43. Virgin Galactic
19. Churchill Capital 44. Zynga
20. Carnival Corp. 45. United Airlines
21. GoPro 46. Boeing
22. Delta Air Lines 47. Coca-Cola
23. OrganiGram Holdings 48. Starbucks
24. Palantir Technologies 49. Cronos Group
25. Naked Brand Group (NASDAQ: NAKD) 50. Workhorse Group
Data source: Robinhood, as of Feb. 25, 2021. Table by author.
A major lust for momentum and penny stocks
If there's one thing that sticks out like a sore thumb on this list, it's that Robinhood investors can't get enough penny stocks and high-volatility momentum plays for their portfolio.
In particular, you'll note that many of the most-popular stocks discussed on Reddit's WallStreetBets chatroom are among the top-50 holdings on Robinhood. Companies like GameStop and AMC Entertainment, which are the poster children of the retail investor-fueled Reddit frenzy, are respectively the 13th and third most-held stocks on the platform. Both GameStop and AMC sport high levels of short interest, mostly from institutional investors or hedge funds. This made them the perfect targets for a short squeeze by retail investors.
Unfortunately, you'll find little-to-no substance behind their rallies. GameStop is probably working on its fourth consecutive annual loss as it struggles to transition to a digital gaming environment. Meanwhile, AMC Entertainment narrowly avoided bankruptcy, and is watching the traditional movie theater operating model get decimated by the pandemic and select streaming providers.
The other thing Robinhood investors are probably failing to realize is that penny stocks are almost always valued in penny territory for a good reason. For example, intimate apparel retailer Naked Brand Group hasn't generated a profit in at least six years, and the company is now in the midst of an organizational shift that'll focus on e-commerce. Naked Brand shows that tiny stocks are often tiny for a very good reason.
Image source: Getty Images.
Cannabis, cannabis, and more cannabis
Robinhood investors' love affair with marijuana stocks continues for yet another month. As I've noted previously, Robinhood doesn't allow its members to buy over-the-counter (OTC)-listed companies. This means they're predominantly stuck buying the underperforming Canadian pot stocks that are listed on major U.S. exchanges. Seven of the top 50 holdings are Canadian pot stocks.
If there's good news to report, it's that Aurora Cannabis has been slowly falling down the ranks of the most-held Robinhood stocks. Once the most-held stock on the entire platform, Aurora now sits at No. 18. It should continue to fall considering how poorly the company has been run. Even though new management has aggressively cut costs, it doesn't change the fact that the company's outstanding share count has risen by more than 12,000% since June 2014, or that the finish line to achieve positive earnings before interest, taxes, depreciation, and amortization (EBITDA) has been moved back on a number of occasions.
The bad news is that Robinhood investors might have replaced Aurora Cannabis with an even worse pot stock: Sundial Growers. Although Sundial has an estimated $680 million in cash, it's built up its coffers on the backs of its shareholders. The company has issued over 1.1 billion shares via offerings and debt-to-equity swaps in five months. It's also in the midst of switching its focus to retail from wholesale, which'll only exacerbate near-term losses at a time when most North American pot stocks are turning profitable.
Image source: Getty Images.
Alternative energy and transportation remain must-owns for millennials
If you thought cannabis was well represented in Robinhood's leaderboard, take a gander at the alternative energy and transportation plays. Nearly 30% of the top 50 are auto stocks, airlines, or a company focused on clean/renewable energy solutions. Suffice it to say, Robinhood investors are expecting a big uptick in travel demand, post-pandemic, and an increased focus on renewable energy from the Biden administration.
But, as noted, they're also potentially playing with fire by chasing momentum stocks that have wildly detached from their underlying fundamentals. China-based electric-vehicle (EV) manufacturer NIO is still worth $73 billion after a 25% pullback, yet has only delivered a little north of 82,800 EVs since its inception. Being based in China, the largest auto market for EVs in the world, could unquestionably help its long-term outlook. However, $73 billion for such a young and unproven business is a bit much.
Likewise, piling into American Airlines doesn't seem like a prudent idea. Even during the best of times, airline stocks generate mediocre margins and are able to return capital to shareholders through buybacks and dividends. But having taken a coronavirus relief loan, American Airlines is barred from buybacks and dividends. It also boasts the highest debt load of any major airline ($41 billion). Even if it survives the pandemic without seeking bankruptcy, it'll be so financially constrained by its debt that most growth initiatives can be tossed out the window.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora Cannabis (NYSE: ACB) 43. Meanwhile, AMC Entertainment narrowly avoided bankruptcy, and is watching the traditional movie theater operating model get decimated by the pandemic and select streaming providers. For example, intimate apparel retailer Naked Brand Group hasn't generated a profit in at least six years, and the company is now in the midst of an organizational shift that'll focus on e-commerce. | Aurora Cannabis (NYSE: ACB) 43. We know this, because Robinhood's leaderboard (a published list of the most-held stocks on the platform) is filled with penny stocks, momentum plays, and a number of others awful businesses. The Motley Fool owns shares of and recommends Alibaba Group Holding Ltd., Amazon, Apple, Facebook, Microsoft, Netflix, OrganiGram Holdings, Starbucks, Tesla, Twitter, Virgin Galactic Holdings Inc, Walt Disney, and Zynga. | Aurora Cannabis (NYSE: ACB) 43. Robinhood investors can't stop buying these 50 stocks Online investing app Robinhood, which known best for its commission-free trades and gifting of free shares of stock to new members, attracted some 3 million new users last year. The Motley Fool owns shares of and recommends Alibaba Group Holding Ltd., Amazon, Apple, Facebook, Microsoft, Netflix, OrganiGram Holdings, Starbucks, Tesla, Twitter, Virgin Galactic Holdings Inc, Walt Disney, and Zynga. | Aurora Cannabis (NYSE: ACB) 43. We know this, because Robinhood's leaderboard (a published list of the most-held stocks on the platform) is filled with penny stocks, momentum plays, and a number of others awful businesses. The Motley Fool owns shares of and recommends Alibaba Group Holding Ltd., Amazon, Apple, Facebook, Microsoft, Netflix, OrganiGram Holdings, Starbucks, Tesla, Twitter, Virgin Galactic Holdings Inc, Walt Disney, and Zynga. |
36868.0 | 2021-02-27 00:00:00 UTC | Heeding These 3 Warning Signs Will Make You a Better Investor | ACB | https://www.nasdaq.com/articles/heeding-these-3-warning-signs-will-make-you-a-better-investor-2021-02-27 | nan | nan | Whether it be falling for a pump-and-dump scheme, buying stock in a cartoonishly dysfunctional company, or panic-selling a soon-to-be-winner right before its takeoff, we've all been known to make investing mistakes. The good news is that it's possible to learn from these mistakes and do better, provided we understand what went wrong and what to look for next time around.
Each of the three warning signs I'll discuss today will be relevant for the rest of your investing career. If you heed them and act accordingly, I guarantee that you'll protect your portfolio from a few hefty shocks.
Image source: Getty Images.
1. You feel time pressure to buy or sell
Have you ever seen a stock's price jump, then rushed to your brokerage to buy it immediately, only to see its value collapse catastrophically soon after? If so, you're not alone. But next time you feel tempted to jump on a hot investment before the crowd shows up, you should recognize that you're at high risk of making a low-quality choice that could harm your portfolio's value.
Take Aurora Cannabis' (NYSE: ACB) price movements in the last 12 months as an example. If you had piled on when you heard that its stock was exploding in May of 2020 or February of 2021, you'd be sitting on some gnarly losses right now.
ACB data by YCharts
When you're investing for the long term, short-term price movements that grab headlines are not something that you should place a lot of weight on when deciding whether to buy a stock. The fact that a stock's price is rising quickly today doesn't mean that it will continue to do so in the future.
More importantly, the fear of missing out on a short-term price movement can drive you to invest in stocks that you haven't fully vetted.
2. You're not sure precisely what the company does (or how it's different from competitors)
If you're holding a stock, you need to know how the company makes its revenue today, and how it plans to make even more in the future. For smaller companies in one line of business, that's not such a daunting task. But when you start to invest in diversified businesses or conglomerates, it's easy to lose track of what's going on. That leaves you exposed to risks which you may not appreciate when you purchase the stock.
One good exercise to test your knowledge is to state what the company does in one or two simple sentences.
Going back to our Aurora Cannabis example, that could be something like "it makes medicinal and recreational cannabis products and sells them in the U.S. and Canada." Then, add on another sentence explaining why the stock is worth your money more than its competitors. That could look like, "because it's making aggressive cost cuts that will take it closer to profitability," or even "because other stocks in the industry are overvalued in anticipation of cannabis legalization," assuming you believe those things are true.
3. You don't have a plan
When you're considering whether to purchase a stock, you need a rough plan. That plan should include the price at which you're comfortable with buying the stock, as well as your investing thesis for its increasing long-term value. If you're not sure how to judge the appropriate price level, start by examining the intrinsic value and go from there.
You should also plan for how long a newly purchased stock will live in your portfolio. Your plan could be as simple as "I'll hold this stock until I start to withdraw funds for retirement," or "I'll hold this stock for three years," or even "until it triples in value." Making a roadmap before you invest is helpful because it'll reduce the temptation to sell based on short-term setbacks. It'll also help you to stay focused on your portfolio goals over time.
In the context of Aurora Cannabis, the plan could be something like "I'd be willing to buy it at around $10.50 and hold it until 2025 (when marijuana legalization may be nationwide in the U.S.) or until it increases by 300%, whichever comes first." If the price subsequently dips below your target or above your goal, you've already taken a lot of the uncertainty out of your next decision.
Remember, you're not obligated to stick to your investing plan, especially if it's based on a set of assumptions that are starting to look incorrect. If a company's financial conditions change significantly, don't be afraid to chart a new course. Just make sure that you're keeping your eyes on the horizon rather than recent price history when you do.
10 stocks we like better than Aurora Cannabis Inc.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | ACB data by YCharts When you're investing for the long term, short-term price movements that grab headlines are not something that you should place a lot of weight on when deciding whether to buy a stock. Take Aurora Cannabis' (NYSE: ACB) price movements in the last 12 months as an example. But next time you feel tempted to jump on a hot investment before the crowd shows up, you should recognize that you're at high risk of making a low-quality choice that could harm your portfolio's value. | Take Aurora Cannabis' (NYSE: ACB) price movements in the last 12 months as an example. ACB data by YCharts When you're investing for the long term, short-term price movements that grab headlines are not something that you should place a lot of weight on when deciding whether to buy a stock. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market. | Take Aurora Cannabis' (NYSE: ACB) price movements in the last 12 months as an example. ACB data by YCharts When you're investing for the long term, short-term price movements that grab headlines are not something that you should place a lot of weight on when deciding whether to buy a stock. You're not sure precisely what the company does (or how it's different from competitors) If you're holding a stock, you need to know how the company makes its revenue today, and how it plans to make even more in the future. | Take Aurora Cannabis' (NYSE: ACB) price movements in the last 12 months as an example. ACB data by YCharts When you're investing for the long term, short-term price movements that grab headlines are not something that you should place a lot of weight on when deciding whether to buy a stock. You're not sure precisely what the company does (or how it's different from competitors) If you're holding a stock, you need to know how the company makes its revenue today, and how it plans to make even more in the future. |
36869.0 | 2021-02-24 00:00:00 UTC | Is Aurora Cannabis Stock a Buy? | ACB | https://www.nasdaq.com/articles/is-aurora-cannabis-stock-a-buy-2021-02-24 | nan | nan | Aurora Cannabis (NYSE: ACB) has struggled to grow its business, and its investors have grown accustomed to seeing red on its bottom line. The company has failed to post an operating profit or even achieve profitability on an adjusted EBITDA basis. Share issues, rather than cash-positive operating activities, have been key to ensuring there is enough money flowing into the business to keep the lights on. And that's been frustrating for investors, who continue to have their ownership diluted.
But there is hope that, after all the cost-cutting efforts and layoffs Aurora has been making over the past 12 months, its operations should be much leaner, meaner, and in better overall shape moving forward. And the company is coming off an improved quarter in which its bottom line showed signs of progress -- or did it? Let's take a closer look at how Aurora performed in its most recent quarter and whether investors should be more bullish on this troubled pot stock.
Image source: Getty Images.
A look at the company's recent results
On Feb. 11, Aurora released its second-quarter results for the period ending Dec. 31, 2020. The company did show progress on its bottom line, with an adjusted earnings before interest, tax, debt and amortization (EBITDA) loss of 16.8 million Canadian dollars falling sharply from the CA$57.9 million loss that it posted in the first quarter, for the period ending Sept. 30, 2020. This was despite revenue of CA$67.7 million showing no growth from the previous period, making it the third quarter in a row now in which that exact scenario has happened. However, Aurora anticipates more of an improvement in the EBITDA number in the third quarter after reductions to its headcount a few months ago. Those cost savings haven't been fully realized on the company's latest earnings report.
Without sales growth and continuous losses, Aurora isn't giving investors much of a reason to invest in the business. While improving adjusted EBITDA is a positive, the company has pushed back its goal of breaking even multiple times. And although it does appear to be on the right track, investors need to remember that adjusted EBITDA is not a GAAP number, meaning that it isn't comparable from one business to another; the company effectively chooses what to include in the calculation.
A closer look at the period shows that Aurora's operating loss was CA$47 million -- an increase of 11.2% from the CA$42.3 million loss it incurred in Q1. The company did bring down its operating expenses by CA$4.5 million, or 6.6%, from the previous quarter. However, that was offset with declining gross profits, as Aurora netted just CA$17.3 million after cost of sales this past quarter compared with CA$26.6 million in Q1. The company said the drop in those margins was a result of it scaling back production levels at Aurora Sky in addition to a CA$1.8 million increase in expenses that were related to net returns, price adjustments, and provisions.
The challenge with marijuana companies is that there is often a lot of noise on their financials. That can make it difficult for investors to assess just how well a business is doing, and Aurora is no exception. While there were some positives to take away from the company's most recent quarterly performance, there may not be enough of an overall improvement to justify the stock's current valuation.
Is Aurora's stock too expensive?
Since the start of 2021, shares of Aurora have risen more than 30%. And while that's lower than the Horizons Marijuana Life Sciences ETF and the 60% gains it has made over the same period, it's well above the 3% that the S&P 500 is up by. At a $2.15 billion valuation, investors are paying 6.4 times revenue for shares of Aurora (since profits are non-existent, a multiple of sales is a more appropriate metric to use here). And that looks favorable when comparing it to rival cannabis producers Canopy Growth, Aphria, and HEXO:
ACB PS Ratio data by YCharts
Its valuation doesn't appear to be all that high given what investors are paying for other stocks in the cannabis industry. But that's because investors are often willing to pay higher multiples for businesses that are doing well while paying lower premiums for companies like Aurora, which appear to be riskier. Aurora's constant need for capital boosts is another reason why investors might be hesitant. Over the past two quarters, it has issued shares to raise CA$493.4 million -- up 53.8% from the prior-year period.
All of that dilution can make the valuation a bit misleading, because the share price will only decline if Aurora continues to issue more shares due to its cash burn. In the six-month period ending Dec. 31, 2020, it spent CA$172.7 million just to fund its operating activities. Although that's a decline from CA$229.6 million a year ago, it's still a problem that investors can't afford to ignore.
While Aurora's stock may seem cheap, the price tag may not be enough of a reason to look past the company's current struggles.
Should you invest in Aurora Cannabis?
Aurora's latest results don't do enough to convince me that the stock is a buy or destined for a turnaround. There are simply too many problems to worry about here, and that could keep the stock price down. From a lack of growth to tons of cash burn, the business still has a long way to go in proving to investors that it's anything but a risky investment.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
David Jagielski has no position in any of the stocks mentioned. The Motley Fool recommends HEXO. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora Cannabis (NYSE: ACB) has struggled to grow its business, and its investors have grown accustomed to seeing red on its bottom line. And that looks favorable when comparing it to rival cannabis producers Canopy Growth, Aphria, and HEXO: ACB PS Ratio data by YCharts Its valuation doesn't appear to be all that high given what investors are paying for other stocks in the cannabis industry. But there is hope that, after all the cost-cutting efforts and layoffs Aurora has been making over the past 12 months, its operations should be much leaner, meaner, and in better overall shape moving forward. | Aurora Cannabis (NYSE: ACB) has struggled to grow its business, and its investors have grown accustomed to seeing red on its bottom line. And that looks favorable when comparing it to rival cannabis producers Canopy Growth, Aphria, and HEXO: ACB PS Ratio data by YCharts Its valuation doesn't appear to be all that high given what investors are paying for other stocks in the cannabis industry. A closer look at the period shows that Aurora's operating loss was CA$47 million -- an increase of 11.2% from the CA$42.3 million loss it incurred in Q1. | Aurora Cannabis (NYSE: ACB) has struggled to grow its business, and its investors have grown accustomed to seeing red on its bottom line. And that looks favorable when comparing it to rival cannabis producers Canopy Growth, Aphria, and HEXO: ACB PS Ratio data by YCharts Its valuation doesn't appear to be all that high given what investors are paying for other stocks in the cannabis industry. The company did show progress on its bottom line, with an adjusted earnings before interest, tax, debt and amortization (EBITDA) loss of 16.8 million Canadian dollars falling sharply from the CA$57.9 million loss that it posted in the first quarter, for the period ending Sept. 30, 2020. | Aurora Cannabis (NYSE: ACB) has struggled to grow its business, and its investors have grown accustomed to seeing red on its bottom line. And that looks favorable when comparing it to rival cannabis producers Canopy Growth, Aphria, and HEXO: ACB PS Ratio data by YCharts Its valuation doesn't appear to be all that high given what investors are paying for other stocks in the cannabis industry. Without sales growth and continuous losses, Aurora isn't giving investors much of a reason to invest in the business. |
36870.0 | 2021-02-24 00:00:00 UTC | 5 Pot Stocks Money Managers Bought Hand Over Fist in Q4 | ACB | https://www.nasdaq.com/articles/5-pot-stocks-money-managers-bought-hand-over-fist-in-q4-2021-02-24 | nan | nan | Arguably the most anticipated day of 2021 occurred last week -- and if you weren't paying close attention, you might have missed it.
Tuesday, Feb. 16, marked the deadline for money managers with at least $100 million in assets under management to file Form 13F with the Securities and Exchange Commission (SEC). A 13F provides a snapshot of what securities institutional investment funds and hedge funds were holding at the end of the most recent quarter. In this instance, we're talking about an under-the-hood look at what the brightest minds on Wall Street were up to during the fourth quarter.
If there was one takeaway from the mountain of 13Fs filed with the SEC for Q4, it was that marijuana stocks got a lot of love. ownership by 13F filers in the following five pot stocks increased by 28% to as much as 61% from the sequential third quarter.
Image source: Getty Images.
Aphria & Tilray: Aggregate share ownership by 13F filers up 61% and 51%, respectively
I'm discussing Aphria (NASDAQ: APHA) and Tilray (NASDAQ: TLRY) together because of their pending merger. Since the announcement came during Q4, it almost certainly influenced money managers' decision to buy into both companies hand over fist.
The reverse merger, which will keep the Tilray name despite Aphria's shareholders owning a larger percentage of the combined company, will create the largest cannabis company by annual sales, broaden the duo's product offerings, and cement the combination as a force in European markets. Additionally, the scale offered by Aphria and Tilray should result in cost synergies and low production costs. Money managers appear to be viewing this combination favorably, which is why ownership rocketed higher in both names in Q4.
However, Tilray has been anything but successful since its share price moonshot to $300 in September 2018. Management has struggled to expand beyond Canada, and the company has been burning through cash at a worrisome rate. In other words, Tilray needed this deal far more than Aphria did. Fixing Tilray's deficiencies won't be easy, which should give investors reason to pause following the recent run-up in both companies.
Image source: Getty Images.
OrganiGram Holdings: Up 36%
Money managers also piled into New Brunswick-based OrganiGram Holdings (NASDAQ: OGI). The 34.1 million aggregate shares figure owned by 13F filers is over 9 million (36%) more than they held in the sequential third quarter.
The likeliest reason behind this shift in sentiment is the changing of the guard in Washington. Joe Biden winning the presidency in November opened the door to a new era of hope for cannabis reform on Capitol Hill. Democrats winning back the Senate by the slimmest majority possible in early January was simply the icing on the cake. Legalizing marijuana at the federal level in the U.S. would allow OrganiGram and its peers to enter the far more lucrative U.S. weed market.
Successful money managers might also be drawn to OrganiGram's inherent competitive advantages. For example, it only has a single operating facility, which means it's relatively easy to adjust its output and expenses. The company also incorporates three tiers of growing in its licensed indoor rooms, which helps to maximize yield. When coupled with the company's abundant investments in high-margin derivative production (e.g., chocolate edibles and beverage powder), it's easy to understand why Wall Street's so excited.
Image source: Getty Images.
Aurora Cannabis: Up 28%
Arguably the most head-scratching move of the quarter was the 28% increase in shares owned by 13F filers in Canadian licensed producer Aurora Cannabis (NYSE: ACB). It's worth noting that hedge funds actually decreased their stakes in Aurora by 11% in Q4.
Politics and short interest are the two best guesses I can offer as to why institutional money managers fancied Aurora Cannabis. The U.S. is more likely than ever before to enact serious federal cannabis reform. That probably has money managers thinking about Aurora's entrance into the U.S.
Aurora also has one of the highest levels of short interest among pot stocks. This suggests it could be susceptible to a short squeeze, which has, in the past, quickly driven up its share price.
Unfortunately, Aurora Cannabis isn't a very good company. Since June 2014, management has drowned shareholders in dilution. The company's total share count has risen from 1.35 million to north of 186 million.
Management has also moved the profitability goalposts on numerous occasions. Those shifts are concerning since the company's debt covenants are tied to reaching positive earnings before interest, taxes, depreciation, and amortization (EBITDA). Investors shouldn't follow the big money into Aurora Cannabis.
Image source: Getty Images.
HEXO: Up 28%
Another pot stock scooped up by money managers that might raise an eyebrow or two is Canadian licensed producer HEXO (NYSE: HEXO).
Aside from possible cannabis reform in the U.S., HEXO's biggest catalyst came in December, when it released its fiscal first-quarter operating results. The $41.3 million Canadian gross sales figure in Q1 2021 represents an all-time high for HEXO, with its negative EBITDA of CA$0.42 million marking the sixth consecutive quarter of improvement. In other words, HEXO's operating performance wasn't nearly as poor as expected in the latest quarter. This suggests supply issues are abating in Canada, and HEXO's cost-cutting initiatives are working.
Then again, HEXO has been nearly as big of a disaster as Aurora. It's issued a lot of shares and debt to raise capital, and it's been busy slashing costs to achieve profitability. Yet even with its adjusted EBITDA improvement, the company's operating loss, sans fair-value adjustments, was still close to CA$9 million in Q1 2021.
Add on the new uncertainty of acquiring Zenabis Global (HEXO's previous acquisition of Newstrike Brands ended poorly ), and I see no reason for investors to buy into the HEXO hype.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Sean Williams has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends OrganiGram Holdings. The Motley Fool recommends HEXO. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora Cannabis: Up 28% Arguably the most head-scratching move of the quarter was the 28% increase in shares owned by 13F filers in Canadian licensed producer Aurora Cannabis (NYSE: ACB). Fixing Tilray's deficiencies won't be easy, which should give investors reason to pause following the recent run-up in both companies. When coupled with the company's abundant investments in high-margin derivative production (e.g., chocolate edibles and beverage powder), it's easy to understand why Wall Street's so excited. | Aurora Cannabis: Up 28% Arguably the most head-scratching move of the quarter was the 28% increase in shares owned by 13F filers in Canadian licensed producer Aurora Cannabis (NYSE: ACB). A 13F provides a snapshot of what securities institutional investment funds and hedge funds were holding at the end of the most recent quarter. HEXO: Up 28% Another pot stock scooped up by money managers that might raise an eyebrow or two is Canadian licensed producer HEXO (NYSE: HEXO). | Aurora Cannabis: Up 28% Arguably the most head-scratching move of the quarter was the 28% increase in shares owned by 13F filers in Canadian licensed producer Aurora Cannabis (NYSE: ACB). The reverse merger, which will keep the Tilray name despite Aphria's shareholders owning a larger percentage of the combined company, will create the largest cannabis company by annual sales, broaden the duo's product offerings, and cement the combination as a force in European markets. HEXO: Up 28% Another pot stock scooped up by money managers that might raise an eyebrow or two is Canadian licensed producer HEXO (NYSE: HEXO). | Aurora Cannabis: Up 28% Arguably the most head-scratching move of the quarter was the 28% increase in shares owned by 13F filers in Canadian licensed producer Aurora Cannabis (NYSE: ACB). Unfortunately, Aurora Cannabis isn't a very good company. HEXO: Up 28% Another pot stock scooped up by money managers that might raise an eyebrow or two is Canadian licensed producer HEXO (NYSE: HEXO). |
36871.0 | 2021-02-24 00:00:00 UTC | 7 Marijuana Stocks That Could Still Go Down in Flames | ACB | https://www.nasdaq.com/articles/7-marijuana-stocks-that-could-still-go-down-in-flames-2021-02-24 | nan | nan | InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Wary investors will continue to characterize the rising stock market as a bubble ready to pop. That is wholly untrue, to some extent. A stock sector bubble is a better characterization, in light of recent market pops and drops. In January, GameStop’s (NYSE:GME) peak to $483 created a once-in-a-lifetime lift that caught short-sellers completely off guard. One hedge fund may have lost billions at that moment. Since then, the stock fell and both the buyers and short-sellers moved on.
After GameStop’s rise and fall, stocks in the silver mining business rose and then fell sharply a day or two later. Last week, the intense buying in cannabis stocks sent those already with a large capitalization to multi-year highs.
You may guess what happened next.
By the end of last week, the pump faded. Sellers lined up sell orders the very next day, sending the stocks crashing lower. Seven marijuana stocks could go down in flames. Investors should recognize the proverbial pump-and-dump schemes that plague the market today.
7 Dividend Stocks Offering Little More Than Danger
The seven stocks to avoid are
Tilray (NASDAQ:TLRY)
Aphria (NASDAQ:APHA)
HEXO (NYSE:HEXO)
Aurora Cannabis (NYSE:ACB)
Canopy Growth (NASDAQ:CGC)
Cronos Group (NASDAQ:CRON)
Sundial Growers (NASDAQ:SNDL)
In the chart below, the overall ratings vary from a low of 11 to a high of 88 (pardon the pun). None of the stocks have a good value score.
Marijuana stocks scored by value, growth, and overall
Click to Enlarge
Data courtesy of Stock Rover
Tilray (TLRY)
TLRY) logo on a web browser." width="300" height="169">
Source: Jarretera / Shutterstock.com
In December, Aphria and Tilray announced a merger that will create a $4 billion market capitalization cannabis firm. The deal involves no cash. APHA shareholders will get 0.8381 shares of Tilray for each Aphria to each share owned. When completed, Aphriria will own 62% of the combined firm.
The merger is critical to the survival of both firms. It will save the firms 100 million CAD ($79 million) in pre-tax annual cost synergies. With competition heating up due to years of excess production, Tilray may have a chance of survival.
On Feb. 9, Tilray announced an agreement with Grow Pharma to import and distribute medical cannabis in the U.K. This market is still very small. Investors who paid up to $67 for TLRY stock, at an $8 billion market cap, will end up regretting it. In the third quarter, Tilray posted a net loss of $2.3 million. Revenue was flat year-on-year at $51.4 million.
Expect unexpected integration costs hurting the combined TLRY-APHA firm after the deal closes.
Aphria (APHA)
Source: Shutterstock
Aphria traded as high as almost $27 at its peak on Feb. 10 before slumping. In Q2 2021, the company beat expectations as revenue grew. It lost money again in the period.
