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38100.0 | 2019-09-26 00:00:00 UTC | November 8th Options Now Available For Aurora Cannabis (ACB) | ACB | https://www.nasdaq.com/articles/november-8th-options-now-available-for-aurora-cannabis-acb-2019-09-26 | nan | nan | Investors in Aurora Cannabis Inc (Symbol: ACB) saw new options begin trading today, for the November 8th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the ACB options chain for the new November 8th contracts and identified one put and one call contract of particular interest.
The put contract at the $4.50 strike price has a current bid of 4 cents. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $4.50, but will also collect the premium, putting the cost basis of the shares at $4.46 (before broker commissions). To an investor already interested in purchasing shares of ACB, that could represent an attractive alternative to paying $4.75/share today.
Because the $4.50 strike represents an approximate 5% 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 63%. 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 0.89% return on the cash commitment, or 7.54% 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 $4.50 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $5.00 strike price has a current bid of 2 cents. If an investor was to purchase shares of ACB stock at the current price level of $4.75/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $5.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 5.68% if the stock gets called away at the November 8th 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 $5.00 strike highlighted in red:
Considering the fact that the $5.00 strike represents an approximate 5% 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 54%. 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 0.42% boost of extra return to the investor, or 3.57% annualized, which we refer to as the YieldBoost.
The implied volatility in the put contract example is 181%, while the implied volatility in the call contract example is 159%.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 251 trading day closing values as well as today's price of $4.75) to be 69%. 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 $5.00 strike highlighted in red: Considering the fact that the $5.00 strike represents an approximate 5% 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 November 8th expiration. | Below is a chart showing ACB's trailing twelve month trading history, with the $5.00 strike highlighted in red: Considering the fact that the $5.00 strike represents an approximate 5% 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 November 8th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the ACB options chain for the new November 8th 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 $5.00 strike highlighted in red: Considering the fact that the $5.00 strike represents an approximate 5% 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 November 8th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the ACB options chain for the new November 8th 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 November 8th 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 $5.00 strike highlighted in red: Considering the fact that the $5.00 strike represents an approximate 5% 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 November 8th expiration. |
38101.0 | 2019-09-24 00:00:00 UTC | RSI Alert: Aurora Cannabis (ACB) Now Oversold | ACB | https://www.nasdaq.com/articles/rsi-alert%3A-aurora-cannabis-acb-now-oversold-2019-09-24 | nan | nan | Legendary investor Warren Buffett advises to be fearful when others are greedy, and be greedy when others are fearful. One way we can try to measure the level of fear in a given stock is through a technical analysis indicator called the Relative Strength Index, or RSI, which measures momentum on a scale of zero to 100. A stock is considered to be oversold if the RSI reading falls below 30.
In trading on Tuesday, shares of Aurora Cannabis Inc (Symbol: ACB) entered into oversold territory, hitting an RSI reading of 29.3, after changing hands as low as $4.72 per share. By comparison, the current RSI reading of the S&P 500 ETF (SPY) is 49.5. A bullish investor could look at ACB's 29.3 RSI reading today as a sign that the recent heavy selling is in the process of exhausting itself, and begin to look for entry point opportunities on the buy side. The chart below shows the one year performance of ACB shares:
Looking at the chart above, ACB's low point in its 52 week range is $4.58 per share, with $12.525 as the 52 week high point — that compares with a last trade of $4.76.
Find out what 9 other oversold stocks you need to know about »
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 Tuesday, shares of Aurora Cannabis Inc (Symbol: ACB) entered into oversold territory, hitting an RSI reading of 29.3, after changing hands as low as $4.72 per share. A bullish investor could look at ACB's 29.3 RSI reading today as a sign that the recent heavy selling is in the process of exhausting itself, and begin to look for entry point opportunities on the buy side. The chart below shows the one year performance of ACB shares: Looking at the chart above, ACB's low point in its 52 week range is $4.58 per share, with $12.525 as the 52 week high point — that compares with a last trade of $4.76. | A bullish investor could look at ACB's 29.3 RSI reading today as a sign that the recent heavy selling is in the process of exhausting itself, and begin to look for entry point opportunities on the buy side. The chart below shows the one year performance of ACB shares: Looking at the chart above, ACB's low point in its 52 week range is $4.58 per share, with $12.525 as the 52 week high point — that compares with a last trade of $4.76. In trading on Tuesday, shares of Aurora Cannabis Inc (Symbol: ACB) entered into oversold territory, hitting an RSI reading of 29.3, after changing hands as low as $4.72 per share. | In trading on Tuesday, shares of Aurora Cannabis Inc (Symbol: ACB) entered into oversold territory, hitting an RSI reading of 29.3, after changing hands as low as $4.72 per share. A bullish investor could look at ACB's 29.3 RSI reading today as a sign that the recent heavy selling is in the process of exhausting itself, and begin to look for entry point opportunities on the buy side. The chart below shows the one year performance of ACB shares: Looking at the chart above, ACB's low point in its 52 week range is $4.58 per share, with $12.525 as the 52 week high point — that compares with a last trade of $4.76. | In trading on Tuesday, shares of Aurora Cannabis Inc (Symbol: ACB) entered into oversold territory, hitting an RSI reading of 29.3, after changing hands as low as $4.72 per share. A bullish investor could look at ACB's 29.3 RSI reading today as a sign that the recent heavy selling is in the process of exhausting itself, and begin to look for entry point opportunities on the buy side. The chart below shows the one year performance of ACB shares: Looking at the chart above, ACB's low point in its 52 week range is $4.58 per share, with $12.525 as the 52 week high point — that compares with a last trade of $4.76. |
38102.0 | 2019-09-24 00:00:00 UTC | Why You Should Wait to Buy Marijuana Stocks | ACB | https://www.nasdaq.com/articles/why-you-should-wait-to-buy-marijuana-stocks-2019-09-24 | nan | nan | While marijuana is never not being talked about in thefinancial newssomewhere, it’s become a hot topic again on Wall Street as Canada gets ready to legalize marijuana edibles, beverages, extracts and lotions on October 17. The products should be available for purchase around mid-December.
Source: Shutterstock
That’s fantastic!
Now, according to Arcview Market Research, by 2022, the cannabis edibles market could be worth a whopping $4.1 billion in Canada and the United States. So, it’s no surprise that investors are trying to figure out the best way to play this rising trend.
In fact, I was recently asked if investors should buy marijuana stocks now or wait until we see profits. My answer? Wait.
Two of the big pure-plays on marijuana, Canopy Growth Corporation (NYSE:) and Aurora Cannabis Inc. (NYSE:), have seen their growth slow in their most-recent earnings quarters. That’s the opposite of what you want in a company you’re investing in!
To be honest, I don’t see the cannabis side of the marijuana business being the big winner. In fact, I look for it to shrink.
With marijuana legal on a recreational level in Canada and the U.S. getting closer to following suit, a lot of folks can try it now. But smoking marijuana is not “one size fits all.” There’s a lot of varieties and differences in experience when it comes to smoking marijuana, and nothing has been settled on what works best for the marketplace. Clearly, there’s still a lot that needs to be worked out there.
There’s also the blowback from vaping. The CDC announced yesterday that there are now 530 cases of lung injury tied to vaping — a 39% increase from the 380 cases reported just a week ago. They believe that the illness is due to vaping THC, nicotine or a mix between the two. Many patients have wound up in the hospital, and so far, seven have died. There’s also concern over not knowing what the long-term effects of vaping will be. So, this does not bode well for the smoking side of the business.
Instead, I look for the CBD oil market to grow over the long term. However, there are still some issues here, too.
Now, this might come as a surprise, but every weekend I bicycle with a guy who owns a big hemp farm and is in the hemp seed business. While hemp is perfectly legal in all 50 states of the U.S., states like Idaho might see him as being in the pot business.
You see, cannabis seeds are both male and female. The female plants without seeds have higher THC levels, while the male cannabis plants have much less. However, sometimes they change their gender, and if a grower gets too much female in the hemp, they have to basically burn it off, and there goes their crop.
The other problem with CBD oil is the quality is very mixed. I have anesthesiologist clients who swear by it, but they can’t get the quality they want. But once that’s fixed, CBD could be a huge business.
Now, I know what you’re thinking: Louie, does this mean you’re completely against the marijuana space?
Investing in the “Legit” Marijuana Companies
Absolutely not. I just prefer to focus on the companies that have already proven their profitability with track records of solid growth. The “legit” ones, if you will.
For example, in my Accelerated Profits service, I recommended Shopify, Inc. (NYSE:), a Canadian company, back in January. This company offers a “hassle-free” platform to other retail businesses, giving them space to build their brand and sell their products. It benefited from the legalization of cannabis in Canada, thanks to the surge in online shopping for cannabis.
At the time of my recommendation, the company had posted an average 211.7% earnings surprise in the past four quarters.
The result for my subscribers? We locked in a solid 46% profit in just three months.
SHOP isn’t the only company I’ve recommended in this sector. In , we currently have Innovative Industrial Properties, Inc. (NYSE:) on the Breakthrough Stocks Buy List. It’s the only publicly traded cannabis real estate investment trust (REIT). The stock boasts a strong 2.3% dividend yield.
There are two big factors that make IIPR so special. The first is that because it’s a REIT, it’s required to return at least 90% of its taxable income to shareholders in the form dividends. In fact, IIPR will pay its third-quarter dividend of $0.78 on October 15. All shareholders of record on September 30 will receive the dividend.
The second is that it’s not a pure play, either. You see, Innovative Industrial Properties has never grown, processed or sold a single marijuana product. Rather, it leases facilities to medical cannabis providers. Basically, it’s the landlord of the pot growers.
And it’s continued to grow nicely. In the second quarter, property acquisitions helped the REIT achieve triple-digit revenue growth. IIPR acquired 10 properties between April and June, as well as another four properties in July. Year to date, the REIT has acquired 15 properties for about $167.3 million, and it currently owns 26 properties in 12 states.
For the second quarter, revenues surged 159.4% year-over-year to $8.3 million, up from $3.2 million in the same quarter a year ago. Earnings per share soared 76.5% year-over-year to $0.30. The consensus estimate called for earnings of $0.29 per share on $8.34 million in revenue, so IIPR posted a 3.4% earnings surprise and a slight sales miss. Looking forward, though, IIPR’s earnings are forecast to grow 123.8%
Now, this is a volatile stock, and after hitting 52-week high after 52-week high, its shares are now trading well below those levels. However, I see the pullback as an excellent buying opportunity, because as the demand for marijuana and cannabis rises, so will the need for the properties to grow the plant. I’m such a big fan of this stock that it’s one of my Top 5 Stocks on my Buy List.
However, it’s all about buying at the right price, as you never want to overpay for a stock. So, . Also, I recently shared my latest thoughts on IIPR in the Sept. 20 Breakthrough Stocks Weekly Update, so make sure to for all the details.
is a renowned growth investor. He is the editor of four investing newsletters: Growth Investor, , Accelerated Profits and . His most popular service, Growth Investor, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
The post 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. | This company offers a “hassle-free” platform to other retail businesses, giving them space to build their brand and sell their products. However, I see the pullback as an excellent buying opportunity, because as the demand for marijuana and cannabis rises, so will the need for the properties to grow the plant. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. | In , we currently have Innovative Industrial Properties, Inc. (NYSE:) on the Breakthrough Stocks Buy List. For the second quarter, revenues surged 159.4% year-over-year to $8.3 million, up from $3.2 million in the same quarter a year ago. He is the editor of four investing newsletters: Growth Investor, , Accelerated Profits and . | In fact, I was recently asked if investors should buy marijuana stocks now or wait until we see profits. Two of the big pure-plays on marijuana, Canopy Growth Corporation (NYSE:) and Aurora Cannabis Inc. (NYSE:), have seen their growth slow in their most-recent earnings quarters. However, I see the pullback as an excellent buying opportunity, because as the demand for marijuana and cannabis rises, so will the need for the properties to grow the plant. | In fact, I was recently asked if investors should buy marijuana stocks now or wait until we see profits. It benefited from the legalization of cannabis in Canada, thanks to the surge in online shopping for cannabis. He is the editor of four investing newsletters: Growth Investor, , Accelerated Profits and . |
38103.0 | 2019-09-24 00:00:00 UTC | Canada Has Sold This Much Marijuana Since Its Legalization Day | ACB | https://www.nasdaq.com/articles/canada-has-sold-this-much-marijuana-since-its-legalization-day-2019-09-24 | nan | nan | According to pretty much every Wall Street analyst and independent report, legal marijuana is the next great growth trend. Sales of legal weed have more than tripled on a global basis since 2014 to $10.9 billion, and are on pace to gallop higher by five to 18 times current levels by the end of the next decade, based on a variety of Wall Street projections.
Setting the blueprint for this growth in sales is our neighbor to the north, Canada. Even though Canada isn't expected to come anywhere near the United States in terms of aggregate annual cannabis sales, it became the first industrialized country in the world to green-light recreational marijuana last year. Sales for adult-use cannabis commenced on Oct. 17, 2018.
Image source: Getty Images.
Canadian weed sales in July hit a new all-time high
How has Canada fared since adult-use weed sales were launched? Let's take a month-by-month look at licensed-store sales, as recorded by Statistics Canada (all data is reported in Canadian dollars, with U.S. dollar equivalency in parenthesis).
October: CA$53.68 million ($40.48 million)
November: CA$53.73 million ($40.52 million)
December: CA$57.34 million ($43.24 million)
January: CA$54.88 million ($41.39 million)
February: CA$51.66 million ($38.96 million)
March: CA$60.94 million ($45.96 million)
April: CA$74.58 million ($56.24 million)
May: CA$85.81 million ($64.71 million)
June: CA$91.46 million ($68.97 million)
July: CA$104.5 million ($78.80 million)
As you can see, Canadian licensed-store sales hit an all-time high for the fifth consecutive month in July. It also marked the first time that single-month sales topped CA$100 million, and was a return to sequential monthly double-digit percentage sales growth.
On an aggregate basis, recreational cannabis sales have totaled CA$688.58 million ($519.27 million) since Oct. 17, 2018. Given the steady incline in sales, Canada's first trailing year of full legalization will likely land between CA$950 million and CA$1 billion. Most forecasts peg Canada for around $5 billion in annual sales (that's U.S.) within five years.
Image source: Getty Images.
Here's why Canada's recreational cannabis launch has been a disappointment
Although CA$1 billion in dispensary sales would be nothing to sneeze at in Canada's first full year as a legalized marijuana market, it's actually quite disappointing considering the expectations Wall Street, investors, and the pot stocks themselves had coming into this launch. This disappointment can be boiled down to a handful of factors.
For one, regulators have proven ill-prepared to handle the legalization of recreational marijuana. Admittedly, there is no precedent for legalization within an industrialized country, so Health Canada doesn't deserve all of the blame here. But there's no denying that it and select provinces have played a key role in minimizing legal marijuana sales.
You see, when the year began, Health Canada had more than 800 cultivation, processing, and sales applications on its desk for review. On average, these reviews were taking many months if not longer than a year to complete, which ultimately kept cultivators, processors, and retailers waiting in the wings to meet demand.
The same can be said for select provinces, which have been slow to approve licenses for physical retail stores. With certain provinces having few physical locations in which to buy marijuana, consumers have been forced to buy online and wait for their product to arrive, or they've simply purchased from illicit producers.
There have also been compliant packing shortages throughout Canada. These shortages have left cultivated but unprocessed cannabis sitting on the sidelines.
Even the growers are somewhat to blame. By waiting until the Cannabis Act was a certainty to pass before spending big money on cultivation expansion, most pot stocks are now scrambling to complete grow facilities and get them fully licensed.
Image source: Getty Images.
Supply issues won't be resolved anytime soon
Maybe more worrisome than the subdued launch of recreational marijuana in Canada is that while all of these issues are fixable, none of them are expected to be resolved anytime soon. In fact, Aurora Cannabis (NYSE: ACB), Canada's largest producer by peak annual output, noted in its fiscal fourth-quarter operating results that it's done what it can to improve efficiency on its end, but is as the mercy of supply issues that are beyond the company's control at the moment.
Canada may be a cannabis pioneer that other industrialized countries follow, but its publicly traded pot stocks also have some of the highest premiums thanks to Wall Street's and investors' unrealistic expectations built into this next-big-thing investment. This slow start to adult-use pot sales firmly exposes some of the largest and best-known Canadian cannabis stocks to significant downside.
For example, Aurora Cannabis recently wound up missing its own sales guidance that had been issued five weeks prior to its report. The company had also been hinting at recurring positive adjusted EBITDA in Q4 2019 since the beginning of calendar 2019. However, when Aurora reported its fiscal fourth-quarter results, the company's adjusted EBITDA remained negative. Any hope of near-term profitability for Aurora Cannabis, at least on an operating basis, have been dashed.
Aurora's peers Canopy Growth (NYSE: CGC) and Cronos Group (NASDAQ: CRON) are even pricier by certain metrics, and may offer considerable downside.
Image source: Getty Images.
Canopy's fiscal first-quarter report was nothing short of a mess, with the company reporting a meager 15% gross margin, as well as mounting losses tied to skyrocketing general and administrative expenses and share-based compensation. Let's not forget that Canopy Growth also has no permanent CEO after the firing of company visionary Bruce Linton in early July. Linton had served as co-CEO with Mark Zekulin.
Then there's Cronos Group, which is nowhere near the disaster Canopy Growth is on a bottom-line basis. However, Cronos is reliant on the upcoming launch of derivative products -- i.e., edibles, vapes, beverages, concentrates, and topicals. When derivative products hit dispensary shelves in Canada by mid-December, they're liable to face the same ongoing supply concerns that have impacted dried cannabis. And, to make matters worse, vape health concerns in the U.S. may adversely impact Cronos Group's vape business.
Suffice it to say that things are headed in the right direction for Canada's marijuana industry. Unfortunately, things aren't moving quick enough to satisfy a number of overzealous growth forecasts, and that's ultimately bad news for Canadian pot stock 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 – 10 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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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. | In fact, Aurora Cannabis (NYSE: ACB), Canada's largest producer by peak annual output, noted in its fiscal fourth-quarter operating results that it's done what it can to improve efficiency on its end, but is as the mercy of supply issues that are beyond the company's control at the moment. Sales of legal weed have more than tripled on a global basis since 2014 to $10.9 billion, and are on pace to gallop higher by five to 18 times current levels by the end of the next decade, based on a variety of Wall Street projections. Canada may be a cannabis pioneer that other industrialized countries follow, but its publicly traded pot stocks also have some of the highest premiums thanks to Wall Street's and investors' unrealistic expectations built into this next-big-thing investment. | In fact, Aurora Cannabis (NYSE: ACB), Canada's largest producer by peak annual output, noted in its fiscal fourth-quarter operating results that it's done what it can to improve efficiency on its end, but is as the mercy of supply issues that are beyond the company's control at the moment. Canadian weed sales in July hit a new all-time high How has Canada fared since adult-use weed sales were launched? October: CA$53.68 million ($40.48 million) November: CA$53.73 million ($40.52 million) December: CA$57.34 million ($43.24 million) January: CA$54.88 million ($41.39 million) February: CA$51.66 million ($38.96 million) March: CA$60.94 million ($45.96 million) April: CA$74.58 million ($56.24 million) May: CA$85.81 million ($64.71 million) June: CA$91.46 million ($68.97 million) July: CA$104.5 million ($78.80 million) As you can see, Canadian licensed-store sales hit an all-time high for the fifth consecutive month in July. | In fact, Aurora Cannabis (NYSE: ACB), Canada's largest producer by peak annual output, noted in its fiscal fourth-quarter operating results that it's done what it can to improve efficiency on its end, but is as the mercy of supply issues that are beyond the company's control at the moment. October: CA$53.68 million ($40.48 million) November: CA$53.73 million ($40.52 million) December: CA$57.34 million ($43.24 million) January: CA$54.88 million ($41.39 million) February: CA$51.66 million ($38.96 million) March: CA$60.94 million ($45.96 million) April: CA$74.58 million ($56.24 million) May: CA$85.81 million ($64.71 million) June: CA$91.46 million ($68.97 million) July: CA$104.5 million ($78.80 million) As you can see, Canadian licensed-store sales hit an all-time high for the fifth consecutive month in July. Here's why Canada's recreational cannabis launch has been a disappointment Although CA$1 billion in dispensary sales would be nothing to sneeze at in Canada's first full year as a legalized marijuana market, it's actually quite disappointing considering the expectations Wall Street, investors, and the pot stocks themselves had coming into this launch. | In fact, Aurora Cannabis (NYSE: ACB), Canada's largest producer by peak annual output, noted in its fiscal fourth-quarter operating results that it's done what it can to improve efficiency on its end, but is as the mercy of supply issues that are beyond the company's control at the moment. Here's why Canada's recreational cannabis launch has been a disappointment Although CA$1 billion in dispensary sales would be nothing to sneeze at in Canada's first full year as a legalized marijuana market, it's actually quite disappointing considering the expectations Wall Street, investors, and the pot stocks themselves had coming into this launch. And, to make matters worse, vape health concerns in the U.S. may adversely impact Cronos Group's vape business. |
38104.0 | 2019-09-24 00:00:00 UTC | Where Will Cronos Group Be in 5 Years? | ACB | https://www.nasdaq.com/articles/where-will-cronos-group-be-in-5-years-2019-09-24 | nan | nan | Cronos Group (NASDAQ: CRON) is one of the more popular marijuana stocks, and for good reason. The Canadian cannabis producer has one of the strongest balance sheets in the industry. It also has intriguing growth prospects, which are likely to help Cronos become a much larger company in the years ahead.