Aphria posted GAAP earnings losses of 42 Canadian cents per share. Revenue topped 160.53 million CAD. On closer inspections, investors should notice the adjusted cannabis gross margins slumping to 45.9%, down from 56.6% last year. Its beverage alcohol gross margin added just 533,000 CAD in the quarter.
7 Overvalued Stocks Investors Just Don’t Get Tired Of
The drop in the average retail selling price (ASP) of medical cannabis is a concern, too. ASP fell to $6.96 a gram, down from $7.38 in the prior quarter. Aphria blamed specific pricing pressures it offered to assist patients in need. Promotional programs also hurt prices. Looking ahead, the negative pressures from the Covid-19 pandemic hurting sales may end. Assuming that the vaccine protects people and the shutdown ends, sales could improve.
Since it is another marijuana stock that loses money quarterly, investors should avoid APHA stock.
HEXO (HEXO)
Source: Shutterstock
The decline in HEXO stock’s price reached a point where the company announced a reverse split of shares on Dec. 18, 2020. So, for every four shares owned, investors get one new share. At the time, the stock traded at below $5. To avoid the danger of falling to a stock price below the minimum, management proactively consolidated shares.
Speculators who do not recognize the lack of value a consolidation announcement signifies will lose money. HEXO stock has a good chance of continuing its drop after the temporary spike in recent weeks. In the first quarter, the company posted an 8% growth in adult-use cannabis sales. Adult-use beverage sales grew by 54%.
The weak sequential growth in revenue and the inability to reduce the cost of sales should concern shareholders. One bright spot is that gross margin improved to 35% from 30% in Q4 2020.
Hexo is not a buy at current levels. Wait for the sell-off to end before considering this speculation again.
Aurora Cannabis (ACB)
ACB) logo in green" width="300" height="169">
Source: ElRoi / Shutterstock.com
Aurora Cannabis offered its shareholders faint hope when it posted second-quarter results. Revenue from medical cannabis rose by 42% year on year to 38.9 million CAD. An impressive 562% increase in high margin international medical sales lifted results.
The company lost money again in the quarter. It posted an EBITDA loss of 12.1 million CAD. This is better than the 53.1 million CAD loss YoY. The company ended the quarter with 565 million CAD in cash.
7 Dividend Stocks Offering Little More Than Danger
To lower its negative cash burn rates, Aurora lowered its production levels at Aurora Sky. This lifted its cash cost of sales, thanks to the under-utilization of capacity. In the long-run, Aurora cannot keep booking restructuring costs and running below capacity. It needs to aggressively grow sales to widen its market share.
This is easier said than done. The U.S. may legalize cannabis but U.S. multi-state operators will benefit first.
Avoid ACB stock.
Canopy Growth (CGC)
Source: Shutterstock
The first half of Canopy Growth’s Q3 earnings results presentation did not include financials. Instead, the company touted its product innovations. For example, the National Animal Supplement Council granted Canopy Animal Health its quality seal.
Canopy listed its three-year financial targets somewhere in the middle of the presentation posted here on slide 12. It aims to grow net revenue by 40-50% CAGR. Adjusted EBITDA will not turn positive until next year, in the second half of 2022. Operating cash flow will not be positive for the full year in FY 2023. It will take another three years (FY 2024) when the company achieves positive free cash flow.
CGC stock is only for investors with a time frame of at least three years. Anyone speculating on the stock with a shorter holding period will end up disappointed.
On Wall Street, 14 of 19 analysts have a “hold” rating on the stock.
Cronos Group (CRON)
Source: Shutterstock
Cronos Group stock benefited from the recent volatility in marijuana stocks. The lift may prove temporary as markets eventually value stocks on fundamentals.
In the third quarter, Cronos posted operating losses of $40.2 million. If revenue nearly doubled from $5.78 million to $11.36 million, why is it still losing money? The company benefited from an increase in net revenue and the gross profit contribution of its U.S. business. But the cost of sales grew because of higher volumes in adult-use sales and purchased flower. Wholesale sales fell.
7 Overvalued Stocks Investors Just Don’t Get Tired Of
The mixed revenue results suggest that Cronos needs to expand its U.S. presence. Speculators are betting that cannabis legalization will put an end to Cronos’ quarterly losses.
Among 13 analysts, eight recommend investors “hold” while three rate CRON stock as a “sell.” SimplyWall.st is surprisingly bullish. The site figured a strong positive future cash flow would justify a fair value of around $22.
Sundial Growers (SNDL)
Source: Shutterstock
After long trading at less than a dollar, Sundial Growers stock touched almost $4 recently. The company’s second-quarter results showed no strength.
In that period, the Canadian LP said it was proud to post quarterly revenue of above 20 million CAD. CEO Zach George said, “We have made good progress in streamlining our business over the past six months, having eliminated non-core initiatives, reduced costs, and improved operating efficiencies.”
Sundial is counting on new product offerings and a strong reputation as a high-quality cannabis producer. Speculators could bet that this succeeds in differentiating the firm against the many competitors. If history repeats itself, Aurora, Cronos, and Canopy all promised new products ahead. When that day arrived, operating margins did not improve enough.
Sundial’s strong drop will leave many speculators facing a loss. If the stock rebounds again, those past buyers will sell the stock on the way up to break-even.
On the date of publication, Chris Lau did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Chris Lau is a contributing author for InvestorPlace.com and numerous other financial sites. Chris has over 20 years of investing experience in the stock market and runs the Do-It-Yourself Value Investing Marketplace on Seeking Alpha. He shares his stock picks so readers get original insight that helps improve investment returns.
The post 7 Marijuana Stocks That Could Still Go Down in Flames appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora Cannabis (NYSE:ACB) Canopy Growth (NASDAQ:CGC) Cronos Group (NASDAQ:CRON) Sundial Growers (NASDAQ:SNDL) In the chart below, the overall ratings vary from a low of 11 to a high of 88 (pardon the pun). Aurora Cannabis (ACB) ACB) logo in green" width="300" height="169"> Source: ElRoi / Shutterstock.com Aurora Cannabis offered its shareholders faint hope when it posted second-quarter results. Avoid ACB stock. | Aurora Cannabis (NYSE:ACB) Canopy Growth (NASDAQ:CGC) Cronos Group (NASDAQ:CRON) Sundial Growers (NASDAQ:SNDL) In the chart below, the overall ratings vary from a low of 11 to a high of 88 (pardon the pun). Aurora Cannabis (ACB) ACB) logo in green" width="300" height="169"> Source: ElRoi / Shutterstock.com Aurora Cannabis offered its shareholders faint hope when it posted second-quarter results. Avoid ACB stock. | Aurora Cannabis (NYSE:ACB) Canopy Growth (NASDAQ:CGC) Cronos Group (NASDAQ:CRON) Sundial Growers (NASDAQ:SNDL) In the chart below, the overall ratings vary from a low of 11 to a high of 88 (pardon the pun). Aurora Cannabis (ACB) ACB) logo in green" width="300" height="169"> Source: ElRoi / Shutterstock.com Aurora Cannabis offered its shareholders faint hope when it posted second-quarter results. Avoid ACB stock. | Aurora Cannabis (NYSE:ACB) Canopy Growth (NASDAQ:CGC) Cronos Group (NASDAQ:CRON) Sundial Growers (NASDAQ:SNDL) In the chart below, the overall ratings vary from a low of 11 to a high of 88 (pardon the pun). Aurora Cannabis (ACB) ACB) logo in green" width="300" height="169"> Source: ElRoi / Shutterstock.com Aurora Cannabis offered its shareholders faint hope when it posted second-quarter results. Avoid ACB stock. |
36872.0 | 2021-02-23 00:00:00 UTC | Why Sundial, Aurora Cannabis, Aphria, and Other Marijuana Stocks Plunged Today | ACB | https://www.nasdaq.com/articles/why-sundial-aurora-cannabis-aphria-and-other-marijuana-stocks-plunged-today-2021-02-24 | nan | nan | What happened
Cannabis stocks plummeted on Tuesday morning before rebounding later in the day. Here's how some of the most popular marijuana stocks fared:
Sundial Growers (NASDAQ: SNDL), down 11.9%
Aphria (NASDAQ: APHA), down 6.7%
Tilray (NASDAQ: TLRY), down 5.7%
Cronos Group (NASDAQ: CRON), down 4.8%
Aurora Cannabis (NYSE: ACB), down 4.8%
Canopy Growth (NASDAQ: CGC), down 4.6%
HEXO (NYSE: HEXO), down 4%
So what
Weed stocks have been popular trades in 2021. The prospect of marijuana legalization in the U.S. has led investors to bid up the prices of many cannabis companies in recent weeks.
Pot stocks fell hard on Tuesday. Image source: Getty Images.
Today, however, many traders decided to sell their marijuana stocks and take some profits off the table. There wasn't much in the way of news that appeared to spark the sell-off, other than a general decline in the stock market averages and a relatively steep drop in the prices of many higher-risk stocks.
Now what
Cannabis stocks can be extremely volatile; that's part of the allure for traders who want to generate quick gains. Volatility cuts both ways, though, and it can be brutal when stocks move violently to the downside.
Fortunately, Sundial, Aphria, Tilray, Cronos, Aurora, Canopy, and HEXO all recovered most of their losses by the close of trading after being down between 13% to 23% earlier in the day. Perhaps investors began to once again focus on recent progress toward legalization, such as New Jersey's move to permit sales of recreational marijuana in the state.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool recommends HEXO. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Here's how some of the most popular marijuana stocks fared: Sundial Growers (NASDAQ: SNDL), down 11.9% Aphria (NASDAQ: APHA), down 6.7% Tilray (NASDAQ: TLRY), down 5.7% Cronos Group (NASDAQ: CRON), down 4.8% Aurora Cannabis (NYSE: ACB), down 4.8% Canopy Growth (NASDAQ: CGC), down 4.6% HEXO (NYSE: HEXO), down 4% So what Weed stocks have been popular trades in 2021. Fortunately, Sundial, Aphria, Tilray, Cronos, Aurora, Canopy, and HEXO all recovered most of their losses by the close of trading after being down between 13% to 23% earlier in the day. Perhaps investors began to once again focus on recent progress toward legalization, such as New Jersey's move to permit sales of recreational marijuana in the state. | Here's how some of the most popular marijuana stocks fared: Sundial Growers (NASDAQ: SNDL), down 11.9% Aphria (NASDAQ: APHA), down 6.7% Tilray (NASDAQ: TLRY), down 5.7% Cronos Group (NASDAQ: CRON), down 4.8% Aurora Cannabis (NYSE: ACB), down 4.8% Canopy Growth (NASDAQ: CGC), down 4.6% HEXO (NYSE: HEXO), down 4% So what Weed stocks have been popular trades in 2021. Fortunately, Sundial, Aphria, Tilray, Cronos, Aurora, Canopy, and HEXO all recovered most of their losses by the close of trading after being down between 13% to 23% earlier in the day. Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018. | Here's how some of the most popular marijuana stocks fared: Sundial Growers (NASDAQ: SNDL), down 11.9% Aphria (NASDAQ: APHA), down 6.7% Tilray (NASDAQ: TLRY), down 5.7% Cronos Group (NASDAQ: CRON), down 4.8% Aurora Cannabis (NYSE: ACB), down 4.8% Canopy Growth (NASDAQ: CGC), down 4.6% HEXO (NYSE: HEXO), down 4% So what Weed stocks have been popular trades in 2021. Here's The Marijuana Stock You've Been Waiting For A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom. Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018. | Here's how some of the most popular marijuana stocks fared: Sundial Growers (NASDAQ: SNDL), down 11.9% Aphria (NASDAQ: APHA), down 6.7% Tilray (NASDAQ: TLRY), down 5.7% Cronos Group (NASDAQ: CRON), down 4.8% Aurora Cannabis (NYSE: ACB), down 4.8% Canopy Growth (NASDAQ: CGC), down 4.6% HEXO (NYSE: HEXO), down 4% So what Weed stocks have been popular trades in 2021. Here's The Marijuana Stock You've Been Waiting For A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom. Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks. |
36873.0 | 2021-02-23 00:00:00 UTC | ANALYSIS-Aussie cannabis firms go capital light as they roll into Europe | ACB | https://www.nasdaq.com/articles/analysis-aussie-cannabis-firms-go-capital-light-as-they-roll-into-europe-2021-02-23 | nan | nan | By Shruti Sonal
Feb 24 (Reuters) - A handful of small, young Australian firms are taking a chance on Europe in spite of the region's diverse markets, hopeful that a capital-light investment strategy will diminish their risks.
Europe could be a hard market to crack as regulations vary by country, but favourable rulings for medical marijuana and potential demand are promising factors. The companies reckon that establishing an early base there and working with European partners will help them better negotiate different markets and steal a march on larger North American rivals.
Cann Group CAN.AX and MGC Pharmaceuticals MXC.AX are among many firms that have pushed into Europe, recently signing partnerships to distribute medical marijuana products and also exploring a dual-listing in the region.
Europe is much smaller than North America, already battling oversupply, but the market is a draw for Australian companies that contend with an even smaller home base.
"With prospects still limited largely to just the prescription market (in Australia), exports remain key to marijuana firms," said Jo Paterson, founder and CEO of BOD Australia BDA.AX.
New South Wales-based BOD, valued at just $37 million, entered into distribution partnerships in the United Kingdom, Italy and Netherlands last year. Its stock surged two thirds in the period.
There are indications that regulations around cannabis will continue loosening in Europe.
A ruling in November by the European Union's highest court that cannabidiol - the main ingredient in medical marijuana products - is not a narcotic, is crucial for their success in Europe, the companies said.
The United Nations drug agency voting weeks later to remove cannabis from the most tightly-controlled category of narcotics will also help, they said.
Medical marijuana sales in Europe are expected to surge 52% by 2025, hitting $3.1 billion, according to a report by market researcher Brightfield Group and consultant Hanway Associates.
A recent short-lived Reddit-fuelled rally in cannabis stocks notwithstanding, many investors see them as long-term bets. The cannabis index .POTX has risen 30% in the past 12 months, outstripping 16% growth in the S&P 500 .SPX.
CAPITAL LIGHT
Analysts have warned, however, that Europe's regulatory landscape is complex and could be hard to navigate.
Even bigger firms such as Canopy Growth WEED.TO and Aurora Cannabis ACB.TO have found it difficult to make profits in the continent and are now scaling back investments, though they say that Europe remains a big opportunity.
"Policymakers and businesses are tackling issues including cross-border supply chains, standardising manufacturing and laboratory practice, and prescription requirements," said Ibrahim Said Abdeldayem, a risk consultant at Arriello.
Some countries, including Germany and the Netherlands have well-established medical cannabis legislation. In others such as Sweden and Belgium, cannabis is strictly prohibited.
Australian companies are tackling the diverse markets with a capital-light approach: sticking to partnerships with firms that are better-equipped to handle distribution and rules locally, rather than trying to build processing plants.
Cann Group, the first in Australia to receive a licence to cultivate medicinal cannabis in 2017, said it will focus on Germany and Britain because those markets are expected to grow quickly.
Cann, worth roughly $150 million, is partnering with a London-based company to ensure it is well positioned when the market takes off, its chief operating officer Shane Duncan said.
"Hopefully (Australian investments) will be more thoughtful and more strategic, with a better understanding of the limits of the market, and that it will take time," said Jamie Schau, analyst at Brightfield.
"The important part is to get it right in each market and not treat it as a bloc."
European medical marijuana sales set to rise https://tmsnrt.rs/3tPyGaV
Cannabis stocks rally as more catalysts emergehttps://tmsnrt.rs/3dBuQMY
Framework of cannabis legalization in Europehttps://tmsnrt.rs/3kd8cvK
(Reporting by Shruti Sonal in Bengaluru; Editing by Sayantani Ghosh and Jacqueline Wong)
((Shruti.Sonal@thomsonreuters.com; Twitter: @shrutisonal26;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Even bigger firms such as Canopy Growth WEED.TO and Aurora Cannabis ACB.TO have found it difficult to make profits in the continent and are now scaling back investments, though they say that Europe remains a big opportunity. By Shruti Sonal Feb 24 (Reuters) - A handful of small, young Australian firms are taking a chance on Europe in spite of the region's diverse markets, hopeful that a capital-light investment strategy will diminish their risks. "Policymakers and businesses are tackling issues including cross-border supply chains, standardising manufacturing and laboratory practice, and prescription requirements," said Ibrahim Said Abdeldayem, a risk consultant at Arriello. | Even bigger firms such as Canopy Growth WEED.TO and Aurora Cannabis ACB.TO have found it difficult to make profits in the continent and are now scaling back investments, though they say that Europe remains a big opportunity. Cann Group CAN.AX and MGC Pharmaceuticals MXC.AX are among many firms that have pushed into Europe, recently signing partnerships to distribute medical marijuana products and also exploring a dual-listing in the region. Medical marijuana sales in Europe are expected to surge 52% by 2025, hitting $3.1 billion, according to a report by market researcher Brightfield Group and consultant Hanway Associates. | Even bigger firms such as Canopy Growth WEED.TO and Aurora Cannabis ACB.TO have found it difficult to make profits in the continent and are now scaling back investments, though they say that Europe remains a big opportunity. By Shruti Sonal Feb 24 (Reuters) - A handful of small, young Australian firms are taking a chance on Europe in spite of the region's diverse markets, hopeful that a capital-light investment strategy will diminish their risks. Medical marijuana sales in Europe are expected to surge 52% by 2025, hitting $3.1 billion, according to a report by market researcher Brightfield Group and consultant Hanway Associates. | Even bigger firms such as Canopy Growth WEED.TO and Aurora Cannabis ACB.TO have found it difficult to make profits in the continent and are now scaling back investments, though they say that Europe remains a big opportunity. Europe could be a hard market to crack as regulations vary by country, but favourable rulings for medical marijuana and potential demand are promising factors. Medical marijuana sales in Europe are expected to surge 52% by 2025, hitting $3.1 billion, according to a report by market researcher Brightfield Group and consultant Hanway Associates. |
36874.0 | 2021-02-23 00:00:00 UTC | Cronos Group and Other Cannabis Stocks Could See Higher Highs | ACB | https://www.nasdaq.com/articles/cronos-group-and-other-cannabis-stocks-could-see-higher-highs-2021-02-23 | nan | nan | InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Cannabis stocks like Cronos Group (NASDAQ:CRON) are seeing explosive highs this year. That makes CRON stock and other marijuana plays compelling investments to look at right now.
Source: Shutterstock
What’s more, many states — such as Virginia — are already legalizing cannabis. For instance, voters in New Jersey and Arizona decided to legalize the drug for adult recreational use while states like Mississippi have voted to legalize it for medicinal use. Now, there’s speculation that we could see federal legalization sometime in the near future.
So, it’s no wonder that cannabis stocks are hitting all-time highs. Here are some examples:
Canopy Growth (NASDAQ:CGC) just ran from $25 to a high of over $56
Hexo (NYSE:HEXO) ran from $4.50 to a high of about $11
Aurora Cannabis (NYSE:ACB) ran from $8 to nearly $19
Curaleaf (OTCMKTS:CURLF) ran from $12 to a high of over $18
Aphria (NASDAQ:APHA) ran from $12 to a high of over $32
Lastly, though, Cronos Group exploded from about $7 in early 2021 to a high of $15.83. Of course, it has since pulled back to the $11 level. However, I strongly believe it could run right back to its prior high after catching support.
CRON Stock Could Be One of the Hottest Pot Plays in 2021
There are several reasons to like CRON stock, but one noteworthy point is that the company’s Executive Chairman, Mike Gorenstein, expects it to have lab-grown cannabis in its products by this year. If this happens, it could be a first for the industry. That method of creating products with biosynthesis-derived cannabinoids would come at far less of a cost.
7 Dividend Stocks Offering Little More Than Danger
According to Bloomberg contributor David George-Cosh, biosynthesis is “an engineering process similar to brewing beer that can make THC and CBD for pennies on the dollar.”
We’ll get fourth quarter earnings from CRON in late February, but for reference the company did do well in Q3. Cronos beat expectations and had a good amount of cash on hand, too. Earnings per share (EPS) of a 4 cent loss was ahead of expectations for a loss of six cents. On top of that, sales of nearly $11.4 million beat expectations. Finally, the company had about $1.1 billion in cash and cash equivalents.
Investors should also remember that Altria (NYSE:MO) is backing Cronos, too.
In late 2018, Altria invested $1.8 billion for a 45% stake in CRON and a warrant, which gives MO the “right to acquire an additional 10%” of CRON for $1 billion (Page 28). With this, we could see another cash injection into Cronos, or perhaps a buyout offer.
There’s Plenty of Support for Cannabis
CRON stock itself aside, there have also been new positive developments for cannabis. For instance, recent research shows that there have been lower opioid death rates where cannabis is legal. Health Line details the following:
“Researchers found that counties with more legal cannabis dispensaries had lower rates of opioid-related deaths […] Their analysis showed that increasing the number of dispensaries in a county from one to two was linked to a 17 percent drop in deaths due to opioids.”
On top of that, far more Americans are supportive of legalization. Gallup contributor Megan Brenan notes:
“Americans are more likely now than at any point in the past five decades to support the legalization of marijuana […] The 68% of U.S. adults who currently back the measure is not statistically different from last year’s 66%; however, it is nominally Gallup’s highest reading, exceeding the 64% to 66% range seen from 2017 to 2019.”
And lastly, Senate Democrats — including Senate Majority Leader Chuck Schumer (D-NY), Senate Finance Committee Chairman Ron Wyden (D-OR) and Sen. Cory Booker (D-NJ) — are attempting to reform current cannabis laws.
The Bottom Line
So, all said, CRON stock is well-positioned to benefit in the near future.
For one, there’s a good deal of public support for legalization. Moreover, some people in Congress are pushing for reform this year, as are many more states. With all of this, cannabis stocks are rallying to new highs. And should we see further legalization, the sky’s the limit.
In my opinion, Cronos is one of the best ways to trade this story. Not only is it oversold at support, but it could change the industry with its lab-grown cannabis products. Plus, it could see another cash injection from the tobacco giant Altria in the near term.
In short, take a position in CRON stock and just let it ride. It could see significantly higher highs.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned in this article.
A contributor to InvestorPlace.com, Ian Cooper has been analyzing stocks and options for web-based advisories since 1999.
The post Cronos Group and Other Cannabis Stocks Could See Higher Highs appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Here are some examples: Canopy Growth (NASDAQ:CGC) just ran from $25 to a high of over $56 Hexo (NYSE:HEXO) ran from $4.50 to a high of about $11 Aurora Cannabis (NYSE:ACB) ran from $8 to nearly $19 Curaleaf (OTCMKTS:CURLF) ran from $12 to a high of over $18 Aphria (NASDAQ:APHA) ran from $12 to a high of over $32 Lastly, though, Cronos Group exploded from about $7 in early 2021 to a high of $15.83. 7 Dividend Stocks Offering Little More Than Danger According to Bloomberg contributor David George-Cosh, biosynthesis is “an engineering process similar to brewing beer that can make THC and CBD for pennies on the dollar.” We’ll get fourth quarter earnings from CRON in late February, but for reference the company did do well in Q3. Health Line details the following: “Researchers found that counties with more legal cannabis dispensaries had lower rates of opioid-related deaths […] Their analysis showed that increasing the number of dispensaries in a county from one to two was linked to a 17 percent drop in deaths due to opioids.” On top of that, far more Americans are supportive of legalization. | Here are some examples: Canopy Growth (NASDAQ:CGC) just ran from $25 to a high of over $56 Hexo (NYSE:HEXO) ran from $4.50 to a high of about $11 Aurora Cannabis (NYSE:ACB) ran from $8 to nearly $19 Curaleaf (OTCMKTS:CURLF) ran from $12 to a high of over $18 Aphria (NASDAQ:APHA) ran from $12 to a high of over $32 Lastly, though, Cronos Group exploded from about $7 in early 2021 to a high of $15.83. InvestorPlace - Stock Market News, Stock Advice & Trading Tips Cannabis stocks like Cronos Group (NASDAQ:CRON) are seeing explosive highs this year. Health Line details the following: “Researchers found that counties with more legal cannabis dispensaries had lower rates of opioid-related deaths […] Their analysis showed that increasing the number of dispensaries in a county from one to two was linked to a 17 percent drop in deaths due to opioids.” On top of that, far more Americans are supportive of legalization. | Here are some examples: Canopy Growth (NASDAQ:CGC) just ran from $25 to a high of over $56 Hexo (NYSE:HEXO) ran from $4.50 to a high of about $11 Aurora Cannabis (NYSE:ACB) ran from $8 to nearly $19 Curaleaf (OTCMKTS:CURLF) ran from $12 to a high of over $18 Aphria (NASDAQ:APHA) ran from $12 to a high of over $32 Lastly, though, Cronos Group exploded from about $7 in early 2021 to a high of $15.83. InvestorPlace - Stock Market News, Stock Advice & Trading Tips Cannabis stocks like Cronos Group (NASDAQ:CRON) are seeing explosive highs this year. CRON Stock Could Be One of the Hottest Pot Plays in 2021 There are several reasons to like CRON stock, but one noteworthy point is that the company’s Executive Chairman, Mike Gorenstein, expects it to have lab-grown cannabis in its products by this year. | Here are some examples: Canopy Growth (NASDAQ:CGC) just ran from $25 to a high of over $56 Hexo (NYSE:HEXO) ran from $4.50 to a high of about $11 Aurora Cannabis (NYSE:ACB) ran from $8 to nearly $19 Curaleaf (OTCMKTS:CURLF) ran from $12 to a high of over $18 Aphria (NASDAQ:APHA) ran from $12 to a high of over $32 Lastly, though, Cronos Group exploded from about $7 in early 2021 to a high of $15.83. InvestorPlace - Stock Market News, Stock Advice & Trading Tips Cannabis stocks like Cronos Group (NASDAQ:CRON) are seeing explosive highs this year. Cronos beat expectations and had a good amount of cash on hand, too. |
36875.0 | 2021-02-23 00:00:00 UTC | Where Will Aurora Cannabis Be in 1 Year? | ACB | https://www.nasdaq.com/articles/where-will-aurora-cannabis-be-in-1-year-2021-02-23 | nan | nan | Aurora Cannabis (NYSE: ACB) was one of the most volatile stocks of 2020. As debates about whether or not the once-giant pot grower could face bankruptcy, its shares saw violent swings upwards of 60% and downwards of 70%. Over the course of 12 months, however, the stock managed to disappoint with a decline of 40% as of Feb. 22.
At this point, investors are probably feeling pretty anxious, and wondering if Aurora can indeed turn around its operations and finally produce a profit this year. Anything can happen. But there are more reasons than not why I still think a profitable year is a near impossible achievement.
Image source: Getty Images.
A mixed quarter
After a truly terrible year, Aurora saw its revenue rebound 11% over the prior year's quarter in Q2 2021 (ended Dec. 31) to 70.3 million Canadian dollars. At the same time, its earnings before interest, taxes, depreciation, and amortization (EBITDA) amounted to negative CA$12.1 million. Although that's still not impressive (or positive), its EBITDA did improve by CA$53.1 million over Q2 2020.
More importantly, its year-over-year cash use decreased by 74% to CA$70.5 million. That's undoubtedly promising, as the company faced CA$221.6 million in impairments to its plant, property, and equipment to rapidly shrink its size of operations when it was staring down mounting losses.
There's finally light at the end of the tunnel; the Canadian legal-marijuana market appears to have rebounded after a difficult year of oversupply. Aurora now sells 15,253 kg of dried cannabis per quarter, a sharp increase of 61% compared to the same period last year.
The bad news is that it looks like Aurora is being squeezed out of the U.S. market. Back in May 2020, the company acquired Reliva LLC for a multiple of 8.5 times sales. At that time, Reliva had a trailing-12-month revenue of $10 million. Fast forward two quarters, and the cannabidiol (CBD) subsidiary generated just $2.7 million in sales in the second half of 2020. That's despite Reliva having its products sold in 23,000 stores across North America.It seems like the company overpaid for its acquisition, yet again.