Here are some key drivers that investors can expect to fuel Cronos Group's expansion over the next half decade.
Image source: Getty Images.
International expansion
With Canada's legal marijuana market likely to become saturated in the next few years as supply begins to catch up to demand, international markets are set to become increasingly important parts of Cronos Group's business.
Cronos currently trails its rivals Aurora Cannabis and Canopy Growth in international sales by a significant margin. But Cronos is working to expand its operations outside of Canada. In May, Cronos opened a new research facility in Israel that will focus on developing cannabis-related devices. The cannabis company also has supply and distribution operations in Germany, Poland, and Australia. Investors can expect Cronos to enter many more international markets in the coming years.
Acquisitions
Acquisitions are likely to play a key role in helping Cronos Group expand into international markets and other high-growth areas. Cronos has a massive war chest thanks to Altria's (NYSE: MO) $1.8 billion investment, which gave the tobacco titan a 45% stake in the marijuana producer. Cronos has begun to use some of this capital to expand its cannabis empire, such as its recent purchase of several of Redwood Holding Group's subsidiaries for $300 million.
The Redwood deal gives Cronos a greater presence in the rapidly growing cannabidiol (CBD) market, which could approach $24 billion by 2023, according to analysts at Brightfield Group. It also expands Cronos' product lineup in the U.S., where hemp-derived CBD is legal at the federal level thanks to the passage of the Farm Bill in 2018. Moreover, the product platforms and distribution channels that Cronos is acquiring through the Redwood and other deals could also position it to quickly gain share in the U.S. marijuana market -- which some analysts believe could reach $100 billion within a decade -- should the country move to legalize the drug in the future.
Cronos itself may be acquired
In return for its investment in Cronos, Altria also obtained a warrant that gives it the right to increase its stake in the cannabis company to 55%. If Altria decides to exercise this warrant, it would obtain a controlling share of Cronos, which would also make it easier to acquire the company outright.
Altria is struggling with declining smoking rates in the U.S. The tobacco giant thought it had a solution to its growth woes when it acquired a 35% stake in e-cigarette leader Juul for $12.8 billion last year. However, recent vaping-related deaths and surging teen e-cigarette usage have regulators threatening to ban sales of flavored e-cigarettes, a core part of Juul's business. There's even the possibility that Juul could fail to obtain regulatory approval for its products from the Food and Drug Administration, which might look to limit the e-cigarette industry's growth in light of the teen vaping epidemic.
With its e-cig ambitions potentially going up in smoke, cannabis is likely to become an even more important part of Altria's growth strategy. As such, the tobacco king may decide to purchase the portion of Cronos Group it doesn't already own in order to accelerate its plans to capture a larger share of the global cannabis market.
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 – 10 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 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. | Moreover, the product platforms and distribution channels that Cronos is acquiring through the Redwood and other deals could also position it to quickly gain share in the U.S. marijuana market -- which some analysts believe could reach $100 billion within a decade -- should the country move to legalize the drug in the future. There's even the possibility that Juul could fail to obtain regulatory approval for its products from the Food and Drug Administration, which might look to limit the e-cigarette industry's growth in light of the teen vaping epidemic. As such, the tobacco king may decide to purchase the portion of Cronos Group it doesn't already own in order to accelerate its plans to capture a larger share of the global cannabis market. | International expansion With Canada's legal marijuana market likely to become saturated in the next few years as supply begins to catch up to demand, international markets are set to become increasingly important parts of Cronos Group's business. Acquisitions Acquisitions are likely to play a key role in helping Cronos Group expand into international markets and other high-growth areas. If Altria decides to exercise this warrant, it would obtain a controlling share of Cronos, which would also make it easier to acquire the company outright. | International expansion With Canada's legal marijuana market likely to become saturated in the next few years as supply begins to catch up to demand, international markets are set to become increasingly important parts of Cronos Group's business. Moreover, the product platforms and distribution channels that Cronos is acquiring through the Redwood and other deals could also position it to quickly gain share in the U.S. marijuana market -- which some analysts believe could reach $100 billion within a decade -- should the country move to legalize the drug in the future. Cronos itself may be acquired In return for its investment in Cronos, Altria also obtained a warrant that gives it the right to increase its stake in the cannabis company to 55%. | International expansion With Canada's legal marijuana market likely to become saturated in the next few years as supply begins to catch up to demand, international markets are set to become increasingly important parts of Cronos Group's business. But Cronos is working to expand its operations outside of Canada. The tobacco giant thought it had a solution to its growth woes when it acquired a 35% stake in e-cigarette leader Juul for $12.8 billion last year. |
38105.0 | 2019-09-23 00:00:00 UTC | Aurora Cannabis Stock Has Further to Fall | ACB | https://www.nasdaq.com/articles/aurora-cannabis-stock-has-further-to-fall-2019-09-23 | nan | nan | It would seem like at some point the Aurora Cannabis (NYSE:) stock price has to stabilize. Aurora Cannabis stock has lost half its value just since March. On the Toronto Stock Exchange, ACB now trades back where it did in late 2017.
Source: Shutterstock
But the bottom hasn’t come in yet — and it may not for a while. Admittedly, I have thought there has been an occasionally intriguing bull case for Aurora Cannabis stock. The company has the largest in the industry. Valuation on a revenue basis has come in. Both recreational and medical marijuana, despite near-term worries, still should see growth over time.
But the company’s fourth-quarter earnings report this month significantly undercuts the bull case. It reverses what looked like heading into the release. And while the ACB stock price might be cheaper, it’s certainly not cheap. This still is an unprofitable company with over a billion shares outstanding and a market capitalization over $5 billion. It can get worse.
Execution Whiff Drives ACB Stock Price Down
On its face, Aurora Cannabis earnings actually look reasonably strong. Revenue increased 52% quarter-over-quarter, with net cannabis revenue up 61%. Notably, gross margins expanded, an accomplishment other producers (notably Canopy Growth (NYSE:)) haven’t been able to match.
Adjusted EBITDA was negative, but the loss narrowed sharply against the third quarter. And, here, too, most major players are in a similar spot, with Aphria (NYSE:) a notable exception.
But Aurora Cannabis missed expectations, and not just in terms of Wall Street. It missed . That guidance — preliminary results, actually — was given barely a month earlier and more than a month after the quarter ended.
To be fair, the company’s Chief Corporate Officer Cam Battley told Yahoo! Finance that the company its cannabis revenue outlook. The miss came in so-called ancillary revenue. But he also admitted that management was “red-faced” and said on the Q4 conference call that the miss “shouldn’t have happened.”
In this environment, that type of miss will be punished, and it explains in part why the ACB stock price fell after the report. But there’s a long-term problem here, too.
After all, Aurora Cannabis is probably executing the trickiest strategy of any of the major cannabis plays. It has operations in 25 countries on five continents, per its most recent investor presentation. The company is integrating numerous acquisitions. Unlike Hexo (NYSE:) or even cash-rich Cronos (NASDAQ:), it’s aiming for breadth rather than focus.
It’s a difficult strategy, even if it makes sense in theory. But it’s a tough strategy in which to have confidence when the company can’t guide correctly a full five weeks after the end of a quarter.
The Financing Problem for Aurora Cannabis Stock
Aurora missed expectations on another key front. On the , Battley said the company was “tracking for positive EBITDA” in the fourth quarter.
That didn’t happen. Aurora Cannabis lost over $11 million even on that basis. The company blamed the slow pace of retail rollouts — but that alone doesn’t seem a sufficient explanation. In May, at the time of the Q3 call, Aurora already was two weeks into Q4 and should have had a reasonable idea of the regulatory roadblocks in Canada.
But there’s a bigger issue: There was a growing worry this summer that Aurora was going to need additional financing. As I detailed in July, the falling ACB stock price meant convertible debt would need to . That in turn suggested that the company might need to sell stock. That dilution, on top of a share count already above 1 billion, would add further pressure on Aurora Cannabis stock.
A couple of weeks later, ACB upsized its credit facility. That seemed to assuage the dilution concern. It gave the company room to pay off its debt and invest behind the business — assuming free cash flow turned positive.
That assumption no longer holds. As a Stifel analyst in downgrading ACB stock, Aurora Cannabis has significant cash needs in the coming quarters. It’s going to be very difficult to raise more debt, which leaves the option of selling stock at already depressed prices.
The broader point is that Q4 earnings mattered — and not in a good way. The sell-off in ACB after the report isn’t knee-jerk. It isn’t just part of the wider weakness in cannabis stocks. In fact, the sell-off isn’t even necessarily short-sighted. Aurora Cannabis has significantly damaged investor confidence, and it will take time and success for the company to win it back.
As of this writing, Vince Martin has no positions in any securities mentioned.
The post 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. | Execution Whiff Drives ACB Stock Price Down On its face, Aurora Cannabis earnings actually look reasonably strong. As a Stifel analyst in downgrading ACB stock, Aurora Cannabis has significant cash needs in the coming quarters. On the Toronto Stock Exchange, ACB now trades back where it did in late 2017. | As a Stifel analyst in downgrading ACB stock, Aurora Cannabis has significant cash needs in the coming quarters. On the Toronto Stock Exchange, ACB now trades back where it did in late 2017. And while the ACB stock price might be cheaper, it’s certainly not cheap. | Execution Whiff Drives ACB Stock Price Down On its face, Aurora Cannabis earnings actually look reasonably strong. As a Stifel analyst in downgrading ACB stock, Aurora Cannabis has significant cash needs in the coming quarters. On the Toronto Stock Exchange, ACB now trades back where it did in late 2017. | On the Toronto Stock Exchange, ACB now trades back where it did in late 2017. And while the ACB stock price might be cheaper, it’s certainly not cheap. Execution Whiff Drives ACB Stock Price Down On its face, Aurora Cannabis earnings actually look reasonably strong. |
38106.0 | 2019-09-23 00:00:00 UTC | Aurora Cannabis Sets Date for AGM | ACB | https://www.nasdaq.com/articles/aurora-cannabis-sets-date-for-agm-2019-09-24 | nan | nan | Aurora Cannabis (NYSE: ACB), one of the largest and most high-profile marijuana stocks on the market, has set the date for its annual general meeting (AGM). The investor conclave has been scheduled for Friday, Nov. 8 and will take place not far from the company's Edmonton, Canada, headquarters.
The agenda of the meeting does not indicate anything outside of the usual end-of-fiscal-year business of companies presenting at such events. Shareholders will vote for seats on the board of directors, the number of which the company aims to fix at eight. They will also theoretically have their say on certain aspects of executive compensation.
Aurora stockholders of record as of the close of Sept. 10 are eligible to participate and vote in the AGM.
Image source: Getty Images.
The AGM will put a cap on Aurora's fiscal 2019, which was a difficult year for the company. A Q4 that was far worse than what both the company and analysts expected dampened full-year results. The company's bottom line flipped dramatically to a loss, at almost 298 million Canadian dollars from the fiscal 2018 profit of CA$69 million.
Even though Aurora's revenue figures saw quite a leap -- to almost CA$248 million from the previous year's CA$55 million -- this was due largely to last year's legalization of recreational cannabis in Canada, plus several acquisitions. Such a dynamic was also in force at rival marijuana companies, so that increase wasn't considered exceptional.
Aurora is expected to continue its loss-making ways into at least the proximate future. Although bottom-line estimates for the company are hard to come by, The Wall Street Journal pegs the average expected per-share shortfall at CA$0.04 for the current Q1 of fiscal 2020. Zooming out, the newspaper has it that analysts are collectively expecting a CA$0.12-per-share loss for the entirety of that fiscal year.
The company is slated to release its Q1 earnings on Oct. 28, according to the Journal.
This has been quite a roller coaster for investors in Aurora's stock. At one point it closed at nearly $10 per share, but at $5.08 per share, it's currently trading only slightly above its 2019 low.
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 – 10 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 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), one of the largest and most high-profile marijuana stocks on the market, has set the date for its annual general meeting (AGM). Although bottom-line estimates for the company are hard to come by, The Wall Street Journal pegs the average expected per-share shortfall at CA$0.04 for the current Q1 of fiscal 2020. 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), one of the largest and most high-profile marijuana stocks on the market, has set the date for its annual general meeting (AGM). The company's bottom line flipped dramatically to a loss, at almost 298 million Canadian dollars from the fiscal 2018 profit of CA$69 million. Even though Aurora's revenue figures saw quite a leap -- to almost CA$248 million from the previous year's CA$55 million -- this was due largely to last year's legalization of recreational cannabis in Canada, plus several acquisitions. | Aurora Cannabis (NYSE: ACB), one of the largest and most high-profile marijuana stocks on the market, has set the date for its annual general meeting (AGM). The company's bottom line flipped dramatically to a loss, at almost 298 million Canadian dollars from the fiscal 2018 profit of CA$69 million. Even though Aurora's revenue figures saw quite a leap -- to almost CA$248 million from the previous year's CA$55 million -- this was due largely to last year's legalization of recreational cannabis in Canada, plus several acquisitions. | Aurora Cannabis (NYSE: ACB), one of the largest and most high-profile marijuana stocks on the market, has set the date for its annual general meeting (AGM). The AGM will put a cap on Aurora's fiscal 2019, which was a difficult year for the company. Zooming out, the newspaper has it that analysts are collectively expecting a CA$0.12-per-share loss for the entirety of that fiscal year. |
38107.0 | 2019-09-23 00:00:00 UTC | InvestorPlace Roundup: Digging Into the Marijuana Stocks | ACB | https://www.nasdaq.com/articles/investorplace-roundup%3A-digging-into-the-marijuana-stocks-2019-09-23 | nan | nan | The markets didn’t seem to know which way to turn this morning, as mixed economic data initially put the major indexes into the red before swinging back to the positive side.
Source: Shutterstock
On the one hand, looked troubling, with the eurozone’s composite PMI falling to 50.4 and Germany’s manufacturing purchasing managers’ index (PMI) at 41.4 — below the neutral level of 50 and expectations of 44. On the other hand, U.S. manufacturing data looked more promising. Its PMI rose to 51.
Aside from all this international news, what were readers interested in checking out?
Aurora Stock Still Isn’t Cheap
Like it or not, Vince Martin is on the side of investors who believe Aurora Cannabis (NYSE:) stock has further to fall.
He pointed out that the latest earnings wasn’t that bad on its face. Revenue up 52%. Net cannabis revenue up 61%. A loss on earnings, but a narrower one than in the previous quarter. But the report still disillusioned investors. Why?
In Martin’s words, “Aurora Cannabis missed expectations, and not just in terms of Wall Street. It missed . That guidance — preliminary results, actually — was given barely a month earlier and more than a month after the quarter ended.”
In a way, ACB stock is not helped by the breadth of its operations. It has its feelers in over two dozen countries. That complicates things for the company. As he wrote:
“It’s a difficult strategy, even if it makes sense in theory. But it’s a tough strategy in which to have confidence when the company can’t guide correctly a full five weeks after the end of a quarter.”
A Rough Ride for Roku Stock
Should you get out of Roku (NASDAQ:) stock as it continues its abrupt and somewhat stunning decline? Or should you get in after this massive sell-off? (We’re talking a stock that’s off 28% in the past five days.)
The answer, according to , is that getting out depends on your time frame and getting in depends on how steely your fortitude is — as he puts it, ” this is not a stock for the faint of heart.”
It’s not like Roku is a bad company. Consider how it keeps the growing. But it does seem to have gotten out ahead of its skis a bit, considering the exponential stock price growth. The fall has been fierce and may not be over yet, so use caution.
The company isn’t going anywhere, but as Chahine said of Roku stock, “This falling knife is scary as it could turn out to be a machete that is missing its handle. Meaning, it could cost those who try to catch it digits. It is best to let Roku stock hit the ground before reaching for it.”
Take a Tour of the Marijuana Stocks
has updated his list of 30 of the best marijuana stocks. With that sector so new, there are a huge number of little companies hoping to make it big and a much smaller number of companies that have already achieved some size and scale.
The usual suspects are there. Aurora. Cronos Group (NASDAQ:). Canopy Growth (NYSE:). Aphria (NYSE:). But he doesn’t stop there. He digs into the biotech side of things with GW Pharmaceuticals (NASDAQ:) and the real estate investment trust aspect with Innovative Industrial Properties (NYSE:).
Basically, this article sets out a broad swath of interesting marijuana stocks that interested investors should at least know. As Enomoto puts it, “despite the myriad headwinds, I believe marijuana stocks offer a compelling opportunity. One of the biggest reasons is that we honestly don’t know where this sector can go: While it could fall flat on its face, it very well could spark a paradigm shift.”
TikTok, Buy BABA Stock
thinks that Alibaba Group’s (NYSE: ) connection with TikTok is going to be a great new revenue stream for BABA stock.
What impact does video sharing app TikTok have? As Duggan wrote, “TikTok may be the latest smash social media hit in the U.S., but it’s not new to China. In fact, TikTok parent company ByteDance is based in China and launched the original version of TikTok in China back in 2016.”
TikTok and Douyin (the original, Chinese version of the app) are looking to monetize their success by putting selling links into these apps. And who’s likely to benefit in a big way from such links, other than those apps? Alibaba and its e-selling peers in China.
That’s it for today’s commentary. Please feel free to drop us a note at to let us know what we got right and what we got wrong. Happy investing!
More From InvestorPlace
The post 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. | That guidance — preliminary results, actually — was given barely a month earlier and more than a month after the quarter ended.” In a way, ACB stock is not helped by the breadth of its operations. The markets didn’t seem to know which way to turn this morning, as mixed economic data initially put the major indexes into the red before swinging back to the positive side. The company isn’t going anywhere, but as Chahine said of Roku stock, “This falling knife is scary as it could turn out to be a machete that is missing its handle. | That guidance — preliminary results, actually — was given barely a month earlier and more than a month after the quarter ended.” In a way, ACB stock is not helped by the breadth of its operations. On the other hand, U.S. manufacturing data looked more promising. Basically, this article sets out a broad swath of interesting marijuana stocks that interested investors should at least know. | That guidance — preliminary results, actually — was given barely a month earlier and more than a month after the quarter ended.” In a way, ACB stock is not helped by the breadth of its operations. Aurora Stock Still Isn’t Cheap Like it or not, Vince Martin is on the side of investors who believe Aurora Cannabis (NYSE:) stock has further to fall. It is best to let Roku stock hit the ground before reaching for it.” Take a Tour of the Marijuana Stocks has updated his list of 30 of the best marijuana stocks. | That guidance — preliminary results, actually — was given barely a month earlier and more than a month after the quarter ended.” In a way, ACB stock is not helped by the breadth of its operations. Aurora Stock Still Isn’t Cheap Like it or not, Vince Martin is on the side of investors who believe Aurora Cannabis (NYSE:) stock has further to fall. It is best to let Roku stock hit the ground before reaching for it.” Take a Tour of the Marijuana Stocks has updated his list of 30 of the best marijuana stocks. |
38108.0 | 2019-09-23 00:00:00 UTC | Battered Canopy Growth Stock Could Reach New Lows | ACB | https://www.nasdaq.com/articles/battered-canopy-growth-stock-could-reach-new-lows-2019-09-23 | nan | nan | Canopy Growth (NYSE:) continues to tumble. While shares slightly rebounded at the start of September, the stock has recently fallen from $28 per share down to around $25.50 per share. New negative analyst coverage could be to blame.
Source: Jarretera / Shutterstock.com
MKM Partners’s Bill Kirk is on the whole pot space in general. As he puts it, “Don’t smoke the Kool-Aid.” While he rates CGC stock at “neutral,” he has concerns over the company’s use of share-based compensation. Canopy’s cumulative share-based compensation is nearly 100% of its cumulative revenues. His other concerns include excess pot inventories. Last quarter CGC grew four times the amount of cannabis it sold.
If you have read my prior CGC , you know I have similar thoughts on Canopy Growth stock. But could the company be in better shape than its peers? Or will Canopy Growth stock continue to reach new lows? Let’s take a look at recent development, and see if the story has changed with CGC.
Edibles Could Be a Saving Grace for CGC
Cannabis bears may view excess inventory and falling prices as reasons not to buy. But they could be too focused on the short term. Cannabis 2.0, which encompasses , is just around the corner. These new products will hit Canadian shelves in December.
These high-margin processed cannabis products could be a cash cow for the Canadian pot space. Selling the marijuana you smoke is a commodity business. As I have in my Hexo (NYSE:) analysis, a pivot to cannabis-infused products is the best pathway to profitability. While in the past I have criticized CGC’s partnership with Constellation Brands (NYSE:) as dilutive, the cannabis sphere needs deep-pocketed consumer products companies to profitably roll out branded products.
But Canopy’s long-term strategy is no slam dunk. High competition and too much money spent chasing limited opportunities will make it hard for CGC to profit. In the meantime, the company will hemorrhage cash as it scales into a major pot player. Investors are aware of this cash burn, but may be too optimistic about the profitability point.
Bill Kirk believes Canopy will not reach positive free cash flow until 2026, and this may be one of the more optimistic calls. Another analyst, Oppenheimer’s Rupesh Parikh, highlighted greater cash burn concerns in his . Parikh believes Canopy could lose more than $500 million over the next two fiscal years (CGC’s fiscal year ends in March). With this in mind, the company may face greater risks than the share price reflects. Let’s take a look at CGC’s valuation, and see how it stacks up to peers.
Upside Is Priced into Canopy Growth Stock
Like other marijuana stocks, CGC is richly valued. The company trades at a of 37.3. This is a premium to Aurora Cannabis’s (NYSE:) EV/Sales of 28.6. Smaller competitor Aphria (NYSE:) trades at an even lower valuation (EV/Sales of 8.6). But Canopy is not the most overvalued pot stock. Hexo trades at an EV/Sales of 41. Cronos (NASDAQ:) trades at a staggering EV/Sales ratio of 85.2.
CGC stock is certainly not a value play. High expectations continue to be priced into shares. Investors who bought in at the start of the marijuana legalization trend have won big. But anyone entering the space today must pay through the nose. Paying a premium today for opportunity tomorrow is not always a bad deal. However, for the pot stocks, it seems to be too much of a bubble environment to make a smart investment.
Legalized marijuana will be a big business, but expectations may exceed reality. There could be a time down the road where cannabis stocks are a screaming buy. While investors have started to make their exodus, it is definitely too early to call a bottom.
Seek Better Pot Plays Elsewhere
I remain highly bearish on CGC and most of the other cannabis stocks. Valuations are too high, catalysts are priced in — and all that jazz. But what if you want to gain exposure to marijuana stocks today? Other names in the pot space may offer better value. While Hexo has headwinds of its own, the company may be nimble enough to profit from the infused products niche. The relatively may make it a speculative buy.
But in the case of Canopy Growth, there are too many red flags. Trying to become the top dog in a growing industry can pay off big, but it could also lead to ruin. CGC remains an opportunity with too much risk and not enough upside. Take a look at the cheaper pot stocks, but continue to avoid CGC stock.
As of this writing, Thomas Niel did not hold a position in any of the aforementioned securities
The post 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. | As he puts it, “Don’t smoke the Kool-Aid.” While he rates CGC stock at “neutral,” he has concerns over the company’s use of share-based compensation. Edibles Could Be a Saving Grace for CGC Cannabis bears may view excess inventory and falling prices as reasons not to buy. Bill Kirk believes Canopy will not reach positive free cash flow until 2026, and this may be one of the more optimistic calls. | Or will Canopy Growth stock continue to reach new lows? Bill Kirk believes Canopy will not reach positive free cash flow until 2026, and this may be one of the more optimistic calls. Upside Is Priced into Canopy Growth Stock Like other marijuana stocks, CGC is richly valued. | While in the past I have criticized CGC’s partnership with Constellation Brands (NYSE:) as dilutive, the cannabis sphere needs deep-pocketed consumer products companies to profitably roll out branded products. Upside Is Priced into Canopy Growth Stock Like other marijuana stocks, CGC is richly valued. Take a look at the cheaper pot stocks, but continue to avoid CGC stock. | These high-margin processed cannabis products could be a cash cow for the Canadian pot space. The company trades at a of 37.3. There could be a time down the road where cannabis stocks are a screaming buy. |
38109.0 | 2019-09-23 00:00:00 UTC | 10 Reasons Aurora Cannabis Could Fall Below $4 | ACB | https://www.nasdaq.com/articles/10-reasons-aurora-cannabis-could-fall-below-%244-2019-09-23 | nan | nan | Six months ago, cannabis kingpin Aurora Cannabis (NYSE: ACB) could not be stopped. The company's share price more than doubled from its December lows to hit a closing high that was just pennies from $10 a share, placing the Aurora's valuation at nearly $10 billion, and putting it squarely on the heels of Canopy Growth, the largest marijuana stock in the world by market cap.
Everything was seemingly going Aurora's way. The company was (and still is) primed to lead Canada in peak annual production, and it had just announced the hiring of billionaire activist investor Nelson Peltz as a strategic advisor. It's no secret that a number of Aurora's larger peers have landed equity investments from brand-name businesses, or worked out substantive partnerships with global companies. The hiring of Peltz, who has keen knowledge of the food and beverage industry as an activist investor, was viewed as the bridge that'll allow Aurora Cannabis to move into ancillary global industries.
Image source: Getty Images.
However, looks can be deceiving. Through Wednesday, Sept. 18, Aurora's share price had lost nearly 50% from its $9.96 closing high on March 19, and was off closer to 60% when compared to the company's 52-week intraday high.
At just $5.27 per share (in the U.S.), Aurora might look like an incredible bargain. Yet, there's the very real possibility its share price could continue to fall, pushing its valuation down to perhaps $4 billion, or less.
Here are 10 valid reasons Aurora Cannabis might see a sub-$4 share price in the not-so-distant future.
1. Supply issues beyond its control
To begin with, Aurora's fiscal fourth-quarter report points out that while a number of internal supply chain kinks have been worked out, there are supply issues beyond its control at this point that need to work themselves out. These supply issues concern a backlog of cultivation and sales applications for review by Health Canada, as well as the snail's pace by which some provinces are approving dispensary store licenses. These problems are liable to take many quarters to resolve.
2. Vape health concerns
Another broad concern that impacts the entire industry is the vaping health scare in the United States. In recent weeks, hundreds of cases of mysterious lung illnesses associated with vaping have been reported, along with seven vape-associated deaths. While it's unclear what's causing this rash of lung illnesses, some subsets of affected patients have revealed cannabis use through electronic cigarette devices. With Aurora being one of four chosen partners of vape device giant PAX Labs, these worries could directly impact the launch of vape products in Canada by mid-December.
Image source: Getty Images.
3. Operating underperformance
Aurora Cannabis also isn't inspiring investors with its quarterly operating results. Even though production is on the rise, Aurora's fiscal fourth quarter sales wound up missing its own guidance from five weeks prior. Further, promises of positive adjusted EBITDA that were set early in calendar 2019 were dashed when the company continued to lose money on an adjusted EBITDA basis. It's looking more and more likely that Aurora won't turn the corner to full-year profitability in fiscal 2020.
4. Minuscule international sales
No marijuana stock has a more impressive overseas presence than Aurora Cannabis. Inclusive of cultivation, export agreements, joint ventures, and research, Aurora has operations in 25 countries, including Canada. The only problem is that it can't really take advantage of these international markets until domestic demand is satisfied -- and that's going to take some time, as described by the mentioned supply issues. In the meantime, international sales growth remains subpar.
5. No major partner (as of yet)
Investors were clearly excited by the hiring of Nelson Peltz in March, but have to be disappointed with the lack of a major equity investor or distribution partner with just three months to go before derivative products launch in Canada. Yes, the deal to become a supplier for PAX Labs' Era vape device was a solid win, but for a company with the production potential that Aurora has, it's a disappointment to still be going it alone.
Image source: Getty Images.
6. Undefined U.S. strategy
It's no secret that Aurora Cannabis has plans to enter the U.S. market, which is projected to be the most lucrative marijuana market in the world by aggregate annual sales. Yet, Aurora has been slow to develop and implement a strategy that allows it to benefit from growth in the hemp and cannabidiol (CBD) industry in the meantime. It's fallen behind a number of its peers in legally pushing into the United States' CBD market.
7. Mammoth goodwill
Aurora is a big fan of growing inorganically. Since August 2016, the company has made more than a dozen acquisitions, ultimately increasing its production capacity, expanding its brand offerings, and improving its supply chain infrastructure. But there's a price to be paid for this expansion, and it's known as goodwill – i.e., the premium paid above and beyond tangible assets. Aurora has racked up 3.17 billion Canadian dollars in goodwill, representing 58% of its total assets. In other words, it's grown increasingly likely that the company will, at some point in the future, write down a portion of its goodwill and admit to overpaying for some, or most, of its acquisitions.
8. Industrywide trust issues
Investors can also blame trust issues for Aurora's current, and perhaps continued, underperformance. We've witnessed growers blatantly ignore the Cannabis Act and cultivate illicit marijuana, and also had our fair share of conflicts of interest at the executive level. Although Aurora isn't guilty of anything of that nature, it did just miss its own revenue guidance issued five weeks earlier. Investors simply don't trust cannabis stocks, and it's begun to show in their share price.
Image source: Getty Images.
9. Long-term dilution
There's another price to pay for the company's aggressive acquisition strategy beyond just goodwill and the possibility of a writedown. With minimal access to basic banking services, Aurora Cannabis has frequently acquired other businesses by using its common stock as capital. In the past five years, the company's outstanding share count has risen by 1 billion shares, which is a tough pill to swallow for long-term shareholders who've been continually diluted with each new purchase.
10. Investor pessimism is building
Finally, take note that pessimism is building on Wall Street and among retail investors. As of July 14, 87.2 million shares of Aurora's stock were held by short-sellers (i.e., investors who want the stock to decline). But by Aug. 14, short-sellers had control of 116.5 million outstanding shares, or more than 11% of the company's total shares. Wall Street and investors are clearly sounding the alarm on Aurora Cannabis, and it would behoove marijuana stock investors to listen.
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 – 10 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. | Six months ago, cannabis kingpin Aurora Cannabis (NYSE: ACB) could not be stopped. The company was (and still is) primed to lead Canada in peak annual production, and it had just announced the hiring of billionaire activist investor Nelson Peltz as a strategic advisor. These supply issues concern a backlog of cultivation and sales applications for review by Health Canada, as well as the snail's pace by which some provinces are approving dispensary store licenses. | Six months ago, cannabis kingpin Aurora Cannabis (NYSE: ACB) could not be stopped. Vape health concerns Another broad concern that impacts the entire industry is the vaping health scare in the United States. Operating underperformance Aurora Cannabis also isn't inspiring investors with its quarterly operating results. | Six months ago, cannabis kingpin Aurora Cannabis (NYSE: ACB) could not be stopped. The company's share price more than doubled from its December lows to hit a closing high that was just pennies from $10 a share, placing the Aurora's valuation at nearly $10 billion, and putting it squarely on the heels of Canopy Growth, the largest marijuana stock in the world by market cap. As of July 14, 87.2 million shares of Aurora's stock were held by short-sellers (i.e., investors who want the stock to decline). | Six months ago, cannabis kingpin Aurora Cannabis (NYSE: ACB) could not be stopped. The hiring of Peltz, who has keen knowledge of the food and beverage industry as an activist investor, was viewed as the bridge that'll allow Aurora Cannabis to move into ancillary global industries. Supply issues beyond its control To begin with, Aurora's fiscal fourth-quarter report points out that while a number of internal supply chain kinks have been worked out, there are supply issues beyond its control at this point that need to work themselves out. |
38110.0 | 2019-09-23 00:00:00 UTC | Short Sellers Are Piling Into These 5 Canadian Pot Stocks | ACB | https://www.nasdaq.com/articles/short-sellers-are-piling-into-these-5-canadian-pot-stocks-2019-09-23 | nan | nan | Over the next five to 10 years, marijuana is expected to become the greatest thing since sliced bread. Following a more than tripling in legal worldwide sales between 2014 and 2018 to $10.9 billion, various estimates suggest that global weed sales could soar to as high as $200 billion by 2029/2030. These are growth rates typically reserved for technology companies, not businesses growing and processing a plant.
But in recent months, cannabis has lost its luster. A myriad of supply and tax issues throughout North America, coupled with subpar operating results and clear trust issues, have sent pot stocks considerably lower. And as these issues have cropped up, short sellers have been busy bolstering their stakes in certain marijuana stocks.
Between July 14 and Aug. 14, the number of shares held by short sellers rose by a minimum of 33%, according to data from YCharts, in five popular Canadian pot stocks.
Image source: Getty Images.
OrganiGram Holdings: Short interest up 63%
Arguably the biggest surprise on this list is the substantial spike higher in short shares held in New Brunswick-based grower OrganiGram Holdings (NASDAQ: OGI). Over the noted one-month period, shares held short rose from 1.88 million to 3.06 million, with two factors likely to blame.
First, as noted, we've seen persistent supply issues in Canada since recreational marijuana sales began on Oct. 17, 2018. Even with Health Canada implementing a fix to help resolve its cultivation and sales license backlog, these solutions are going to take time to work. This means the likelihood of ongoing supply chain constraints for OrganiGram, and pretty much every single company on this list.
The other factor is that OrganiGram's fiscal third-quarter operating results yielded a wider-than-expected loss. Interestingly, without any one-time benefits or expenses included, OrganiGram was on track to produce a nominal operating profit. Only a small number of growers are anywhere near reporting an operating profit at the moment. However, near-term expenses tied to the rollout of derivatives, coupled with supply issues, are likely to keep OrganiGram in the red for the time being.
Image source: Getty Images.
CannTrust Holdings: Up 53%
Now, when it comes to Ontario-based CannTrust Holdings (NYSE: CTST), there's no question why short interest is on the rise.
In early July, CannTrust announced that it had been growing unlicensed marijuana in five rooms at its flagship Niagara facility for a period of six months (Oct. 2018 – March 2019), with these rooms subsequently becoming licensed in April. Since this announcement, CannTrust wound up firing its CEO Peter Aceto, who was apparently aware of this ongoing deception, and had its sales temporarily suspended by Health Canada while it awaited punishment.
This past week, the verdict was handed down: an official suspension of the company's cultivation and sales licenses until the company regains compliance. As outlined by Health Canada, compliance will entail a stronger inventory tracking system, improved compliance knowledge among key personnel, and an effort to recover illicitly produced and shipped cannabis.
While the outcome could have been considerably worse, there's no telling how long it could take before CannTrust regains its licenses. For now, short sellers remain firmly in control.
Image source: Getty Images.
Aphria: Up 43%
Embattled pot stock Aphria (NYSE: APHA) has also had a significant increase in shares held short, with a rise of 43% to 29.3 million shares. Nearly 12% of the company's outstanding shares are currently being held by investors who want to see it decline.
Oddly enough, it was Aphria's better-than-expected fiscal fourth quarter report that appears to have attracted these pessimists. In that report, Aphria delivered a 158% sequential-quarter increase in adult-use marijuana sold, as well as a surprise profit. Shares of the company wound up rallying 41% on the day after released its results, sparking the fire that attracted short sellers.
You see, despite a generally improved quarterly report, the bulk of Aphria's sales were derived from its pharmaceutical distribution business, CC Pharma, which was acquired in January. If investors were to solely focus on marijuana, Aphria is yet to be profitable on an operating basis.
What's more, Aphria, like CannTrust, is battling investor trust issues. Aphria's acquisition of Latin American assets came under fire in December via a short-seller report from Quintessential Capital Management and Hindenburg Research. Even though an independent committee found that Aphria had paid a reasonable price for these assets, the company wound up taking a 50 million Canadian dollar writedown on the value of its Latin American assets a few months later.
Image source: Getty Images.
Aurora Cannabis: Up 34%
Not even the largest marijuana producer in the world, Aurora Cannabis (NYSE: ACB), can escape the grip of short sellers. Over the noted one-month period, Aurora saw its shares held short spike by 34% (more than 29 million shares) to 116.5 million.
Aurora has a laundry list of issues it's contending with, all of which have contributed to its recent increase in short shares held. For instance, international sales, which represent a huge component of Aurora's long-term growth plan, have been growing at a snail's pace. Overseas growth is unlikely to take off until domestic demand has been met; and supply issues have kept that from happening.
We've also seen Aurora struggle on the operating front. Even with improved production, the company wound up missing its own sales guidance from five weeks prior, and whiffed on its adjusted EBITDA which was predicted to turn positive on a recurring basis early in the calendar year. Aurora, like most big-name producers, looks as if it'll generate a full-year loss in 2020, despite a steady increase in sales.
And don't overlook the company's goodwill. Currently lugging around CA$3.17 billion in goodwill (58% of total assets) on its balance sheet, Aurora looks like a prime candidate for a writedown in the not-so-distant future.
Image source: Getty Images.
HEXO: Up 33%
Keeping with the theme, Quebec-based HEXO (NYSE: HEXO) has seen its shares held short rise from 19.6 million in mid-July to 26.1 million in mid-August – an increase of 33%.
Similar to OrganiGram's situation, the most identifiable catalyst that's been weighing on HEXO's share price of late is supply concerns. HEXO's recreational cannabis sales haven't improved much on a sequential quarterly basis, which made its previously $1 billion-plus valuation a hard pill to swallow for Wall Street and investors.
Making matters worse, HEXO has not been afraid to spend aggressively to put itself in position to gobble up early stage market share. HEXO has extraction-service agreements in place with the likes of Valens GroWorks, has more than 600,000 square feet of facility space set aside for processing and manufacturing cannabis goods, and plans to roll out a line of nonalcoholic-infused beverages via its joint venture with Molson Coors Brewing when the green flag waves on derivatives in Canada by mid-December. Unfortunately, these expansion efforts have resulted in higher near-term costs with little in the way of sales. Translation: HEXO is losing money and may not have any chance at recurring profits until next year.
With HEXO's share price down more than 50% since late April, short sellers appear to have the company's number for the time being.
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 – 10 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 owns shares of CannTrust Holdings Inc. The Motley Fool owns shares of Molson Coors Brewing. The Motley Fool recommends CannTrust Holdings Inc, HEXO., and OrganiGram 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. | Aurora Cannabis: Up 34% Not even the largest marijuana producer in the world, Aurora Cannabis (NYSE: ACB), can escape the grip of short sellers. Even with improved production, the company wound up missing its own sales guidance from five weeks prior, and whiffed on its adjusted EBITDA which was predicted to turn positive on a recurring basis early in the calendar year. HEXO's recreational cannabis sales haven't improved much on a sequential quarterly basis, which made its previously $1 billion-plus valuation a hard pill to swallow for Wall Street and investors. | Aurora Cannabis: Up 34% Not even the largest marijuana producer in the world, Aurora Cannabis (NYSE: ACB), can escape the grip of short sellers. A myriad of supply and tax issues throughout North America, coupled with subpar operating results and clear trust issues, have sent pot stocks considerably lower. Over the noted one-month period, shares held short rose from 1.88 million to 3.06 million, with two factors likely to blame. | Aurora Cannabis: Up 34% Not even the largest marijuana producer in the world, Aurora Cannabis (NYSE: ACB), can escape the grip of short sellers. OrganiGram Holdings: Short interest up 63% Arguably the biggest surprise on this list is the substantial spike higher in short shares held in New Brunswick-based grower OrganiGram Holdings (NASDAQ: OGI). Aphria: Up 43% Embattled pot stock Aphria (NYSE: APHA) has also had a significant increase in shares held short, with a rise of 43% to 29.3 million shares. | Aurora Cannabis: Up 34% Not even the largest marijuana producer in the world, Aurora Cannabis (NYSE: ACB), can escape the grip of short sellers. HEXO: Up 33% Keeping with the theme, Quebec-based HEXO (NYSE: HEXO) has seen its shares held short rise from 19.6 million in mid-July to 26.1 million in mid-August – an increase of 33%. With HEXO's share price down more than 50% since late April, short sellers appear to have the company's number for the time being. |
38111.0 | 2019-09-23 00:00:00 UTC | Why HEXO Stock is Starting to Look Attractive at These Levels | ACB | https://www.nasdaq.com/articles/why-hexo-stock-is-starting-to-look-attractive-at-these-levels-2019-09-23 | nan | nan | With HEXO Corp. (NYSE:) firmly below the key $1 billion market capitalization, investors are at a loss on what to do next. Although HEXO stock is holding the $4 support line, its earnings report, estimated to take place on Oct. 3, might prove to be a turning point.
Source: Shutterstock
Ahead of the report, MKM Partners on a few cannabis companies last Friday, Sept. 20. It gave HEXO stock a buy rating, which sent the stock up that day. Howver, to get an idea on what to expect from HEXO’s upcoming report, investors should look at the Q3 2019 report posted in June.
Investors are Tired of Waiting
Hexo reported revenue growth of 944%, albeit at $9.76 million. Analysts expected $1 million but at this level, the absolute figures should not matter much. Hexo’s vision of becoming a top-three global cannabis company is a secondary point. Cannabis stocks are simply out of favor.
Since peaking in May, stocks like Canopy Growth (NYSE:) and Aurora Cannabis (NYSE:) are in a sustained downtrend. Investors have grown tired of waiting for profits to come. But that is the nature of a nascent industry that needs the big players to spend heavily on operating expenses. And while these companies continue to grow revenue at a blistering pace, the profits never seem to come.
Why is Hexo stock different from all other cannabis companies, if at all?
Hexo outlined three pillars that will deliver on its goal in becoming a top-three global cannabis firm, specifically, according to management’s comments: operational stability; product innovation; and, brand leadership. It invested in a strong team of scientists, chemists, and those with industry experience working at Kellogg’s (NYSE:) or Coca Cola (NYSE:). With 25 PhDs on staff, the R&D department is developing innovative products. To leverage its expertise, Hexo is partnered with Fortune 500 companies.
The company secured around 200,000 kilograms of hemp supply for CBD and non-THC cannabinoid extraction for the fiscal 2020 year. It has a secondary supply agreement that adds 60,000 kilograms of hemp. The risk here is similar to that faced by other cannabis firms: it is waiting for the in October in Canada — the production and sale of edible cannabis, cannabis extracts and cannabis topicals. Its strategy also relies on cannabis legalization in eight U.S. states in 2020.