It doesn't help Aurora that the U.S. legal marijuana market is seeing intense competition due to the possibility of federal decriminalization on the horizon. Even if that happens, Aurora still won't be able to export its cannabis south -- it would take full legalization to allow that. This means that strategic acquisitions are vital to Aurora's effort to control a piece of the $19.6 billion CBD market opportunity in the U.S. So far, it's not off to a great start.
ACB Total Return Level data by YCharts
What's the verdict?
Despite having more than CA$565 million in cash on hand, Aurora also has CA$493.3 million in debt and convertible liabilities. What does this mean for investors? They have to realize that Aurora isn't out of the woods yet. In the past five months alone, Aurora's shares outstanding have also increased by about 77.39 million to 197.39 million -- a major dilutive hit to investors.
Over the next year, I expect the company will sell more stock to pay for its expenses. Simply put, there is no quick fix to Aurora Cannabis' slew of problems.
But to some, Aurora may be an interesting speculative buy while it's trading at 7 times revenue, far less than the 16 times and 119 times sales its industry peers are trading at. It's on track to regain what it lost in the Canadian market, and international medical marijuana revenue is climbing 562% year over year. Considering the serious underperformance of Aurora's U.S. segment and cash burn habits, however, I'd bet nothing on the company more than a small stake.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Zhiyuan Sun has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora Cannabis (NYSE: ACB) was one of the most volatile stocks of 2020. ACB Total Return Level data by YCharts What's the verdict? At this point, investors are probably feeling pretty anxious, and wondering if Aurora can indeed turn around its operations and finally produce a profit this year. | Aurora Cannabis (NYSE: ACB) was one of the most volatile stocks of 2020. ACB Total Return Level data by YCharts What's the verdict? A mixed quarter After a truly terrible year, Aurora saw its revenue rebound 11% over the prior year's quarter in Q2 2021 (ended Dec. 31) to 70.3 million Canadian dollars. | Aurora Cannabis (NYSE: ACB) was one of the most volatile stocks of 2020. ACB Total Return Level data by YCharts What's the verdict? A mixed quarter After a truly terrible year, Aurora saw its revenue rebound 11% over the prior year's quarter in Q2 2021 (ended Dec. 31) to 70.3 million Canadian dollars. | Aurora Cannabis (NYSE: ACB) was one of the most volatile stocks of 2020. ACB Total Return Level data by YCharts What's the verdict? At that time, Reliva had a trailing-12-month revenue of $10 million. |
36876.0 | 2021-02-19 00:00:00 UTC | Cronos Has Done Well But There’s More to Come | ACB | https://www.nasdaq.com/articles/cronos-has-done-well-but-theres-more-to-come-2021-02-19 | nan | nan | InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Cannabis stocks have been most exciting to watch over the past couple of years. They came out of the blocks screaming but then stumbled hard and fast. One thing hasn’t changed, which is the commitment of their fans to the bullish thesis. Cannabis investors have great conviction that these companies will prosper in the future. I have a healthy level of doubt but definitely not bearish. Cronos (NASDAQ:CRON) is one of the popular pot stocks to trade. While CRON stock has had great success of late, is also has major set-backs.
Source: Shutterstock
I’ll start with the conclusion first then back into the logic. Yes, this is a buy-able dip, but with the understanding that it may not be perfect. Therefore, investors would do well not to take full size positions for many reasons.
2021 could have another burst in stock prices when the legalization process actually starts. Else that’s an axe swinging above it. There is a lot of hope already in the price from the Biden presidency, so they better come through with action.
Investors who stuck with CRON stock in December captured a 130% rally. Going forward, it would be better if they settle down a bit. The pandemic gave birth to a new breed of traders who don’t believe in moderation. They are all in all the time, which is causing these massive swings. This will bring nasty consequences because nothing rallies forever. The longer a stock goes without a correction the harder it falls.
I am not predicting doom for CRON, but I am definitely waving the caution flag. My conscience is clear on that since I suggested going long during its tougher times. My goal is to find opportunities.
CRON Stock Fundamentals Have Improved
Cannabis stocks have tremendously improved their financial metrics. When they were at their hottest in 2018, the relationship between their sales and their market capitalization was ridiculous. Since then their businesses have matured enough so that the numbers have come down to a better balance. They are nowhere near normal yet, but neither is their opportunity.
7 Overvalued Stocks Investors Just Don’t Get Tired Of
The amazing thing about this group is that they are doing this while still illegal in the U.S. Some states have legalized marijuana, but it is still not legal on a national scale. This is testament to the courage and commitment that these companies and their investors have. You cannot short resolve like this for too long without good reason.
Therefore it comes down to picking proper entry points. By this I don’t mean seeking perfect spots, but rather avoiding obvious mistakes. I am not an expert on the intricacies of their business, but I know how to analyze financial metrics.
Cronos has consistently grown its revenues but their valuation is still out of whack. This is a growth industry so I don’t expect them to be profitable. The metric that I watch is the price-to-sales and 124 is extremely high. Buyers of the stock today are giving it credit for 124 years worth of sales now. That is a lot of hopium for them to live up to. This is far more expensive than competitors like Canopy Growth (NASDAQ:CGC), Aphria (NASDAQ:APHA) and Tilray (NASDAQ:TLRY).
Sooner or later, management will have to grow its sales to bring that back into balance. Zoom (NASDAQ:ZM) had that problem last year when it spiked. Cronos stock needs to shrink its P/S since it more than tripled. This doesn’t mean its prospects are not good or that I need to short the stock.
The Bulls Should Slow Down a Bit
Source: Charts by TradingView
Proof that it rallied too fast is that after losing 26% in a week it’s a still bullish channel. The uptrend is still intact even up after a massive drop. That is a ferocious appetite for risk that the bears should avoid.
It has a support zone below but not one hard line. I expect buyers to be waiting between $11.50 and $10 per share. This has been an area of contention since December 2017, so I expect it to play a role again. On the way down these pivot spots are support.
Those who want to own shares for the long term can nibble but not go all-in. Regardless of how good the thesis is for this stock, it has to trade inside the whole market. Therein lies a problem because the indices are even wilder than cannabis stocks. We could have an overall correction and drag CRON stock with it.
Get Long With Room to Spare
This is where I like to use the options markets to create a buffer for my risk. Instead of buying shares I would sell the CRON October $9 put. For this I collect $2.20 per contract, which is a net credit into my account. The worst that could happen is that I own Cronos shares at a $9 cost. My breakeven would then be $6.80 because I collected money to sell the put. I sleep easier knowing that I have a 40% buffer before I start losing money from ownership.
This does not allow me to participate in the upside more than what I collect. But it is a 20% rally equivalent and that’s great. I can live with those compromises knowing that I don’t have to sweat every red tick. Also that I don’t even need a rally to win because time is doing the work for me. I never sell naked puts unless I really want to own the shares.
When it comes down to it, the success of a company’s stock is tied to its success on main street. The mentality of investing in “stonks” is dangerous because it assumes that there’s only one direction for price. I’ve been trading for decades and know that this is false. Fads come and go and new traders will sooner or later learn consequences to their actions. Life has a way of giving us the test before the lesson. Wall Street street evolves but there are laws of physics we can’t defy. In fact, legislators debated it just yesterday.
On the date of publication, Nicolas Chahine did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Nicolas Chahine is the managing director of SellSpreads.com.
The post Cronos Has Done Well But There’s More to Come appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | 7 Overvalued Stocks Investors Just Don’t Get Tired Of The amazing thing about this group is that they are doing this while still illegal in the U.S. The Bulls Should Slow Down a Bit Source: Charts by TradingView Proof that it rallied too fast is that after losing 26% in a week it’s a still bullish channel. On the date of publication, Nicolas Chahine did not have (either directly or indirectly) any positions in the securities mentioned in this article. | InvestorPlace - Stock Market News, Stock Advice & Trading Tips Cannabis stocks have been most exciting to watch over the past couple of years. Cronos (NASDAQ:CRON) is one of the popular pot stocks to trade. CRON Stock Fundamentals Have Improved Cannabis stocks have tremendously improved their financial metrics. | InvestorPlace - Stock Market News, Stock Advice & Trading Tips Cannabis stocks have been most exciting to watch over the past couple of years. Cronos (NASDAQ:CRON) is one of the popular pot stocks to trade. CRON Stock Fundamentals Have Improved Cannabis stocks have tremendously improved their financial metrics. | Cronos (NASDAQ:CRON) is one of the popular pot stocks to trade. Investors who stuck with CRON stock in December captured a 130% rally. Sooner or later, management will have to grow its sales to bring that back into balance. |
36877.0 | 2021-02-19 00:00:00 UTC | Until Aurora Cannabis Gets Profitable, ACB Stock Is Stuck in a Rut | ACB | https://www.nasdaq.com/articles/until-aurora-cannabis-gets-profitable-acb-stock-is-stuck-in-a-rut-2021-02-19 | nan | nan | InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Aurora Cannabis (NYSE:ACB) reported mildly better financial results on Feb.11 for its fiscal Q2 ending Dec. 31, 2020. The problem is that ACB stock is never going to move significantly higher until the cannabis company stops burning through cash.
Source: Shutterstock
For example, ACB stock has fallen 36% from a recent peak of $18.98 on Feb. 10 right before the results were released. As of Feb. 19, it was down to $12.31. In other words, the market was not impressed with the numbers.
Weak Cash Flow Performance
Aurora Cannabis reported that its Q2 results showed cash burn — it calls it cash use — of 70.5 million CAD. This includes negative cash flow from operations, capex spending, working capital losses or usage, and debt and interest payments.
This is both good news and bad news. The good news is that cash burn fell from 273 million CAD last year and even 142.8 million CAD last quarter. In other words, it lowered its cash burn by over 50% in the last 90 days.
But the problem is that the company is still losing money. It simply cannot keep on doing this. Granted, Aurora Cannabis still has a large amount of cash in its coffers. It amounted to 434.4 million CAD at the end of the quarter. But this includes 50 million in restricted cash, so the amount available is only 384 million for ongoing non-debt expenses.
7 Blue-Chip Stocks That Aren’t a Gamble
That means that if the 71 million cash burn continues for four to five quarters, the company will run out of cash or have to do another cash raise. For example, during the last quarter, Aurora raised 365 million CAD in equity financing.
To put it bluntly, the market is tired of the dilution coming from these equity financings. ACB stock won’t abide this anymore. If Aurora cannot show that it is producing cash rather than burning through it, ACB stock will continue to fall.
What Analysts Say About Aurora Cannabis
ACB stock was downgraded by MKM Partners after the results were released. The analyst, Bill Kirk, said that the stock price target was no better than $7.
He pointed out the company is “not on a cost-cutting or growth path that gets to near-term positive EBITDA.”
EBITDA is earnings before interest, taxes, depreciation and amortization. It is a measure of cash flow that does not even include capex spending, debt principal payments and changes in working capital.
In other words, even on the weakest measure, the analyst said the company would not measure up to produce positive cash flow.
Moreover, TipRanks reports that the average of 11 analysts who have provided 12-month price targets on ACB stock in the last three months is $9.46. That represents a loss of about 22% from today’s price.
Similarly, Marketbeat says that its survey of analysts is an average of $11.81, or 1.7% below today’s price.
As the Motley Fool says, profitability in the industry is scarce. Despite the decriminalization/legalization trend, there are “negative forces.” These include “oversupply, black market competition, and the challenges of selling products that remain illegal at the federal level in the U.S.”
What to Do With ACB Stock
Investors are not willing to take the long view on unprofitable and cash-burning cannabis stocks any longer. They figure the management of these companies have to get their acts together.
They will have to stop diluting shareholders with numerous equity financings before share prices like ACB stock will rise significantly from here.
Most investors will look for an entry point at the point of maximum pessimism. This will likely occur within the next several quarterly earnings releases, if not before. In other words, the point of inflection here will be when Aurora Cannabis starts projecting profitability or positive cash burn, even if it hasn’t happened yet.
Until then, I suspect potential investors will tread water and look for an entry point in ACB stock that makes sense for them.
On the date of publication, Mark R. Hake does not hold a long or short position in any stock or security mentioned in this article.
Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.
The post Until Aurora Cannabis Gets Profitable, ACB Stock Is Stuck in a Rut appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | InvestorPlace - Stock Market News, Stock Advice & Trading Tips Aurora Cannabis (NYSE:ACB) reported mildly better financial results on Feb.11 for its fiscal Q2 ending Dec. 31, 2020. The problem is that ACB stock is never going to move significantly higher until the cannabis company stops burning through cash. Source: Shutterstock For example, ACB stock has fallen 36% from a recent peak of $18.98 on Feb. 10 right before the results were released. | InvestorPlace - Stock Market News, Stock Advice & Trading Tips Aurora Cannabis (NYSE:ACB) reported mildly better financial results on Feb.11 for its fiscal Q2 ending Dec. 31, 2020. The problem is that ACB stock is never going to move significantly higher until the cannabis company stops burning through cash. Source: Shutterstock For example, ACB stock has fallen 36% from a recent peak of $18.98 on Feb. 10 right before the results were released. | InvestorPlace - Stock Market News, Stock Advice & Trading Tips Aurora Cannabis (NYSE:ACB) reported mildly better financial results on Feb.11 for its fiscal Q2 ending Dec. 31, 2020. The problem is that ACB stock is never going to move significantly higher until the cannabis company stops burning through cash. Source: Shutterstock For example, ACB stock has fallen 36% from a recent peak of $18.98 on Feb. 10 right before the results were released. | What Analysts Say About Aurora Cannabis ACB stock was downgraded by MKM Partners after the results were released. InvestorPlace - Stock Market News, Stock Advice & Trading Tips Aurora Cannabis (NYSE:ACB) reported mildly better financial results on Feb.11 for its fiscal Q2 ending Dec. 31, 2020. The problem is that ACB stock is never going to move significantly higher until the cannabis company stops burning through cash. |
36878.0 | 2021-02-18 00:00:00 UTC | 1 Effective Way Investors Can De-Risk Their Portfolios | ACB | https://www.nasdaq.com/articles/1-effective-way-investors-can-de-risk-their-portfolios-2021-02-18 | nan | nan | Diversification should play an important role in any investor's strategy. But simply buying stocks from other industries isn't necessarily a guaranteed way to protect yourself from a market crash or downturn. American Airlines and Royal Caribbean are technically in different industries, but they're both struggling due to the pandemic and are down more than 30% over the past year (while the S&P 500 has risen 16%). Holding both stocks in your portfolio would effectively compound your risk.
That's why simply selecting stocks from other industries is not enough. Investors should also consider how closely correlated stocks are. A correlation shows the relationship between values and how they move together. For stocks, it's important because you can use correlations to help predict whether two or more investments might move in the same direction.
Image source: Getty Images.
Investing in uncorrelated stocks gives you much better diversification
Calculating correlations can be a time-consuming activity, but just looking at stock charts can give you a quick glimpse as to how closely one follows another. Here's how two top marijuana stocks, Aurora Cannabis (NYSE: ACB) and Canopy Growth (NASDAQ: CGC), have moved over the past three years:
CGC data by YCharts
The two stocks do not move dollar for dollar in the same direction, but they do follow a very similar path -- although Aurora Cannabis has failed to replicate Canopy Growth's recent spike after the company's CEO made a shocking and bullish prediction suggesting it could soon be operating in the U.S. market. Company-specific factors can disrupt these correlations, but generally, investors can expect to see cannabis producers Canopy Growth and Aurora Cannabis move in fairly similar directions, as they will both benefit from the same industry-specific trends. Investing in both of these stocks can amplify your returns when times are good and there's a lot of bullishness surrounding the cannabis industry. But when the outlook isn't so good, holding both of these stocks can compound your losses and put you in a bigger hole.
A good option if you invest in one of these stocks can be to add a more conservative stock like Johnson & Johnson to your portfolio. The healthcare giant is not in cannabis, and a quick look at its stock performance shows that it hasn't moved in the same direction as either of those pot stocks:
CGC data by YCharts
Despite the volatility of both pot stocks, Johnson & Johnson's shares have grown steadily over the same time frame. This is an example of an uncorrelated stock and one that could be a great option for cannabis investors looking to diversify their investments. By holding Johnson & Johnson in your portfolio, you can earn good returns even as Canopy Growth and Aurora Cannabis shares fluctuate wildly.
But when looking at uncorrelated stocks, you also want to be careful not to become too aggressive and focus on the ones that are negatively correlated. That could prove disastrous for your portfolio.
Negatively correlated stocks could offset your gains
A negative correlation is when a stock moves in the opposite direction of a given investment. One example involves gold mining company Kirkland Lake. When investors look for safety as opposed to growth, they often turn to gold or gold stocks, which explains why Kirkland Lake and Canopy Growth have moved in opposite directions in recent years:
CGC data by YCharts
Investing in gold stocks can be a great way to gain exposure to the rising price of gold. But the danger with negatively correlated stocks is that they can offset one another's returns. If the price of one stock goes up, then a negatively correlated stock will go down, especially the greater the correlation is. While it might not be a bad idea to hold a few such investments if it is part of a broader strategy, this is an example where diversifying too much can bring down your portfolio's overall performance.
Aim for zero
If you're building your portfolio, look for stocks that do not have any correlation to one another, whether it is positive or negative. The lower the overall correlation, the more diversification you can achieve.
But it is important to remember that correlations can change, especially if a company enters another industry or takes on a new strategy. Many marijuana companies, for instance, are focusing more on the consumer packaged goods industry. And Jazz Pharmaceuticals recently acquired cannabis stock GW Pharmaceuticals, which will likely affect the strategy for both companies moving forward.
The bottom line is that investors will still need to continue to monitor their stocks if they want to avoid too much exposure to a segment of the market. But if you don't want to be bothered with worrying about whether stocks are correlated or not and whether your portfolio is diverse enough, you can always invest in an exchange-traded fund (ETF) that mirrors the S&P 500.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
David Jagielski has no position in any of the stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Here's how two top marijuana stocks, Aurora Cannabis (NYSE: ACB) and Canopy Growth (NASDAQ: CGC), have moved over the past three years: CGC data by YCharts The two stocks do not move dollar for dollar in the same direction, but they do follow a very similar path -- although Aurora Cannabis has failed to replicate Canopy Growth's recent spike after the company's CEO made a shocking and bullish prediction suggesting it could soon be operating in the U.S. market. American Airlines and Royal Caribbean are technically in different industries, but they're both struggling due to the pandemic and are down more than 30% over the past year (while the S&P 500 has risen 16%). Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks. | Here's how two top marijuana stocks, Aurora Cannabis (NYSE: ACB) and Canopy Growth (NASDAQ: CGC), have moved over the past three years: CGC data by YCharts The two stocks do not move dollar for dollar in the same direction, but they do follow a very similar path -- although Aurora Cannabis has failed to replicate Canopy Growth's recent spike after the company's CEO made a shocking and bullish prediction suggesting it could soon be operating in the U.S. market. By holding Johnson & Johnson in your portfolio, you can earn good returns even as Canopy Growth and Aurora Cannabis shares fluctuate wildly. When investors look for safety as opposed to growth, they often turn to gold or gold stocks, which explains why Kirkland Lake and Canopy Growth have moved in opposite directions in recent years: CGC data by YCharts Investing in gold stocks can be a great way to gain exposure to the rising price of gold. | Here's how two top marijuana stocks, Aurora Cannabis (NYSE: ACB) and Canopy Growth (NASDAQ: CGC), have moved over the past three years: CGC data by YCharts The two stocks do not move dollar for dollar in the same direction, but they do follow a very similar path -- although Aurora Cannabis has failed to replicate Canopy Growth's recent spike after the company's CEO made a shocking and bullish prediction suggesting it could soon be operating in the U.S. market. The healthcare giant is not in cannabis, and a quick look at its stock performance shows that it hasn't moved in the same direction as either of those pot stocks: CGC data by YCharts Despite the volatility of both pot stocks, Johnson & Johnson's shares have grown steadily over the same time frame. Negatively correlated stocks could offset your gains A negative correlation is when a stock moves in the opposite direction of a given investment. | Here's how two top marijuana stocks, Aurora Cannabis (NYSE: ACB) and Canopy Growth (NASDAQ: CGC), have moved over the past three years: CGC data by YCharts The two stocks do not move dollar for dollar in the same direction, but they do follow a very similar path -- although Aurora Cannabis has failed to replicate Canopy Growth's recent spike after the company's CEO made a shocking and bullish prediction suggesting it could soon be operating in the U.S. market. For stocks, it's important because you can use correlations to help predict whether two or more investments might move in the same direction. The healthcare giant is not in cannabis, and a quick look at its stock performance shows that it hasn't moved in the same direction as either of those pot stocks: CGC data by YCharts Despite the volatility of both pot stocks, Johnson & Johnson's shares have grown steadily over the same time frame. |
36879.0 | 2021-02-18 00:00:00 UTC | Canopy Growth's CEO Has 2 Bold New Predictions | ACB | https://www.nasdaq.com/articles/canopy-growths-ceo-has-2-bold-new-predictions-2021-02-18 | nan | nan | For years, Canopy Growth (NASDAQ: CGC) has been a figurehead atop the fast-growing marijuana industry. The company's aspirations have always been aggressive, looking to lead the industry not just in its home base of Canada but around the world. It was the first big pot stock in 2017 to attract a notable investor from another industry, in beer maker Constellation Brands. It even has a deal in place with multistate operator Acreage Holdings which will close once marijuana is legal in the U.S.
Although those developments happened under founder and former CEO Bruce Linton's watch, new CEO David Klein (who came over from Constellation) doesn't look any less aggressive or bullish on the industry. And if his latest two predictions come true, Canopy Growth's stock could become an ultra-hot buy.
Image source: Getty Images.
Prediction 1: Canopy Growth will enter the U.S. THC market this calendar year
Previously, Klein was projecting that the Ontario-based cannabis producer will be operating in the U.S. within the next 12 months, potentially in 2022. But now he's even more bullish and believes Canopy Growth will be in the U.S. tetrahydrocannabinol (THC) market as soon as this calendar year. Technically, the company does have a presence in the hemp market (as those products are federally permissible in the U.S.). But hemp-based products are low in THC and don't give marijuana users the high many of them are looking for. Entering the THC market could open up the floodgates for Canopy Growth, especially since it already has a partner waiting in the wings.
There's reason for optimism that marijuana reform could be coming after Georgia's runoff election results last month giving Democrats a 50-50 split in the Senate, with Vice President Kamala Harris potentially being a tie-breaking vote. Democrats have typically been more favorable of marijuana reform than Republicans, who are more conservative and harder on drugs. In December 2020, the Democratic-controlled House passed a bill that would decriminalize marijuana.
But passing legislation that would allow Canopy Growth to enter the U.S. THC market would require outright legalization (or something close to it). And for that to go into effect within the current calendar year is definitely a best-case scenario for the industry, especially since politicians have many important issues to focus on, including the rollout of coronavirus vaccines.
Legalization would certainly help Canopy Growth's top line and that may be why Klein is also projecting the following:
Prediction 2: The company will be profitable before the end of the next fiscal year
Profits in the cannabis industry aren't all that common and sometimes are fleeting. Rival Aurora Cannabis promised profitability in the past and, although it has made progress in strengthening its bottom line, it has failed to stay out of the red and delayed its most recent timeline for profitability.
Canopy Growth isn't doing a whole lot better as it released its third-quarter earnings report on Feb. 9, and it posted an adjusted EBITDA loss of 68.4 million Canadian dollars for the period ended Dec. 31, 2020. That was, however, an improvement from the prior-year period when it incurred a loss of CA$97 million. And the company says it expects to reach profitability in the second half of the next fiscal year. That means sometime over the next 12 to 15 months, investors should see a profitable quarter.
But the problem I see with that goal is that if Canopy Growth does enter the THC market in the U.S., that could actually worsen its prospects for profitability since that will likely mean it will spend more money on expansion to take advantage of its new and exciting growth prospects. It also doesn't help that Acreage has incurred adjusted EBITDA losses totaling $26 million over the past three quarters.
Are these goals too lofty?
Both of these targets are extremely aggressive. If I were an investor in Canopy Growth, I would be worried this might set the expectations for the company too high. And that could set the stock up for a sell-off if it fails to turn a profit next year or efforts to legalize marijuana stall or don't go far enough to permit Canopy Growth to complete its acquisition of Acreage.
In the past year, shares of Canopy Growth have more than doubled while the Horizons Marijuana Life Sciences ETF is up 80% over the same time frame. With a market cap of $15 billion -- which is almost more than multistate operators Curaleaf Holdings and Trulieve Cannabis combined -- there's already pressure on the company to perform. Throwing some aggressive targets and expectations into the mix will only make things more challenging for the business to succeed and as a result, makes Canopy Growth an even riskier pot stock to hold right now.
This article represents the opinion of the writer(s), who may disagree with the "official" recommendation position of a Motley Fool premium advisory service. We're motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
David Jagielski has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Constellation Brands. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Prediction 1: Canopy Growth will enter the U.S. THC market this calendar year Previously, Klein was projecting that the Ontario-based cannabis producer will be operating in the U.S. within the next 12 months, potentially in 2022. There's reason for optimism that marijuana reform could be coming after Georgia's runoff election results last month giving Democrats a 50-50 split in the Senate, with Vice President Kamala Harris potentially being a tie-breaking vote. And that could set the stock up for a sell-off if it fails to turn a profit next year or efforts to legalize marijuana stall or don't go far enough to permit Canopy Growth to complete its acquisition of Acreage. | Prediction 1: Canopy Growth will enter the U.S. THC market this calendar year Previously, Klein was projecting that the Ontario-based cannabis producer will be operating in the U.S. within the next 12 months, potentially in 2022. Legalization would certainly help Canopy Growth's top line and that may be why Klein is also projecting the following: Prediction 2: The company will be profitable before the end of the next fiscal year Profits in the cannabis industry aren't all that common and sometimes are fleeting. It also doesn't help that Acreage has incurred adjusted EBITDA losses totaling $26 million over the past three quarters. | Legalization would certainly help Canopy Growth's top line and that may be why Klein is also projecting the following: Prediction 2: The company will be profitable before the end of the next fiscal year Profits in the cannabis industry aren't all that common and sometimes are fleeting. But the problem I see with that goal is that if Canopy Growth does enter the THC market in the U.S., that could actually worsen its prospects for profitability since that will likely mean it will spend more money on expansion to take advantage of its new and exciting growth prospects. And that could set the stock up for a sell-off if it fails to turn a profit next year or efforts to legalize marijuana stall or don't go far enough to permit Canopy Growth to complete its acquisition of Acreage. | Prediction 1: Canopy Growth will enter the U.S. THC market this calendar year Previously, Klein was projecting that the Ontario-based cannabis producer will be operating in the U.S. within the next 12 months, potentially in 2022. Legalization would certainly help Canopy Growth's top line and that may be why Klein is also projecting the following: Prediction 2: The company will be profitable before the end of the next fiscal year Profits in the cannabis industry aren't all that common and sometimes are fleeting. This article represents the opinion of the writer(s), who may disagree with the "official" recommendation position of a Motley Fool premium advisory service. |
36880.0 | 2021-02-18 00:00:00 UTC | CANADA STOCKS - TSX falls 0.47% to 18,287.51 | ACB | https://www.nasdaq.com/articles/canada-stocks-tsx-falls-0.47-to-18287.51-2021-02-18 | nan | nan | * The Toronto Stock Exchange's TSX falls 0.47 percent to 18,287.51
* Leading the index were Crescent Point Energy Corp , up 10.4%, Superior Plus Corp SPB.TO, up 6.7%, and Hudbay Minerals Inc HBM.TO, higher by 4.4%.
* Lagging shares were Canopy Growth Corp WEED.TO, down 9.5%, Aurora Cannabis Inc ACB.TO, down 7.4%, and Cronos Group Inc CRON.TO, lower by 5.9%.