New Lows for HEXO Stock Possible
At a recent price of $3.94, HEXO stock is down 53% from 52-week highs but is still up 30% from yearly lows. The increased selling pressure could send the stock to new lows. This may frustrate existing shareholders. Still, those willing to average down or to start on a speculative position could get a big reward. Cannabis legalization in the U.S., Canada, and in other countries will lead to revenue growth.
Hexo has the title of being the first cannabis company to join the Food and Consumer Products of Canada, a leading national trade group. The company’s added 374 new workers and raised its total headcount to 822 employees at the end of last quarter. It has 1,100 employees in total.
CAD $400 Million Revenue Target
Hexo has an ambitious CAD $400 million ($301.5 million) revenue target. It faces two risks in getting there. First, regulatory risks would delay the advancements of its products. More likely, regulatory delays will push out the company meeting its revenue target. Execution is the second risk. If its Belleville operations are ready in the fall as planned, Hexo will be mitigating that risk.
In Quebec, Hexo targets 30% share. But Hexo has a preferred supplier status in the region, a strong reputation, and a product its customers like.
In the near-term, the company set a goal of a 40% gross margin. Longer-term, the company may achieve 50%. But to get there, it needs to be a top-four global cannabis company.
Your Takeaway on HEXO Stock
Investors have a number of available to forecast the stock’s fair value. But until Hexo starts generating consistently growing revenue each quarter, the estimate is a guess with a wide margin for error. Investors should instead wait for legalization and regulatory clarity first. This will remove some of the risks that may still not yet be priced in HEXO stock.
Disclosure: As of this writing, the author did not hold a position in any of the aforementioned securities.
The post 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. | Although HEXO stock is holding the $4 support line, its earnings report, estimated to take place on Oct. 3, might prove to be a turning point. Hexo outlined three pillars that will deliver on its goal in becoming a top-three global cannabis firm, specifically, according to management’s comments: operational stability; product innovation; and, brand leadership. Hexo has the title of being the first cannabis company to join the Food and Consumer Products of Canada, a leading national trade group. | Investors are Tired of Waiting Hexo reported revenue growth of 944%, albeit at $9.76 million. Hexo’s vision of becoming a top-three global cannabis company is a secondary point. CAD $400 Million Revenue Target Hexo has an ambitious CAD $400 million ($301.5 million) revenue target. | Why is Hexo stock different from all other cannabis companies, if at all? The risk here is similar to that faced by other cannabis firms: it is waiting for the in October in Canada — the production and sale of edible cannabis, cannabis extracts and cannabis topicals. New Lows for HEXO Stock Possible At a recent price of $3.94, HEXO stock is down 53% from 52-week highs but is still up 30% from yearly lows. | Howver, to get an idea on what to expect from HEXO’s upcoming report, investors should look at the Q3 2019 report posted in June. Why is Hexo stock different from all other cannabis companies, if at all? The risk here is similar to that faced by other cannabis firms: it is waiting for the in October in Canada — the production and sale of edible cannabis, cannabis extracts and cannabis topicals. |
38112.0 | 2019-09-23 00:00:00 UTC | Marijuana ETF Universe Grows Again With Addition of Global X POTX | ACB | https://www.nasdaq.com/articles/marijuana-etf-universe-grows-again-with-addition-of-global-x-potx | nan | nan | After a brisk July that saw three cannabis exchange traded funds (ETFs) come to market, issuers took a marijuana ETF break in August, but at least one is back at it. The Global X Cannabis ETF (NASDAQ:) debuted on Thursday, Sept. 19, becoming the sixth marijuana ETF listed in the U.S.
Source: Shutterstock
For investors keeping score at home, with the addition of the index-based POTX (it tracks the Cannabis Index), there are now three passive marijuana ETFs in the U.S. and .
It remains to be seen which structure, active or passive, is most beneficial for investors. Excluding POTX simply because it’s just a few days old, all of the marijuana ETFs that debuted this year along with the category’s oldest member, ETFMG Alternative Harvest ETF (NYSEARCA:), have been drubbed in 2019 as prices but not valuations have come down on a slew of previously beloved marijuana stocks.
Just this month, both MJ and the AdvisorShares Pure Cannabis ETF (NYSEARCA:), the first active marijuana ETF, are each down more than 8.60%, indicating the jury’s still out on whether active or passive is the way to go.
Getting back to POTX, the newest marijuana ETF enters a crowded field at a time of vast challenges for cannabis stocks. To be sure, those are considerations, but not detractors to the rookie fund’s investment thesis and potential.
A Pulse on POTX
The POTX structure is similar to some rivals in the marijuana ETF camp with the new Global X fund allocating over 80% of its weight to Canadian companies. That’s the lay of land for passive marijuana ETFs, which usually feature light or no exposure to U.S. cannabis companies because those firms don’t trade on major domestic exchanges.
As has been widely noted, Canadian cannabis exposure with plenty of pros and cons investors need to acknowledge.
According to coinciding with the POTX launch:
“In October 2018, Canada achieved a milestone as the first G-7 country to fully legalize adult use of recreational cannabis…Since then, cannabis consumption has been on the rise, with 17.5% of Canadians reporting use, up from 14% a year ago, prior to legalization. In addition, sales of various medical and non-medical forms of cannabis increased 53% in the aggregate less than a year since recreational use was first allowed.”
Top 10 holdings in POTX include familiar names, such as Aurora Cannabis (NYSE:), Canopy Growth (NYSE:) and HEXO Corp (NYSE:). Those companies and others currently have limited exposure to the U.S., which Global X acknowledges in its research. That’s also a trait that needs to change to bolster the case for POTX and every other marijuana ETF over the long-term.
Also from Global X:
“Currently, Canadian LPs may only enter the US by selling hemp or CBD products, which were legalized for cultivation and sale on December 12th with the 2018 Farm Bill…LPs have also acquired rights to control US companies once cannabis is legalized at a federal level. For example, Canopy Growth, which operates in the recreational cannabis market in Canada and in other legal medical markets around the world, announced on April 19th that it reserves the right to acquire the US based company, Acreage Holdings, for $3.4 billion, once cannabis is legalized at a federal level in the US.”
Bottom Line: Other Perks
POTX has some other perks, including some that are reflective of the broader cannabis industry. For instance, global marijuana revenue is expected to be about $15 billion this year, but the total addressable market is more than 12 times larger than that.
Additionally, other countries are looking to fully legalize cannabis, Mexico and New Zealand among them, and that could be a slight catalyst for marijuana ETFs, but not a panacea without the U.S. following suit.
Another benefit specific to POTX is its fee. The new marijuana ETF charges just 0.50% per year, or $50 on a $10,000 investment, making it on the market today and the least expensive among the passive products in this space. Time will tell if that’s enough to get investors in the door.
Todd Shriber does not own any of the aforementioned securities.
The post 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 For investors keeping score at home, with the addition of the index-based POTX (it tracks the Cannabis Index), there are now three passive marijuana ETFs in the U.S. and . That’s the lay of land for passive marijuana ETFs, which usually feature light or no exposure to U.S. cannabis companies because those firms don’t trade on major domestic exchanges. Additionally, other countries are looking to fully legalize cannabis, Mexico and New Zealand among them, and that could be a slight catalyst for marijuana ETFs, but not a panacea without the U.S. following suit. | After a brisk July that saw three cannabis exchange traded funds (ETFs) come to market, issuers took a marijuana ETF break in August, but at least one is back at it. Just this month, both MJ and the AdvisorShares Pure Cannabis ETF (NYSEARCA:), the first active marijuana ETF, are each down more than 8.60%, indicating the jury’s still out on whether active or passive is the way to go. For example, Canopy Growth, which operates in the recreational cannabis market in Canada and in other legal medical markets around the world, announced on April 19th that it reserves the right to acquire the US based company, Acreage Holdings, for $3.4 billion, once cannabis is legalized at a federal level in the US.” Bottom Line: Other Perks POTX has some other perks, including some that are reflective of the broader cannabis industry. | Excluding POTX simply because it’s just a few days old, all of the marijuana ETFs that debuted this year along with the category’s oldest member, ETFMG Alternative Harvest ETF (NYSEARCA:), have been drubbed in 2019 as prices but not valuations have come down on a slew of previously beloved marijuana stocks. Just this month, both MJ and the AdvisorShares Pure Cannabis ETF (NYSEARCA:), the first active marijuana ETF, are each down more than 8.60%, indicating the jury’s still out on whether active or passive is the way to go. For example, Canopy Growth, which operates in the recreational cannabis market in Canada and in other legal medical markets around the world, announced on April 19th that it reserves the right to acquire the US based company, Acreage Holdings, for $3.4 billion, once cannabis is legalized at a federal level in the US.” Bottom Line: Other Perks POTX has some other perks, including some that are reflective of the broader cannabis industry. | It remains to be seen which structure, active or passive, is most beneficial for investors. For example, Canopy Growth, which operates in the recreational cannabis market in Canada and in other legal medical markets around the world, announced on April 19th that it reserves the right to acquire the US based company, Acreage Holdings, for $3.4 billion, once cannabis is legalized at a federal level in the US.” Bottom Line: Other Perks POTX has some other perks, including some that are reflective of the broader cannabis industry. Time will tell if that’s enough to get investors in the door. |
38113.0 | 2019-09-22 00:00:00 UTC | Aurora Cannabis Stock: This Wall Street Analyst Thinks You Should Sell | ACB | https://www.nasdaq.com/articles/aurora-cannabis-stock%3A-this-wall-street-analyst-thinks-you-should-sell-2019-09-22 | nan | nan | Aurora Cannabis (NYSE: ACB) is one of the most popular marijuana stocks on the market today, but not everyone is a fan.
Stifel analyst W. Andrew Carter recently lowered his rating on Aurora Cannabis' stock to "sell" from "hold." He also reduced his target price to CA$5 ($3.77) from CA$7 ($5.28).
Image source: Getty Images.
Carter argues that Aurora's fourth-quarter report indicates that the marijuana company is nowhere close to achieving profitability. Aurora generated a net loss of CA$297.9 million in its most recent quarter. Even its adjusted earnings, before interest, taxes, depreciation, and amortization (EBITDA) -- which excludes share-based compensation and a host of other charges and expenses -- came in negative, at a loss of CA$11.7 million.
Although Carter acknowledged that Canada's impending legalization of cannabis derivatives -- such as edibles, infused beverages, and topicals -- should provide a catalyst for revenue growth, overall recreational marijuana sales are likely to be "more muted" than expected. In turn, Carter slashed his forecast for Aurora's 2020 full-year revenue to CA$485 million from CA$600 million. Carter also now expects Aurora to generate a larger EBITDA loss of CA$89 million, compared with his prior projection of CA$32 million.
Moreover, Carter predicts that Aurora will need to raise "significant" capital before the end of Q1 2020. Unlike rivals Canopy Growth (NYSE: CGC), which received $4 billion in investments from beer giant Constellation Brands (NYSE: STZ) (NYSE: STZ-B), and Cronos Group (NASDAQ: CRON), which received a $1.8 billion investment from tobacco titan Altria (NYSE: MO), Aurora has yet to sell a significant stake in itself to a larger partner. As a result, Aurora has relatively low cash reserves, which Carter believes will make it challenging for it to invest in the potentially massive U.S. marijuana market.
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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) is one of the most popular marijuana stocks on the market today, but not everyone is a fan. Even its adjusted earnings, before interest, taxes, depreciation, and amortization (EBITDA) -- which excludes share-based compensation and a host of other charges and expenses -- came in negative, at a loss of CA$11.7 million. Although Carter acknowledged that Canada's impending legalization of cannabis derivatives -- such as edibles, infused beverages, and topicals -- should provide a catalyst for revenue growth, overall recreational marijuana sales are likely to be "more muted" than expected. | Aurora Cannabis (NYSE: ACB) is one of the most popular marijuana stocks on the market today, but not everyone is a fan. In turn, Carter slashed his forecast for Aurora's 2020 full-year revenue to CA$485 million from CA$600 million. Carter also now expects Aurora to generate a larger EBITDA loss of CA$89 million, compared with his prior projection of CA$32 million. | Aurora Cannabis (NYSE: ACB) is one of the most popular marijuana stocks on the market today, but not everyone is a fan. In turn, Carter slashed his forecast for Aurora's 2020 full-year revenue to CA$485 million from CA$600 million. Carter also now expects Aurora to generate a larger EBITDA loss of CA$89 million, compared with his prior projection of CA$32 million. | Aurora Cannabis (NYSE: ACB) is one of the most popular marijuana stocks on the market today, but not everyone is a fan. Aurora generated a net loss of CA$297.9 million in its most recent quarter. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market. |
38114.0 | 2019-09-21 00:00:00 UTC | The Single Most Compelling Reason to Buy Aurora Cannabis | ACB | https://www.nasdaq.com/articles/the-single-most-compelling-reason-to-buy-aurora-cannabis-2019-09-22 | nan | nan | You could easily come up with a relatively long list of reasons not to buy Aurora Cannabis (NYSE: ACB). It remains unprofitable. The dilution of its shares has reached epic proportions. The company couldn't even meet revenue guidance that it provided less than a month before its quarterly update. Aurora also hasn't found a major partner from outside the cannabis industry while several of its peers have.
Feel free to pause for a moment and think about all of the other reasons to avoid Aurora. Once you're finished, take a deep breath and put all of that out of your mind. Despite the many downsides with investing in Aurora, there actually are some arguments to be made for the stock. And there's one especially compelling reason to buy Aurora.
Image source: Getty Images.
Aurora's greatest strength
What's the greatest strength for Aurora Cannabis? The company's industry-leading production capacity is certainly a candidate. However, I think Aurora's greatest strength is instead its international medical cannabis operations. I view Aurora's international leadership as the single most compelling reason to buy the stock.
Aurora claims operations in 24 countries outside Canada -- more than any other cannabis producer. The company is active in Europe, Latin America and the Caribbean, Australia, and South Africa. Aurora isn't just active internationally, though; it's leading in international medical cannabis markets.
The company holds a leading market share in Germany, which boasts the largest legal medical cannabis market outside of North America. Aurora was one of only three producers to be allowed to cultivate medical cannabis inside Germany.
Achieving the European Union (EU) Good Manufacturing Practices (GMP) certification is a must for doing business in Europe, and it helps in selling in other international markets as well. Aurora currently has two facilities that have EU GMP certification. Cam Battley, Aurora's chief corporate officer, said in the company's fourth-quarter conference call that Aurora is in the final stages of obtaining EU GMP certification for two additional Canadian facilities. The company is also building a cannabis production facility in Portugal that should be ready for operation in the second half of 2020.
Aurora has a significant capability in the global hemp market, too. The company acquired Agropro, Europe's largest producer, processor, and supplier of organic hemp and hemp products, in 2018. It also owns Borela, another European hemp processor and distributor, and ICC Labs, a South American leader in hemp and cannabis production.
A major opportunity
These international chops are tremendously important to Aurora's future. I'd argue that they are much more critical than any success the company achieves in its home country of Canada. Why? The opportunity is much larger.
The Canadian medical cannabis market could grow to around $2.3 billion annually. Canada's adult-use recreational market could approach $7 billion per year. But Aurora thinks the European medical cannabis market could present a $74 billion opportunity over the long term.
Keep in mind that we're only talking about medical cannabis. Should countries outside of Canada legalize recreational cannabis, Aurora would be in a great position to leverage its leadership in the medical cannabis space to carve out a significant market share in the recreational market.
And we haven't addressed the hemp opportunity yet. Market researcher Brightfield Group estimates that the European hemp CBD market could reach nearly $1.7 billion by 2023. The U.S. hemp market could be much larger, with Brightfield Group projecting a market size of $22 billion by 2022. Although this estimate is a lot higher than what other analysts predict, Brightfield Group stands by its aggressive projection, saying that "there is too much momentum, too much demand and too much potential for this industry not to explode."
Huge risk, potentially huge reward
Investing in marijuana stocks is fraught with risk. Aurora Cannabis is no exception. The global medical cannabis and hemp CBD markets aren't anywhere close to the sizes that some predict. It's entirely possible that the estimates will prove to be overly optimistic by a wide margin.
But if you're looking for a reason to buy Aurora Cannabis stock, you don't have to search any further than the company's international presence and opportunities. Aurora has made a big bet on being a first mover in several of the global markets. The company has also boosted its production capacity in anticipation of tremendous global demand for cannabis. If it's right, investors who push the list of negatives about Aurora to the side and focus on this one key reason to buy the stock could be richly rewarded over the long run.
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 – 10 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 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. | You could easily come up with a relatively long list of reasons not to buy Aurora Cannabis (NYSE: ACB). Achieving the European Union (EU) Good Manufacturing Practices (GMP) certification is a must for doing business in Europe, and it helps in selling in other international markets as well. Although this estimate is a lot higher than what other analysts predict, Brightfield Group stands by its aggressive projection, saying that "there is too much momentum, too much demand and too much potential for this industry not to explode." | You could easily come up with a relatively long list of reasons not to buy Aurora Cannabis (NYSE: ACB). The company holds a leading market share in Germany, which boasts the largest legal medical cannabis market outside of North America. Market researcher Brightfield Group estimates that the European hemp CBD market could reach nearly $1.7 billion by 2023. | You could easily come up with a relatively long list of reasons not to buy Aurora Cannabis (NYSE: ACB). Aurora isn't just active internationally, though; it's leading in international medical cannabis markets. Should countries outside of Canada legalize recreational cannabis, Aurora would be in a great position to leverage its leadership in the medical cannabis space to carve out a significant market share in the recreational market. | You could easily come up with a relatively long list of reasons not to buy Aurora Cannabis (NYSE: ACB). However, I think Aurora's greatest strength is instead its international medical cannabis operations. Aurora isn't just active internationally, though; it's leading in international medical cannabis markets. |
38115.0 | 2019-09-20 00:00:00 UTC | Health Care Sector Update for 09/20/2019: REGN,ALGN,ZBH,ACB | ACB | https://www.nasdaq.com/articles/health-care-sector-update-for-09-20-2019%3A-regnalgnzbhacb-2019-09-20 | nan | nan | Top Health Care Stocks
JNJ +0.9%
PFE +0.26%
ABT -0.37%
MRK +1.4%
AMGN +0.7%
Health care stocks were rising, with the NYSE Health Care Index climbing around 0.8% this afternoon while the shares of health care companies in the S&P 500 also were up 0.9% as a group. The Nasdaq Biotechnology index was climbing 0.3%.
Among health care stocks moving on news:
(+) Regeneron Pharmaceuticals (REGN) rose 2.3% after it and Sanofi (SNY) said that data published in The Lancet from a pair of phase III trials showed that adding Dupixent antibody medication to a corticosteroid nasal spray reduced the size of nasal polyps and the severity of nasal congestion in adult patients with recurring severe chronic rhinosinusitis with nasal polyps despite previous treatment. Also, a European committee recommended Dupixent be approved for a third indication as an add-on therapy with intranasal corticosteroids for treating chronic rhinosinusitis with nasal polyposis.
In other sector news:
(+) Align Technology (ALGN) was 2% higher after the company late Thursday announced a global distribution agreement with Zimmer Biomet's (ZBH) dental products division. The deal will allow Align Tech to sell its iTero Element family of intra-oral scanners through Zimmer's global direct salesforce and network of dental clinicians and laboratories. Zimmer customers also will receive access to Invisalign clear aligners through the iTero platform.
(-) Aurora Cannabis (ACB) fell over 2% after MKM Partners began analyst coverage of the Canadian medical and recreational marijuana company with a sell rating and a CAD5 price target.
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) fell over 2% after MKM Partners began analyst coverage of the Canadian medical and recreational marijuana company with a sell rating and a CAD5 price target. In other sector news: (+) Align Technology (ALGN) was 2% higher after the company late Thursday announced a global distribution agreement with Zimmer Biomet's (ZBH) dental products division. The deal will allow Align Tech to sell its iTero Element family of intra-oral scanners through Zimmer's global direct salesforce and network of dental clinicians and laboratories. | (-) Aurora Cannabis (ACB) fell over 2% after MKM Partners began analyst coverage of the Canadian medical and recreational marijuana company with a sell rating and a CAD5 price target. Top Health Care Stocks Health care stocks were rising, with the NYSE Health Care Index climbing around 0.8% this afternoon while the shares of health care companies in the S&P 500 also were up 0.9% as a group. | (-) Aurora Cannabis (ACB) fell over 2% after MKM Partners began analyst coverage of the Canadian medical and recreational marijuana company with a sell rating and a CAD5 price target. Health care stocks were rising, with the NYSE Health Care Index climbing around 0.8% this afternoon while the shares of health care companies in the S&P 500 also were up 0.9% as a group. Among health care stocks moving on news: (+) Regeneron Pharmaceuticals (REGN) rose 2.3% after it and Sanofi (SNY) said that data published in The Lancet from a pair of phase III trials showed that adding Dupixent antibody medication to a corticosteroid nasal spray reduced the size of nasal polyps and the severity of nasal congestion in adult patients with recurring severe chronic rhinosinusitis with nasal polyps despite previous treatment. | (-) Aurora Cannabis (ACB) fell over 2% after MKM Partners began analyst coverage of the Canadian medical and recreational marijuana company with a sell rating and a CAD5 price target. Health care stocks were rising, with the NYSE Health Care Index climbing around 0.8% this afternoon while the shares of health care companies in the S&P 500 also were up 0.9% as a group. Among health care stocks moving on news: (+) Regeneron Pharmaceuticals (REGN) rose 2.3% after it and Sanofi (SNY) said that data published in The Lancet from a pair of phase III trials showed that adding Dupixent antibody medication to a corticosteroid nasal spray reduced the size of nasal polyps and the severity of nasal congestion in adult patients with recurring severe chronic rhinosinusitis with nasal polyps despite previous treatment. |
38116.0 | 2019-09-20 00:00:00 UTC | Time to Hit the Panic Button With Aurora Cannabis? Why 1 Analyst Slashed His Price Target by Over 30% | ACB | https://www.nasdaq.com/articles/time-to-hit-the-panic-button-with-aurora-cannabis-why-1-analyst-slashed-his-price-target | nan | nan | "Nobody loves you when you're down and out."
Aurora Cannabis (NYSE: ACB) is finding out just how true the line from the old blues song is. The stock sank last week after it whiffed on fourth-quarter revenue guidance that it had provided less than a month earlier. Now the big Canadian cannabis producer is feeling the sting from a top analyst piling on.
Stifel Nicolaus analyst Andrew Carter downgraded Aurora stock from a hold to a sell rating earlier this week, and slashed his one-year price target by more than 30%. Is it time for investors to hit the panic button with Aurora?
Image source: Getty Images.
Behind Stifel's stifling
Stifel Nicolaus pretty much doesn't like anything about Aurora's near-term prospects. It lowered its full-year fiscal 2020 sales projection for Aurora from 600 million Canadian dollars to CA$485 million -- a 19% reduction. This likely stemmed at least in part to Aurora's chief corporate officer, Cam Battley, stating in Aurora's Q4 conference call that the company is "anticipating a bit of a plateau" in adult-use recreational cannabis sales between now and the launch of the "Cannabis 2.0" cannabis derivatives market in Canada.
Aurora's pathway to profitability also appears likely to be full of potholes, according to Stifel Nicolaus. Stifel's Carter predicted that the cannabis producer won't achieve break-even earnings before interest, taxes, depreciation, and amortization (EBITDA) until the first quarter of fiscal 2021.
Battley claimed earlier this year that Aurora would post positive adjusted EBITDA in its fiscal 2019 fourth quarter. After that didn't happen, the company's CFO, Glen Ibbott, said that Aurora is "moving to EBITDA positive in the short term, not the long term."
But Stifel now has a more negative short-term view. It thinks that Aurora will post negative EBITDA of CA$89 million in fiscal year 2020, lower than the previous estimate of an EBITDA loss of CA$32 million.
The biggest problem
In my view, the biggest problem identified by Stifel Nicolaus is one that Bank of America Merrill Lynch analyst Christopher Carey raised a couple of months ago: Aurora is running out of cash. And the failure to achieve positive EBITDA is accelerating the timeline for when the company will need to raise more capital.
Stifel expects that Aurora will burn through nearly all of its cash over the next three quarters. Before it runs out of cash, the cannabis producer will have to go to the well again. Andrew Carter thinks that will happen before the end of March 2020.
This time around, that could be more challenging than in the past. Carter wrote to investors about "the backdrop of overwhelmingly negative investor sentiment toward the [cannabis] sector, damaged credibility, and limited catalysts near-term to drive enthusiasm for the shares." This kind of environment is problematic for a company trying to raise capital by issuing new shares.
An uphill climb to generate more cash couldn't come at a worse time. Aurora is already behind some of its peers, particularly Canopy Growth, in jumping into the U.S. hemp market. Aurora Executive Chairman Michael Singer said in the Q4 call that entering the U.S. is "now a key objective" in fiscal 2020. But making that leap will require more money.
Time to panic?
There's an awful lot of doom and gloom for investors to digest related to Aurora. Is it time to panic? Not for long-term investors.
If you think that the global cannabis market is going to be anywhere close to what even conservative analysts predict it will be, Aurora has a good shot at being a huge winner over the long run. The company has the production capacity and international operations to be successful.
On the other hand, if you're not a long-term investor, any time is a time to panic. The short-term volatility associated with investing in marijuana stocks can be downright terrifying.
But the question about panicking over Aurora assumes you already own shares. Whether or not to buy Aurora right now is another matter altogether. The company will have to raise more money. Doing so will require more dilution -- either now or in the future.
I suspect things could become darker before there's light, especially if the plateau predicted by Cam Battley is reflected in Aurora's next quarterly update. Aurora could keep on singing the blues for a while.
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 – 10 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 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 finding out just how true the line from the old blues song is. Stifel Nicolaus analyst Andrew Carter downgraded Aurora stock from a hold to a sell rating earlier this week, and slashed his one-year price target by more than 30%. Stifel's Carter predicted that the cannabis producer won't achieve break-even earnings before interest, taxes, depreciation, and amortization (EBITDA) until the first quarter of fiscal 2021. | Aurora Cannabis (NYSE: ACB) is finding out just how true the line from the old blues song is. Stifel Nicolaus analyst Andrew Carter downgraded Aurora stock from a hold to a sell rating earlier this week, and slashed his one-year price target by more than 30%. Stifel's Carter predicted that the cannabis producer won't achieve break-even earnings before interest, taxes, depreciation, and amortization (EBITDA) until the first quarter of fiscal 2021. | Aurora Cannabis (NYSE: ACB) is finding out just how true the line from the old blues song is. Stifel Nicolaus analyst Andrew Carter downgraded Aurora stock from a hold to a sell rating earlier this week, and slashed his one-year price target by more than 30%. This likely stemmed at least in part to Aurora's chief corporate officer, Cam Battley, stating in Aurora's Q4 conference call that the company is "anticipating a bit of a plateau" in adult-use recreational cannabis sales between now and the launch of the "Cannabis 2.0" cannabis derivatives market in Canada. | Aurora Cannabis (NYSE: ACB) is finding out just how true the line from the old blues song is. But Stifel now has a more negative short-term view. And the failure to achieve positive EBITDA is accelerating the timeline for when the company will need to raise more capital. |
38117.0 | 2019-09-19 00:00:00 UTC | Should You Believe the Long-Term Narrative for Tilray Stock? | ACB | https://www.nasdaq.com/articles/should-you-believe-the-long-term-narrative-for-tilray-stock-2019-09-19 | nan | nan | In a distressing reversal of fortune, cannabis-related companies like Tilray (NASDAQ:) have suffered sharply. No longer content on listening to a strong narrative, investors wanted hard numbers. Unfortunately, the weed alpha dogs like Cronos Group (NASDAQ:), Canopy Growth (NYSE:) and Aurora Cannabis (NYSE:) have all produced disappointing results. For Tilray stock, it’s down more than 56%.
Source: Jarretera / Shutterstock.com
Of course, several analysts have their take on the issue, and I’m not going to speak for any of them. I will say, though, that in my view, marijuana investments like TLRY stock are stuck between two worlds: one that emphasizes traditional investment metrics, such as earnings-per-share, and another that banks on the broader industry’s potential.
To be frank, most investors — and I’m one of them — got caught up in the latter. Generally, we believe that it’s an incredibly difficult, if not impossible to assess names like Tilray stock against traditional metrics. It’s unlike a blue-chip stock where you have ample historical data to work with.
At the same time, I don’t begrudge that volatility rocked this space. Sure, I’d argue against the magnitude of bearishness. Nevertheless, investors must see firm evidence that their funds are being put to good use. Due to recent controversies like the CannTrust Holdings (NYSE:) scandals, these high-profile incidents impugned the entire sector.
Therefore, investors lost patience, which I can appreciate. From their perspective, it was time to put up or shut up. When major player after major player failed to produce confidence-inspiring earnings results, prior weed advocates abandoned ship.
But with TLRY stock appearing to have stabilized at the $30 level, should speculators consider giving it another look?
Tilray Stock Has a Great Story … If It Can Turn the Page
Not too long ago, TLRY stock touched the $300 level on an intra-day basis. If you think about it, this is a remarkable concept: at one point, no matter how briefly, someone thought that Tilray stock was worth $300 a pop. In that context, losing a zero is a very good price indeed.
Joking aside, my InvestorPlace colleague Ian Bezek explored the idea of capitalizing on the marijuana sector’s fallout. Regarding Tilray stock, Bezek sees potential. However, he notes that other companies like Canopy and Cronos have big backers. Without similar support for Tilray, the medical cannabis specialist has an .
It’s a fair point. From the get-go, cannabis firms have sought mainstream credibility. Nothing spells out “making it” quite like a backer like Altria Group (NYSE:) or Constellation Brands (NYSE:).
In that regard, I agree with Bezek. However, Tilray stock features a powerful narrative that just got more interesting.
As I’m sure you’ve heard, the has captured the nation’s attention. Increasingly, the public, including some vape users, are leery about the practice.
Because the vaping news cycle seemingly gets worse every day, I’m not sure how this will play out. However, cannabis, which is also a “vapable” substance, for medicinal use has only . In fact, some medical professionals who were previously opposed to cannabis are now prescribing it.
And that sentiment suits TLRY stock for the long haul. Tilray’s products are consumables wrapped in . Designed purely for medicinal purposes, they don’t have the stigma associated with stereotypical cannabis platforms.
Plus, the vaping crisis provides an opportunity for TLRY to distinguish itself as a medicinal player, not a recreational one. That’s crucial as it reaches out to the international markets.
A Global Opportunity to Advantage
Many, if not most bullish arguments about TLRY stock focus on the potential U.S. legalization of marijuana. After all, 62% of the American people . With a total population of over 327 million, that could add up to serious coin.
However, the U.S. isn’t the only non-Canadian nation that’s growing tolerant to weed. In a surprising report from CNBC, many . Historically known for their draconian narcotics laws, if Asia converts to green, it would be a game-changer, irrespective of what happens in the U.S.
For example, Japan recently approved clinical trials for Epidiolex, a cannabidiol (CBD)-based oral solution for helping epileptic patients. Consequently, Japan also has a rapidly aging population. If medical cannabis gains greater acceptance there, it would represent a huge boon for specialists like Tilray. Logically, this would skyrocket Tilray stock, perhaps back to its intra-day highs.
That said, TLRY stock has a financial credibility problem. Management must convince prospective buyers that it can stay in the business long enough to actualize these positive forward narratives.
And that’s the underlying reason why Tilray stock and its ilk are so volatile. Yes, the story is great … profound, even. But getting there is the hard part. I for one am a believer, but I can also appreciate why others remain skeptical.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.
The post 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. | Generally, we believe that it’s an incredibly difficult, if not impossible to assess names like Tilray stock against traditional metrics. Due to recent controversies like the CannTrust Holdings (NYSE:) scandals, these high-profile incidents impugned the entire sector. Historically known for their draconian narcotics laws, if Asia converts to green, it would be a game-changer, irrespective of what happens in the U.S. For example, Japan recently approved clinical trials for Epidiolex, a cannabidiol (CBD)-based oral solution for helping epileptic patients. | Unfortunately, the weed alpha dogs like Cronos Group (NASDAQ:), Canopy Growth (NYSE:) and Aurora Cannabis (NYSE:) have all produced disappointing results. I will say, though, that in my view, marijuana investments like TLRY stock are stuck between two worlds: one that emphasizes traditional investment metrics, such as earnings-per-share, and another that banks on the broader industry’s potential. When major player after major player failed to produce confidence-inspiring earnings results, prior weed advocates abandoned ship. | Unfortunately, the weed alpha dogs like Cronos Group (NASDAQ:), Canopy Growth (NYSE:) and Aurora Cannabis (NYSE:) have all produced disappointing results. For Tilray stock, it’s down more than 56%. Tilray Stock Has a Great Story … If It Can Turn the Page Not too long ago, TLRY stock touched the $300 level on an intra-day basis. | For Tilray stock, it’s down more than 56%. Nevertheless, investors must see firm evidence that their funds are being put to good use. Regarding Tilray stock, Bezek sees potential. |
38118.0 | 2019-09-19 00:00:00 UTC | 3 Medical Marijuana Stocks to Buy | ACB | https://www.nasdaq.com/articles/3-medical-marijuana-stocks-to-buy-2019-09-19 | nan | nan | [Editor’s note: This story was previously published in March 2019. It has since been updated and republished.]
Often, when analysts or bloggers talk up the potential of , the focus is on the consumer side of the industry. But some of the best stocks in the pot sector may be medical marijuana stocks.
Indeed, it’s on the medical side where growth is likely to be largest in the near term. Canada did legalize recreational marijuana last year, but investors promptly in response. Almost a year later, stocks like Canopy Growth (NYSE:) and Tilray (NASDAQ:) have recently touched 52-week lows.
U.S. legalization is likely to be a long slog. Attitudes are mixed in Europe — but even in legalized markets, black market (and untaxed) operators will be able to take share.
Meanwhile, approval of medical marijuana (in the U.S. and elsewhere) seems to be moving at a faster pace. In such a highly regulated market, black market and even smaller producers likely will be shut out. Quality and consistency will be key. Here, scale will matter. And those companies that win early have the best chance of becoming market leaders — and providing big gains for investors.
As always — and particularly in this space — investors need to mind the risks and size of their positions accordingly. But for investors who see medical marijuana stocks as the next big thing, these three are the best stocks to buy for investors enamored with weed.
Medical Marijuana Stocks to Buy: Charlotte’s Web (CWBHF)
Source: Kevin McGovern / Shutterstock.com
Charlotte’s Web (OTCMKTS:) has become one of the leading players in CBD oil (cannabidiol). And though Charlotte’s Web products are made from hemp — at least for now — instead of marijuana, the stock still looks like one of the best plays in the sector.
InvestorPlace’s Matt McCall named CWBHF (the stock also trades on the Canadian Securities Exchange under ticker CWEB) as . McCall’s case makes some sense. CBD oil sales are soaring, and Charlotte’s Web is a market leader. As McCall pointed out, the federal farm bill in the U.S. provided a catalyst by legalizing hemp.
So far this year, Charlotte’s Web stock has outperformed most recreational players, gaining 65% year-to-date. But a nearly 30% pullback from August highs creates another opportunity for an attractive entry point. Second-quarter earnings appear to have disappointed some investors, but revenue growth of 45% year-over-year and 15% quarter-over-quarter suggest the growth story remains intact.
There is a risk here from U.S. Food and Drug Administration regulation, but the agency seems unlikely to be a roadblock to Charlotte’s Web stock’s growth. With so many customers yet to try CBD oil — and so many existing users attached — market growth should be huge. And while CWBHF isn’t cheap from a valuation standpoint, its position as a market leader should allow it to grow into its valuation.
Cronos (CRON)
Source: Shutterstock
Like most major cannabis plays, shares of Cronos (NASDAQ:) have declined of late. CRON stock has dropped by 50% since early March.
The declines may continue. CRON, like many of its peers, still isn’t cheap. And it still isn’t profitable. But there’s a lot to like here, particularly for investors more interested in the medical side of the industry than the consumer side.
To be sure, investors see Cronos as a consumer play. The by tobacco giant Altria (NYSE:) brings in not only cash, but Altria’s advertising expertise and distribution reach.
But investors can’t ignore that Cronos is a medical marijuana stock as well. In fact, it’s that business that drove the majority of its revenue until recently. And it also has given the company a beachhead in multiple markets around the world, from its home market of Canada to Germany, Israel and Poland.
Cronos is looking to export medical marijuana via a joint venture in Israel. Its with Gingko Bioworks aims to biologically manufacture expert cannabis strains. Those strains could be used for consumer products — but they might also have medical applications as the effect of cannabinoids is better understood.
The broader case for CRON stock is that the company , where management sees prices and profits likely to be minimal as supply increases. If that strategy works, it will allow Cronos to profit from higher-margin derivative sales to consumers. But that high-level expertise will also make Cronos a potential leader on the medical side as well.
Aurora Cannabis (ACB)
Source: ElRoi / Shutterstock.com
Like CRON stock, Aurora Cannabis (NYSE:) has a “falling knife” chart. ACB stock touched a seven-month low at the beginning of the month, and a rebound was undercut by a disappointing fiscal fourth-quarter report on Thursday.
Given that Aurora likely will relatively soon, patience is probably advised here.
But from a long-term standpoint, there’s an attractive case here. Aurora’s is probably greater than that of any cannabis play at the moment. Medical sales drove just 30% of net cannabis revenue in Q4, but that figure should rise as efforts in Germany and Latin America drive growth.
Aurora will in part be a consumer play, as is the case for most marijuana stocks at this point. But its medical business is already large – and growing. In fact, Aurora already serves nearly 90,000 medical marijuana patients worldwide. As that figure rises, so will Aurora’s revenue. Once profitability follows — which should be next year — the long slide in ACB stock may finally reverse.
As of this writing, Vince Martin has no positions in any securities mentioned.
The post 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. | ACB stock touched a seven-month low at the beginning of the month, and a rebound was undercut by a disappointing fiscal fourth-quarter report on Thursday. Aurora Cannabis (ACB) Source: ElRoi / Shutterstock.com Like CRON stock, Aurora Cannabis (NYSE:) has a “falling knife” chart. Once profitability follows — which should be next year — the long slide in ACB stock may finally reverse. | Aurora Cannabis (ACB) Source: ElRoi / Shutterstock.com Like CRON stock, Aurora Cannabis (NYSE:) has a “falling knife” chart. ACB stock touched a seven-month low at the beginning of the month, and a rebound was undercut by a disappointing fiscal fourth-quarter report on Thursday. Once profitability follows — which should be next year — the long slide in ACB stock may finally reverse. | Aurora Cannabis (ACB) Source: ElRoi / Shutterstock.com Like CRON stock, Aurora Cannabis (NYSE:) has a “falling knife” chart. ACB stock touched a seven-month low at the beginning of the month, and a rebound was undercut by a disappointing fiscal fourth-quarter report on Thursday. Once profitability follows — which should be next year — the long slide in ACB stock may finally reverse. | Aurora Cannabis (ACB) Source: ElRoi / Shutterstock.com Like CRON stock, Aurora Cannabis (NYSE:) has a “falling knife” chart. ACB stock touched a seven-month low at the beginning of the month, and a rebound was undercut by a disappointing fiscal fourth-quarter report on Thursday. Once profitability follows — which should be next year — the long slide in ACB stock may finally reverse. |
38119.0 | 2019-09-19 00:00:00 UTC | 3 Reasons Investors Should Be Concerned About Aurora’s Most Recent Earnings Report | ACB | https://www.nasdaq.com/articles/3-reasons-investors-should-be-concerned-about-auroras-most-recent-earnings-report-2019-09 | nan | nan | Aurora Cannabis (NYSE: ACB) released its quarterly results last week, which failed to impress investors as the stock has fallen since then. Although the company showed significant sales growth from the previous year, there were still some areas of concern that should have investors thinking twice about whether to buy the stock today.
The company fell short of a forecast that it made just a month earlier
Perhaps the most disappointing result of all was that the company's net revenues of 98.9 million Canadian dollars fell short of the range that Aurora said it expected its sales to fall within just a month earlier. In an update issued by the company, Aurora expected sales, net of excise tax, to fall between CA$100 million and CA$107 million. Missing analyst expectations isn't uncommon for the industry, but a company missing its own forecasts that it updated just a month earlier is a whole different story.
For investors, that's a big problem: If the company can't forecast what it will report one month in advance, it's hard to believe that any guidance the company issues will be any more accurate. It would be hard to trust Aurora's guidance for a year if it's struggled with such a short-term projection on results that have already happened. It doesn't instill a lot of confidence in the company's projections, and that's a big problem, as it may have investors second-guessing other forecasts, as well.
Image Source: Getty Images.
Aurora burned through CA$192 million to fund its operating activities
Cash burn has been a big problem for many marijuana companies, and Aurora is certainly no exception. For the full year, the company confirmed just how much it has used: CA$192 million. That's without taking into account the company's investing activities, which burned through another CA$312 million.
While many investors may be focused on whether or not a company is profitable, cash flow is what's going to keep the lights on and the business running. Aurora's been spending aggressively to grow its business and things haven't been improving, as the company still used CA$4.6 million in cash to fund its operations in Q4.
Investors should care about cash flow because the company has had to issue a lot of shares. If Aurora doesn't start generating cash flow from its operations, this trend may continue and result in even more dilution. Currently, the company has more than 1 billion shares outstanding, compared to a couple of years ago when there were fewer than 400 million shares.
Still no big moves from the company
When a company releases quarterly earnings, it can be a time for a big announcement, especially at year-end. However, Aurora has been quiet in terms of big moves lately. It's been about six months since the company announced it had brought on billionaire investor Nelson Peltz as an advisor, presumably to help find potential partnerships for Aurora, but there's been nothing major to announce on that front since then.
Meanwhile, other cannabis producers have been linking up with companies in other industries to not only strengthen their financial positions, but also take advantage of their key competencies.
Takeaway for investors
Aurora has done a good job of growing within Canada, but by stretching itself into other markets and perhaps not doing enough to convince investors of the growth that it's working on in North America, it may be getting difficult for investors to justify the company's $5 billion-plus market cap.