* On the TSX 59 issues rose and 159 fell as a 0.4-to-1 ratio favored decliners. There were 12 new highs and no new lows, with total volume of 181.2 million shares.
* The most heavily traded shares by volume were Crescent Point Energy Corp CPG.TO, Manulife Financial Corp MFC.TO and Aphria Inc APHA.TO.
* The TSX's energy group .SPTTEN fell 1.23 points, or 1.1%, while the financials sector .SPTTFS climbed 0.99 points, or 0.3%.
* West Texas Intermediate crude futures CLc1 fell 1.77%, or $1.08, to $60.06 a barrel. Brent crude LCOc1 fell 1.49%, or $0.96, to $63.38 O/R
* The TSX is up 4.9% for the year.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | * Lagging shares were Canopy Growth Corp WEED.TO, down 9.5%, Aurora Cannabis Inc ACB.TO, down 7.4%, and Cronos Group Inc CRON.TO, lower by 5.9%. * On the TSX 59 issues rose and 159 fell as a 0.4-to-1 ratio favored decliners. * West Texas Intermediate crude futures CLc1 fell 1.77%, or $1.08, to $60.06 a barrel. | * Lagging shares were Canopy Growth Corp WEED.TO, down 9.5%, Aurora Cannabis Inc ACB.TO, down 7.4%, and Cronos Group Inc CRON.TO, lower by 5.9%. * The Toronto Stock Exchange's TSX falls 0.47 percent to 18,287.51 * Leading the index were Crescent Point Energy Corp , up 10.4%, Superior Plus Corp SPB.TO, up 6.7%, and Hudbay Minerals Inc HBM.TO, higher by 4.4%. * The most heavily traded shares by volume were Crescent Point Energy Corp CPG.TO, Manulife Financial Corp MFC.TO and Aphria Inc APHA.TO. | * Lagging shares were Canopy Growth Corp WEED.TO, down 9.5%, Aurora Cannabis Inc ACB.TO, down 7.4%, and Cronos Group Inc CRON.TO, lower by 5.9%. * The Toronto Stock Exchange's TSX falls 0.47 percent to 18,287.51 * Leading the index were Crescent Point Energy Corp , up 10.4%, Superior Plus Corp SPB.TO, up 6.7%, and Hudbay Minerals Inc HBM.TO, higher by 4.4%. * The most heavily traded shares by volume were Crescent Point Energy Corp CPG.TO, Manulife Financial Corp MFC.TO and Aphria Inc APHA.TO. | * Lagging shares were Canopy Growth Corp WEED.TO, down 9.5%, Aurora Cannabis Inc ACB.TO, down 7.4%, and Cronos Group Inc CRON.TO, lower by 5.9%. * On the TSX 59 issues rose and 159 fell as a 0.4-to-1 ratio favored decliners. * The most heavily traded shares by volume were Crescent Point Energy Corp CPG.TO, Manulife Financial Corp MFC.TO and Aphria Inc APHA.TO. |
36881.0 | 2021-02-18 00:00:00 UTC | Aurora Cannabis Stock: It’s Too…High? | ACB | https://www.nasdaq.com/articles/aurora-cannabis-stock%3A-its-too...high-2021-02-18 | nan | nan | InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Along with much of the rest of the cannabis sector, Aurora Cannabis (NYSE:ACB) has seen a strong bull move from $8 to a high of about $19 during the year so far. But things got choppy late last week. On Feb. 12, the ACB stock fell by over 34% to $12.48. The market capitalization is just over $2.4 billion. However, the shares are still much cheaper than the highs reached when the cannabis sector was in a frenzy. Keep in mind that — back March 2019 — they were fetching over $100!
ACB) logo in green" width="300" height="169">
Source: ElRoi / Shutterstock.com
As for last week’s drop, there were several reasons. First of all, the sector saw a general sell-off, as seen with Tilray (NASDAQ:TLRY), Canopy Growth (NASDAQ:CGC) and Cronos Group (NASDAQ:CRON).
Another catalyst was the latest earnings report – which was mixed. The earnings came in at a loss of 1.74 CAD, compared to the Street forecast of 24 cents a share. Although, the sales did beat expectations, coming to 70.3 million CAD. The census forecast, on the other hand, was 69.42 million CAD. A key was the strength in the medical business.
In the quarter, Aurora did make some major deals. There was a strategic agreement with MedReleaf Australia for a five-year supply deal. The result is that MedReleaf will be the exclusive supply in Australia for various Aurora brands.
Next, the company announced another supplier agreement with Cantek Holdings, which is a top cannabis player in Israel. The deal involves dried bulk flower deliveries for a two-year period, with a minimum of 4,000 kgs annually.
A New Company?
In early September, Aurora hired Miguel Martin as the company’s new CEO. Note that he has a strong background as an operator in the consumer products industry. Before joining Aurora, he was the president of Logic Technology, a manufacturer of electric cigarettes. He has also served as an executive at Altria (NYSE:MO).
7 Blue-Chip Stocks That Aren’t a Gamble
Martin’s strategy for Aurora is actually quite simple, but looks to be spot-on. The focus is on premium products and finding ways to lower fixed costs. Ultimately, this should help to increase profitability but also allow for more consistent growth.
After all, Aurora still burns substantial amounts of cash. In the quarter, the outflow was a hefty $70.5 million.
Now, Aurora has been smart to take advantage of the run-up in ACB stock. In late January, the company raised $137.9 million in a secondary offering. In all, there is $565 million in the bank and the balance sheet looks solid.
Yet things could remain challenging for the business. MKM Partners Analyst Bill Kirk certainly thinks so. He recently pointed out the 17% quarter-over-quarter drop in net revenues for the consumer cannabis market. The fact is that Canada is seeing more saturation. And yes, while Aurora is moving toward premium offerings, this will take time to get to critical mass. In fact, other large cannabis companies are doing the same.
Kirk also believes the company will not get to positive EBITDA in the near-term. For the most part, Aurora has already engaged in significant cost cutting efforts.
In light of this, Kirk has put a price target on ACB stock at $7.09, which assumes 43% downside from current levels!
Bottom Line on ACB Stock
Again, Aurora looks to be on the right track. But the restructuring will take time. Besides, the valuation on ACB stock has definitely gotten extended, with the shares trading at nearly 7 times revenues. This is steep in terms of the growth rate of the business and the difficulties of getting to profitability.
And yes, ACB stock was part of the Reddit frenzy. But as we’ve seen with other companies caught up in this – like GameStop (NYSE:GME) and AMC (NYSE:AMC) – the enthusiasm can cool down quickly and the losses can be significant. So for now, it’s probably a good idea to hold off on ACB stock.
On the date of publication, Tom Taulli did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Tom Taulli (@ttaulli) is the author of various books on investing and technology, including Artificial Intelligence Basics, High-Profit IPO Strategies and All About Short Selling. He is also the founder of WebIPO, which was one of the first platforms for public offerings during the 1990s.
The post Aurora Cannabis Stock: It’s Too…High? appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | In light of this, Kirk has put a price target on ACB stock at $7.09, which assumes 43% downside from current levels! InvestorPlace - Stock Market News, Stock Advice & Trading Tips Along with much of the rest of the cannabis sector, Aurora Cannabis (NYSE:ACB) has seen a strong bull move from $8 to a high of about $19 during the year so far. On Feb. 12, the ACB stock fell by over 34% to $12.48. | InvestorPlace - Stock Market News, Stock Advice & Trading Tips Along with much of the rest of the cannabis sector, Aurora Cannabis (NYSE:ACB) has seen a strong bull move from $8 to a high of about $19 during the year so far. On Feb. 12, the ACB stock fell by over 34% to $12.48. ACB) logo in green" width="300" height="169"> Source: ElRoi / Shutterstock.com As for last week’s drop, there were several reasons. | InvestorPlace - Stock Market News, Stock Advice & Trading Tips Along with much of the rest of the cannabis sector, Aurora Cannabis (NYSE:ACB) has seen a strong bull move from $8 to a high of about $19 during the year so far. Now, Aurora has been smart to take advantage of the run-up in ACB stock. On Feb. 12, the ACB stock fell by over 34% to $12.48. | InvestorPlace - Stock Market News, Stock Advice & Trading Tips Along with much of the rest of the cannabis sector, Aurora Cannabis (NYSE:ACB) has seen a strong bull move from $8 to a high of about $19 during the year so far. Besides, the valuation on ACB stock has definitely gotten extended, with the shares trading at nearly 7 times revenues. On Feb. 12, the ACB stock fell by over 34% to $12.48. |
36882.0 | 2021-02-17 00:00:00 UTC | CANADA STOCKS - TSX falls 0.63% to 18,376.24 | ACB | https://www.nasdaq.com/articles/canada-stocks-tsx-falls-0.63-to-18376.24-2021-02-17 | nan | nan | * The Toronto Stock Exchange's TSX falls 0.63 percent to 18,376.24
* Leading the index were Ivanhoe Mines Ltd , up 5.1%, Boardwalk Real Estate Investment Trust BEI_u.TO, up 3.8%, and Killam Apartment REIT KMP_u.TO, higher by 2.8%.
* Lagging shares were Aurora Cannabis Inc ACB.TO, down 7.5%, BlackBerry Ltd BB.TO, down 7.3%, and SSR Mining Inc SSRM.TO, lower by 7.2%.
* On the TSX 80 issues rose and 138 fell as a 0.6-to-1 ratio favored decliners. There were 10 new highs and no new lows, with total volume of 191.5 million shares.
* The most heavily traded shares by volume were Manulife Financial Corp MFC.TO, Suncor Energy Inc SU.TO and Aphria Inc APHA.TO.
* The TSX's energy group .SPTTEN rose 0.53 points, or 0.5%, while the financials sector .SPTTFS climbed 0.97 points, or 0.3%.
* West Texas Intermediate crude futures CLc1 rose 1.93%, or $1.16, to $61.21 a barrel. Brent crude LCOc1 rose 1.7%, or $1.08, to $64.43 O/R
* The TSX is up 5.4% for the year.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | * Lagging shares were Aurora Cannabis Inc ACB.TO, down 7.5%, BlackBerry Ltd BB.TO, down 7.3%, and SSR Mining Inc SSRM.TO, lower by 7.2%. * The Toronto Stock Exchange's TSX falls 0.63 percent to 18,376.24 * Leading the index were Ivanhoe Mines Ltd , up 5.1%, Boardwalk Real Estate Investment Trust BEI_u.TO, up 3.8%, and Killam Apartment REIT KMP_u.TO, higher by 2.8%. * The most heavily traded shares by volume were Manulife Financial Corp MFC.TO, Suncor Energy Inc SU.TO and Aphria Inc APHA.TO. | * Lagging shares were Aurora Cannabis Inc ACB.TO, down 7.5%, BlackBerry Ltd BB.TO, down 7.3%, and SSR Mining Inc SSRM.TO, lower by 7.2%. * The most heavily traded shares by volume were Manulife Financial Corp MFC.TO, Suncor Energy Inc SU.TO and Aphria Inc APHA.TO. * The TSX's energy group .SPTTEN rose 0.53 points, or 0.5%, while the financials sector .SPTTFS climbed 0.97 points, or 0.3%. | * Lagging shares were Aurora Cannabis Inc ACB.TO, down 7.5%, BlackBerry Ltd BB.TO, down 7.3%, and SSR Mining Inc SSRM.TO, lower by 7.2%. * The Toronto Stock Exchange's TSX falls 0.63 percent to 18,376.24 * Leading the index were Ivanhoe Mines Ltd , up 5.1%, Boardwalk Real Estate Investment Trust BEI_u.TO, up 3.8%, and Killam Apartment REIT KMP_u.TO, higher by 2.8%. * The most heavily traded shares by volume were Manulife Financial Corp MFC.TO, Suncor Energy Inc SU.TO and Aphria Inc APHA.TO. | * Lagging shares were Aurora Cannabis Inc ACB.TO, down 7.5%, BlackBerry Ltd BB.TO, down 7.3%, and SSR Mining Inc SSRM.TO, lower by 7.2%. * The Toronto Stock Exchange's TSX falls 0.63 percent to 18,376.24 * Leading the index were Ivanhoe Mines Ltd , up 5.1%, Boardwalk Real Estate Investment Trust BEI_u.TO, up 3.8%, and Killam Apartment REIT KMP_u.TO, higher by 2.8%. * The most heavily traded shares by volume were Manulife Financial Corp MFC.TO, Suncor Energy Inc SU.TO and Aphria Inc APHA.TO. |
36883.0 | 2021-02-17 00:00:00 UTC | Why Marijuana Stocks Like Aurora Cannabis and HEXO Are Sinking Today | ACB | https://www.nasdaq.com/articles/why-marijuana-stocks-like-aurora-cannabis-and-hexo-are-sinking-today-2021-02-17 | nan | nan | What happened
Wednesday is not shaping up to be a memorable day for marijuana stock investors, with many of the sector's top names dropping in price. As of late afternoon, Aurora Cannabis (NYSE: ACB) was down by 8%, HEXO (NYSE: HEXO) had fallen nearly 7%, and cannabidiol (CBD) products specialist Charlotte's Web Holdings (OTC: CWBHF) was trading 6% lower.
So what
It was actually a fairly quiet news day for Aurora, HEXO, and Charlotte's Web in particular and for marijuana stocks generally. That followed a burst of happenings in a short space of time; HEXO's announcement that it is acquiring peer Zenabis, Canopy Growth's third-quarter earnings, etc.
Image source: Getty Images.
For the most part, these developments were taken positively by investors, and the stocks began to trade higher. On top of that, members of the suddenly high-profile Reddit WallStreetBets group briefly latched on to marijuana stocks as value plays and/or potential short squeeze candidates.
But this rally appears to have been short-lived, with investors taking profits and perhaps returning to the sober realization that marijuana companies still have many challenges in front of them.
Now what
Yes, the decriminalization/legalization trend seems to be gathering steam, but profitability throughout the industry is still scarce, affected by negative factors including oversupply, black market competition, and the challenges of selling products that remain illegal at the federal level in the U.S.
Cannabis stock prices seem to be coming down to more reasonable levels, perhaps on the back of these considerations.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Charlotte's Web and HEXO. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | As of late afternoon, Aurora Cannabis (NYSE: ACB) was down by 8%, HEXO (NYSE: HEXO) had fallen nearly 7%, and cannabidiol (CBD) products specialist Charlotte's Web Holdings (OTC: CWBHF) was trading 6% lower. What happened Wednesday is not shaping up to be a memorable day for marijuana stock investors, with many of the sector's top names dropping in price. That followed a burst of happenings in a short space of time; HEXO's announcement that it is acquiring peer Zenabis, Canopy Growth's third-quarter earnings, etc. | As of late afternoon, Aurora Cannabis (NYSE: ACB) was down by 8%, HEXO (NYSE: HEXO) had fallen nearly 7%, and cannabidiol (CBD) products specialist Charlotte's Web Holdings (OTC: CWBHF) was trading 6% lower. What happened Wednesday is not shaping up to be a memorable day for marijuana stock investors, with many of the sector's top names dropping in price. So what It was actually a fairly quiet news day for Aurora, HEXO, and Charlotte's Web in particular and for marijuana stocks generally. | As of late afternoon, Aurora Cannabis (NYSE: ACB) was down by 8%, HEXO (NYSE: HEXO) had fallen nearly 7%, and cannabidiol (CBD) products specialist Charlotte's Web Holdings (OTC: CWBHF) was trading 6% lower. So what It was actually a fairly quiet news day for Aurora, HEXO, and Charlotte's Web in particular and for marijuana stocks generally. Now what Yes, the decriminalization/legalization trend seems to be gathering steam, but profitability throughout the industry is still scarce, affected by negative factors including oversupply, black market competition, and the challenges of selling products that remain illegal at the federal level in the U.S. Cannabis stock prices seem to be coming down to more reasonable levels, perhaps on the back of these considerations. | As of late afternoon, Aurora Cannabis (NYSE: ACB) was down by 8%, HEXO (NYSE: HEXO) had fallen nearly 7%, and cannabidiol (CBD) products specialist Charlotte's Web Holdings (OTC: CWBHF) was trading 6% lower. So what It was actually a fairly quiet news day for Aurora, HEXO, and Charlotte's Web in particular and for marijuana stocks generally. Here's The Marijuana Stock You've Been Waiting For A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom. |
36884.0 | 2021-02-17 00:00:00 UTC | Will Robinhood's IPO Be GameStopped? | ACB | https://www.nasdaq.com/articles/will-robinhoods-ipo-be-gamestopped-2021-02-17 | nan | nan | Investors waiting for the chance to buy shares of Robinhood, the online trading app that helped democratize stock investing by eliminating transaction fees, might have viewed the recent GameStop drama with apprehension.
Many traders blame Robinhood for the collapse of the video game retailer's stock after it soared some 1,700% in a matter of days only to lose 90% of its value over the following week. The fact that the online brokerage banned or restricted buying GameStop and other so-called meme stocks served to fuel suspicion it was working closely with the hedge funds that were losing billions of dollars on their short positions.
Robinhood has been hoping to go public this year through an IPO or some other direct listing (it hired Goldman Sachs for that purpose). Has the trading app damaged its reputation enough that a public offering won't be well received?
Image source: Robinhood.
A volatile mix
Robinhood offered a very plausible explanation for its actions that has nothing to do with bailing out short-sellers.
When an investor buys or sells a stock, it takes some time for the trade to settle. Although it seems virtually instantaneous in your brokerage account, the T+2 requirement, as it's called, means the actual trade doesn't settle for two days (it used to be even longer in years past). Because the trading app's separate Robinhood Securities division is required to make deposits with the clearinghouses to cover the trades, the extreme activity of the massive short-squeeze trading forced Robinhood to limit buying certain stocks until it could raise enough capital.
Robinhood says it was just a handful of stocks that were driving virtually all of the volume in trading -- a situation that CEO Vlad Tenev described as an unprecedented event.
With such massive concentration in only a few stocks, Robinhood had to come up with ways to mitigate the risk. While the clearinghouses were originally looking for billions of dollars in deposits, imposing trading restrictions and depositing about $700 million was the outcome.
Colluding to protect the rich
But putting the toothpaste of rumor back into the tube is not easy. Market maker Citadel Securities is Robinhood's biggest client, generating around $12.4 million in market orders in December alone, while the separate Citadel hedge fund was helping to bail out fellow hedge fund Melvin Capital from sinking under the weight of its GameStop short bet. Therefore, many remain convinced that the trading app was pressured to block trades to give the hedge funds time to cover their short positions.
Although there are regulatory walls erected between the hedge fund and its securities business (and between Robinhood's trading platform and its securities side), many still believe those barriers were easily scaled when billions of dollars were at stake.
For an app named Robinhood that launched with the declaration "Let them trade!" it was a bit of irony that its actions saved billionaire hedge fund operators from ruin while slamming the door on small retail investors' ability to profit.
There's no greener grass
Many traders abandoned the app after it limited buying GameStop stock. According to one analyst, some 40% of Robinhood traders who left the app went to Square's Cash App, while Fidelity, Stash, and TD Ameritrade also saw an influx of new customers.
On the surface, it suggests potential problems with an eventual IPO. Robinhood suffered a few other glitches over the past year that caused dissatisfaction among users, but quelling this reputed investor uprising with what looked like an iron glove could be the most damaging.
Yet Robinhood shouldn't really worry. Even as some investors fled, many said they would return. As P.T. Barnum is alleged to have said, there's no such thing as bad publicity. Even at the height of the controversy the app was downloaded 600,000 times in just one day, suggesting the brouhaha simply gave Robinhood millions of dollars in free advertising.
App data outlet Apptopia says Robinhood remains the most popular trading app worldwide in terms of downloads, far outstripping No. 2 app Webull.
Short-term memory loss
Traders are already moving on to their next stock targets. Marijuana producers like Tilray and Aurora Cannabis just soared 50% and 21%, respectively, in one day, which one portfolio manager said was caused by "the Reddit army and friends."
Whether they used Robinhood to drive up the stock is unknown, but the trading app's popularity remains largely untarnished and its IPO will undoubtedly still be a hit.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Investors waiting for the chance to buy shares of Robinhood, the online trading app that helped democratize stock investing by eliminating transaction fees, might have viewed the recent GameStop drama with apprehension. The fact that the online brokerage banned or restricted buying GameStop and other so-called meme stocks served to fuel suspicion it was working closely with the hedge funds that were losing billions of dollars on their short positions. Robinhood suffered a few other glitches over the past year that caused dissatisfaction among users, but quelling this reputed investor uprising with what looked like an iron glove could be the most damaging. | Investors waiting for the chance to buy shares of Robinhood, the online trading app that helped democratize stock investing by eliminating transaction fees, might have viewed the recent GameStop drama with apprehension. Because the trading app's separate Robinhood Securities division is required to make deposits with the clearinghouses to cover the trades, the extreme activity of the massive short-squeeze trading forced Robinhood to limit buying certain stocks until it could raise enough capital. Market maker Citadel Securities is Robinhood's biggest client, generating around $12.4 million in market orders in December alone, while the separate Citadel hedge fund was helping to bail out fellow hedge fund Melvin Capital from sinking under the weight of its GameStop short bet. | Investors waiting for the chance to buy shares of Robinhood, the online trading app that helped democratize stock investing by eliminating transaction fees, might have viewed the recent GameStop drama with apprehension. Because the trading app's separate Robinhood Securities division is required to make deposits with the clearinghouses to cover the trades, the extreme activity of the massive short-squeeze trading forced Robinhood to limit buying certain stocks until it could raise enough capital. Whether they used Robinhood to drive up the stock is unknown, but the trading app's popularity remains largely untarnished and its IPO will undoubtedly still be a hit. | Has the trading app damaged its reputation enough that a public offering won't be well received? Because the trading app's separate Robinhood Securities division is required to make deposits with the clearinghouses to cover the trades, the extreme activity of the massive short-squeeze trading forced Robinhood to limit buying certain stocks until it could raise enough capital. There's no greener grass Many traders abandoned the app after it limited buying GameStop stock. |
36885.0 | 2021-02-16 00:00:00 UTC | CANADA STOCKS - TSX rises 0.17% to 18,492.50 | ACB | https://www.nasdaq.com/articles/canada-stocks-tsx-rises-0.17-to-18492.50-2021-02-16 | nan | nan | * The Toronto Stock Exchange's TSX rises 0.17 percent to 18,492.50
* Leading the index were Aphria Inc , up 27.6%, Aurora Cannabis Inc ACB.TO, up 12.9%, and Vermilion Energy Inc VET.TO, higher by 7.7%.
* Lagging shares were Ballard Power Systems Inc BLDP.TO, down 6.2%, BlackBerry Ltd BB.TO, down 5.9%, and Agnico Eagle Mines Ltd AEM.TO, lower by 4.4%.
* On the TSX 99 issues rose and 116 fell as a 0.9-to-1 ratio favored decliners. There were 19 new highs and no new lows, with total volume of 289.8 million shares.
* The most heavily traded shares by volume were Enbridge Inc ENB.TO, Manulife Financial Corp MFC.TO and Aphria Inc APHA.TO.
* The TSX's energy group .SPTTEN rose 3.08 points, or 3.0%, while the financials sector .SPTTFS climbed 1.26 points, or 0.4%.
* West Texas Intermediate crude futures CLc1 rose 1.13%, or $0.67, to $60.14 a barrel. Brent crude LCOc1 rose 0.17%, or $0.11, to $63.41 O/R
* The TSX is up 6.1% for the year.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | * The Toronto Stock Exchange's TSX rises 0.17 percent to 18,492.50 * Leading the index were Aphria Inc , up 27.6%, Aurora Cannabis Inc ACB.TO, up 12.9%, and Vermilion Energy Inc VET.TO, higher by 7.7%. * Lagging shares were Ballard Power Systems Inc BLDP.TO, down 6.2%, BlackBerry Ltd BB.TO, down 5.9%, and Agnico Eagle Mines Ltd AEM.TO, lower by 4.4%. * The most heavily traded shares by volume were Enbridge Inc ENB.TO, Manulife Financial Corp MFC.TO and Aphria Inc APHA.TO. | * The Toronto Stock Exchange's TSX rises 0.17 percent to 18,492.50 * Leading the index were Aphria Inc , up 27.6%, Aurora Cannabis Inc ACB.TO, up 12.9%, and Vermilion Energy Inc VET.TO, higher by 7.7%. * On the TSX 99 issues rose and 116 fell as a 0.9-to-1 ratio favored decliners. * The TSX's energy group .SPTTEN rose 3.08 points, or 3.0%, while the financials sector .SPTTFS climbed 1.26 points, or 0.4%. | * The Toronto Stock Exchange's TSX rises 0.17 percent to 18,492.50 * Leading the index were Aphria Inc , up 27.6%, Aurora Cannabis Inc ACB.TO, up 12.9%, and Vermilion Energy Inc VET.TO, higher by 7.7%. * The most heavily traded shares by volume were Enbridge Inc ENB.TO, Manulife Financial Corp MFC.TO and Aphria Inc APHA.TO. * The TSX's energy group .SPTTEN rose 3.08 points, or 3.0%, while the financials sector .SPTTFS climbed 1.26 points, or 0.4%. | * The Toronto Stock Exchange's TSX rises 0.17 percent to 18,492.50 * Leading the index were Aphria Inc , up 27.6%, Aurora Cannabis Inc ACB.TO, up 12.9%, and Vermilion Energy Inc VET.TO, higher by 7.7%. * Lagging shares were Ballard Power Systems Inc BLDP.TO, down 6.2%, BlackBerry Ltd BB.TO, down 5.9%, and Agnico Eagle Mines Ltd AEM.TO, lower by 4.4%. * On the TSX 99 issues rose and 116 fell as a 0.9-to-1 ratio favored decliners. |
36886.0 | 2021-02-16 00:00:00 UTC | Why Aurora Cannabis Stock Popped Double Digits Today | ACB | https://www.nasdaq.com/articles/why-aurora-cannabis-stock-popped-double-digits-today-2021-02-16 | nan | nan | What happened
The cannabis sector has been volatile recently with Reddit-inspired trades booming and busting some marijuana stocks. Tuesday, shares of Aurora Cannabis (NYSE: ACB) jumped 12.8% as investors are back to trading based on industry news.
So what
News from a large Canadian pension fund as well as a new acquisition in the sector have investors hoping there's more room for Aurora to run.
British Columbia Investment Management (BCI) significantly increased its stake in Aurora Cannabis as of the end of 2020, according to a Form 13F SEC filing. It ended last year with 290,404 shares, up from just 58,346 shares it reported three months prior. Also today, fellow Canadian pot grower HEXO (NYSE: HEXO) announced it plans to acquire Zenabis Global in an all-stock deal valued at approximately $235 million.
Image source: Getty Images.
Now what
Consolidation in the marijuana sector has been ongoing, and investors in Aurora would likely view a combination with another pot company a positive for the struggling Canadian grower. Aurora initiated a business-transformation program early in 2020. The plan is designed to reduce expenses, better scrutinize capital expenditures, and improve its balance sheet to attain profitability. In its fiscal 2021 second-quarter results reported last week, the company said the plan "will give Aurora maximum flexibility and position the organization to drive significant cashflow in the coming quarters."
Increased ownership from the manager of British Columbia's public funds and further consolidation have investors feeling optimistic today. The hope is that Aurora can return to share-price appreciation, bringing the company's market capitalization closer to early 2019 levels when it was triple today's valuation.
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*Stock Advisor returns as of November 20, 2020
Howard Smith has no position in any of the stocks mentioned. The Motley Fool recommends HEXO. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Tuesday, shares of Aurora Cannabis (NYSE: ACB) jumped 12.8% as investors are back to trading based on industry news. British Columbia Investment Management (BCI) significantly increased its stake in Aurora Cannabis as of the end of 2020, according to a Form 13F SEC filing. In its fiscal 2021 second-quarter results reported last week, the company said the plan "will give Aurora maximum flexibility and position the organization to drive significant cashflow in the coming quarters." | Tuesday, shares of Aurora Cannabis (NYSE: ACB) jumped 12.8% as investors are back to trading based on industry news. British Columbia Investment Management (BCI) significantly increased its stake in Aurora Cannabis as of the end of 2020, according to a Form 13F SEC filing. Also today, fellow Canadian pot grower HEXO (NYSE: HEXO) announced it plans to acquire Zenabis Global in an all-stock deal valued at approximately $235 million. | Tuesday, shares of Aurora Cannabis (NYSE: ACB) jumped 12.8% as investors are back to trading based on industry news. Now what Consolidation in the marijuana sector has been ongoing, and investors in Aurora would likely view a combination with another pot company a positive for the struggling Canadian grower. * David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Aurora Cannabis Inc. wasn't one of them! | Tuesday, shares of Aurora Cannabis (NYSE: ACB) jumped 12.8% as investors are back to trading based on industry news. Now what Consolidation in the marijuana sector has been ongoing, and investors in Aurora would likely view a combination with another pot company a positive for the struggling Canadian grower. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market. |
36887.0 | 2021-02-16 00:00:00 UTC | Why It’s Time to Bail Out of Aurora Cannabis Stock | ACB | https://www.nasdaq.com/articles/why-its-time-to-bail-out-of-aurora-cannabis-stock-2021-02-16 | nan | nan | The long-awaited turnaround for Aurora Cannabis (ACB) is no closer to becoming a reality, according to one analyst.
Following the Canadian LP’s lackluster latest quarterly statement, Jeffries' Owen Bennett believes there’s “little to be bullish about given the current valuation.”
Bennett had only recently expressed worries about Aurora’s top-line performance, and his concern was valid given FQ2’s results.
The company reported revenue of C$67.67 million, which came in under consensus estimates by C$1.02 million. Additionally, the company’s promise to turn EBITDA positive in the quarter didn’t work out either; Aurora reported Adj. EBITDA (excl. one-time costs) of C$-12.1 million. Furthermore, Canadian recreational sales sequentially declined by 17%, despite new retail store openings and the launch of vape and edibles products.
“Recent actions were supposed to support margin delivery but we are seeing no evidence of this yet,” Bennett said. “We saw little sequential improvement on GM despite the increased sales of high margin medical cannabis, SG&A (along with R&D expense) as a percentage of sales further increased in Q3, and there was a worsening in adj. EBITDA.”
Canadian cannabis stocks have run up significantly recently, as U.S. marijuana reform at the federal level appears a real near-term possibility. Investors are evidently banking on cannabis companies north of the border entering the lucrative U.S. market. While Bennett counts fellow Canadian companies, Cronos and Canopy as overvalued too, the two could yet make an impact in the U.S market. However, with heavy cash outflow and debt payments due shortly, the same cannot be said of Aurora.
“We question whether it even has enough to compete effectively in the CBD space (see how much Canopy is spending), never mind the THC space. It also may not be easy to raise any more capital when the US opens up as most likely any smart institutional money will be moving into US MSOs,” Bennett forlornly summed up.
As a result, Bennett rates ACB an Underperform (i.e. Sell), backed by a C$4.59 ($3.64) price target. This target implies ~70% downside from current levels. (To watch Bennett’s track record, click here)
According to Bennett’s colleagues, the outlook for Aurora is not very promising, either. The stock has a Moderate Sell consensus rating based on 4 Holds and 7 Sells. The average price target stands at C$11.99 ($9.5) which suggests shares will be changing hands for a 33% discount over the next 12 months. (See ACB stock analysis on TipRanks)
To find good ideas for cannabis stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | The long-awaited turnaround for Aurora Cannabis (ACB) is no closer to becoming a reality, according to one analyst. As a result, Bennett rates ACB an Underperform (i.e. Sell), backed by a C$4.59 ($3.64) price target. (See ACB stock analysis on TipRanks) To find good ideas for cannabis stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights. | The long-awaited turnaround for Aurora Cannabis (ACB) is no closer to becoming a reality, according to one analyst. As a result, Bennett rates ACB an Underperform (i.e. Sell), backed by a C$4.59 ($3.64) price target. (See ACB stock analysis on TipRanks) To find good ideas for cannabis stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights. | (See ACB stock analysis on TipRanks) To find good ideas for cannabis stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights. The long-awaited turnaround for Aurora Cannabis (ACB) is no closer to becoming a reality, according to one analyst. As a result, Bennett rates ACB an Underperform (i.e. Sell), backed by a C$4.59 ($3.64) price target. | As a result, Bennett rates ACB an Underperform (i.e. Sell), backed by a C$4.59 ($3.64) price target. The long-awaited turnaround for Aurora Cannabis (ACB) is no closer to becoming a reality, according to one analyst. (See ACB stock analysis on TipRanks) To find good ideas for cannabis stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights. |
36888.0 | 2021-02-16 00:00:00 UTC | Marijuana Reform Just Got a Major Boost in the U.S. | ACB | https://www.nasdaq.com/articles/marijuana-reform-just-got-a-major-boost-in-the-u.s.-2021-02-16 | nan | nan | February has been a very good month for marijuana stocks, not least because it started with a clutch of powerful senators pledging to move on cannabis law reform within the next few months.
This is extremely good news for marijuana stocks -- no wonder the news spurred a big rally for them. In this Motley Fool Live segment recorded on Feb. 5, 2021, veteran Motley Fool contributor Eric Volkman and healthcare and cannabis bureau chief Corinne Cardina discuss how the senators' promise will soon affect marijuana law.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Corinne Cardina: Democratic senators said this week that they plan to pursue significant cannabis reform legislation. So the Senators said they will release a "Unified discussion draft on comprehensive reform early this year, and then passing the legislation will be a priority for the summit."
We saw a lot of Cannabis stocks rejoicing. This happened on Monday [Feb.1]. So since Monday, we've got Canopy Growth (NASDAQ: CGC) up 8%, Aurora Cannabis (NYSE: ACB) up 17%, Cronos (NASDAQ: CRON), nearly 20%.
Eric, what do we know about this plan so far and what do we not yet know? Can you put it also in terms of where this falls on the spectrum of decriminalization to full federal legalization? How big of a deal is this and what do we know?
Eric Volkman: Sure. It certainly is a big deal, what you had was three Democrat senators and three quite prominent Democrat senators.
The most prominent being Chuck Schumer, the new Majority Leader in Senate. Also, Cory Booker, who's a high-profile senator from New Jersey, who always seems to be in the news. He always seems to be on top of any interesting issue that could garner in some press.
Also, Ron Wyden, who is probably a little bit less known to the general public, but he's one of the senators from Oregon. Oregon has relative to the other American states, has had a long history with legalization. They legalized medical marijuana a long time ago. They were very early in legalizing recreational marijuana too.
So what they did, they issued a joint statement several days ago, I don't have the exact date, in which they said that marijuana reform, as they put it, is going to be a priority for the Senate. That they're going to get the ball rolling in what they say is the early part of the year. What does "early part" mean? Well, they didn't get more specific.
There's a lot we don't know about it simply because of that lack of specificity. It was a fairly short statement, only a few paragraphs long. We know that they are going to try to advance something. What form this is going to take? Again, that's a question. There is legislation that has been passed in the House of Representatives last year. We have the MORE Act which would essentially decriminalize marijuana, and then the SAFE Banking Act, which would pave the way for cannabis companies to use financial services like any other company.
So we don't know. [The senators] studiously avoided using the words decriminalization or legalization. Most likely, the talk so far, such as there has been, has been about decriminalization. That's what Kamala Harris promised in the Vice Presidential debate before Election Day last year.
The big distinction between decriminalization and legalization: Decriminalization simply means that you're not going to be prosecuted for a marijuana-related offense of any size. As long as you don't bring like a truck full of the stuff across state lines, you're probably going to be OK.
That does not mean legalization. That doesn't mean that you can all of a sudden set up outside of your house a marijuana stand and sell it along with your kids' lemonade. It doesn't work that way. It doesn't open a market for it at all.
Legalization, on the other hand, as we've seen with a whole clutch of states -- 15 now plus the District of Columbia -- means that you can open a market. You could start a business within certain constraints as long as you have a license to do so.
So, legalization means that there can be a legitimate business of some form in the marijuana trade. Decriminalization simply means you're not going to go to jail for it.
Corinne Cardina has no position in any of the stocks mentioned. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | So since Monday, we've got Canopy Growth (NASDAQ: CGC) up 8%, Aurora Cannabis (NYSE: ACB) up 17%, Cronos (NASDAQ: CRON), nearly 20%. Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks. So the Senators said they will release a "Unified discussion draft on comprehensive reform early this year, and then passing the legislation will be a priority for the summit." | So since Monday, we've got Canopy Growth (NASDAQ: CGC) up 8%, Aurora Cannabis (NYSE: ACB) up 17%, Cronos (NASDAQ: CRON), nearly 20%. In this Motley Fool Live segment recorded on Feb. 5, 2021, veteran Motley Fool contributor Eric Volkman and healthcare and cannabis bureau chief Corinne Cardina discuss how the senators' promise will soon affect marijuana law. Learn more Corinne Cardina: Democratic senators said this week that they plan to pursue significant cannabis reform legislation. | So since Monday, we've got Canopy Growth (NASDAQ: CGC) up 8%, Aurora Cannabis (NYSE: ACB) up 17%, Cronos (NASDAQ: CRON), nearly 20%. February has been a very good month for marijuana stocks, not least because it started with a clutch of powerful senators pledging to move on cannabis law reform within the next few months. In this Motley Fool Live segment recorded on Feb. 5, 2021, veteran Motley Fool contributor Eric Volkman and healthcare and cannabis bureau chief Corinne Cardina discuss how the senators' promise will soon affect marijuana law. | So since Monday, we've got Canopy Growth (NASDAQ: CGC) up 8%, Aurora Cannabis (NYSE: ACB) up 17%, Cronos (NASDAQ: CRON), nearly 20%. In this Motley Fool Live segment recorded on Feb. 5, 2021, veteran Motley Fool contributor Eric Volkman and healthcare and cannabis bureau chief Corinne Cardina discuss how the senators' promise will soon affect marijuana law. Learn more Corinne Cardina: Democratic senators said this week that they plan to pursue significant cannabis reform legislation. |
36889.0 | 2021-02-16 00:00:00 UTC | The 3 Biggest Mistakes Marijuana Stock Investors Are Making | ACB | https://www.nasdaq.com/articles/the-3-biggest-mistakes-marijuana-stock-investors-are-making-2021-02-16 | nan | nan | Don't look now, but marijuana stocks are blazing hot, once again.
Pot stocks have been on fire since the beginning of November, which follows a roughly 19-month lull (April 2019 to October 2020) where they grossly underperformed. For instance, the ETFMG Alternative Harvest ETF, which holds stakes in dozens of direct and ancillary pot players, is up 129% since the end of October.
Image source: Getty Images.
If you're wondering what changed, look no further than the political makeup in the United States.
For years, the Senate has been under Republican control. Former Senate Majority Leader Mitch McConnell, who's openly against legalizing cannabis at the federal level, used his power in the upper house of Congress to ensure marijuana legislation didn't reach the floor for vote. With Democrats now in control of the Senate, House, and Oval Office, it's more likely than ever that we could see real cannabis reform at the federal level. This would open up capital markets to cannabis companies, allow interstate transport, and remove barriers to entry for Canadian pot stocks. In other words, the largest marijuana market in the world would be open for business.
But as the hype once again builds around cannabis, I can't help but point out three of the biggest mistakes marijuana stock investors keep making.
Image source: Getty Images.
1. They're counting their chickens before they've hatched
One of the most common mistakes made by pot stock investors (and I include myself in this crowd) is counting their chickens before they've hatched.
As an example, when Canada lifted the curtain on adult-use weed sales in October 2018, it was widely expected that our neighbor to the north would become a cannabis leader. It was the first industrialized nation to approve recreational marijuana, and many of its licensed producers had been expanding their production capacity to meet demand.
But when sales actually began, and in the months and quarters that followed, it became readily apparent that Canada was (pardon the pun) chronically unprepared for legalization. Federal regulators eventually delayed the launch of higher-margin derivatives by a couple of months, while select provincial regulators (ahem, Ontario) stymied the opening of new dispensaries. All the while, most Canadian licensed producers overextended themselves on the capacity front.
We may well be witnessing investors getting ahead of themselves on the legalization front in the United States. While there's no question that the likelihood of legalization is vastly improved with Democrats in control of the legislative branch of government, it's far from a lock. Without a filibuster, 10 Republicans would need to support the legalization of cannabis at the federal level. And even if that were to happen, President Joe Biden would have to sign the bill into law. Biden has previously campaigned on decriminalizing and rescheduling weed -- not legalizing it.
The "this time is different" ideology could come back to bite pot stock investors, once again.
Image source: Getty Images.
2. They're ignoring dilution
Another big mistake that could cost pot stock investors a lot of money is ignoring share-based dilution.
In Canada, banks aren't lending much given how poorly the Canadian pot industry has performed over the past two years. Meanwhile, in the U.S., some banks and credit unions have entirely avoided the cannabis industry for fear of facing criminal and/or financial penalties in the future. Providing basic banking services to U.S. pot stocks would technically constitute money laundering as long as cannabis is listed as a Schedule I drug at the federal level.
To some extent, it makes sense that unprofitable marijuana stocks regularly turn to selling their stock or issuing convertible debt as a way to raise capital. But the level to which some companies will drown their shareholders in at-the-market offerings and convertible debt issuances is astounding.
Aurora Cannabis (NYSE: ACB), which has long been one of the most popular pot stocks among millennial investors, is the perfect example of a cannabis company that continues to destroy shareholder value through dilution. Between June 2014 and the end of 2020, Aurora's outstanding share count ballooned from about 1.35 million to north of 186 million. That's an increase of almost 13,600%!
Aurora has used its stock to fund day-to-day operations, as well as finance more than a dozen acquisitions, nearly all of which it grossly overpaid for. Even with this rampant dilution, Aurora's long-term future remains in doubt, as evidenced by the $243 million Canadian in cash it burned through between July 1, 2020 and Dec. 31, 2020.
Long story short, ignore pot stock dilution at your own risk.
Image source: Getty Images.
3. They're chasing cannabis penny stocks
The third mistake, which could prove costliest of all, is that marijuana stock investors are suddenly obsessed with chasing penny stocks.
Over the past couple of weeks, retail investors on Reddit's WallStreetBets forum have been effectively banding together to pile into heavily shorted or low-priced stocks. This has sent the likes of Sundial Growers (NASDAQ: SNDL) and MedMen Enterprises (OTC: MMNFF) into the stratosphere.
The problem is penny stocks are usually priced low for a very good reason.
Sundial Growers, which might well be the most popular stock on Wall Street right now, has been issuing stock like water and converting debt to equity. Since the end of September, the company's outstanding share count has ballooned from just over 500 million to 1.56 billion. That's right -- the company has issued 1 billion shares in about four months. That level of dilution should absolutely terrify investors.
As for MedMen, its survival remains in doubt. It ended September with just over $10 million in cash and cash equivalents, although it did raise $25.7 million in early November. Nevertheless, that's a pittance compared to the $30.1 million net loss recorded in its September quarter. MedMen's overzealous expansion and unresponsive previous management team may have dug a hole so deep that the company can never recover.
There are great marijuana stocks that investors can buy. Chasing cannabis penny stocks, however, is not the way to get rich in this fast-growing industry.
This article represents the opinion of the writer, who may disagree with the "official" recommendation position of a Motley Fool premium advisory service. We're motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
Sean Williams has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora Cannabis (NYSE: ACB), which has long been one of the most popular pot stocks among millennial investors, is the perfect example of a cannabis company that continues to destroy shareholder value through dilution. Former Senate Majority Leader Mitch McConnell, who's openly against legalizing cannabis at the federal level, used his power in the upper house of Congress to ensure marijuana legislation didn't reach the floor for vote. Providing basic banking services to U.S. pot stocks would technically constitute money laundering as long as cannabis is listed as a Schedule I drug at the federal level. | Aurora Cannabis (NYSE: ACB), which has long been one of the most popular pot stocks among millennial investors, is the perfect example of a cannabis company that continues to destroy shareholder value through dilution. Between June 2014 and the end of 2020, Aurora's outstanding share count ballooned from about 1.35 million to north of 186 million. Long story short, ignore pot stock dilution at your own risk. | Aurora Cannabis (NYSE: ACB), which has long been one of the most popular pot stocks among millennial investors, is the perfect example of a cannabis company that continues to destroy shareholder value through dilution. They're chasing cannabis penny stocks The third mistake, which could prove costliest of all, is that marijuana stock investors are suddenly obsessed with chasing penny stocks. Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018. | Aurora Cannabis (NYSE: ACB), which has long been one of the most popular pot stocks among millennial investors, is the perfect example of a cannabis company that continues to destroy shareholder value through dilution. Long story short, ignore pot stock dilution at your own risk. And make no mistake – it is coming. |
36890.0 | 2021-02-16 00:00:00 UTC | Meme Stock Predictions for 2021: Where Will GME, BB, AMC and Bitcoin Go? | ACB | https://www.nasdaq.com/articles/meme-stock-predictions-for-2021%3A-where-will-gme-bb-amc-and-bitcoin-go-2021-02-16 | nan | nan | InvestorPlace - Stock Market News, Stock Advice & Trading Tips
The dust hasn’t even settled yet on the “Great Meme Stock Bubble of 2021” and people are already selling the rights to the movies. By the time these stories hit the silver screen, though, where will meme stocks have gone?
To answer that, these are my five meme stock predictions for the new year, with topics ranging from cannabis picks to cryptocurrencies.
9 Meme Stocks That Social Media Won't Shut Up About
Meme stocks can be hard to time. But one thing is clear, they will dominate thestock market newsfor the foreseeable future. So, here’s where the latest batch could go.
Marijuana Stocks Will Soar… Until Congress Drops the Ball
Source: Shutterstock
This year has seen no shortage of hot marijuana stocks looking to make their mark. More specifically, the top-five cannabis stocks mentioned on Reddit’s subreddit, r/WallStreetBets (WSB)– Tilray (NASDAQ:TLRY), Sundial Growers (NASDAQ:SNDL), Aphria (NASDAQ:APHA), Canopy Growth (NASDAQ:CGC) and Aurora Cannabis (NYSE:ACB) — have returned as high as 360% this year.
All this excitement, however, hinges on one hope: U.S. federal cannabis legalization. It’s a ball that Senate majority leader Chuck Schumer got rolling this month, after declaring intentions to end federal marijuana prohibitions by this year. If the $78 billion U.S. marijuana market opens to Canadian companies, these firms could stand to become America’s next Big Tobacco.
But this optimism is likely premature. For instance, as FiveThirtyEight senior writer Amelia Thomson-DeVeaux points out, Congressional appetite for total legalization remains low. In fact, the most investors should expect by 2024 are “piecemeal marijuana reform bills” that decriminalize cannabis.
That would leave Canadian pot companies locked out of the U.S. recreational market, sending share prices all the way back down.
GameStop Will Sink Below $20
Source: Emil O / Shutterstock.com
Short squeezes can last a long time, but even the best trades have a sell-by date. So, although GameStop (NYSE:GME) stock could hold a $50 to $70 range for several more months, it’s unlikely Reddit users can repeat a big squeeze to $480.
Plus, as 2021 rolls on, even fewer people will believe GameStop is worth $50, or perhaps anything at all. The company already cut its dividend to zero before the novel coronavirus pandemic. And without a clear strategy to replace its lucrative used-game business, it is starting to look more like Blockbuster than Best Buy (NYSE:BBY).
But not all is lost. GameStop investors still have time to sell out at higher-than-usual valuations. As of this writing, GME stock’s 0.69 times price-to-sales ratio is still twice as high as its ten-year average. History also shows that the effects of short squeezes can last several years.
8 Cheap Stocks Under $20 That Could Double
Just don’t wait too long. As GameStop struggles to replace its mall-based stores with e-commerce revenues, the company could easily see shares sink back to $20 by the end of the year.
AMC Entertainment Will Head Towards Bankruptcy
Source: rblfmr / Shutterstock.com
Even before Covid-19, AMC Entertainment (NYSE:AMC) was in trouble. Years of debt binging by its Chinese owners had left the once-profitable firm in financial ruin. By 2019, the company’s interest payments were twice as large as its operating income. In other words, the company can’t even afford the interest on its debt, let alone ever paying down the principal.
That’s left AMC in an endless cycle of interest payments — a term known as a “zombification.” And though the company managed to raise almost $1 billion during its Reddit-fueled rise, they still need some $4 billion more to reduce interest payments to a payable level.
As 2021 rolls forward, expect to see AMC’s majority owners start giving up hope. Few movie studios have created new content for the theaters recently and the 2021 blockbuster lineup is mostly made up of delayed releases from last year. Without a significant profit driver in 2021, AMC will likely fall to its far better-capitalized rival, Regal Cinemas, which is owned by Cineworld (OTCMKTS:CNNWF).
BlackBerry Stock Will Hold Steady
Source: Shutterstock
Contrary to my other predictions, not all meme stocks have a worrying future. After struggling for years, BlackBerry (NYSE:BB) has finally stemmed the tide. For a while, the tech company worked in the shadows, trying to replace its billions of handset sales with software products. And it wasn’t until the Reddit stock bubble that people started noticing.
Today, BlackBerry dominates the Internet of Things (IoT) and connected vehicle space. Investors can find the company’s QNX operating system embedded in 175 million cars. The company also has security solutions in 500 million IoT endpoints around the globe. And, as the cybersecurity perils of IoT devices increase, investors can expect BB to eventually replace its declining licensing revenues and regain growth.
7 Must-Own Stocks in February
Analysts now project BlackBerry’s revenues to stabilize by 2022 and see modest growth after that. Shares sit at just over $12 and investors can expect BB stock to hold steady or even show some modest gains by year-end.
Bitcoin Will Go Up, But Altcoins Will Steal the Show
Source: Shutterstock
Today, Bitcoin’s (CCC:BTC-USD) market capitalization dominates the cryptocurrency landscape. According to CoinMarketCap, Bitcoin makes up over 60% of all cryptocurrencies by dollar value.
However, in 2021, we could see a significant change. As more exchanges start offering altcoins, these alternatives could start challenging the dominance of BTC. On Feb. 8, the Chicago Mercantile Exchange launched Ether futures, making Ethereum (CCC:ETH-USD) the second cryptocurrency on the CME.
Bitcoin alternatives have also spread to retail investors. In October 2020, PayPal (NASDAQ:PYPL) started offering altcoins alongside Bitcoin. Additionally, on Robinhood, investors can now buy 16 different cryptocurrencies besides BTC.
Keep in mind that Bitcoin’s value could fall in 2021 if a significant economic shock hits. After all, cryptocurrencies are risk-on assets that positively correlate with the market. However, if markets continue to rise, both Bitcoin and altcoins could see more meaningful gains.
What to Expect in 2021
There’s still a great deal of uncertainty surrounding the markets this year.
For instance, novel coronavirus variants threaten the efficacy of vaccines. Plus, a shakier-than-expected recovery could send the stock market tumbling. But one thing is sure — social media is here to stay when it comes to investing. That means meme stocks will play an outsized role for years to come.
7 Safe Stocks for Reddit's WSB Bull Gang
So, Wall Street should keep an eye on Reddit. That’s because, now more than ever, it’s going to be individuals that drive the market in 2021.
On the date of publication, Tom Yeung did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Tom Yeung, CFA, is a registered investment advisor on a mission to bring simplicity to the world of investing.
The post Meme Stock Predictions for 2021: Where Will GME, BB, AMC and Bitcoin Go? appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | More specifically, the top-five cannabis stocks mentioned on Reddit’s subreddit, r/WallStreetBets (WSB)– Tilray (NASDAQ:TLRY), Sundial Growers (NASDAQ:SNDL), Aphria (NASDAQ:APHA), Canopy Growth (NASDAQ:CGC) and Aurora Cannabis (NYSE:ACB) — have returned as high as 360% this year. It’s a ball that Senate majority leader Chuck Schumer got rolling this month, after declaring intentions to end federal marijuana prohibitions by this year. As GameStop struggles to replace its mall-based stores with e-commerce revenues, the company could easily see shares sink back to $20 by the end of the year. | More specifically, the top-five cannabis stocks mentioned on Reddit’s subreddit, r/WallStreetBets (WSB)– Tilray (NASDAQ:TLRY), Sundial Growers (NASDAQ:SNDL), Aphria (NASDAQ:APHA), Canopy Growth (NASDAQ:CGC) and Aurora Cannabis (NYSE:ACB) — have returned as high as 360% this year. Shares sit at just over $12 and investors can expect BB stock to hold steady or even show some modest gains by year-end. Bitcoin Will Go Up, But Altcoins Will Steal the Show Source: Shutterstock Today, Bitcoin’s (CCC:BTC-USD) market capitalization dominates the cryptocurrency landscape. | More specifically, the top-five cannabis stocks mentioned on Reddit’s subreddit, r/WallStreetBets (WSB)– Tilray (NASDAQ:TLRY), Sundial Growers (NASDAQ:SNDL), Aphria (NASDAQ:APHA), Canopy Growth (NASDAQ:CGC) and Aurora Cannabis (NYSE:ACB) — have returned as high as 360% this year. InvestorPlace - Stock Market News, Stock Advice & Trading Tips The dust hasn’t even settled yet on the “Great Meme Stock Bubble of 2021” and people are already selling the rights to the movies. Marijuana Stocks Will Soar… Until Congress Drops the Ball Source: Shutterstock This year has seen no shortage of hot marijuana stocks looking to make their mark. | More specifically, the top-five cannabis stocks mentioned on Reddit’s subreddit, r/WallStreetBets (WSB)– Tilray (NASDAQ:TLRY), Sundial Growers (NASDAQ:SNDL), Aphria (NASDAQ:APHA), Canopy Growth (NASDAQ:CGC) and Aurora Cannabis (NYSE:ACB) — have returned as high as 360% this year. InvestorPlace - Stock Market News, Stock Advice & Trading Tips The dust hasn’t even settled yet on the “Great Meme Stock Bubble of 2021” and people are already selling the rights to the movies. Bitcoin Will Go Up, But Altcoins Will Steal the Show Source: Shutterstock Today, Bitcoin’s (CCC:BTC-USD) market capitalization dominates the cryptocurrency landscape. |
36891.0 | 2021-02-13 00:00:00 UTC | Marijuana Stock Bubble 2.0 Is Here | ACB | https://www.nasdaq.com/articles/marijuana-stock-bubble-2.0-is-here-2021-02-13 | nan | nan | You'd struggle to find an industry that's generated more robust returns than cannabis in recent months. The ETFMG Alternative Harvest ETF, a basket fund that contains an assortment of direct and ancillary marijuana stocks, is up 212% since the end of October (through Feb. 10).
Some individual pot stocks have performed multiple times better. Sundial Growers (NASDAQ: SNDL), Tilray (NASDAQ: TLRY), Aphria (NASDAQ: APHA), Aurora Cannabis (NYSE: ACB), and HEXO are up a respective 2,280%, 1,190%, 535%, 388%, and 341% since the end of October.
It begs the question: What are investors smoking?
Image source: Getty Images.
Here's why cannabis stocks are going "bong-kers"
In recent weeks, multiple factors have made pot stocks all the buzz.
To begin with, Democrats taking control of Congress and the Oval Office could bring about real federal cannabis reforms. During the previous administration, Republican Mitch McConnell repeatedly kept cannabis legislation from reaching the Senate floor as Senate Majority Leader. Now, as Senate Minority Leader, McConnell no longer holds the same power. New Senate Majority Leader Chuck Schumer has been clear that he intends to co-draft legislation to legalize marijuana in the U.S.