It's no surprise that the stock has been falling. There are simply better marijuana stocks to invest in that have much more appealing growth opportunities in North America.
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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) released its quarterly results last week, which failed to impress investors as the stock has fallen since then. Although the company showed significant sales growth from the previous year, there were still some areas of concern that should have investors thinking twice about whether to buy the stock today. Aurora's been spending aggressively to grow its business and things haven't been improving, as the company still used CA$4.6 million in cash to fund its operations in Q4. | Aurora Cannabis (NYSE: ACB) released its quarterly results last week, which failed to impress investors as the stock has fallen since then. In an update issued by the company, Aurora expected sales, net of excise tax, to fall between CA$100 million and CA$107 million. For investors, that's a big problem: If the company can't forecast what it will report one month in advance, it's hard to believe that any guidance the company issues will be any more accurate. | Aurora Cannabis (NYSE: ACB) released its quarterly results last week, which failed to impress investors as the stock has fallen since then. The company fell short of a forecast that it made just a month earlier Perhaps the most disappointing result of all was that the company's net revenues of 98.9 million Canadian dollars fell short of the range that Aurora said it expected its sales to fall within just a month earlier. For investors, that's a big problem: If the company can't forecast what it will report one month in advance, it's hard to believe that any guidance the company issues will be any more accurate. | Aurora Cannabis (NYSE: ACB) released its quarterly results last week, which failed to impress investors as the stock has fallen since then. In an update issued by the company, Aurora expected sales, net of excise tax, to fall between CA$100 million and CA$107 million. Still no big moves from the company When a company releases quarterly earnings, it can be a time for a big announcement, especially at year-end. |
38120.0 | 2019-09-18 00:00:00 UTC | Aphria Stock Is the Most Well-Behaved Pot Stock on the Market | ACB | https://www.nasdaq.com/articles/aphria-stock-is-the-most-well-behaved-pot-stock-on-the-market-2019-09-18 | nan | nan | Anyone who’s been halfway paying attention to the action in cannabis stocks knows it hasn’t been an easy ride. From the most well-known names to the most obscure, it’s been a volatile and difficult ride. Aphria (NYSE:) is no exception, with Aphria stock down big from its highs.
Source: Shutterstock
Shares have fallen roughly 40% from the February highs and almost 60% from its 52-week highs. To say that it’s been a rough ride is putting it lightly and these two performance marks emphasizes as much.
Earlier this week, we in Aurora Cannabis (NYSE:). After the company reported earnings, shares took a tumble. But so far at least, the stock has avoided a lower low. That’s the positive take despite the revenue miss and bearish reaction in the stock price.
However, APHA stock has its own silver lining: the stock is actually trending higher.
Aphria Stock Is Stronger Than It Seems
Coming into August, Aphria stock had been dragging hard. Shares were down almost 50% in just a few months and sentiment couldn’t have been worse. Then better-than-expected earnings propelled shares higher, as the stock ran from a low of $5.02 to roughly $7.50 just a day later.
The one-day ~50% rally set the tone for APHA, even though shares are now lower at this point. I think the stock is down from its post-earnings high as investors try to work through various resistance points and as they fight the bearish stigma attached to the industry right now.
There’s no reason to mince words about it: Cannabis stocks are out of favor right now. That’s not likely to persist forever, which is why it’s important to look for stocks showing relative strength. While Aphria stock is not showing strength relative to the market, it is showing strength relative to its peers.
Identifying stocks with relative strength is because they’re the ones that when the group comes back in favor.
Even though shares have been under pressure lately, Aphria stock is still up 16.2% so far in 2019. That’s better than Canopy Growth (NYSE:), Aurora Cannabis and Cronos Group (NASDAQ:). CRON, ACB and CGC are all positive on the year too, but lag APHA.
The performance is also better than Tilray (NASDAQ:) and New Age Beverages (NASDAQ:), which are both down in 2019.
Of the group, Aphria stock is the top performer over the last six, three and one month. For the last timeframe, APHA stock is up almost 11%. So this is certainly worth paying attention to.
The Exact Breakout Point
As you can see on the chart above, we have an ascending triangle formation developing in Aphria stock. That’s where uptrend support (blue line) continues to squeeze a stock higher against a static level of resistance. It’s a bullish trade development, as investors look for a breakout.
In this case, recent resistance has been near $7.20. But that’s not the big breakout point, in my view. Instead, I’m looking at the $7.60 level. This level has been notable resistance since the April breakdown. If Aphria stock can clear it, it will also mean that APHA has reclaimed its 200-day moving average.
In this case, clearing $7.60 could trigger a big-time breakout. The first upside target is 61.8% retracement at $8.68. Above that and I’m looking for a gap-fill up to $9.85.
There is risk, though.
If uptrend support fails, it puts the ascending triangle formation at risk of failing. Below it and the 50-day moving average is the first downside target. Below that puts the $5.80 level on watch and below that, the $5 mark is possible.
The Bottom Line on APHA Stock
The bottom line here is simple: Aphria stock is the most well-behaved stock in the cannabis space showing the most relative strength among its peers. Its stock has a very clear setup on the charts, while its most recent earnings report was good enough to ignite the recent rally.
A glance at the balance sheet reveals $422 million in cash and short-term equivalents. That’s notable, given the stock’s $1.67 billion market cap.
Further, current assets of $577 million is more than five times its current liabilities of $102.5 million. Total assets also significantly outweigh total liabilities, total $1.8 billion vs. $524 million.
In other words, Aphria is more than capable of covering its short-term obligations as it focuses on growing its business. If there’s a speculative cannabis stock worth monitoring right now, it’s Aphria in my opinion.
Bret Kenwell is the manager and author of and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities.
The post 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. | CRON, ACB and CGC are all positive on the year too, but lag APHA. I think the stock is down from its post-earnings high as investors try to work through various resistance points and as they fight the bearish stigma attached to the industry right now. The Exact Breakout Point As you can see on the chart above, we have an ascending triangle formation developing in Aphria stock. | CRON, ACB and CGC are all positive on the year too, but lag APHA. While Aphria stock is not showing strength relative to the market, it is showing strength relative to its peers. The Exact Breakout Point As you can see on the chart above, we have an ascending triangle formation developing in Aphria stock. | CRON, ACB and CGC are all positive on the year too, but lag APHA. However, APHA stock has its own silver lining: the stock is actually trending higher. Aphria Stock Is Stronger Than It Seems Coming into August, Aphria stock had been dragging hard. | CRON, ACB and CGC are all positive on the year too, but lag APHA. Aphria (NYSE:) is no exception, with Aphria stock down big from its highs. Even though shares have been under pressure lately, Aphria stock is still up 16.2% so far in 2019. |
38121.0 | 2019-09-18 00:00:00 UTC | Is Tilray Stock’s Crushing Bear Market Finally Over? | ACB | https://www.nasdaq.com/articles/is-tilray-stocks-crushing-bear-market-finally-over-2019-09-18 | nan | nan | Tilray (NASDAQ:), like so many marijuana stocks, is having a terrible year. Yes, some traders like to make fun of anyone that bought Tilray stock near its $300/share peak. But don’t forget that as recently as this January, Tilray stock still traded for as much as $100 per share. This year alone, shares have lost more than half their remaining value.
Source: Jarretera / Shutterstock.com
That shouldn’t come as a surprise. As I explained in , the company was doing better on earnings but the supply growth from other producers overwhelmed Tilray’s progress. That’s been a valid concern so far. TLRY stock has continued to sink as the oversupply in the Canadian marijuana market has further intensified.
The worst may finally be over, however. Tilray stock has rebounded more than 20% from its 52-week low since the start of September.
Is Tilray ready to rally again?
Tilray’s Growth Strategy Seems Reasonable
Despite the punishing decline in Tilray’s stock price, management hasn’t panicked. As I explained in that previous article, Tilray CEO Brendan Kennedy has focused on disciplined supply growth at a reasonable price. Tilray’s deals, such as buying Manitoba Harvest came at affordable prices rather than paying big bucks as firms like Canopy Growth (NYSE:) have done with some of their acquisitions.
Tilray has also wisely used convertible bonds to raise funds. The convert feature is now way out of the money, ensuring that shareholders won’t be diluted unless Tilray shares go on a monster run. This was a savvy way to raise nearly half a billion in funds without hitting TLRY stock owners with much dilution.
Finally, while the international market hasn’t taken off that quickly, Tilray has a shot there as well. The company is building out its facilities in Portugal — again at a reasonable build-out cost.
Still Hasn’t Reached Critical Mass
Tilray stock bears, on the other hand, continue to question Tilray’s prospects. While the company certainly has avoided some of the excesses of its rivals, at the end of the day you need revenues and profits to justify your share price.
And Tilray simply doesn’t have much of either. Tilray’s market cap, even with the stock at just $30, is still almost $3 billion. That’s a huge valuation for a company that has produced less than $100 million in revenues over the last year. If revenues reach $200 million over the next year or two and Tilray manages to maintain a still robust 10x price/sales ratio, that’d imply an additional 33% downside on TLRY stock to around $20/share.
Also, despite the small revenue base, Tilray has a ton of product lines. With the addition of Manitoba Harvest, it now has foods and supplements in addition to the more standard fare. And Tilray has international operations in a variety of countries. Yet, it hasn’t added up to a critical mass that can deliver sustainable profits just yet. Like with Aurora (NYSE:), Tilray has a lot of irons in the fire, but there’s no sign that any particular thing is heating up just yet.
CannTrust Reminds Us Of Dangers In The Cannabis Industry
While Tilray stock has enjoyed a welcome rebound, the industry isn’t out of the woods yet. The huge supply and demand imbalance continues to weigh painfully on the sector. And that’s not all. Regulatory risk remains a major concern.
Tuesday brought us a fresh reminder on that front. CannTrust (NYSE:) stock plunged another 14% on the day. CannTrust hit new all-time lows after admitting that Health Canada had suspended the company’s license to produce and sell marijuana. It’s a suspension, rather than a full revocation of their operating license. Still, it was a huge blow to the company’s already damaged credibility.
The license suspension on its own shouldn’t come as a huge surprise. As InvestorPlace’s Josh Enomoto recently , CannTrust suffered two major scandals. The first involved illegal growing operations hidden with false walls. CannTrust fired its CEO with cause, along with other top employees, as a result. The company also somehow had black market seeds get mixed into its inventory.
Adding it all up, CannTrust stock is now down a shocking 90% from where it traded earlier in 2019. That’s a nearly total wipeout for a New York Stock Exchange-listed company. While there’s nothing that dramatic going on with Tilray from a scandal point of view, CannTrust’s collapse serves as a fitting reminder that this is a new industry that will have tons of growing pains.
Also, it’s worth noting that marijuana companies have started getting more traction in mainstream stock indexes and associated ETFs. However, the index operators will now CannTrust stock out of the primary Canadian stock index and related ETFs, and other fund operators may be slower to include pot stocks like Tilray in their funds as a result of this incident.
Tilray Stock Verdict
Tilray has much better management than CannTrust, thank goodness. But that doesn’t mean that is time to get too excited about the recent rebound in the TLRY stock price.
The cannabis industry is continuing to face massive growing pains. There will be winners eventually. But more companies will end up like CannTrust as well. The industry is young and a lot of competition has to fall by the wayside for the survivors to prosper.
Tilray, without a major partner, hasn’t yet proven that it will be able to be one of the industry’s eventual winners. For now, Cronos (NASDAQ:) and Canopy, with their major backers, might be a safer choice until the industry’s slump ends.
At the time of this writing, Ian Bezek had no positions in any of the aforementioned securities. You can reach him on Twitter at @irbezek.
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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. | Tilray’s deals, such as buying Manitoba Harvest came at affordable prices rather than paying big bucks as firms like Canopy Growth (NYSE:) have done with some of their acquisitions. If revenues reach $200 million over the next year or two and Tilray manages to maintain a still robust 10x price/sales ratio, that’d imply an additional 33% downside on TLRY stock to around $20/share. While there’s nothing that dramatic going on with Tilray from a scandal point of view, CannTrust’s collapse serves as a fitting reminder that this is a new industry that will have tons of growing pains. | Tilray’s Growth Strategy Seems Reasonable Despite the punishing decline in Tilray’s stock price, management hasn’t panicked. This was a savvy way to raise nearly half a billion in funds without hitting TLRY stock owners with much dilution. Still Hasn’t Reached Critical Mass Tilray stock bears, on the other hand, continue to question Tilray’s prospects. | Still Hasn’t Reached Critical Mass Tilray stock bears, on the other hand, continue to question Tilray’s prospects. However, the index operators will now CannTrust stock out of the primary Canadian stock index and related ETFs, and other fund operators may be slower to include pot stocks like Tilray in their funds as a result of this incident. Tilray Stock Verdict Tilray has much better management than CannTrust, thank goodness. | That’s a huge valuation for a company that has produced less than $100 million in revenues over the last year. But that doesn’t mean that is time to get too excited about the recent rebound in the TLRY stock price. But more companies will end up like CannTrust as well. |
38122.0 | 2019-09-18 00:00:00 UTC | Avoid Aurora Cannabis Stock Until Investor Fears Subside | ACB | https://www.nasdaq.com/articles/avoid-aurora-cannabis-stock-until-investor-fears-subside-2019-09-18 | nan | nan | Aurora Cannabis (NYSE:) can’t seem to catch a break. After rallying to around $6.30 earlier this month, the stock resumed its downtrend, closing Sept. 17 at $5.27. What will it take for Aurora Cannabis stock to shake off its downtrend?
Source: ElRoi / Shutterstock.com
On Sept. 11, Aurora reported that disappointed investors. Markets did not like the company’s revenue and margin numbers. Revenue rose 52%, adding $44.9 million CAD in the quarter to the $98.9 million CAD total.
But, the average selling price of dried cannabis dropped 30% to $5.58 CAD and the average selling price of cannabis extracts fell 23%. The declines are due to increased sales in the consumer market. Bulk wholesale sales, although having a very attractive margin, also hurt average selling price slightly.
This fall, Aurora will introduce new product formats to the Canadian consumer market. This could widen the company’s addressable market but may also result in lower profitability in the near term.
Retail distribution is still a short-term constraint, as the company’s fiscal 2019 results showed. But a retail infrastructure expansion in 2020 — with physical store openings across Canada — will drive revenue growth.
Higher Output
Kilograms produced rose 12-fold to 29,034 kilograms. Aurora sold 17,793 kilograms, up 10-fold from last year. Operating costs improved but not enough to satisfy investors. Gross margin improved slightly, reaching 58%. ACB stock price will respond favorably if the company demonstrates an ability to keep ahead of its competition. It improved its per-gram cost of production, which gives Aurora plenty of flexibility to expand its business.
The Aurora Sky unit was produced at a cost of around $1 a gram. Continued improvements, while maintaining a high-quality product, will help Aurora operate with extremely healthy margins.
Expansion in the United States, Europe
Aurora recently a major partnership in the United States. Along with the UFC, a mixed martial arts organization, Aurora will fund a joint clinical research program that will examine the use of hemp-derived CBD as an effective treatment for pain, inflammation, wound-healing and recovery on MMA athletes. If the study yields positive data, Aurora could form partnerships and collaborative studies with other sports organizations. For now, the UFC deal is a big win for Aurora because the organization has over 300 million fans in over 170 countries.
In Q4, Aurora benefited from stronger European sales. Sales in Germany lagged and will need more attention. Aurora won a contract for supplying a very small amount of cannabis in . Still, getting support from the Italian government is a positive start. And because the European market is quality driven, not price driven, Aurora has a good chance of winning more supply deals in the future.
Risks for ACB Stock
Aurora is a leading cannabis supplier in Canada, but revenue growth did not meet analyst expectations. Even though it reached almost 90,000 registered patients, sales will only improve as patients take advantage of writing off the cost of medical cannabis. Increasing insurance coverage will also lead to higher consumption of its products. So long as customers seek physician care while using medical cannabis, Aurora will benefit from higher sales in the medical market.
After watching ACB stock fall so quickly in recent trading sessions, it is clear that investors are no longer willing to wait for the company to reach positive EBITDA. Yet anyone invested in Aurora stock will need to exercise more patience. The company is currently manufacturing all of its products at commercial scale. As it rolls out its products, it will not sell below costs. So as its market expands, product demand will result in a sustained pricing level that is of high margin for Aurora.
My Takeaway on Aurora Cannabis Stock
Despite analysts expressing disappointment over Aurora’s Q4 numbers, the average price target is still 52.9% above the recent $5.27 closing price (per ). In the next few days, Aurora stock could trend lower and might even close at new yearly lows. The sentiment is too negative to ignore, so investors should wait for buyers to step in before starting a position.
As of this writing, Chris Lau did not hold a position in any of the aforementioned securities.
The post 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. | Risks for ACB Stock Aurora is a leading cannabis supplier in Canada, but revenue growth did not meet analyst expectations. After watching ACB stock fall so quickly in recent trading sessions, it is clear that investors are no longer willing to wait for the company to reach positive EBITDA. ACB stock price will respond favorably if the company demonstrates an ability to keep ahead of its competition. | ACB stock price will respond favorably if the company demonstrates an ability to keep ahead of its competition. Risks for ACB Stock Aurora is a leading cannabis supplier in Canada, but revenue growth did not meet analyst expectations. After watching ACB stock fall so quickly in recent trading sessions, it is clear that investors are no longer willing to wait for the company to reach positive EBITDA. | ACB stock price will respond favorably if the company demonstrates an ability to keep ahead of its competition. Risks for ACB Stock Aurora is a leading cannabis supplier in Canada, but revenue growth did not meet analyst expectations. After watching ACB stock fall so quickly in recent trading sessions, it is clear that investors are no longer willing to wait for the company to reach positive EBITDA. | ACB stock price will respond favorably if the company demonstrates an ability to keep ahead of its competition. Risks for ACB Stock Aurora is a leading cannabis supplier in Canada, but revenue growth did not meet analyst expectations. After watching ACB stock fall so quickly in recent trading sessions, it is clear that investors are no longer willing to wait for the company to reach positive EBITDA. |
38123.0 | 2019-09-17 00:00:00 UTC | 5 Top Stock Trades for Wednesday: BA, ACB, PINS | ACB | https://www.nasdaq.com/articles/5-top-stock-trades-for-wednesday%3A-ba-acb-pins-2019-09-17 | nan | nan | The stock market was relatively calm on Tuesday as investors await a rate decision from the Federal Reserve on Wednesday. There were still some big movers on the day though, so let’s look at a few top stock trades.
Top Stock Trades for Tomorrow #1: Boeing
As investors grow optimistic about getting the MAX 737 back in action, Boeing (NYSE:) stock is coiling and looking to move higher.
Shares have been consolidating between $375 and $385. In order to trigger a move higher, BA stock needs to clear $385. Just overhead — near $387 — is the 38.2% retracement. If Boeing can clear both marks, a rally into the $390s is possible. Above the March high and BA may even fill the gap back up over $410.
If shares resolve lower, see that recent uptrend support (blue line) buoys the name.
Top Stock Trades for Tomorrow #2: Aurora Cannabis
I hate to say it, but investors should have seen the decline coming in Aurora Cannabis (NYSE:) stock. InvestorPlace readers have been leery of ACB for months now, and our recent call that shares may fall again only reiterated that cautious stance.
Now breaking below the August lows, let’s see if ACB draws in buyers near $5. We can’t trust the name on the long side while it’s below $5.40 — at least in the short term. Even if it does reclaim this mark, it’s only good for a short-term bounce.
Below $5 and the December lows are possible, but let’s take it one step at a time and see if it hits $5 to begin with.
Top Stock Trades for Tomorrow #3: Pinterest
Pinterest (NYSE:) wants to begin rallying again, but it faces a tough road with high-growth tech stocks under pressure recently. On the charts, there’s a lot of overhead, too.
$30 is a significant mark, while the 50-day moving average is up at $30.57 and the declining 20-day moving average is at $31.05. $32 has also proven significant. Not to pummel you with numbers, but making matters even more complicated, the 50% retracement is at $29.94 and the 38.2% is at $31.57.
So let’s simplify it.
PINS has a lot of marks between $30 and $32. Above $32 and it has mostly blue skies. Below $30 and it has the 100-day moving average at $29 and uptrend support at $28.
Even simpler? Above $32 is bullish, below $28 is bearish.
Top Stock Trades for Tomorrow #4: Corning
Corning (NYSE:) is getting hit hard on Tuesday, down more than 7%. On the weekly chart above, we can see shares being rejected by the 100-week moving average.
It puts a key support zone on watch just below current levels. The ~$27 mark has been notable over the last three years, while the 200-week moving average stepped up as big-time support last month. That’s currently at $26.50.
Below that mark and GLW is in trouble. If we get a dip down into the $27 area, aggressive investors have a better risk/reward there than here, but GLW isn’t my cup of tea.
Top Stock Trades for Tomorrow #5: Acadia Pharmaceuticals
Acadia Pharmaceuticals (NASDAQ:) has been a beast lately, gapping from $23.77 to almost $39 in a single move.
ACAD stock consolidated that move beautifully in a narrowing range, before resolving higher on Monday. It tried to breakout over $44 again on Tuesday — which has been multi-day resistance — but was rejected.
Over $44 puts the $44.85 highs on the table and over that, ACAD can regain upside momentum. A break below $40 signals that Acadia needs more time to consolidate.