As a quick reminder, Gallup's national sentiment poll on cannabis showed that an all-time record 68% of respondents in 2020 favored the idea of legalization. More specifically, 83% of self-identified Democrats want to wave the green flag on marijuana, compared to only 48% for self-identified Republicans.
Secondly, long-awaited consolidation is underway. In mid-December, Aphria and Tilray announced their intention to merge and create the largest cannabis company by annual sales. Combining these two businesses will result in tangible cost synergies, improved global reach, and a huge portfolio of derivatives (e.g., edibles, beverages, vapes, concentrates, oils, and topicals) that should boost overall operating margins.
Thirdly, the North American pot industry is exhibiting signs of maturity. Following its fiscal third-quarter earnings release, Canopy Growth (NASDAQ: CGC) announced that it will generate positive operating cash flow by fiscal 2023, along with positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) by the latter half of fiscal 2022. Meanwhile, many U.S. multistate operators are expected to turn the corner to recurring profitability in 2021.
Image source: Getty Images.
Canadian pot stocks have entered "Bubble 2.0"
This probably all sounds great, but we've been here before. Canadian pot stocks have promised investors the moon in the past, only to disappoint them. Based on the share price appreciation we've witnessed in recent weeks, it seems like Canadian marijuana stocks are again about to harsh shareholders' mellow.
As much as the polling suggests that the American public favors legalization, actually passing it just isn't that easy. Unless Democrats were to abandon the filibuster in the Senate, which is unlikely, 60 votes would be needed to pass any cannabis legislation. That means getting 10 Republican senators to cross the aisle, which will undoubtedly be a tough task.
Even if House Speaker Nancy Pelosi and Senate Majority Leader Schumer successfully pass legislation to legalize marijuana, it's unclear if President Joe Biden would sign it. Biden campaigned on the idea of decriminalizing and rescheduling cannabis -- not legalizing it. Let's not forget that Biden is behind some bills crafted three decades ago that targeted drug users and dealers with harsh sentences.
It's also not clear that the current consolidation wave in the marijuana space is occurring out of strength. Although Wall Street and investors have lauded the Aphria-Tilray merger, finding a partner seemed like more of a necessity for Tilray than Aphria. Tilray had been burning through its cash at an extraordinary rate and relying on share and debt offerings to raise capital. This isn't what I would consider a merger of strength.
Image source: Getty Images.
There are serious disconnects in the underlying fundamentals, as well. The aforementioned Canopy Growth report that got Wall Street excited featured another quarter with a huge cash outflow ($135.4 million Canadian) and a steep net loss of CA$829.3 million. Canopy Growth nearly had CA$5 billion in cash and cash equivalents on hand following a large equity investment from Constellation Brands in November 2018. It now has less than CA$1.6 billion in cash and short-term investments. The company has been bleeding cash for years and is still a long way from recurring profitability.
Canadian pot stocks also have a habit of destroying shareholder value through multiple rounds of share offerings and debt-to-equity swaps. While Tilray and Canopy Growth have issued an extensive number of shares over the years, neither holds a candle to what Aurora Cannabis and Sundial Growers have done to their shareholders. Aurora's outstanding share count has catapulted by over 12,200% since June 2014, whereas Sundial's outstanding share count has risen by more than 1 billion shares since the end of September.
The Canadian cannabis industry can succeed over the long run, but investors aren't being rational if they expect a rocket launch after years of underperformance.
It's time to face the facts: Marijuana stock bubble 2.0 is here, at least for Canada.
This article represents the opinion of the writer, who may disagree with the "official" recommendation position of a Motley Fool premium advisory service. We're motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Sundial Growers (NASDAQ: SNDL), Tilray (NASDAQ: TLRY), Aphria (NASDAQ: APHA), Aurora Cannabis (NYSE: ACB), and HEXO are up a respective 2,280%, 1,190%, 535%, 388%, and 341% since the end of October. Combining these two businesses will result in tangible cost synergies, improved global reach, and a huge portfolio of derivatives (e.g., edibles, beverages, vapes, concentrates, oils, and topicals) that should boost overall operating margins. Even if House Speaker Nancy Pelosi and Senate Majority Leader Schumer successfully pass legislation to legalize marijuana, it's unclear if President Joe Biden would sign it. | Sundial Growers (NASDAQ: SNDL), Tilray (NASDAQ: TLRY), Aphria (NASDAQ: APHA), Aurora Cannabis (NYSE: ACB), and HEXO are up a respective 2,280%, 1,190%, 535%, 388%, and 341% since the end of October. Following its fiscal third-quarter earnings release, Canopy Growth (NASDAQ: CGC) announced that it will generate positive operating cash flow by fiscal 2023, along with positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) by the latter half of fiscal 2022. Even if House Speaker Nancy Pelosi and Senate Majority Leader Schumer successfully pass legislation to legalize marijuana, it's unclear if President Joe Biden would sign it. | Sundial Growers (NASDAQ: SNDL), Tilray (NASDAQ: TLRY), Aphria (NASDAQ: APHA), Aurora Cannabis (NYSE: ACB), and HEXO are up a respective 2,280%, 1,190%, 535%, 388%, and 341% since the end of October. New Senate Majority Leader Chuck Schumer has been clear that he intends to co-draft legislation to legalize marijuana in the U.S. As a quick reminder, Gallup's national sentiment poll on cannabis showed that an all-time record 68% of respondents in 2020 favored the idea of legalization. Here's The Marijuana Stock You've Been Waiting For A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom. | Sundial Growers (NASDAQ: SNDL), Tilray (NASDAQ: TLRY), Aphria (NASDAQ: APHA), Aurora Cannabis (NYSE: ACB), and HEXO are up a respective 2,280%, 1,190%, 535%, 388%, and 341% since the end of October. During the previous administration, Republican Mitch McConnell repeatedly kept cannabis legislation from reaching the Senate floor as Senate Majority Leader. Even if House Speaker Nancy Pelosi and Senate Majority Leader Schumer successfully pass legislation to legalize marijuana, it's unclear if President Joe Biden would sign it. |
36892.0 | 2021-02-12 00:00:00 UTC | CANADA STOCKS - TSX rises 0.23% to 18,434.59 | ACB | https://www.nasdaq.com/articles/canada-stocks-tsx-rises-0.23-to-18434.59-2021-02-12 | nan | nan | * The Toronto Stock Exchange's TSX rises 0.23 percent to 18,434.59 * Leading the index were Prairiesky Royalty Ltd , up 7.3%, CI Financial Corp , up 5.6%, and Vermilion Energy Inc , higher by 5.6%. * Lagging shares were Aurora Cannabis Inc , down 14.2%, Agnico Eagle Mines Ltd , down 6.0%, and Colliers International Group Inc , lower by 5.3%. * On the TSX 135 issues rose and 83 fell as a 1.6-to-1 ratio favored advancers. There were 13 new highs and no new lows, with total volume of 179.1 million shares. * The most heavily traded shares by volume were Aphria Inc , Aurora Cannabis Inc and Enbridge Inc . * The TSX's energy group rose 2.09 points, or 2.1%, while the financials sector climbed 0.88 points, or 0.3%. * West Texas Intermediate crude futures rose 2.47%, or $1.44, to $59.67 a barrel. Brent crude rose 2.45%, or $1.5, to $62.64 [O/R] * The TSX is up 5.7% for the year. Keywords: CANADA STOCKS/
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | * The Toronto Stock Exchange's TSX rises 0.23 percent to 18,434.59 * Leading the index were Prairiesky Royalty Ltd , up 7.3%, CI Financial Corp , up 5.6%, and Vermilion Energy Inc , higher by 5.6%. * Lagging shares were Aurora Cannabis Inc , down 14.2%, Agnico Eagle Mines Ltd , down 6.0%, and Colliers International Group Inc , lower by 5.3%. * The most heavily traded shares by volume were Aphria Inc , Aurora Cannabis Inc and Enbridge Inc . | * Lagging shares were Aurora Cannabis Inc , down 14.2%, Agnico Eagle Mines Ltd , down 6.0%, and Colliers International Group Inc , lower by 5.3%. * The most heavily traded shares by volume were Aphria Inc , Aurora Cannabis Inc and Enbridge Inc . * The TSX's energy group rose 2.09 points, or 2.1%, while the financials sector climbed 0.88 points, or 0.3%. | * The Toronto Stock Exchange's TSX rises 0.23 percent to 18,434.59 * Leading the index were Prairiesky Royalty Ltd , up 7.3%, CI Financial Corp , up 5.6%, and Vermilion Energy Inc , higher by 5.6%. * Lagging shares were Aurora Cannabis Inc , down 14.2%, Agnico Eagle Mines Ltd , down 6.0%, and Colliers International Group Inc , lower by 5.3%. * The TSX's energy group rose 2.09 points, or 2.1%, while the financials sector climbed 0.88 points, or 0.3%. | * The Toronto Stock Exchange's TSX rises 0.23 percent to 18,434.59 * Leading the index were Prairiesky Royalty Ltd , up 7.3%, CI Financial Corp , up 5.6%, and Vermilion Energy Inc , higher by 5.6%. * On the TSX 135 issues rose and 83 fell as a 1.6-to-1 ratio favored advancers. * The most heavily traded shares by volume were Aphria Inc , Aurora Cannabis Inc and Enbridge Inc . |
36893.0 | 2021-02-12 00:00:00 UTC | Should You Sell Aurora Cannabis Stock? | ACB | https://www.nasdaq.com/articles/should-you-sell-aurora-cannabis-stock-2021-02-12 | nan | nan | Aurora Cannabis (NYSE: ACB) is one of the most popular pot stocks in the market today. Yet perhaps it shouldn't be.
So says MKM Partners analyst Bill Kirk, who cut his rating on Aurora Cannabis from neutral to sell on Friday. He sees the weed producer's stock price falling to $7.09. If he's right, shareholders could suffer losses of roughly 46% from Aurora's current price near $13.15.
Investors should sell Aurora Cannabis stock, according to MKM Partners analyst Bill Kirk. Image source: Getty Images.
Kirk is concerned about the 17% sequential decline in Aurora's consumer cannabis net revenue in the second quarter. He also notes that Aurora failed to deliver on its promise of positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). "We don't see a cost-cutting or growth path that gets to near-term positive EBITDA," Kirk said.
Moreover, with the Canadian market already oversupplied with cannabis, Kirk cautions that Aurora's plan to shift toward higher-priced premium offerings could prove challenging.
For his part, CEO Miguel Martin highlighted Aurora's reduced cash losses in the company's earnings release. The marijuana maker burned through 74% less cash in the second quarter than it did in the year-ago period, though at $70.5 million, this figure is still concerning.
But Martin notes that Aurora still has $565 million in cash reserves. He also believes that the company's cost-cutting will help to "drive significant cash flow in the coming quarters."
For today at least, investors appear to be siding with Kirk. Aurora's stock price was down 9% as of 2:33 p.m. EST.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora Cannabis (NYSE: ACB) is one of the most popular pot stocks in the market today. So says MKM Partners analyst Bill Kirk, who cut his rating on Aurora Cannabis from neutral to sell on Friday. He also notes that Aurora failed to deliver on its promise of positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). | Aurora Cannabis (NYSE: ACB) is one of the most popular pot stocks in the market today. So says MKM Partners analyst Bill Kirk, who cut his rating on Aurora Cannabis from neutral to sell on Friday. Investors should sell Aurora Cannabis stock, according to MKM Partners analyst Bill Kirk. | Aurora Cannabis (NYSE: ACB) is one of the most popular pot stocks in the market today. Investors should sell Aurora Cannabis stock, according to MKM Partners analyst Bill Kirk. * David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Aurora Cannabis Inc. wasn't one of them! | Aurora Cannabis (NYSE: ACB) is one of the most popular pot stocks in the market today. "We don't see a cost-cutting or growth path that gets to near-term positive EBITDA," Kirk said. 10 stocks we like better than Aurora Cannabis Inc. |
36894.0 | 2021-02-12 00:00:00 UTC | Why Aurora Cannabis, OrganiGram Holdings, and HEXO Dropped, Then Bounced Friday | ACB | https://www.nasdaq.com/articles/why-aurora-cannabis-organigram-holdings-and-hexo-dropped-then-bounced-friday-2021-02-12 | nan | nan | What happened
Cannabis stocks have been on a wild ride this week starting with chatter among Reddit users that likely caused a surge across the sector. That trend reversed on Thursday, however, and the stocks are bouncing around again today.
Shares of OrganiGram Holdings (NASDAQ: OGI), for example, dropped 14% early Friday morning, before reversing to a 15% gain as of 10:55 a.m. EST. Shares of Aurora Cannabis (NYSE: ACB) and HEXO (NYSE: HEXO) were also each down double digits early in the session, but have settled back to a drop of 7% and a gain of 3%, respectively.
So what
Along with the retail trading volatility, there is some news for investors to digest today. Aurora Cannabis announced its fiscal 2021 second quarter results last night, reporting progress on its business transformation plan.
Image source: Getty Images.
Now what
Aurora has spent much of the past year raising capital and restructuring its business in an effort to contain its losses. The changes included cutting jobs, closing operations to consolidate production, and selling additional stock. The goals are to reduce expenses, more closely scrutinize capital expenditures, and improve the balance sheet en route to attaining profitability.
In a recent business update, however, Aurora warned that its "back to basics" business strategy "will delay the company's ability to achieve positive adjusted EBITDA as management invests in its consumer business." But in yesterday's report, the company said it is progressing nicely against its plan. "We are confident that this will give Aurora maximum flexibility and position the organization to drive significant cashflow in the coming quarters," Aurora CEO Miguel Martin commented regarding the new strategy. The company reported consumer and medical cannabis net revenue increased 25% and 42% respectively, versus the prior year period.
OrganiGram reported its Canadian adult recreational use net revenue grew 30% in its fiscal 2021 first quarter report last month, but overall net revenue dropped 23% compared to the year-ago period. With a market capitalization of about $960 million, OrganiGram is smaller than these peers, and some investors believe it has more potential.
Other investor optimism comes from speculation on legalization in the U.S. Some Canadian cannabis growers are already positioning themselves for the possibility. HEXO just named a general manager of U.S. operations to oversee growth initiatives of Truss CBD USA, the company's joint venture with brewer Molson Coors (NYSE: TAP). The company is also working with "potential non-beverage CPG partners with whom we are in ongoing discussions," as part of its U.S. operations, according to HEXO CEO and co-founder Sebastien St-Louis.
Investors in the cannabis sector need to be comfortable with volatile share prices, as experienced today. As the industry continues to develop, however, there will be more business fundamentals to follow rather than simply speculating on potential growth. That is where investor focus should remain.
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Howard Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends OrganiGram Holdings. The Motley Fool recommends HEXO. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Shares of Aurora Cannabis (NYSE: ACB) and HEXO (NYSE: HEXO) were also each down double digits early in the session, but have settled back to a drop of 7% and a gain of 3%, respectively. The goals are to reduce expenses, more closely scrutinize capital expenditures, and improve the balance sheet en route to attaining profitability. HEXO just named a general manager of U.S. operations to oversee growth initiatives of Truss CBD USA, the company's joint venture with brewer Molson Coors (NYSE: TAP). | Shares of Aurora Cannabis (NYSE: ACB) and HEXO (NYSE: HEXO) were also each down double digits early in the session, but have settled back to a drop of 7% and a gain of 3%, respectively. In a recent business update, however, Aurora warned that its "back to basics" business strategy "will delay the company's ability to achieve positive adjusted EBITDA as management invests in its consumer business." The company reported consumer and medical cannabis net revenue increased 25% and 42% respectively, versus the prior year period. | Shares of Aurora Cannabis (NYSE: ACB) and HEXO (NYSE: HEXO) were also each down double digits early in the session, but have settled back to a drop of 7% and a gain of 3%, respectively. In a recent business update, however, Aurora warned that its "back to basics" business strategy "will delay the company's ability to achieve positive adjusted EBITDA as management invests in its consumer business." 10 stocks we like better than OrganiGram Holdings When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. | Shares of Aurora Cannabis (NYSE: ACB) and HEXO (NYSE: HEXO) were also each down double digits early in the session, but have settled back to a drop of 7% and a gain of 3%, respectively. That trend reversed on Thursday, however, and the stocks are bouncing around again today. In a recent business update, however, Aurora warned that its "back to basics" business strategy "will delay the company's ability to achieve positive adjusted EBITDA as management invests in its consumer business." |
36895.0 | 2021-02-12 00:00:00 UTC | Aurora Cannabis Inc. (ACB) Q2 2021 Earnings Call Transcript | ACB | https://www.nasdaq.com/articles/aurora-cannabis-inc.-acb-q2-2021-earnings-call-transcript-2021-02-12 | nan | nan | Image source: The Motley Fool.
Aurora Cannabis Inc. (NYSE: ACB)
Q2 2021 Earnings Call
Feb 11, 2021, 5:00 p.m. ET
Contents:
Prepared Remarks
Questions and Answers
Call Participants
Prepared Remarks:
Operator
Greetings, and welcome to the Aurora Cannabis second-quarter 2021 results conference call. [Operator instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Ananth Krishnan, vice president, corporate development and investor relations.
Ananth Krishnan -- Vice President, Corporate Development and Investor Relations
Thanks, Maria, and good afternoon, everyone, and thank you for joining us for the Aurora Cannabis second-quarter fiscal 2021 conference call for the three months ended December 31, 2020. This call is being recorded today, Thursday, February 11, 2021. With me are Aurora's CEO, Miguel Martin; and CFO, Glen Ibbott. After the close of markets today, Aurora issued a news release announcing our financial results for the fiscal second quarter.
This news release and the accompanying financial statements and management discussion and analysis are available on our website or on our SEDAR and EDGAR profiles. Listeners are reminded that certain matters discussed in today's conference call or answers that may be given to questions asked could constitute forward-looking statements that are subject to the risks and uncertainties relating to Aurora's future financial or business performance. Actual results could differ materially from those anticipated in these forward-looking statements. The risk factors that may affect results are detailed in Aurora's annual information form and other periodic filings and registration statements.
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These documents may be accessed via the SEDAR and EDGAR databases. Since we are conducting today's call from our respective remote locations, there may be brief delays, crosstalk, or other minor technical issues during the call. We thank you in advance for your patience and understanding. Following the prepared remarks by Miguel and Glen, we will conduct a question-and-answer session.
[Operator instructions] With that, I'd like to turn the call over to Miguel. Please go ahead, Miguel.
Miguel Martin -- Chief Executive Officer
Thank you, Ananth, and good afternoon. Let me begin with some high-level comments about the quarter. I will then turn the call over to Glen for his financial review, after which I'll come back to discuss our progress to date and why we believe we are very well positioned to take advantage of the massive global cannabis opportunity ahead of us. In short, we had an excellent second quarter, and we're pleased to be tracking to the strategic plan laid out in September when I became CEO.
We are now executing a proven, regulated CPG strategy that I know very well. One that we are confident will give us maximum flexibility to drive growth, cash flow, and shareholder value in the coming quarters. Our fiscal second quarter represents a pivot for Aurora from a full year of tough but shareholder-friendly decisions that will ultimately lay the foundation for the future. We essentially reorganized the business, reset strategy, and mobilized our entire team, where they are now organized behind our strategic plan.
We're squarely on offense. Early progress is already reflected in our financial statements and market share data. But beyond our financial statements, we've made significant strides pursuing margin accretive initiatives. Rest assured that in the coming quarters, Aurora's intent are continuing on this trend.
As you know, our core business is four parts: first, high-margin Canadian medical, where we are No. 1 by revenue; second, international medical, where we continue to see strong growth, in fact, we just recently announced a strategic relationship that should accelerate the business; three, our U.S. CBD business, Reliva, which is the No. 1 Nielsen-ranked CBD brand, and continues to be a platform that provides us with significant optionality in the U.S.; and four, our Canadian rec business, where we've seen the market react positively to both our generation one and gen two products and our ability to enhance quality across both efforts.
We're pleased that for the second quarter, our total cannabis net revenue, excluding provisions, was $70.3 million, an increase of 11% versus the year-ago period. Adjusted gross margin was impacted slightly, but relatively steady in the low 40s. It's important to note that margins would have been 52%, had we not applied the full fixed cost of the Aurora Sky facility during a time when we significantly reduced production and initiated targeted product returns in order to open the channel to higher velocity products. Fortunately, this is mostly offset by steady margins in our medical markets in Canada, Europe, and U.S.
CBD. Combined, the margin in these businesses is generally 60% or higher on a run-rate basis. SG&A was $42.3 million, excluding a one-time charge associated with our strategic plan, this represents a dramatic decrease of 55% from last year's second quarter. Finally, as it relates to Q2, we materially improved our year-over-year adjusted EBITDA loss with a $58 million swing to $12.1 million, excluding restructuring and revenue provisions.
Another big positive for the quarter was the improvement in our cash use by more than 74% versus Q2 2020 and our cash on hand as of yesterday was $565 million. The reduced cash burn plus our newfound balance sheet strength and flexibility allows us to act quickly should now pertain to grow and take market share arises. So the bottom line is we feel great about the quarter and our strategic progress. We're building momentum as we execute our plan, and we firmly believe we have the team, the tools, and the strategy in place to take advantage of a dynamic and exciting market.
I'll now turn it over to Glen to walk through the financial details.
Glen Ibbott -- Chief Financial Officer
Thanks, Miguel. Good afternoon, everyone. Please note that the figures I'll be going over today are all in Canadian dollars and can be found in the press release we issued this afternoon. I would also note that the comparative period for our analysis today is Q2 2020.
We believe this best represents the measure of the company's transformation and improved performance. Where appropriate, I will also note the sequential period comparisons. For our second-quarter fiscal 2021, the three-month period ended December 31, 2020. We saw a strong performance in our medical business, especially international sales, and we continued to transform our consumer business, with the shift to higher quality, higher-margin products.
We also made the decision to significantly reduce production volumes to align with demand. We expect our sales to production ratio in Q3 to be in the 90% range. And we initiated targeted product returns in order to open provincial sales channels to premium product. Yes.
These actions impacted reported revenues and gross margins for Q2, but they provide a sturdy foundation to support higher margins and accelerating cash flow in the coming quarters. In Q2 2021, our net revenue, all of it from Cannabis businesses, was $70.3 million, excluding product return provisions of $2.7 million. Our consumer Cannabis business delivered $31.1 million in net revenue prior to these return provisions and our medical Cannabis segment continued to accelerate, generating $39 million in sales. Adjusted gross margin before fair value adjustments on Cannabis net revenue remained strong at 42%, compared to 48% in the comparative quarter.
Excluding the $2.7 million of product return provisions, our overall Q2 adjusted gross margin was just 300 basis points lower than the prior period. Importantly, I should point out that our decision to reduce production at Sky, align it with demand, and to reposition it to produce our premium flower brands, did impact gross margins in Q2. So underutilization of capacity resulted in close to an 8% reduction in overall gross margins. Some of this is expected to reverse in the future as we have a full quarter of reduced costs at Sky.
Now I'll provide some additional insights into reported revenue and margins. Firstly, let's not lose sight of the importance of our medical business here in Canada and internationally. Our medical revenue was up 42.3% year over year and 16.4% sequentially. This was primarily due to strong performance in the international medical business, which was up 562% year over year and 84% sequentially.
Not only was revenue growth significant, but this segment also carries our highest margins. The growth was driven in part by continued progress in Europe, which is now five times the size than it was a year ago and up 36% sequentially, but this quarter also saw our first shipment of medical Cannabis to Cantek Holdings in Israel. It's also important to note that we continue to have an ongoing advantage in the Canadian medical market share, and this is underscored by a 5.5% increase in revenues year over year. In our medical segment, adjusted gross margins were 56%, relatively consistent with comparative quarters.
However, Q2 margins were impacted by the capacity underutilization at Sky as production was smartly scaled back, and our overall medical gross margins would have been 66% of full capacity. I'd like to draw your attention to the fact that we've been selling in Canadian and European medical markets for over four years, and have seen little to no price compression. So with revenues currently at $39 million and growing and 60% plus gross margins, it's clear that our medical business is a key differentiator for Aurora, and should be an important driver of future cash flows. Looking now at our consumer business.
Aurora's Q2 revenue was $31.1 million, down 7% from Q2 2020, not including return provisions. However, with provisions included, our reported revenue was up 24.7% over the comparative period. We are very pleased that our consumer derivatives net revenue was $11.5 million, an increase of 18.4% sequentially. This was driven by our focus on higher-margin products such as vapes, edibles, and concentrates.
Our consumer average selling price rose 6% in the quarter due to increase in derivative sales and the continuing shift in flower and mix toward our premium brands. Consumer margins were 27%, compared to 38% in the prior quarter, and this is because of the underutilized overhead costs at Sky and an increase in product return provisions. Adjusting for just the return provisions, consumer gross margin would have been 34.2%. Also related to our production and demand alignment, we halt the construction at our Sun facility in Alberta.
As the route forward for this facility is not yet clear, during the quarter, we recorded a noncash impairment of approximately $228 million for this shutdown. Now to SG&A, which includes R&D. We are pleased with our $42 million run rate in Q2. This excludes approximately $2 million of termination costs related to our business transformation.
So stepping back a bit. We've engineered significant change year over year, and that's highlighted by this past quarter's SG&A coming in at 63% of sales versus 143% of sales in the prior-year comparative. We continue to believe this level of SG&A spend is quite sustainable and capable of supporting a much higher revenue line. So pulling all of this together, we generated an adjusted EBITDA loss in Q2 2021 of $12.1 million, and that's excluding revenue provisions and restructuring costs.
That's a dramatic improvement from the $69.9 million adjusted EBITDA loss in the prior year comparative. It was a further $7 million in our Q2 cost of sales that was related to facility and production rationalization. I'm pleased to see that our run-rate EBITDA continues to improve. Now a few important points regarding our balance sheet, cash flows, and cash position.
Inventory and biological assets increased $16 million from the previous quarter, and that's a significant improvement as we made progress rationalizing production levels to current demand. As you know, with an agricultural product, alignment does take time. But our December decision to adjust product reduction was an incredibly important step toward our goal of shifting to a more variable and agile model. Another area of dramatic improvement this past quarter is cash and our use of cash.
Now we used $20.6 million of cash to fund operations, excluding working capital investments, and used a further $2.1 million in contract and employee termination costs. Both are down materially from the prior quarter and cash used in operations is down over 75% from the prior year. We also paid a net $8.8 million for capital expenditures in Q2, down from $15 million in the prior quarter and down from $128 million in the prior-year comparative. We continue to expect cash used for CAPEX to be below $40 million for this fiscal year.
Increased net working capital used $30.4 million in the quarter. However, this was mainly due to shifts from the level of accounts receivable and accounts payable, which we expect to settle out over time. Critically, the net change in inventory and biological assets used $10 million in cash during the quarter, a marked improvement from the $25.1 million in Q1, demonstrating our progress to more closely align production levels of demand. Finally, as of today, we have a very strong cash position with $565 million in the bank and about $97 million of outstanding term debt that is not due until the end of calendar 2022.
We also expect to receive some additional non-dilutive cash inflows from previously announced facility sales and COVID-related government grants over the next several months. So what I think people really need to take away from our Q2 results are the following. We continue to deliver excellent results in our high-margin medical business, both in Canada and International. We're seeing a positively changing product mix in our consumer business and have taken important steps in rationalizing and repositioning production.
SG&A is well controlled and cash flow items continued to improve, supported by a strong balance sheet. So I'm very pleased with our recent performance, and I'm quite satisfied that we have the company well-positioned today and on a firm financial trajectory. I'd now like to turn the call back over to Miguel.
Miguel Martin -- Chief Executive Officer
Thank you, Glen. As you know, calendar 2020 was a difficult year. We made some tough decisions and faced several challenges, not the least of which was rightsizing our cost structure, strengthening our balance sheet, and dealing with the pandemic. Yet by the fall, we formulated and introduced a new strategy, and I know I speak for our entire team when I say we're thrilled to be back on offense, pursuing profitable growth opportunities and creating an economic model that strikes the balance between where the industry is today and where it's going.
The goal of the plan is simple: drive revenue for mostly premium products over variable production costs and significantly lower fixed costs. The upshot will be higher margins, stronger cash flow, and long-term shareholder returns. And having our financial house in order, in my opinion, will attract new business and lead to untold opportunity. Before we go to questions, let me take a deeper dive into our businesses and subsequent strategy starting with medical.
Our domestic and international medical businesses delivered a 42% revenue increase over last year's second quarter and generate consistently high margins in the 60% range. As I've mentioned, we are the No. 1 medical Cannabis company in Canada by revenue today, yet we still have lots of opportunities to grow in the years to come. Just one of the many initiatives we have is moving our patient intake and experience online, where we can now offer substantially more choices to our patients and veterans.
Over time, the medical channel may see some migration to the consumer channel, but we see pockets of demand in the Canadian medical landscape that represent meaningful growth opportunities for Aurora. Aurora is uniquely positioned with the infrastructure, regulatory experience, and compliance systems in place to continue to lead and take share in the medical market. These investments represent a significant barrier to entry and key patient groups represent a very sticky patient group for our products. These attributes of our medical business support our expectation that the Canadian medical channel can continue to generate 60% gross margins for the foreseeable future.
Our international medical segment has been a consistent performer and reported an 84% revenue increase quarter over quarter. We are already one of the leading providers of flower in Germany, and we continue to see opportunities in the oil market. In November, we entered into a strategic supply agreement with Cantek in Israel, providing us with a great opportunity to expand our medical Cannabis brand and industry-leading science. In early January, Aurora and our partner, BfArM, were successfully awarded three of nine lots, which included all available flower lots to the French medical Cannabis tender program.
Aurora has one of the largest global footprints generating revenue in 13 countries today. We're excited about these opportunities and the global momentum they represent for medical Cannabis regimes. Additionally, in January, we announced a long-term strategic agreement with MedReleaf Australia, to exclusively distribute the Aurora, CanniMed, and MedReleaf brands in that country. MedReleaf is an asset-light, sustainable growth platform in Australia that helps physicians, pharmacists, and patients access to high-quality range of Aurora Cannabis medicines.
We're also seeing other countries beginning to approach medical Cannabis more favorably and compassionately, and we expect our experience in Germany, Israel, and Australia to position us to be a front-runner in new markets. That won't be by accident, however, it will result from Aurora's commitment to science, compliance, testing, EU GMP compliant cultivation, and our ability to operate in a highly regulated framework. This is unique to Aurora and provides us with transferable knowledge as we enter new medical markets globally. Now let's turn to our U.S.
CBD segment, which has been receiving a lot of attention due to the democratic control of the presidency in the U.S. as well as both houses of Congress. Our Nielsen's top-ranked U.S. CBD brand, Reliva, remains an enviable strategic platform, and we're excited to be announcing a new brand extension called KG7, an athletic-focused CBD brand in the coming weeks.
Reliva provides us with critical distribution, regulatory experience, and relationships in the key high-growth U.S. market. Reliva focuses on brick-and-mortar stores and as the primary CBD supplier for some of the largest retailers and wholesalers nationally, and our products are in over 22,000 stores. Given its variable cost model, Reliva doesn't require any CAPEX, but as I said, it's a foothold in the largest cannabinoid market in the world, which bodes well for Aurora's global positioning.
We will continue to leverage our science and innovation, and it wouldn't surprise me that the non-THC parts of our portfolio are as big as the THC parts of our portfolio, particularly with positive FDA action in the U.S. Stepping back and specifically on the U.S. THC market, I would say the following. The U.S.
is clearly one of the largest markets today, with legislative reform, that would allow companies like Aurora to operate THC businesses in the U.S. I would expect it could be much bigger. We firmly believe that as a company with deep roots in science and experience in operating under federally legal frameworks, Aurora will have an opportunity to participate in that market in a meaningful way. I will not commit to how we will gain exposure to the current U.S.
THC market, but I can say we won't simply wait for comprehensive legislation. And that we are assessing ways to legally advantage our shareholders today in addition to when comprehensive legislation is in place. One thing I am confident in is that the competitive landscape in the U.S. will look very different if THC is de-scheduled.
And we believe social justice and economic reforms will ultimately drive it. For clarity, whatever we do in the U.S., whether that be in THC or in non-THC businesses, it will be carefully and thoughtfully done and make strategic sense for our shareholders. Moving to the Canadian consumer market. We see it as having significant white space, given the market which is currently seeing a rollout of new stores.
Currently, there are 1,450 stores across Canada. We believe the store count can more than double in the near future. In an effort to capitalize on this opportunity, just last month, we entered into a strategic agreement with Great North Distributors, Canada's first and largest national sales broker for legalized adult-use cannabis. They are now the exclusive representative for our Canadian cannabis retail brands.
Great North reaches across every province in Canada, including established relationships with provincially owned and operated retailers and private retailers in Canada's cannabis industry. Beyond this agreement, our strategic plan includes: first, focus on driving sales of premium brands and flower, particularly with our high-quality, high-premium brands such as Whistler, San Rafael, and Aurora; secondly, win share in key margin accretive growth formats, vapor, pre-rolls, edibles and concentrates; third, as we mentioned, we've already taken meaningful steps to align our production and manufacturing costs away from fixed variable. Let's touch upon each of these topics individually. Core and premium categories are more important for Aurora long-term even as we appreciate the importance of having a brand in the value segment.
This is because the consumer is dynamic, trying different brands, and in doing so, shifting market share. We, therefore, have a great opening to market premium brands with vapes, pre-rolls, and premium flower offerings across multiple price tiers. This will attract premium consumers and over time build loyalty, based on the quality of the product and the experience it provides. As seen in many states in the U.S., there are vibrant premium offerings in all key categories succeeding with consumers.
To that point, across every CPG category, there's always a consumer segment that will pay a premium price for premium products. We are blessed with a few of the best brands in the cannabis industry, Aurora, San Rafael, and Whistler. We are building brand ecosystems around each of them in various formats to foster greater visibility and provide greater choices to the consumers when they could work up the value chain. Achieving this goal will require alignment with production, focusing our resources on growing high-potency, high-terpene premium cultivars on a consistent basis, and reaching consumers who are willing to pay a premium for a premium product.
We are well on our way to building these key pieces of infrastructure. Recall that we generate significantly more gross profit dollars on our premium Aurora, San Rafael, and Whistler flower per gram than we do on Daily Special. And the difference between gross margin contribution per gram can be four times or five times or greater. Therefore, we don't need to be cultivating the low potency flower for Daily Special.
As a first-mover in these decisions, we're better off sourcing that product in the wholesale market more efficiently. Of course, premium segments must also be supported with classic CPG sales, marketing, trade marketing, and consumer engagement methodologies to build awareness, foster affinity, and generate outsized returns. And within vapes and pre-rolls, there is also a lot of opportunities to bring classic CPG elements in packaging and alignment that traditional flower does not lend itself to. We've already experienced a significant improvement in the vape category as the most prominent proof point in our innovation strategy, much like pre-rolls, concentrates, and edibles.
Specifically, we have seen our market share in vape go up from basically zero in September to approximately 8% at the OCS recently, which is great news. We've also launched a new product that we're really excited about, our OG Chemdawg concentrate, and the market reaction has been extremely strong, and we would expect to start seeing similar gains in other margin accretive categories as other new products roll out. So I'm very pleased with our top-line strategy. And as I highlighted, we're making progress on costs.
To give you a bit more detail, at the tail end of fiscal 2020, we announced the closure of four cultivation facilities across our network, and I can confirm that several of those facilities are now shuttered. Most recently, we have terminated construction at our Aurora Sun facility and successfully reduced capacity utilization by 75% at our Aurora Sky facility. This will allow us to focus on premium-quality flower at this facility. We're already seeing data that higher value, higher-margin derivative products is a winning strategy.
So in closing, I think the main takeaway today is that Aurora has never been better positioned strategically, operationally, and financially. We have over $565 million in cash available, the No. 1 medical business in Canada, industry-leading gross margins in our medical Cannabis segment, and some of the strongest brands in the cannabis industry. And I say that at a time when the cannabis industry is presenting us with a generational opportunity.
We intend on seizing the moment, and I look forward to keeping you all updated in the coming quarters. I will now turn it over to the operator for questions. Operator?
Questions & Answers:
Operator
[Operator instructions] Our first question is from Vivien Azer with Cowen. Please proceed with your question.
Vivien Azer -- Cowen and Company -- Analyst
Hi. Good evening. Thanks. My question is on your mix by segment.
Miguel, as you kind of think about the business over, call it, the next 12 or 18 months, clearly, you're very satisfied with the medical Cannabis business and considering the substantially higher-margin than you're getting on that. Do you guys have any internal targets you can share in terms of revenue mix that you hope to see kind of by the end of fiscal '22, for instance? Thanks.
Miguel Martin -- Chief Executive Officer
Yeah. Thank you, Vivien. I'm not going to get to the exact specifics of it. It's a little bit dynamic.
Let me tell you sort of how I look at mix and this is going to sound very familiar to you. First and foremost, when we think about premium to discount mix, discount to me is something you have to deal with, but you really want to look at price gaps and the interplay between the two. I'd like to see, in a perfect world, from a revenue standpoint, about a 70-30 mix, premium to discount. Now some aspects, as you mentioned, of those gen two products may carry a discount moniker, such as Daily Special.
But clearly, a vapor product, a concentrate product, a pre-roll product carries a higher margin. So I guess, the way I would sort of cut that up would be that 70-30 premium to discount or 70-30 of those gen two products plus a premium flower product to discount products. I do think you're going to see a leveling out of the discount flower business in Canada. Clearly, the inventories will continue to be rightsized and that clearly is a pathway forward.
We're also seeing from the provinces as they're starting to go through SKU rationalization and a focus on profitably per SKU that there'll be greater interest from them as well as the retailers on having a more premium focus and a more accretive sort of margin approach as it pertains to gen two versus just low-cost flower. Operator?
Operator
Our next question is with Michael Lavery with Piper Sandler. Please proceed with your question.
Michael Lavery -- Piper Sandler -- Analyst
Thank you. Good evening. I just would love to get a little more thoughts on the U.S. You've touched on it some.
You've made it clear that you've got an interest in maybe making a move ahead of significant reform. Maybe what would it take for what's a sufficient catalyst for that? And/or is something sort of like cannabis acreage deal, what you have in mind? Or is there another pathway on your radar?
Miguel Martin -- Chief Executive Officer
Absolutely. It's a great question. I mean, Michael, obviously, we're staying very close to the shifting legislation and policy landscape that's taking place in the U.S. I think to sort of reframe the question a bit, and then I'll talk about the triggers.
I think it's important to understand what type of company we think is going to be successful in the U.S. We continue to believe that a company like Aurora or companies like us that have a history of operating in a compliant, highly regulated federal environment like Canada or Germany will be advantaged in a federal U.S. construct. I clearly believe the FDA is going to play a role in cannabis and other federal agencies will play a role in cannabis in the U.S.
And so those companies that have operated in that successfully, whether that's manufacturing, GMP, ISO, labeling, sales, and marketing practices, we'll all have significant legs up there. That's not to say the MSOs don't have their own advantages, but Canadian LPs that are science-based and compliance-based and have experience will benefit. It's I think a little bit shortsighted to say that those companies that have been successful around the world wouldn't also be successful in the U.S. Now in terms of catalysts, the course of legislation is promising.
We've heard comments, obviously, from Senator Schumer and others. We're seeing iterations of whether it's the SAFE Banking Act or more states act. I think, first and foremost, a version of the SAFE Banking Act that would allow a bit more clarity around financials, I think, has to make sense. Interstate commerce, clearly, I think, is a benefit and is of interest to many key parties, including ourselves, and I think you're going to see something on that.
And then from that, what type of investment makes sense? I think it's hard to say. But what I can say is we put the cash on the balance sheet to be opportunistic. And I think there's a lot of different ways that a company like Aurora can monetize its experience, its genetics, its IP, its brands and whether that's through M&A or whether that's through partnership, we'd have to see. But clearly, there's going to be a significant advantage that companies like Aurora will have at the time in which the U.S.
legalizes cannabis. And I think we're excited about that, and we'll take advantage of it when the time is right.
Operator
Our next question is from Pablo Zuanic with Cantor Fitzgerald. Please proceed with your question.
Pablo Zuanic -- Cantor Fitzgerald -- Analyst
Look, I mean, just a question for Glen. Obviously, this quarter, medical was 75% of your gross profit. So in terms of the domestic medical business market, that market is not growing, so it's probably going to get more competitive. You're saying you're maintaining your gross margins there.
But talk about the stickiness in that business? Because, yes, you are the leader, but other companies are also talking about gaining share in medical, which is very attractive given the margins. And Glen, second question related to that, you doubled your export $6 million to $12 million. Is that new number sustainable? Do you stay there? Or were there some one-offs this quarter?
Glen Ibbott -- Chief Financial Officer
Thanks, Pablo. Great questions. What we're seeing in Canada and medical is continued strength and actually grow -- what we're seeing is growth in Canada. And as I mentioned, year over year, we've seen that growth.
With a renewed focus on that segment, we've actually put new leadership in there and working very, very hard on making the patient experience as easy as possible, think Amazon, right, just make this a beautiful experience and a focus on our high-value patients. We actually see tremendous opportunity there, Pablo, and we're not signing up to the presumption that that's a market just to be milked to see it through to the end. So no, we expect growth out of that, and we certainly have some internal targets that would be part of that plan over the next couple of years. Internationally, yes, we benefited this quarter from a sale into Israel, that was about a little over $3 million.
We had significant growth across the rest of the country that we sell in. Germany itself was up 21% quarter over quarter. Poland, U.K., a number of countries in Europe are showing good strong growth. And so that might run a little counter to what you're hearing from others, but even in the face of COVID headwinds, our international medical business continues to accelerate.
And that has been growing quarter over quarter. Now we're adding new countries. So the Israel supply agreement may be a little bit lumpy quarter over quarter. But just modeling it in long term is going to be an important market for us.
Pablo Zuanic -- Cantor Fitzgerald -- Analyst
Thank you.
Operator
Our next question is with David Kideckel with ATB Capital Markets. Please proceed with your question.
David Kideckel -- ATB Capital Markets -- Analyst
Hi. Good evening. Congrats on the quarter, all. I wanted to take this pretty high level here, Miguel.
With the recent acquisition of GW Pharmaceuticals, another company that I cover. I'm wondering what you think the ramifications are for the industry as a whole, but also Aurora specifically, just given your strong base within deep science and plant genetics?
Miguel Martin -- Chief Executive Officer
David, thanks for the great question. I think it's validation. If you look at what they paid for it, if you look at what they were getting, if you look at how they plugged into it, clearly, the economics of a strong scientific base, genetics IP, biosynthesis, all the things that you talk about a lot, was recognized as a significant value in that situation. So I think it is validation.
One of the most important aspects of the U.S. is going to be how genetics and IP and those type of assets work in the U.S. There's obviously litigation right now against GW that I think will really set the stage for where that sits. But there's no reason to believe that this category won't operate some of the other categories, and there will be companies like a Monsanto.
There will be a pharma approach to cannabinoids, and it's a deep bench of opportunities there. So I thought it was very bullish sort of representation of the value that we have there. Clearly, experience and compliance and science will win the day in the U.S. We've seen that in Germany.
You see that in plants with the recent tenders. You see it in these other markets. And clearly, the same companies appear to be winning time, after time, after time. And Aurora is one of them and so that's one of the reasons why we're really bullish on the category, particularly as it pertains to the U.S.
because we have that experience. But you're right, the science piece outside of the brands and the rec and the consumer action is really an untold part of the story, and I think, a really exciting piece of it.
Operator
Our next question is with Andrew Carter from Stifel. Please proceed with your question.
Glen Ibbott -- Chief Financial Officer
Andrew, we're not hearing you.
Miguel Martin -- Chief Executive Officer
Andrew, we couldn't hear you.
Andrew Carter -- Stifel Financial Corp. -- Analyst
I apologize. Can you hear me now?
Miguel Martin -- Chief Executive Officer
We can. Go ahead.
Andrew Carter -- Stifel Financial Corp. -- Analyst
Absolutely. Sorry about that. I wanted to ask about the kind of what your expectations are from a consumer business? Because we have the COVID lockdowns in place right now. I assume that's hitting the shipments for the provinces.
Obviously, a seasonally lower quarter. Should that be flat? Have you taken, obviously, a lot of adjustments? Kind of give us kind of thinking of how the Canadian kind of consumer business is trending next quarter.
Miguel Martin -- Chief Executive Officer
You got it. Well, Andrew, listen, it's a bit of a convoluted answer. So if you think about what's happening in Canada right now, there's a couple of things to make it difficult to sort of predict exactly what's happening. First and foremost, you mentioned COVID.
That's having an impact, particularly in Ontario, in the ability of stores to be open and consumers to access their products. Secondly, you're having the provinces in a very sort of aggressive way, start to bring in things like SKU rationalization, and a variety of other aspects to it. Third is there are a lot of sort of LPs that are sitting on low-cost flowers. So I think that's a long-winded way to say, we're going to be in this environment, I think, for a bit longer until we see COVID and the stores open up.
I don't think you're going to see back to that normal growth. But I do expect we'll get back to last quarter's growth. And we're optimistic about that. Right now, there's roughly 1,450, 1,470 stores.
I think every expectation that's going to double in the next six months, and there's a lot of incentive for it to double. We also continue to see volume move from the illicit market or the legacy market into this type of market. And so I think it's hard to predict, Andrew, but I think this disruption that you're seeing right now probably gets you to the, I don't know, beginning of the summer, and then I think things will take off pretty aggressively. The flip side of that is, we haven't really seen an impact in the medical business, which is obviously really strong for us.
And so I think for those that participate in the medical business, you're not going to see the same type of disruption, which benefits folks like Aurora.
Operator
Our next question is with John Zamparo with CIBC. Please proceed with your question.
John Zamparo -- CIBC -- Analyst
Thanks. Good evening. I wanted to follow-up on the earlier question on the international medical business over the next couple of years. I mean, presuming no legalization of any major countries, do you think the primary driver of this growth is going to be taking share or just addressable market growth? And then, secondly, are there arrangements similar to Cantek that you're working on right now that we could potentially see over the coming quarters?
Miguel Martin -- Chief Executive Officer
Yes, John. Thank you. I think if you think about international sales, we see growth opportunities even in existing markets. I mean, as the products become more accustomed to the patients, if the systems become more developed, the economics become more developed.
I think you're going to see a growth like you've seen in medical markets in the U.S. And so we're very bullish on existing markets. What you also see in some of these markets is a movement obviously, from medical to rec, and that's a potential in Israel. I think Israel is early days, but very exciting in terms of what we're seeing there with Cantek.
We mentioned in the written remarks or the prepared remarks, about getting three of the nine tenders in France. Between what's happening in France and the U.K., those are really significant markets, and there is an evolution there. So we have no reason to believe that international can't continue to grow. And while we'll always be looking to take market share from our competitors, one of the things we do see in those international markets is there's a pretty high barrier to entry.
It's expensive, requires a certain skill set, requires a significant amount of experience, requires EU GMP manufacturing, in many cases, which is why we're so thrilled about our facility in the Netherlands that we describe as Nordic. And so I'm very optimistic and bullish on the international markets, whether we get a massive movement in terms of countries opening up or not.
Operator
Our next question is with Tamy Chen with BMO Capital Markets. Please proceed with your question.
Tamy Chen -- BMO Capital Markets -- Analyst
Hi. Thanks for the question. I was wondering if you're able to help us understand or possibly even quantify of your consumer revenue mix this quarter, how much was in that Daily Special category, and how much was the Aurora, San Rafael, Whistler? And then on the gross margins, Glen, I apologize. I may have missed this, but I just wanted to better understand, when you talk about the underutilization or the less absorption of fixed cost, as we think to the fiscal Q3 quarter, I apologize if I missed this, I mean, do you expect that that headwind is larger because it's a full quarter impact? And if you could just kind of clarify again what you meant by that this headwind might reverse course?
Glen Ibbott -- Chief Financial Officer
So let me start with the gross margin, Tamy, and then Miguel can kind of chime in on Daily Special, where he's expecting that to go. What I was referring to with Sky is we actually took the cost out right at the end of the quarter. And I think you saw that we announced publicly mid-December a reduction in headcount and some of the costs that vary with production levels. So we didn't actually get much of a cost reduction in the quarter, although we took production down.
What we'll see in Q3 is that those costs will be gone for the full quarter. So we expect, on a per unit basis, to recover a little bit in terms of our efficiency there. Not wholly, there is some fixed costs. And when we're operating in a 25% capacity, obviously, those fixed costs make each kind of per unit measure, a little bit more expensive.
So we should see improvement in Q3. I have to tell you, Tamy, when we think about margins and EBITDA and just the business, so we're really taking purposeful long-term decision to create value. I'm a little -- I'm going to say is not so fussed about what this will look like in Q3. But over time, we know it's the right thing because a big part of what we're doing at Sky, yes, aligning our production with our demand.
But almost as importantly, is repositioning Sky to be able to produce our premium products, and you can think of the difference in the economics, as Miguel alluded to, when we're selling products from that facility that generate a three times, four times or more times the gross profit dollars. So that's a big part of it. So we expect margins to improve through two things, just the full quarterly cost recovery, but more importantly, shifting to a higher average selling price coming out of that facility. Miguel, your thoughts on Daily Special and where we're at if you wanted to?
Miguel Martin -- Chief Executive Officer
Yes. I mean, Daily Special had a high watermark, 13, 14 share back in March and April. It really had that sort of price point to itself and now it's roughly half of that. We've made significant changes in Daily Special.
That's not to say we're focused on discount. But as I mentioned, pretty significant changes to the potency and terp levels of that product. I think we'll have to see where that falls. I'm much more interested in San Rafael, and to be honest, Aurora and Whistler.
It's early days on that turnaround plan. It's got really sort of three parts to it. The first will be the higher quality product. We've seen it in -- already getting through Québec, which has lower days on hand than some of the other provinces, and we've been pretty pleased with that.
We'll start to see it in the other quarters. You'll pick up on it in Hifyre and Headset data and Buddy data that I know you look at. And then start to see some further work on Aurora and Whistler. So hard to say where that's going to land, not knowing the competitive thing.
But as I mentioned earlier, with Vivien's comment, long term, we'd like to see 70% of our revenue come from premium products in gen two and 30% from the discount area, particularly low-cost flower. So I think the best answer, Tamy, I can tell you is our first launch with that vapor product, we were pleased with that. Next was concentrating, and it takes a little bit longer on the flower. But this quarter and next quarter, I think you'll start to see that, and I'll be able to give you a better answer in terms of mix and blend.
Operator
Our next question is with Matt Bottomley with Canaccord Genuity. Please proceed with your question.
Matt Bottomley -- Canaccord Genuity -- Analyst
Thank you. Good evening, everyone. Just wanted to dig a little deeper on the adult-use penetration here when we look at maybe consumer mind share, took a step back here in sequential declines in the consumer side. But can you give any color as to how you think your sales to end users out of these dispensaries? Because I think the inventory balances and the lower days of sales on hand here, it's affecting all the players across the board here in Canada.
So just any color on how you think your branded products are actually selling in these dispensaries, particularly relative to last quarter? And then, lastly, any commentary on your adjusted EBITDA for next quarter? I know you said last earnings season that potentially you'd get close to breakeven this quarter. So is that possible as we look to fiscal Q3?
Miguel Martin -- Chief Executive Officer
You got it. So on the adjusted EBITDA, part of the change in the financing allowed us to not have to hardwire EBITDA targets by quarter. I understand people are interested in it. But there are things that you want to be able to do to naturally run your business.
As an example, the significant investment we made to put a higher-quality product into the system, take back lower quality product, accelerate it through the provinces has an impact to EBITDA. If we were just singularly focused on that, we wouldn't do it, which is not the right thing for the business, nor is it the right thing for the consumer. So what I can tell you, Matt, is it's our intent to make progress. We've done that here pretty significantly.
And we intend to keep doing that. It is my stated goal to run a profitable business. But I think hardwiring or giving guidance to a particular date when you have a category that's this dynamic and moving this quickly, I think you do yourself a disservice. In terms of takeaway data, we're a bit -- we get some from some of the key accounts that we partner with, a Choom or a High Tide or a Meta or other -- Nova, or others.
And what I would say is what you'd expect, the newer, higher quality, higher potency product, we see much better take rates. I mentioned the 8% quick move that we saw in our vapor launch. Concentrates are doing really well. I think it's a bit early days on some other sides of the flower.
What I will tell you though is you're right, there definitely is an impact across all LPs. What's happening, it's not just COVID though, it's also, I think, the evolution of how the provinces are handling days on hand, how they're handling SKU rationalization, how they're handling the cadence of new products, it's definitely a change. And I think as they adjust here, and I give them a lot of respect for how they're going about it, as the rest of us try to navigate that as well. It will be a bit bumpy, but in the long run, I think it's the right thing for the category, particularly as you're adding so many stores.
So I think we're in a bit of a weird time here. There are impacts across the system as we get on the other side of COVID and more stores open and the data gets better, which is something we're really pleased with. The data is getting better, the syndicated data. I'll be able to give you a much better answer in terms of retail takeaway and some of the other core metrics that you're used to hearing from.
Operator
Our next question is with Matt McGinley from Needham. Please proceed with your question.
Matt McGinley -- Needham & Company -- Analyst
Thank you. So you noted that you expect to see continued improvement in the rate of free cash flow burn, but the top line at present doesn't look like it will be strong enough to revert the cash flow back to a positive state without a substantially larger inflection in revenue or cost structure. So the question is, how much offense can you play with strategic M&A if you're still burning cash at such a high rate? Unless the M&A is cash generative, which it seldom is, do you feel the visibility into improved operating fundamentals is there where you could do that without putting the company at risk?
Miguel Martin -- Chief Executive Officer
Listen, we continue to expect to make progress on it. I think we're getting close to a point where things look a lot different than they have historically. If you look at what we need to be able to execute our plan, we don't need cash to do it. Our last big significant investment we needed to make was the finishing of the Netherlands facility to be EU GMP, and we do expect the rec business to turn around.
The other three parts of our business are doing really well. So we're comfortable with it. In terms of being able to make a play, I don't think it's out of the woods that there would be something that would have upside to it that would allow it to be more obvious, but we're not concerned about it. We've had the best cash position we've ever had.
This is the best state the balance sheet's been in for a long period of time, and we're going to continue to find efficiencies and work our way forward. So I'm not concerned at all that we have what we need to execute our plan. I'm not concerned that we don't have what we need in order to make a move if we needed to.
Operator
Our next question is Vivien Azer with Cowen. Please proceed with your question.
Vivien Azer -- Cowen and Company -- Analyst
Thanks for taking the follow-up. I just wanted to clarify, Miguel, I apologize if you misunderstood my question or I didn't deliver it well. My question was around a targeted mix shift between medical and consumer given the very high margins on your medical Cannabis business?
Miguel Martin -- Chief Executive Officer
You got it. Viv, I'm sure you didn't say it wrong. I'm sure I misunderstood it. I expect medical to be steady and potentially slightly up.
As Glen was quite articulate. We have not seen margin compression in that business. In terms of -- from a mix difference, we do expect to see growth in the rec business and then potentially is upside internationally medically. I don't know how to put that all together, other than saying we don't believe that the Canadian medical business is going to decline, and we do think we can not only grow it, but gain share.
You've seen some pretty significant union announcements around medical Cannabis benefits that give that an opportunity. I also think that there's opportunities in moving some folks from the legacy market into it. Internationally, medically, the medical business has the potential to be stronger. We're seeing these early days in Israel.