Bret Kenwell is the manager and author of and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long PINS.
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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. | InvestorPlace readers have been leery of ACB for months now, and our recent call that shares may fall again only reiterated that cautious stance. Now breaking below the August lows, let’s see if ACB draws in buyers near $5. The stock market was relatively calm on Tuesday as investors await a rate decision from the Federal Reserve on Wednesday. | InvestorPlace readers have been leery of ACB for months now, and our recent call that shares may fall again only reiterated that cautious stance. Now breaking below the August lows, let’s see if ACB draws in buyers near $5. Top Stock Trades for Tomorrow #3: Pinterest Pinterest (NYSE:) wants to begin rallying again, but it faces a tough road with high-growth tech stocks under pressure recently. | InvestorPlace readers have been leery of ACB for months now, and our recent call that shares may fall again only reiterated that cautious stance. Now breaking below the August lows, let’s see if ACB draws in buyers near $5. Top Stock Trades for Tomorrow #1: Boeing As investors grow optimistic about getting the MAX 737 back in action, Boeing (NYSE:) stock is coiling and looking to move higher. | InvestorPlace readers have been leery of ACB for months now, and our recent call that shares may fall again only reiterated that cautious stance. Now breaking below the August lows, let’s see if ACB draws in buyers near $5. $30 is a significant mark, while the 50-day moving average is up at $30.57 and the declining 20-day moving average is at $31.05. |
38124.0 | 2019-09-17 00:00:00 UTC | Aurora Cannabis Stock and the Pot Market’s Credibility Problem | ACB | https://www.nasdaq.com/articles/aurora-cannabis-stock-and-the-pot-markets-credibility-problem-2019-09-17 | nan | nan | Aurora Cannabis (NYSE:) missed earnings estimates by a mile, but you wouldn’t know it from the company’s press release or statements from some boosters.
Source: Shutterstock
Sales of $74.2 million were about $7 million below estimates that had previously been revised down, and there was an unexpected loss of $8.9 million from two of its investments. The net loss to common stockholders, however, was
The company’s press release was filled with . CEO Terry Booth said ACB had taken its place “as the global leader in cannabis production, research, innovation, and international market development.” He later called himself “a little red-faced” about the miss.
But one analyst was so fooled he proceeded to pound the table for a stock that is now 15% below its pre-earnings level, insisting sales had “.”
The Credibility Gap
All this highlights a growing credibility gap between pot advocates and economic reality, the kind of thing that often comes before a market’s hard fall.
Pot advocates have insisted that legal marijuana is a gold mine with enormous pent-up demand. The reality is it’s a minefield with a lot of un-exploded ordnance.
While Canada legalized marijuana use a year ago, it’s still subject to provincial regulation. Many provinces have been slow-walking their approvals due to concern with health impacts. Legislators in New York refused to go along with a call for legalization. Even Illinois, the 11th state to legalize the drug, is .
At the same time, vaping, a popular method for taking marijuana because it involves taking less smoke into the lungs, is under renewed attack. Aurora chairman Michael Singer said he is He insists Aurora will test all its vaping products under rigorous Canadian standards, but a ban on e-cigarettes would be certain to have deep impacts on the marijuana market.
The CBD Oil Boom
One big protection against the iffy situation with marijuana is CBD oil. People in chronic pain are anxious to try this marijuana derivative as opioids have become demonized. Aurora has been pursuing the opportunity in the states, using the advice of strategic advisor Nelson Peltz and with the Ultimate Fighting Championship (UFC).
But just as the pot market is in as I called it before earnings, CBD oil is about to enter one just as Aurora ramps up investment.
While there is anecdotal evidence the substance helps with pain, scientists have found no evidence it works on anything but Pain relief is also one of the least-supported benefits in clinical trials.
The result of this lack of information is that desperate people want CBD oil to or heal their pets. This could give CBD oil of being not a cure-all, but snake oil.
The Bottom Line on ACB Stock
The boom in Aurora Cannabis stock took off before the science or market could justify it.
Legal products must go through stringent regulation and tested for safety before they enter a market. Illegal ones do not. Marijuana and its derivatives exist in a gray area between legal and illegal, where all sorts of claims are made but few have been vetted.
The two states that legalized weed first, Colorado and Washington, knew they were just making an illegal high legal, and acted accordingly. The new market is out way ahead of its skis. Whether Aurora has enough cash to reach its promised land should now be an open question.
is a financial and technology journalist. He is the author of the mystery thriller, The Reluctant Detective Finds Her Family, available at the Amazon Kindle store. Write him at or follow him on Twitter at @danablankenhorn. As of this writing he owned no shares in companies mentioned in this article.
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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. | CEO Terry Booth said ACB had taken its place “as the global leader in cannabis production, research, innovation, and international market development.” He later called himself “a little red-faced” about the miss. The Bottom Line on ACB Stock The boom in Aurora Cannabis stock took off before the science or market could justify it. Aurora Cannabis (NYSE:) missed earnings estimates by a mile, but you wouldn’t know it from the company’s press release or statements from some boosters. | The Bottom Line on ACB Stock The boom in Aurora Cannabis stock took off before the science or market could justify it. CEO Terry Booth said ACB had taken its place “as the global leader in cannabis production, research, innovation, and international market development.” He later called himself “a little red-faced” about the miss. Aurora Cannabis (NYSE:) missed earnings estimates by a mile, but you wouldn’t know it from the company’s press release or statements from some boosters. | CEO Terry Booth said ACB had taken its place “as the global leader in cannabis production, research, innovation, and international market development.” He later called himself “a little red-faced” about the miss. The Bottom Line on ACB Stock The boom in Aurora Cannabis stock took off before the science or market could justify it. Aurora chairman Michael Singer said he is He insists Aurora will test all its vaping products under rigorous Canadian standards, but a ban on e-cigarettes would be certain to have deep impacts on the marijuana market. | CEO Terry Booth said ACB had taken its place “as the global leader in cannabis production, research, innovation, and international market development.” He later called himself “a little red-faced” about the miss. The Bottom Line on ACB Stock The boom in Aurora Cannabis stock took off before the science or market could justify it. But just as the pot market is in as I called it before earnings, CBD oil is about to enter one just as Aurora ramps up investment. |
38125.0 | 2019-09-17 00:00:00 UTC | 7 CBD Stocks to Buy That Are Still Worth Your Investment Dollars | ACB | https://www.nasdaq.com/articles/7-cbd-stocks-to-buy-that-are-still-worth-your-investment-dollars-2019-09-17 | nan | nan | As the cannabidiol (CBD) market takes off, investors look increasingly for the stocks to buy that are driving this market. The industry received a massive boost from the 2018 Farm Bill, which legalized hemp across the United States. This frees hemp companies from Schedule I restrictions, allowing them relative freedom to operate within and outside of the United States.
Other more mainstream marijuana players have entered the CBD market. Canopy Growth (NYSE:) grows the product and rumors abound that Aurora Cannabis (NYSE:) will soon follow. However, both stocks have fallen in recent months due to compressing multiples and falling prices in dried cannabis.
Some CBD stocks have not seen dramatic stock price increases. The following stocks to buy appear well-positioned to profit CBD-focused investors:
Aphria (APHA)
Source: Shutterstock
Aphria (NYSE:) has become the world’s third-largest cannabis producer. With prices of dried cannabis in decline, CBD has become one distinct outlet for adding value. It already offers an extensive line of products. In the U.S., it has worked to build partnerships to bring CBD products to market as it awaits legal status for its marijuana-based CBD.
In addition to the high capacity, APHA stock also offers a low valuation. It maintains a forward price-to-earnings (PE) ratio of around 23.7. It also trades at just over 9.5 times sales, which comes in well-below many larger peers. Moreover, Wall Street believes it will turn profitable this year. Analysts forecast four Canadian cents (three cents) per share in earnings this year and 32 Canadian cents (24 cents) per share in 2020.
APHA stock has also avoided the severe decline to hit larger Canadian names in the cannabis industry. Despite giving up most gains from earlier in the year, the price of APHA has remained steady since about May. Moreover, it has logged a 20% gain since the beginning of the year. This stability should position APHA stock to recover once sentiment turns.
Charlotte’s Web Holdings (CWBHF)
Source: Shutterstock
Charlotte’s Web Holdings (OTCMKTS:) has not yet become a household name. However, that may quickly change for the Boulder, Colorado-based producer and distributor of hemp-based CBD products. With companies such as Kroger (NYSE:) and CVS (NYSE:) stocking their products, the public should increasingly recognize Charlotte’s Web as more than just a children’s book.
The stock suffered in August as it reported an earnings and revenue miss. Still, amid the ups and downs, the stock has risen by nearly 65% since the beginning of the year. Investors may also pick it up at a discount as it has fallen by over 23% since just before the company missed estimates.
Despite the miss, revenue grew by 45.3% year-over-year. Although profits fell from the four cents per share in the same quarter last year, operating expenses nearly doubled to fund expansion.
Moreover, the forward PE ratio stands at just 24, a bargain considering the price-to-sales (PS) ratio of many unprofitable cannabis stocks exceeds that figure. Furthermore, Wall Street forecasts profit growth of 58.3% this year and 263.2% the following year. Given the low valuation and massive growth coming, investors should put CWBHF stock on their stocks to buy list before it becomes better known.
Curaleaf Holdings (CURLF)
Source: Shutterstock
Like Charlotte’s Web, Curaleaf Holdings (OTCMKTS:) is another stock on the verge of becoming better known. Based in Wakefield, Massachusetts, Curaleaf produces cannabis and hemp-based CBD products for wellness.
Though much of its business faces Schedule I-based restrictions, it has managed to establish operations in 12 states. Still, with hemp-based CBD, they have the segue needed to go nationwide no matter what happens with marijuana laws.
Moreover, the market seems intent on pushing CURLF stock higher. Despite a recent earnings and revenue miss, Curaleaf stock rose on a 231.2% increase in revenue year-over-year. Furthermore, despite volatility in the equity, CURLF stock has risen by almost 60% year-to-date. It has also begun to recover from a downturn in the stock that saw its value fall by about 43% between early May and mid-July.
Admittedly, multiples offer a mixed picture. A PS ratio of 25.3 makes this one of the more expensive CBD stocks to buy. Also, it will need loosened Schedule I restrictions to achieve its potential. However, with it trading below its book value, investors should consider CURLF stock before it becomes more recognized.
CV Sciences (CVSI)
Source: Shutterstock
CV Sciences (OTCMKTS:) is the leading CBD oil maker in the U.S. It sells CBD-based products under its PlusCBD brand. The San Diego-based company also runs a specialty pharmaceuticals division that produces CBD products to treat specific medical conditions.
The company continues to position itself for expansion as it has begun construction on a 45,500 sq. ft. facility in the San Diego area. This will allow the company to increase production by an estimated 500%.
CVSI stock earned a profit last year of nine cents per share. Despite rising revenue, it will swing to an estimated loss of four cents per share this year as the company invests in expansion. However, this should not take CVSI off of any stocks to buy list. Wall Street predicts a profit of 13 cents per share next year.
CV Sciences stock has lost about 25% of its value since the beginning of the year. Still, CVSI should become one of the stocks to buy hinges on its valuation. Despite the massive growth, CV Sciences trades at about 24.2 forward earnings and less than 5.2 times company sales. With revenue and sales set to spike, this makes CVSI stock look like a buying opportunity, not one investors should unload.
GW Pharmaceuticals (GWPH)
Source: Shutterstock
GW Pharmaceuticals (NASDAQ:) has built its future on prescription-based CBD products. It manufactures Epidyolex, the first CBD-based drug approved by the Food and Drug Administration (FDA). By taking this step, it made itself a leader in prescription-based CBD products. Now that its other drug, Sativex, is now on the market in several countries, its prospects should only improve.
At a forward PE ratio of almost 111 and trading at more than 31 times sales, GWPH may not look like it belongs on any stocks to buy list. However, Wall Street expects the company to turn profitable next year. It also forecasts 93.4% earnings growth in fiscal 2019 and 295.2% the following year.
I on GWPH stock at $155 per share. Admittedly, that prediction may have come early. However, with the prospects for GW Pharma to lead this niche, I stand by the overall forecast.
Moreover, it has seen fewer negative effects from the selloff in cannabis stocks than larger peers. Although it has fallen by more than 27% from its 52-week high, it has still risen by about 43% year-to-date. Given the strong sales of its CBD products, expect to see revenue and profit increases in the company’s pipeline.
HEXO Corporation (HEXO)
Source: Shutterstock
HEXO (NYSE:) presents a unique opportunity in many areas of the cannabis industry, including CBD-based products. With its 30% market share in its home province of Quebec, it maintains a base from which it can move into markets in both Canada and the U.S. Moreover, with its alliance with Molson Coors (NYSE:), it presents a unique opportunity in the CBD and cannabis-based beverage market.
HEXO stock trades at just over $4.20 per share as of the time of this writing. It has lost about half of its value since peaking at $8.40 per share in late April. This makes HEXO somewhat risky as it has followed larger Canadian peers on a downward trend.
Our own likes HEXO stock but warns against holding a position going into earnings. I agree with this sentiment. However, the decline has taken its forward price-to-earnings ratio to about 47. While that may seem high amid flat growth for 2019, analysts are looking for 170.6% earnings growth for fiscal 2020.
Although HEXO stock remains one of the riskier stocks to buy, its position in Quebec and its alliance with Molson Coors should give the company market niches with which it can lead in CBD and perhaps cannabis in general.
Planet 13 Holdings (PLNHF)
Source: Shutterstock
Planet 13 Holdings (OTCMKTS:) has made a name for itself in its home market of Las Vegas through retailing. Its Cannabis Entertainment Complex, otherwise known as the “Superstore,” attracted a record number of visitors in August.
But aside from its gaining fame as a retailer, it also happens to produce CBD. In May, Planet 13 announced the introduction of its . They made this available at its Superstore, the Fashion Show Mall, with plans to expand to other retail outlets. They also made Planet M available online.
This strategy appears effective. Analysts believe that this is one of the stocks to buy in large part because it will probably turn a profit this year. Earnings should grow quickly from there. Analysts predict an increase of 118.2% this year and a staggering 450% in fiscal 2020. Despite the massive growth, it trades at only 17.5 times forward earnings and just over 16.1 times sales.
PLNHF stock has stagnated since May, trading in a range between $1.80 and $2.20 per share. However, it has not suffered the decline seen in most other cannabis stocks. It has also risen by around 107% since the beginning of the year.
As the Superstore increasingly becomes a destination for cannabis shoppers, it should not only bolster sales of CBD products, but it should also boost the growth of PLNHF stock.
As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can at @HealyWriting.
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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. | The San Diego-based company also runs a specialty pharmaceuticals division that produces CBD products to treat specific medical conditions. At a forward PE ratio of almost 111 and trading at more than 31 times sales, GWPH may not look like it belongs on any stocks to buy list. As the Superstore increasingly becomes a destination for cannabis shoppers, it should not only bolster sales of CBD products, but it should also boost the growth of PLNHF stock. | Charlotte’s Web Holdings (CWBHF) Source: Shutterstock Charlotte’s Web Holdings (OTCMKTS:) has not yet become a household name. CV Sciences (CVSI) Source: Shutterstock CV Sciences (OTCMKTS:) is the leading CBD oil maker in the U.S. HEXO Corporation (HEXO) Source: Shutterstock HEXO (NYSE:) presents a unique opportunity in many areas of the cannabis industry, including CBD-based products. | Some CBD stocks have not seen dramatic stock price increases. Although HEXO stock remains one of the riskier stocks to buy, its position in Quebec and its alliance with Molson Coors should give the company market niches with which it can lead in CBD and perhaps cannabis in general. As the Superstore increasingly becomes a destination for cannabis shoppers, it should not only bolster sales of CBD products, but it should also boost the growth of PLNHF stock. | As the cannabidiol (CBD) market takes off, investors look increasingly for the stocks to buy that are driving this market. This stability should position APHA stock to recover once sentiment turns. CVSI stock earned a profit last year of nine cents per share. |
38126.0 | 2019-09-17 00:00:00 UTC | Canopy Growth Stock Emerges as Top Pick | ACB | https://www.nasdaq.com/articles/canopy-growth-stock-emerges-as-top-pick-2019-09-17 | nan | nan | The cannabis industry as a whole continues to face unforeseen pressures, and Canopy Growth (NYSE:) hasn’t been an exception to that headwind. But, of all the marijuana stocks worth a closer look now, CGC stock is at the top of that relatively short list.
Source: Jarretera / Shutterstock.com
That’s not been the case in a long, long while. In July, CGC’s board of directors, which is mostly controlled by the company’s single-biggest shareholder Constellation Brands (NYSE:), terminated CEO Bruce Linton. This led to a disruption at a critical time for cannabis companies.
A in quarterly revenue rattled owners of Canopy Growth stock in August as well, further fanning already-bearish flames. The backdrop has been decidedly grim.
Yet, this month’s rebound effort is undeniable, and arguably well-supported.
Canopy Growth Stock Takes the Lead
Since early this month, cannabis stocks have started to put some distance between themselves in terms of performance. Tilray (NASDAQ:) is up 21% since the end of August, while Aurora Cannabis (NYSE:) has broken even and CannTrust Holdings (NYSE:) has given up 13% of its value.
CGC stock is at the upper end of that performance race, gaining nearly 19% this month.
The divergence likely has much to do with an increasing understanding of each companies’ nuances following a wave of earnings reports.
That’s certainly been the case for Canopy Growth, which has enjoyed the added benefit of interim CEO Mark Zekulin to unwind some of the damage that’s been done to Canopy Growth stock over the course of the past two months. His focal point?
“We have been in construction for 70 months,” Zekulin told . “We have four months left on that expansion plan. … A lot of that work is now done and the real focus is taking the chess board that we’ve set and really focusing on now executing.”
The market seems to be buying the idea, although there’s an even bigger reason CGC stock could have rekindled its bullishness.
Winning Where it Counts
The cannabis industry is still gelling, and its players are still trying to figure out their place in it.
Canopy Growth’s place is, for the most part, recreational marijuana — and recreational marijuana in Canada in particular. For the quarter ending in June, 72% of revenue was made up by , and only 12% of its sales were made to international customers. And, 80% of its gross sales were of dry cannabis used for smoking.
The revenue headwind was and is a legitimate concern. But a couple of key details were glossed over by a market that was ready to see the glass as half empty rather than half full. Chief among those details is the fact that the revenue lull wasn’t the indication of waning demand it was being made out to be.
The evidence: The average selling price of cannabis, per gram, in Canada hasn’t swayed since mid-July, . Prices in the United States, meanwhile, have actually improved since mid-July, negating the chatter that supply has far outpaced demand.
In that vein, although the quarter ending in June wasn’t the one Canopy Growth stock owners were hoping for, demand continued to rise. Adult-use purchases of cannabis in Canada reached a , rising for a fourth-straight month.
That’s right in Canopy’s sweet spot. And it’s happening at a time when the company is about to maximize all those pieces on the proverbial chess board.
The Bottom Line for CGC Stock
Don’t misread the message. Canopy still has much to prove, and even with the recent selloff, the stock remains outrageously overvalued.
That’s not a particularly big liability in this instance though. While Canopy Growth admittedly spent too aggressively on acquisitions, those acquisitions do improve the company’s capacity to connect with consumers and secure more supply. Canopy just needs to get more out of those assets. That’s in the works, even before a new CEO takes the helm.
How far or how high that might take CGC stock remains uncertain. But, up 20% from last month’s low is a good start to a rebound. And it has plenty of backing via lip service.
You could certainly do worse.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about him at his website , or follow him on Twitter, at @jbrumley.
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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. | The cannabis industry as a whole continues to face unforeseen pressures, and Canopy Growth (NYSE:) hasn’t been an exception to that headwind. In July, CGC’s board of directors, which is mostly controlled by the company’s single-biggest shareholder Constellation Brands (NYSE:), terminated CEO Bruce Linton. In that vein, although the quarter ending in June wasn’t the one Canopy Growth stock owners were hoping for, demand continued to rise. | The cannabis industry as a whole continues to face unforeseen pressures, and Canopy Growth (NYSE:) hasn’t been an exception to that headwind. A in quarterly revenue rattled owners of Canopy Growth stock in August as well, further fanning already-bearish flames. In that vein, although the quarter ending in June wasn’t the one Canopy Growth stock owners were hoping for, demand continued to rise. | Canopy Growth Stock Takes the Lead Since early this month, cannabis stocks have started to put some distance between themselves in terms of performance. That’s certainly been the case for Canopy Growth, which has enjoyed the added benefit of interim CEO Mark Zekulin to unwind some of the damage that’s been done to Canopy Growth stock over the course of the past two months. In that vein, although the quarter ending in June wasn’t the one Canopy Growth stock owners were hoping for, demand continued to rise. | The cannabis industry as a whole continues to face unforeseen pressures, and Canopy Growth (NYSE:) hasn’t been an exception to that headwind. Canopy Growth Stock Takes the Lead Since early this month, cannabis stocks have started to put some distance between themselves in terms of performance. In that vein, although the quarter ending in June wasn’t the one Canopy Growth stock owners were hoping for, demand continued to rise. |
38127.0 | 2019-09-17 00:00:00 UTC | Is Aurora Cannabis Stock a Buy Despite a Revenue Miss? | ACB | https://www.nasdaq.com/articles/is-aurora-cannabis-stock-a-buy-despite-a-revenue-miss-2019-09-17 | nan | nan | Aurora Cannabis (NYSE:) recently reported earnings and sales came up short. As such, Aurora Cannabis stock sold off. It’s been a painful run for cannabis stocks over the past few months as they desperately lack a catalyst to send their share prices higher.