We're seeing growth in other key markets, such as Germany and Poland, and we do expect to grow the rec business. How that all plays out with COVID and store counts. In Canada, it's hard for me to say, Viv, but that's how I would sort of describe it. So I apologize if it doesn't give you the precision that you may want.
Operator
Our next question is from Adam Buckman with Scotiabank. Please proceed with your question.
Adam Buckham -- Scotiabank -- Analyst
Good evening. Thanks for taking my question. Now I just wanted to touch on the Reliva business if possible. Now it looks like it contributed roughly $1 million to the top line in the quarter and $2.7 million on a six-month basis, which I believe is a little bit of a deceleration versus historicals.
Can you maybe walk us through what the bottleneck is on the CBD side? And then what catalysts we should be looking for in terms of acceleration in this line?
Miguel Martin -- Chief Executive Officer
Great. I'm more than happy to talk about Reliva. The catalyst is very simple. It's FDA regulation.
We've seen some very positive news as of late around Dushey and the potential placement of CBD within a dietary supplement framework. We'd have to see what that looks like. It was always my belief that the additive nature of Reliva or Aurora, a company that is science and deep genetics and a variety of other things, puts it in a place where Reliva would be advantaged with the FDA in the same way that you saw vapor companies be advanced with the FDA as they connected up with large tobacco companies. So there's that.
I mean, Reliva right now is wonderful optionality. And the reason I think you've seen a bit of a deceleration is COVID has pretty dramatically affects grocery stores, supermarkets, convenience stores, and pharmacies around foot traffic. And so it just is not as viable. Now that being said, we continue to garner significant regulatory learnings and experiences, the fact that those products are in stores in 23,000 stores and are in the top three wholesalers in the U.S., give it a pretty significant leg up at a time in which I believe we roll out comprehensive FDA regulation, particularly around ingestibles.
So we're excited about Reliva. We'll be launching a new brand called Kg7 that I mentioned in our prepared remarks. And I clearly expect, whether you want to say that the U.S. CBD business is $2 billion or $5 billion or $10 billion, that under an FDA protocol that allows for the sale of it by compliant companies, Reliva is going to be advantaged.
And I think that's going to be a time in which it definitely will be material to it. And the other part is Reliva is a brick-and-mortar brand. And I know in an age of e-com and Amazon and everything else, but the reality is it requires a lot of regulatory expertise to operate in brick-and-mortar stores, and we think that's a big advantage for us at a time in which the FDA is, I believe, will pass comprehensive science-based legislation. So that's how I would describe the Reliva situation today.
The only other point I would make is we are seeing international markets open up for CBD. And that's exciting, I think, for a brand like Reliva. And you may even see that throughout the Aurora system in a variety of different ways that complement the infrastructure we have in those countries. So I think that's another piece of it.
More to follow-on that in future quarters.
Operator
Our next question is with John Chu with Desjardins Capital Market. Please proceed with your question.
John Chu -- Desjardins Capital Market -- Analyst
Hi. Good evening. I guess my main question here is with the pivot to a premium focused -- the key question for me is whether or not Sky is capable of producing premium flower. So I'll just -- let's pick from some of the texts I've read in the MD&A.
You're still conducting tests on Sky's abilities, but can you give us a bit of an insight as to how these tests are progressing? Because, obviously, being able to produce that premium flower Sky is core to this premium strategy.
Miguel Martin -- Chief Executive Officer
Yes. I'd be happy to, John. I mean, first, though, let me remind everybody, we have other significant facilities beyond Sky. Obviously, Sky is one of the largest and is an important piece in producing high-quality flower at a low price.
So we have tremendous experience, whether that's at facilities like Whistler or River or Ridge or whether it's at our Nordic facility. So it's not like we're new to producing 20-plus potency product with high terp levels and high quality. So there's a long history of Aurora being successful with Whistler, San Rafael, and Aurora products. And as it pertains to Sky, we are making progress.
It is a pivot, and there's no question about that. We made the tough decision of taking it down to 25% production that allows us the ability to test a variety of different mechanisms and systems and cultivars and genetics at the Sky facility. I would argue, though, that we have several of the deepest experience and some of the best scientists. And so we're well on our way to see that.
We also are complementing that process through external buy, which allows us additional flexibility. But I think the best thing I can describe is we're early on to that process. We just made the decision in December to take it down. I think we'll be able to talk more specifically about it in the coming quarters.
But this isn't reinventing the wheel. This isn't establishing new protocols or developing new skills for us. It's taking what we've been able to do for years in other facilities and applying it to the Sky facility. So that's how I would describe it.
Operator
Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to turn the call back over to Miguel Martin, chief executive officer.
Miguel Martin -- Chief Executive Officer
Well, thank you, everyone. We really appreciate it. We're awfully excited about where the company is. We're even more excited about where the company is going.
We appreciate your questions. We appreciate your interest. And while it's early days for me as the new CEO, I can tell you, the team, the infrastructure, and the entire strategic plan is well on track, and we look forward to bringing you even better results in the quarters to come. Thank you.
I hope all your families are safe and well. All the best. Bye.
Operator
[Operator signoff]
Duration: 59 minutes
Call participants:
Ananth Krishnan -- Vice President, Corporate Development and Investor Relations
Miguel Martin -- Chief Executive Officer
Glen Ibbott -- Chief Financial Officer
Vivien Azer -- Cowen and Company -- Analyst
Michael Lavery -- Piper Sandler -- Analyst
Pablo Zuanic -- Cantor Fitzgerald -- Analyst
David Kideckel -- ATB Capital Markets -- Analyst
Andrew Carter -- Stifel Financial Corp. -- Analyst
John Zamparo -- CIBC -- Analyst
Tamy Chen -- BMO Capital Markets -- Analyst
Matt Bottomley -- Canaccord Genuity -- Analyst
Matt McGinley -- Needham & Company -- Analyst
Adam Buckham -- Scotiabank -- Analyst
John Chu -- Desjardins Capital Market -- Analyst
More ACB analysis
All earnings call transcripts
This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora Cannabis Inc. (NYSE: ACB) Q2 2021 Earnings Call Feb 11, 2021, 5:00 p.m. Operator [Operator signoff] Duration: 59 minutes Call participants: Ananth Krishnan -- Vice President, Corporate Development and Investor Relations Miguel Martin -- Chief Executive Officer Glen Ibbott -- Chief Financial Officer Vivien Azer -- Cowen and Company -- Analyst Michael Lavery -- Piper Sandler -- Analyst Pablo Zuanic -- Cantor Fitzgerald -- Analyst David Kideckel -- ATB Capital Markets -- Analyst Andrew Carter -- Stifel Financial Corp. -- Analyst John Zamparo -- CIBC -- Analyst Tamy Chen -- BMO Capital Markets -- Analyst Matt Bottomley -- Canaccord Genuity -- Analyst Matt McGinley -- Needham & Company -- Analyst Adam Buckham -- Scotiabank -- Analyst John Chu -- Desjardins Capital Market -- Analyst More ACB analysis All earnings call transcripts This article is a transcript of this conference call produced for The Motley Fool. Listeners are reminded that certain matters discussed in today's conference call or answers that may be given to questions asked could constitute forward-looking statements that are subject to the risks and uncertainties relating to Aurora's future financial or business performance. | Operator [Operator signoff] Duration: 59 minutes Call participants: Ananth Krishnan -- Vice President, Corporate Development and Investor Relations Miguel Martin -- Chief Executive Officer Glen Ibbott -- Chief Financial Officer Vivien Azer -- Cowen and Company -- Analyst Michael Lavery -- Piper Sandler -- Analyst Pablo Zuanic -- Cantor Fitzgerald -- Analyst David Kideckel -- ATB Capital Markets -- Analyst Andrew Carter -- Stifel Financial Corp. -- Analyst John Zamparo -- CIBC -- Analyst Tamy Chen -- BMO Capital Markets -- Analyst Matt Bottomley -- Canaccord Genuity -- Analyst Matt McGinley -- Needham & Company -- Analyst Adam Buckham -- Scotiabank -- Analyst John Chu -- Desjardins Capital Market -- Analyst More ACB analysis All earnings call transcripts This article is a transcript of this conference call produced for The Motley Fool. Aurora Cannabis Inc. (NYSE: ACB) Q2 2021 Earnings Call Feb 11, 2021, 5:00 p.m. Our consumer Cannabis business delivered $31.1 million in net revenue prior to these return provisions and our medical Cannabis segment continued to accelerate, generating $39 million in sales. | Operator [Operator signoff] Duration: 59 minutes Call participants: Ananth Krishnan -- Vice President, Corporate Development and Investor Relations Miguel Martin -- Chief Executive Officer Glen Ibbott -- Chief Financial Officer Vivien Azer -- Cowen and Company -- Analyst Michael Lavery -- Piper Sandler -- Analyst Pablo Zuanic -- Cantor Fitzgerald -- Analyst David Kideckel -- ATB Capital Markets -- Analyst Andrew Carter -- Stifel Financial Corp. -- Analyst John Zamparo -- CIBC -- Analyst Tamy Chen -- BMO Capital Markets -- Analyst Matt Bottomley -- Canaccord Genuity -- Analyst Matt McGinley -- Needham & Company -- Analyst Adam Buckham -- Scotiabank -- Analyst John Chu -- Desjardins Capital Market -- Analyst More ACB analysis All earnings call transcripts This article is a transcript of this conference call produced for The Motley Fool. Aurora Cannabis Inc. (NYSE: ACB) Q2 2021 Earnings Call Feb 11, 2021, 5:00 p.m. It's important to note that margins would have been 52%, had we not applied the full fixed cost of the Aurora Sky facility during a time when we significantly reduced production and initiated targeted product returns in order to open the channel to higher velocity products. | Aurora Cannabis Inc. (NYSE: ACB) Q2 2021 Earnings Call Feb 11, 2021, 5:00 p.m. Operator [Operator signoff] Duration: 59 minutes Call participants: Ananth Krishnan -- Vice President, Corporate Development and Investor Relations Miguel Martin -- Chief Executive Officer Glen Ibbott -- Chief Financial Officer Vivien Azer -- Cowen and Company -- Analyst Michael Lavery -- Piper Sandler -- Analyst Pablo Zuanic -- Cantor Fitzgerald -- Analyst David Kideckel -- ATB Capital Markets -- Analyst Andrew Carter -- Stifel Financial Corp. -- Analyst John Zamparo -- CIBC -- Analyst Tamy Chen -- BMO Capital Markets -- Analyst Matt Bottomley -- Canaccord Genuity -- Analyst Matt McGinley -- Needham & Company -- Analyst Adam Buckham -- Scotiabank -- Analyst John Chu -- Desjardins Capital Market -- Analyst More ACB analysis All earnings call transcripts This article is a transcript of this conference call produced for The Motley Fool. 1 by revenue; second, international medical, where we continue to see strong growth, in fact, we just recently announced a strategic relationship that should accelerate the business; three, our U.S. CBD business, Reliva, which is the No. |
36896.0 | 2021-02-12 00:00:00 UTC | Pre-Market Most Active for Feb 12, 2021 : SOS, TLRY, INO, FUSE, ACB, CCIV, XERS, SPCE, APHA, OGI, NOK, SQQQ | ACB | https://www.nasdaq.com/articles/pre-market-most-active-for-feb-12-2021-%3A-sos-tlry-ino-fuse-acb-cciv-xers-spce-apha-ogi-nok | nan | nan | The NASDAQ 100 Pre-Market Indicator is down -16.4 to 13,717.95. The total Pre-Market volume is currently 33,093,910 shares traded.
The following are the most active stocks for the pre-market session:
SOS Limited (SOS) is -0.73 at $5.59, with 12,724,463 shares traded., following a 52-week high recorded in prior regular session.
Tilray, Inc. (TLRY) is -1.44 at $30.72, with 4,100,236 shares traded. TLRY's current last sale is 279.27% of the target price of $11.
Inovio Pharmaceuticals, Inc. (INO) is +2.64 at $15.64, with 3,994,991 shares traded. INO's current last sale is 130.33% of the target price of $12.
Fusion Acquisition Corp. (FUSE) is +0.64 at $12.84, with 3,497,450 shares traded.
Aurora Cannabis Inc. (ACB) is -1.32 at $13.15, with 3,056,215 shares traded. ACB's current last sale is 140.49% of the target price of $9.36.
Churchill Capital Corp IV (CCIV) is +3.2999 at $34.80, with 2,144,271 shares traded.
Xeris Pharmaceuticals, Inc. (XERS) is +1.44 at $8.07, with 2,054,071 shares traded. As reported by Zacks, the current mean recommendation for XERS is in the "strong buy range".
Virgin Galactic Holdings, Inc. (SPCE) is -5.74 at $53.67, with 1,410,198 shares traded. SPCE's current last sale is 178.9% of the target price of $30.
Aphria Inc. (APHA) is -0.68 at $16.20, with 1,284,351 shares traded. As reported by Zacks, the current mean recommendation for APHA is in the "buy range".
Organigram Holdings Inc. (OGI) is +0.01 at $3.68, with 1,278,304 shares traded. OGI's current last sale is 207.91% of the target price of $1.77.
Nokia Corporation (NOK) is +0.04 at $4.14, with 1,164,817 shares traded. NOK's current last sale is 85.36% of the target price of $4.85.
ProShares UltraPro Short QQQ (SQQQ) is +0.06 at $12.21, with 1,034,225 shares traded. This represents a 1.24% increase from its 52 Week Low.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora Cannabis Inc. (ACB) is -1.32 at $13.15, with 3,056,215 shares traded. ACB's current last sale is 140.49% of the target price of $9.36. Churchill Capital Corp IV (CCIV) is +3.2999 at $34.80, with 2,144,271 shares traded. | Aurora Cannabis Inc. (ACB) is -1.32 at $13.15, with 3,056,215 shares traded. ACB's current last sale is 140.49% of the target price of $9.36. TLRY's current last sale is 279.27% of the target price of $11. | Aurora Cannabis Inc. (ACB) is -1.32 at $13.15, with 3,056,215 shares traded. ACB's current last sale is 140.49% of the target price of $9.36. The total Pre-Market volume is currently 33,093,910 shares traded. | ACB's current last sale is 140.49% of the target price of $9.36. Aurora Cannabis Inc. (ACB) is -1.32 at $13.15, with 3,056,215 shares traded. TLRY's current last sale is 279.27% of the target price of $11. |
36897.0 | 2021-02-12 00:00:00 UTC | Will There Be More M&A for the Cannabis Industry in 2021? | ACB | https://www.nasdaq.com/articles/will-there-be-more-ma-for-the-cannabis-industry-in-2021-2021-02-12 | nan | nan | In the past few months, some big deals have taken place in the cannabis industry. In December 2020, there was news of a near-$4 billion merger including Canadian pot giants Aphria (NASDAQ: APHA) and Tilray (NASDAQ: TLRY), which will create the largest cannabis company in the world in terms of revenue. Earlier this month, Jazz Pharmaceuticals (NASDAQ: JAZZ) also announced it would be acquiring GW Pharmaceuticals (NASDAQ: GWPH). And with more states legalizing marijuana and a slightly more pot-friendly presidential administration and U.S. Congress in place, there's tons of excitement in the industry right now.
Is the industry ripe for more mergers and acquisitions (M&As)? Below, I'll take a look at some of the industry's largest deals and whether cannabis investors should expect to see more action this year.
Image source: Getty Images.
A look back at some of the sector's most notable deals
It's not uncommon for cannabis companies to acquire other businesses. In the U.S. pot market, where pot is illegal at the federal level and can't cross state lines, it has become a necessary form of expansion. One of Curaleaf's largest acquisitions was the purchase of Grassroots last year for $875 million, which increased the number of states it operated in from 18 to 23.
Moves including large publicly traded companies in the cannabis sector or other industries, however, are not as common. That's what makes the Aphria-Tilray merger so unique. The last time there was such a notable deal came when Aurora Cannabis acquired MedReleaf for $2.5 billion in 2018. There's also the Canopy Growth acquisition of Acreage that was initially priced at $3.4 billion -- but that transaction still isn't complete because of the illegality of marijuana in the U.S. Constellation Brands first invested 245 million Canadian dollars in Canopy Growth in 2017 (it has since added another $4 billion). The other notable outsider to dip its toes in the industry is tobacco maker Altria, which invested $1.8 billion in Cronos in 2018.
That's why Jazz Pharmaceuticals' announcement that it would be acquiring GW Pharmaceuticals for a record-breaking $7.2 billion, paying a premium of about 50% for the stock, made headlines It's not often that non-cannabis companies get involved in the industry, and it has got investors excited and wondering about the possibilities.
Are the recent deals a sign of things to come?
In the Canadian cannabis market, large deals simply haven't been the norm. However, the stage could be set for more. Aurora was previously linked to Aphria in talks, and nothing ever came of them. And while Aphria has found a new partner in Tilray, Aurora could still be looking for a company to join forces with. Sundial Growers said in its last earnings release that it would be looking at all possibilities in a "strategic alternative review," and it's another company that might be out on the hunt for deals in order to bolster its business.
Another big announcement looks probable for the Canadian cannabis sector in 2021, especially if companies look to get bigger to compete with Tilray and Aphria for top spot in the market. And deals in the U.S. will continue to take place, as new recreational markets like Arizona and New Jersey will create some exciting opportunities for multistate operators this year.
The bigger question mark, and what will likely get cannabis investors excited, is if companies from other industries get involved in the wheeling and dealing. Jazz is in the pharmaceutical industry, and although GW's marquee product is cannabis-based Epidiolex, it's technically a pharmaceutical company as well. The acquisition is not nearly as risky or groundbreaking of a move as the investments that Altria and Constellations Brands made in the pot sector. The deal does technically give Jazz exposure to the cannabis market, but it's not investing in a bona fide pot producer: The U.S. Food and Drug Administration (FDA) approved Epidiolex in 2018, making GW one of the safer stocks in the cannabis space.
The recent deal involving GW and Jazz could prove to be a one-off situation. Although there is hope that under President Biden, meaningful marijuana reform could take place, until full legalization happens, many big-name companies from other industries are likely to remain on the fence. There are simply too many logistical and legal challenges that would come with expanding into the sector today. And despite shifts in D.C. politics, there's no guarantee that the legality of marijuana will drastically change anytime soon.
What does this mean for investors?
The recent merger including Aphria and Tilray could trigger some moves in Canada. Jazz's acquisition of GW will likely not have the same effect on the industry, as it's technically a pharma deal.
But whether you're looking to buy a cannabis company that could be an attractive acquisition target or just want to make a good investment, you should consider pot stocks that have strong balance sheets and modest valuations that potential acquirers could afford to take a chance on. There isn't a magic formula that will tell you which company will be the next one to be bought, as it'll depend on a variety of factors. But by investing in a decently priced cannabis stock that has good financials, even if a deal doesn't end up happening, you'll still end up boasting a good investment.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
Simply click here to get the full story now.
Learn more
David Jagielski has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Constellation Brands. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Sundial Growers said in its last earnings release that it would be looking at all possibilities in a "strategic alternative review," and it's another company that might be out on the hunt for deals in order to bolster its business. Although there is hope that under President Biden, meaningful marijuana reform could take place, until full legalization happens, many big-name companies from other industries are likely to remain on the fence. But whether you're looking to buy a cannabis company that could be an attractive acquisition target or just want to make a good investment, you should consider pot stocks that have strong balance sheets and modest valuations that potential acquirers could afford to take a chance on. | In December 2020, there was news of a near-$4 billion merger including Canadian pot giants Aphria (NASDAQ: APHA) and Tilray (NASDAQ: TLRY), which will create the largest cannabis company in the world in terms of revenue. Earlier this month, Jazz Pharmaceuticals (NASDAQ: JAZZ) also announced it would be acquiring GW Pharmaceuticals (NASDAQ: GWPH). In the Canadian cannabis market, large deals simply haven't been the norm. | In December 2020, there was news of a near-$4 billion merger including Canadian pot giants Aphria (NASDAQ: APHA) and Tilray (NASDAQ: TLRY), which will create the largest cannabis company in the world in terms of revenue. That's why Jazz Pharmaceuticals' announcement that it would be acquiring GW Pharmaceuticals for a record-breaking $7.2 billion, paying a premium of about 50% for the stock, made headlines It's not often that non-cannabis companies get involved in the industry, and it has got investors excited and wondering about the possibilities. The deal does technically give Jazz exposure to the cannabis market, but it's not investing in a bona fide pot producer: The U.S. Food and Drug Administration (FDA) approved Epidiolex in 2018, making GW one of the safer stocks in the cannabis space. | Earlier this month, Jazz Pharmaceuticals (NASDAQ: JAZZ) also announced it would be acquiring GW Pharmaceuticals (NASDAQ: GWPH). In the Canadian cannabis market, large deals simply haven't been the norm. The recent merger including Aphria and Tilray could trigger some moves in Canada. |
36898.0 | 2021-02-11 00:00:00 UTC | Aurora Cannabis Pops After Hours on Second-Quarter Results | ACB | https://www.nasdaq.com/articles/aurora-cannabis-pops-after-hours-on-second-quarter-results-2021-02-11 | nan | nan | Aurora Cannabis (NYSE: ACB) was lively in after-hours trading on Thursday, following release of its second-quarter 2021 figures following market close.
The high-profile Canadian marijuana company's net revenue for the period was just under 67.7 million Canadian dollars ($53.3 million), which was down marginally from the previous quarter's results, but 23% higher on a year-over-year basis.
Meanwhile, the comprehensive net loss came in at nearly CA$302 million ($238 million), or CA$1.74 ($1.37) per share. This put it between the first-quarter shortfall of CA$106 million ($83 million) and the CA$1.3 billion ($1.0 million) of the year-ago quarter.
Image source: Getty Images.
Encouragingly, both of Aurora's main product categories -- recreational marijuana and medical product -- saw healthy annual rises. For the former, this was 25%, helped by a CA$1.7 million ($1.3 million) sequential improvement in the sale of derivatives such as edibles and vapes.
The medical segment, the larger of the two in terms of sales for the company, grew 42%. This is particularly heartening given that medical cannabis has significantly higher margins than its recreational counterpart. International sales were the fuel that lit the rocket, as a growing market abroad boosted Aurora's medical take by 562%.
The company didn't hesitate to point out that its use of cash has fallen dramatically, with a 74% year-over-year chop to CA$70.5 million ($55.5 million) for the quarter. At the end of the period, it had CA$565 million ($445 million) in cash on its books.
In early after-hours trading Thursday, Aurora stock was up by more than 8%, well ahead of the gain in the S&P 500 during standard market hours.
Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
And make no mistake – it is coming.
Cannabis legalization is sweeping over North America – 15 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.
And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.
Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Aurora Cannabis (NYSE: ACB) was lively in after-hours trading on Thursday, following release of its second-quarter 2021 figures following market close. International sales were the fuel that lit the rocket, as a growing market abroad boosted Aurora's medical take by 562%. Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks. | Aurora Cannabis (NYSE: ACB) was lively in after-hours trading on Thursday, following release of its second-quarter 2021 figures following market close. The high-profile Canadian marijuana company's net revenue for the period was just under 67.7 million Canadian dollars ($53.3 million), which was down marginally from the previous quarter's results, but 23% higher on a year-over-year basis. Encouragingly, both of Aurora's main product categories -- recreational marijuana and medical product -- saw healthy annual rises. | Aurora Cannabis (NYSE: ACB) was lively in after-hours trading on Thursday, following release of its second-quarter 2021 figures following market close. The high-profile Canadian marijuana company's net revenue for the period was just under 67.7 million Canadian dollars ($53.3 million), which was down marginally from the previous quarter's results, but 23% higher on a year-over-year basis. This put it between the first-quarter shortfall of CA$106 million ($83 million) and the CA$1.3 billion ($1.0 million) of the year-ago quarter. | Aurora Cannabis (NYSE: ACB) was lively in after-hours trading on Thursday, following release of its second-quarter 2021 figures following market close. The high-profile Canadian marijuana company's net revenue for the period was just under 67.7 million Canadian dollars ($53.3 million), which was down marginally from the previous quarter's results, but 23% higher on a year-over-year basis. International sales were the fuel that lit the rocket, as a growing market abroad boosted Aurora's medical take by 562%. |
36899.0 | 2021-02-11 00:00:00 UTC | CANADA STOCKS - TSX falls 0.45% to 18,373.81 | ACB | https://www.nasdaq.com/articles/canada-stocks-tsx-falls-0.45-to-18373.81-2021-02-11 | nan | nan | * The Toronto Stock Exchange's TSX falls 0.45 percent to 18,373.81
* Leading the index were Inter Pipeline Ltd , up 29.1%, Colliers International Group Inc CIGI.TO, up 11.7%, and Seven Generations Energy Ltd VII.TO, higher by 5.7%.
* Lagging shares were Aphria Inc APHA.TO, down 36.5%, Aurora Cannabis Inc ACB.TO, down 22.7%, and Cronos Group Inc CRON.TO, lower by 22.0%.
* On the TSX 93 issues rose and 125 fell as a 0.7-to-1 ratio favored decliners. There were 13 new highs and no new lows, with total volume of 203.7 million shares.
* The most heavily traded shares by volume were Aphria Inc APHA.TO, Aurora Cannabis Inc ACB.TO and Inter Pipeline Ltd IPL.TO.
* The TSX's energy group .SPTTEN fell 0.62 points, or 0.6%, while the financials sector .SPTTFS climbed 1.07 points, or 0.3%.
* West Texas Intermediate crude futures CLc1 fell 1.21%, or $0.71, to $57.97 a barrel. Brent crude LCOc1 fell 0.98%, or $0.6, to $60.87 O/R
* The TSX is up 5.4% for the year.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | * Lagging shares were Aphria Inc APHA.TO, down 36.5%, Aurora Cannabis Inc ACB.TO, down 22.7%, and Cronos Group Inc CRON.TO, lower by 22.0%. * The most heavily traded shares by volume were Aphria Inc APHA.TO, Aurora Cannabis Inc ACB.TO and Inter Pipeline Ltd IPL.TO. * The Toronto Stock Exchange's TSX falls 0.45 percent to 18,373.81 * Leading the index were Inter Pipeline Ltd , up 29.1%, Colliers International Group Inc CIGI.TO, up 11.7%, and Seven Generations Energy Ltd VII.TO, higher by 5.7%. | * Lagging shares were Aphria Inc APHA.TO, down 36.5%, Aurora Cannabis Inc ACB.TO, down 22.7%, and Cronos Group Inc CRON.TO, lower by 22.0%. * The most heavily traded shares by volume were Aphria Inc APHA.TO, Aurora Cannabis Inc ACB.TO and Inter Pipeline Ltd IPL.TO. * The TSX's energy group .SPTTEN fell 0.62 points, or 0.6%, while the financials sector .SPTTFS climbed 1.07 points, or 0.3%. | * The most heavily traded shares by volume were Aphria Inc APHA.TO, Aurora Cannabis Inc ACB.TO and Inter Pipeline Ltd IPL.TO. * Lagging shares were Aphria Inc APHA.TO, down 36.5%, Aurora Cannabis Inc ACB.TO, down 22.7%, and Cronos Group Inc CRON.TO, lower by 22.0%. * The Toronto Stock Exchange's TSX falls 0.45 percent to 18,373.81 * Leading the index were Inter Pipeline Ltd , up 29.1%, Colliers International Group Inc CIGI.TO, up 11.7%, and Seven Generations Energy Ltd VII.TO, higher by 5.7%. | * The most heavily traded shares by volume were Aphria Inc APHA.TO, Aurora Cannabis Inc ACB.TO and Inter Pipeline Ltd IPL.TO. * Lagging shares were Aphria Inc APHA.TO, down 36.5%, Aurora Cannabis Inc ACB.TO, down 22.7%, and Cronos Group Inc CRON.TO, lower by 22.0%. * On the TSX 93 issues rose and 125 fell as a 0.7-to-1 ratio favored decliners. |
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