Source: Shutterstock
Earnings clearly won’t be it for Aurora Cannabis stock at this point. However, there is one silver lining to the recent decline: no new lows.
That’s right. Sometimes good news can be found in bearish developments. Should ACB stock log a higher low, then it may be on the road to recovery. Let’s explore:
Revenue Miss
On September 11, Aurora Cannabis of 98.84 million CAD. That missed analysts’ expectations by more than 4.5 million CAD. While that many not seem like a big deal, investors have to take the miss in context.
It’s the company’s second straight revenue miss and its fifth miss out of the last six quarters. Further, Aurora Cannabis doesn’t have the type of valuation that supports its stock price when it misses on top-line sales. That goes for most if not all of the cannabis industry, including Canopy Growth (NYSE:), Aphria (NYSE:), Tilray (NASDAQ:), Cronos Group (NASDAQ:) and others.
In other words, these companies have incredibly high valuations that are all banking on equally incredible growth. And while sales quintupled year-over-year in the most recent quarter for ACB, it came up short of expectations.
It doesn’t help that margins have been under pressure as well.
It’s not that Aurora Cannabis has a poor balance sheet or that the cannabis market is hitting a dead end. It’s that sentiment is not bullish, and momentum is bearish for cannabis stock right now. ACB and others need some positive catalysts, and missing headline expectations isn’t one of them.
Trading Aurora Cannabis Stock
Ahead of earnings, Aurora Cannabis stock had rallied through the 50-day moving average. However, it ran right into downtrend resistance (blue line). Had the results been strong, investors may have been in store for a strong finish to the week.
Now, shares are down about 8.5% from Wednesday’s close. With the fall, the ACB stock price is back below the 20-day and 50-day moving averages. When these two moving averages went from support to resistance is outlined very clearly on the chart via purple arrows.
That was a prelude to failing support that ushered in a wave of selling. Luckily for InvestorPlace readers, and have been able to sidestep some of the pain.
The post-earnings decline also solidified downtrend resistance. As we discussed at the top of the article though, the silver lining is that ACB stock has not made new 2019 lows — at least, not yet.
From here, bulls need to make sure Aurora Cannabis stock stays above $5.40. If this level gives way, a test of downtrend support becomes possible, as does a test of the $5 mark. Instead, if ACB stock can hold up and avoid a new low, it can start to work higher despite a lower-than-expected revenue result. Rallying on weaker-than-expected results can be viewed as a bullish development, as it may suggest all the bad news is priced in.
The simple way to evaluate Aurora Cannabis stock from here? Note the $5.40 benchmark. Below it is bad, above it is constructive.
Bottom Line on ACB Stock
Let’s not mince words here: Aurora Cannabis is very much a speculative “prove-it” stock. That is, it’s not a blue-chip name like Microsoft (NASDAQ:) or Apple (NASDAQ:). Nor is it a dependable staple going through a hard time like Boeing (NYSE:).
While Aurora Cannabis is one of the notable names in a high-growth emerging industry, it’s still a speculative name that needs to prove to investors that it can turn that revenue growth into cash flow and continue to . From CFO Glen Ibbott:
We continue to see strong growth in cannabis revenues in both medical and consumer categories. Our cultivation execution continues to drive production costs lower and improve gross margins. Aurora’s diversified product portfolio remains in demand with patients and consumers alike.
Aurora has seen a significant increase in assets, climbing from $1.43 billion at year-end 2018 to $4.2 billion in its most recent quarter. In the same time frame, total liabilities have increased from $253 million to approximately $850 million. While liability growth outpaces asset growth, its assets far outweigh liabilities.
ACB has staying power, at least in the short term. But what it and the recent of the cannabis space really need is a catalyst and better sentiment.
Bret Kenwell is the manager and author of and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities.
The post 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. | Should ACB stock log a higher low, then it may be on the road to recovery. And while sales quintupled year-over-year in the most recent quarter for ACB, it came up short of expectations. ACB and others need some positive catalysts, and missing headline expectations isn’t one of them. | Should ACB stock log a higher low, then it may be on the road to recovery. And while sales quintupled year-over-year in the most recent quarter for ACB, it came up short of expectations. ACB and others need some positive catalysts, and missing headline expectations isn’t one of them. | Bottom Line on ACB Stock Let’s not mince words here: Aurora Cannabis is very much a speculative “prove-it” stock. Should ACB stock log a higher low, then it may be on the road to recovery. And while sales quintupled year-over-year in the most recent quarter for ACB, it came up short of expectations. | Bottom Line on ACB Stock Let’s not mince words here: Aurora Cannabis is very much a speculative “prove-it” stock. Should ACB stock log a higher low, then it may be on the road to recovery. And while sales quintupled year-over-year in the most recent quarter for ACB, it came up short of expectations. |
38128.0 | 2019-09-17 00:00:00 UTC | The 2 "G's" Absolutely Killing Pot Stocks Recently | ACB | https://www.nasdaq.com/articles/the-2-gs-absolutely-killing-pot-stocks-recently-2019-09-17 | nan | nan | For years, investors have been told the tale that marijuana stocks might be one of the greatest growth stories over the next decade. And based on the sales data we have, that very much looks like the case. Between 2014 and 2018, the duo of Arcview Market Research and BDS Analytics found that global legal weed sales more than tripled to $10.9 billion. Estimates on Wall Street opine that worldwide sales could gallop to as high as $200 billion a year by the end of the next decade.
Yet, if you take a closer look at the performance of marijuana stocks since the end of March, it's been abysmal. Inclusive of dividends paid, the Horizons Marijuana Life Sciences ETF, the first-ever tradable exchange-traded fund focused on cannabis, has shed 30% since the end of March.
While there are obviously a number of factors that can be blamed for this subpar performance, many of them point back to the two "G's": governance and greed.
Image source: Getty Images.
Stringent governance has been challenging
Tight federal, state, and/or local regulations are difficult for an industry used to operating in the black market for decades to get used to -- and we've seen these struggles play out both in Canada and in the United States.
In Canada, for example, dried flower supply issues have been persistent since day one of recreational pot sales on Oct. 17, 2018. Sure, some of this blame can be placed on growers that began expanding their capacity later than expected. However, the bulk of these supply problems can be traced back to governance issues.
Health Canada, the regulatory agency tasked with overseeing the Canadian weed industry, began this year with more than 800 cultivation, processing, and sales license applications on its desk for review. This is why, on average, it's taking many months, if not more than a year, to approve growing or sale licenses. Even though Health Canada announced policy changes designed to help it work through its backlog, it'll still take numerous quarters before the agency makes sizable headway. This means continued supply concerns for dried flower, as well as with derivative pot products, which are set to begin hitting dispensary shelves by mid-December.
To add to the above point, we've also witnessed regulatory hurdles in select provinces. Ontario, for instance, has been particularly slow to open physical dispensary locations, which has meant considerably lower-than-expected sales in the province.
We're also seeing governance issues come into play in the United States, albeit to a slightly lesser degree than in Canada. In California, the state has been slow to approve dispensary store licenses. More important, municipalities have been given the option to allow or deny cannabis retailers. According to the Los Angeles Times, a meager 18.5% of California's 482 cities are allowing marijuana to be sold in dispensaries. That's created an open invitation for illicit producers to set up shop throughout the rest of the state.
Image source: Getty Images.
Greed, vis-a-vis high tax rates, has been a killer
But don't place all of the blame simply on tight industry regulations throughout North America. High tax rates, especially in certain U.S. markets, deserve credit for pressuring cannabis stocks.
Once again, California is a front-and-center culprit. Although it's the largest cannabis market in the world, and is estimated to account for almost a quarter of the $30.1 billion in licensed-store sales by 2024, according to Arcview and BDS Analytics, its tax rates on legal weed are outrageous.
California's cannabis consumers are currently paying for a laundry list of expenses that includes:
State sales tax
Local sales tax
The excise tax of 15% added to cannabis sales
A wholesale tax on cannabis leaves or flower
The laboratory testing confirming the quality of the product
Other regulatory costs, including seed-to-sale governance and tracking
Long story short, estimates range, depending on the locale and the magnitude of other expenses that aren't listed as taxes, from a tax rate of anywhere from somewhere in the 40% range to as high as 77% on legal marijuana in California. This means that black-market marijuana can run circles around legal-channel cannabis on price -- and that's exactly what's happened. This year, 74% of pot sold in the Golden State is likely to avoid taxation since it'll come from the illicit market.
Canada's excise tax rate of roughly 10% is considerably lower than most legal weed markets in the U.S., and has, therefore, been less exposed to greed concerns. Nonetheless, supply shortages and modest price undercutting of the legal market has opened the door to Canada's black market.
Image source: Getty Images.
Brand-name pot stocks are suffering
These governance and greed concerns are both fixable, but it's going to take quite a bit of time to tackle these issues. In the meantime, pot stocks with the richest valuations are liable to feel the most pain from the industry failing to live up to near-term expectations -- namely, pot stocks like Canopy Growth (NYSE: CGC) and Aurora Cannabis (NYSE: ACB), which are valued at aggressive multiples of fiscal 2020 sales despite the fact that both will likely lose money next year.
Canopy Growth is particularly exposed here, given its ballooning losses and top-level turnover. In early July, company visionary and now-former co-CEO Bruce Linton was shown the door, leaving investors to wonder who'll lead Canopy Growth's strategy moving forward. Linton's "expand first, ask question later" strategy has put the company in line to gobble up significant market share when supply issues are resolved in Canada. However, this aggressive acquisition and expansion strategy, along with Linton's robust share-based compensation offered to employees, might make Canopy one of the last major growers to turn a recurring profit.
Meanwhile, Aurora Cannabis' fiscal fourth-quarter report alludes that the company has done everything it can from a production perspective to get more marijuana to market. Nevertheless, Aurora's report notes that there are conditions beyond the company's control when it comes to the country's supply challenges. Making matters worse, Aurora's early year prediction of fourth-quarter positive recurring EBITDA didn't come to fruition, and the company is still lugging around 3.17 billion Canadian dollars in goodwill, which heightens the likelihood of an eventual writedown.
Long story short, brand-name cannabis stocks may offer long-term promise, but they're very avoidable for the moment while governance and greed issues are being sorted out.
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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. | In the meantime, pot stocks with the richest valuations are liable to feel the most pain from the industry failing to live up to near-term expectations -- namely, pot stocks like Canopy Growth (NYSE: CGC) and Aurora Cannabis (NYSE: ACB), which are valued at aggressive multiples of fiscal 2020 sales despite the fact that both will likely lose money next year. Health Canada, the regulatory agency tasked with overseeing the Canadian weed industry, began this year with more than 800 cultivation, processing, and sales license applications on its desk for review. In early July, company visionary and now-former co-CEO Bruce Linton was shown the door, leaving investors to wonder who'll lead Canopy Growth's strategy moving forward. | In the meantime, pot stocks with the richest valuations are liable to feel the most pain from the industry failing to live up to near-term expectations -- namely, pot stocks like Canopy Growth (NYSE: CGC) and Aurora Cannabis (NYSE: ACB), which are valued at aggressive multiples of fiscal 2020 sales despite the fact that both will likely lose money next year. California's cannabis consumers are currently paying for a laundry list of expenses that includes: State sales tax Local sales tax The excise tax of 15% added to cannabis sales A wholesale tax on cannabis leaves or flower The laboratory testing confirming the quality of the product Other regulatory costs, including seed-to-sale governance and tracking Long story short, estimates range, depending on the locale and the magnitude of other expenses that aren't listed as taxes, from a tax rate of anywhere from somewhere in the 40% range to as high as 77% on legal marijuana in California. Long story short, brand-name cannabis stocks may offer long-term promise, but they're very avoidable for the moment while governance and greed issues are being sorted out. | In the meantime, pot stocks with the richest valuations are liable to feel the most pain from the industry failing to live up to near-term expectations -- namely, pot stocks like Canopy Growth (NYSE: CGC) and Aurora Cannabis (NYSE: ACB), which are valued at aggressive multiples of fiscal 2020 sales despite the fact that both will likely lose money next year. California's cannabis consumers are currently paying for a laundry list of expenses that includes: State sales tax Local sales tax The excise tax of 15% added to cannabis sales A wholesale tax on cannabis leaves or flower The laboratory testing confirming the quality of the product Other regulatory costs, including seed-to-sale governance and tracking Long story short, estimates range, depending on the locale and the magnitude of other expenses that aren't listed as taxes, from a tax rate of anywhere from somewhere in the 40% range to as high as 77% on legal marijuana in California. Cannabis legalization is sweeping over North America – 10 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018. | In the meantime, pot stocks with the richest valuations are liable to feel the most pain from the industry failing to live up to near-term expectations -- namely, pot stocks like Canopy Growth (NYSE: CGC) and Aurora Cannabis (NYSE: ACB), which are valued at aggressive multiples of fiscal 2020 sales despite the fact that both will likely lose money next year. Canada's excise tax rate of roughly 10% is considerably lower than most legal weed markets in the U.S., and has, therefore, been less exposed to greed concerns. Brand-name pot stocks are suffering These governance and greed concerns are both fixable, but it's going to take quite a bit of time to tackle these issues. |
38129.0 | 2019-09-16 00:00:00 UTC | Here's Why Aurora Cannabis Doesn't Deserve a Top-Shelf Valuation | ACB | https://www.nasdaq.com/articles/heres-why-aurora-cannabis-doesnt-deserve-a-top-shelf-valuation-2019-09-16 | nan | nan | Aurora Cannabis (NYSE: ACB) is one of the most popular marijuana stocks among retail investors. The good news is that a solid rationale does exist for its rock star-like popularity. Aurora has positioned itself to become the top dog in its home market of Canada in terms of annual sales. The company has also established a top-tier international footprint and a wide-ranging product portfolio to capitalize on the next-stage of marijuana legalization in Canada.
Nonetheless, Aurora's stock sports a rather questionable valuation. Depending on which analyst estimate you go by, Aurora's shares are currently trading at 8 to 13.5 times the company's projected sales for fiscal year 2021. That's a sky-high valuation anyway you slice it, and unfortunately, Aurora probably doesn't deserve one.
Image Source: Getty Images.
Too much uncertainty and risk
Aurora's premium valuation seems to be predicated upon the rather shaky proposition that the next U.S. political cycle will usher in game-changing marijuana legislation. Not so fast. The cold, hard truth is that the only U.S. presidential candidates that are clearly gung ho about rescheduling marijuana are left-leaning Democrat candidates -- all of whom currently trail in the polls.
Underscoring this point, former Vice President Joe Biden -- and current Democrat presidential front runner -- has been flat-out unwilling to embrace marijuana legalization as part of his platform -- despite several nationwide polls showing that a majority of Americans do, in fact, support such legislation. Biden's lack of enthusiasm on this touchstone issue definitely qualifies as a dark cloud for the industry.
On the other side of the political divide, President Trump has shown little to no interest in the subject during his tenure in the White House. Federal marijuana legalization, therefore, will probably remain on the back burner if Trump is reelected in 2020 -- especially if Republicans retain control of the Senate. In effect, marijuana investors shouldn't expect a shift in federal policy unless there is a dramatic change of power in Washington, D.C., in 2020, which doesn't appear to be likely right now.
Key investing takeaway
The bottom line is that Aurora -- along with its Canadian cannabis peers -- may have to wait perhaps another eight to 12 years for the U.S. recreational cannabis market to truly come into play. That might sound like a black-swan type scenario, but it also happens to be the most realistic forecast based on the U.S. political landscape.
Think about it another way. When the Affordable Care Act (aka "Obamacare") became law almost a decade ago, numerous political pundits and healthcare analysts thought this groundbreaking legislation would prove to be a stepping-stone to universal healthcare. As things stand now, though, Obamacare is arguably on life support from a political standpoint. The push to end federal prohibition on marijuana -- despite its numerous successes over the past five years -- could ultimately suffer the same fate as the drive toward universal healthcare in the United States.
The key takeaway here is that it might be best to avoid Aurora's stock for the time being. The company definitely has a lot of potential, but there's no telling if or when the U.S. recreational cannabis market will fully open up to international players. If anything, the old guard in both political parties seems content to kick the can down the road on this issue, which doesn't bode well for legal marijuana companies with premium valuations.
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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) is one of the most popular marijuana stocks among retail investors. Too much uncertainty and risk Aurora's premium valuation seems to be predicated upon the rather shaky proposition that the next U.S. political cycle will usher in game-changing marijuana legislation. Underscoring this point, former Vice President Joe Biden -- and current Democrat presidential front runner -- has been flat-out unwilling to embrace marijuana legalization as part of his platform -- despite several nationwide polls showing that a majority of Americans do, in fact, support such legislation. | Aurora Cannabis (NYSE: ACB) is one of the most popular marijuana stocks among retail investors. Too much uncertainty and risk Aurora's premium valuation seems to be predicated upon the rather shaky proposition that the next U.S. political cycle will usher in game-changing marijuana legislation. If anything, the old guard in both political parties seems content to kick the can down the road on this issue, which doesn't bode well for legal marijuana companies with premium valuations. | Aurora Cannabis (NYSE: ACB) is one of the most popular marijuana stocks among retail investors. * 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! See the 10 stocks *Stock Advisor returns as of June 1, 2019 George Budwell has no position in any of the stocks mentioned. | Aurora Cannabis (NYSE: ACB) is one of the most popular marijuana stocks among retail investors. 10 stocks we like better than Aurora Cannabis Inc. * 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! |
38130.0 | 2019-09-16 00:00:00 UTC | Why Aurora Cannabis, American Airlines Group, and Construction Partners Slumped Today | ACB | https://www.nasdaq.com/articles/why-aurora-cannabis-american-airlines-group-and-construction-partners-slumped-today-2019 | nan | nan | Wall Street didn't have a good start to the week on Monday. Investors weren't happy to learn about massive explosions linked to a drone attack in Saudi Arabia, and fear about global energy supply sent crude oil prices soaring. That was good for energy stocks, but it made most market participants nervous about whether the vulnerable economy will be able to sustain any further pressure. Some companies saw steeper declines in their share prices for a variety of reasons. Aurora Cannabis (NYSE: ACB), American Airlines Group (NASDAQ: AAL), and Construction Partners (NASDAQ: ROAD) were among the worst performers. Here's why they did so poorly.
Aurora gets downgraded
Shares of Aurora Cannabis dropped more than 8% after the Canadian marijuana stock got poor comments from analysts. Stifel cut its rating on the cannabis specialist from hold to sell, reducing its price target from 7 Canadian dollars to CA$5, or about $3.75. Stifel believes that marijuana investors are generally disappointed with how the sector has performed lately, and that might make it harder for Aurora to get the financing it'll need in order to achieve its global expansion goals. In the absence of a major catalyst, such as complete legalization of marijuana across the U.S. market, Stifel's finding it hard to see any reasons for Aurora shareholders to be optimistic in the near term.
Image source: Aurora Cannabis.
American Airlines to get hit at the pump
American Airlines Group saw its shares fall 7% as airline stocks in general reacted negatively to the move higher in energy prices. Fuel costs are a major component of the expense structure for airlines, and American in particular faces more challenging conditions in the form of more significant debt, labor disputes, exposure to the 737 MAX controversy, and high fuel consumption. Airlines have come a long way, so few expect rising fuel prices to cause American no longer to be profitable at all. However, the industry remains competitive, and more pressure on the cost front will take away American's flexibility to respond to initiatives that rivals put in place.
Construction Partners has shareholders selling some stock
Finally, shares of Construction Partners slumped 6%. The Alabama-based civil infrastructure company announced a secondary stock offering, saying that major shareholder SunTx Capital Management intends to sell 5 million shares. That would've produced worth roughly $785 million in proceeds as of Friday's close, but the vote of no confidence from SunTx let some of the air out of the stock. Even with the drop, though, Construction Partners is still up more than 50% since the beginning of the year, and many see plenty more opportunity for the infrastructure specialist to benefit from projects and strategic moves in the future.
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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), American Airlines Group (NASDAQ: AAL), and Construction Partners (NASDAQ: ROAD) were among the worst performers. Investors weren't happy to learn about massive explosions linked to a drone attack in Saudi Arabia, and fear about global energy supply sent crude oil prices soaring. Stifel believes that marijuana investors are generally disappointed with how the sector has performed lately, and that might make it harder for Aurora to get the financing it'll need in order to achieve its global expansion goals. | Aurora Cannabis (NYSE: ACB), American Airlines Group (NASDAQ: AAL), and Construction Partners (NASDAQ: ROAD) were among the worst performers. Construction Partners has shareholders selling some stock Finally, shares of Construction Partners slumped 6%. Offer from The Motley Fool: The 10 best stocks to buy now Motley Fool co-founders Tom and David Gardner have spent more than a decade beating the market. | Aurora Cannabis (NYSE: ACB), American Airlines Group (NASDAQ: AAL), and Construction Partners (NASDAQ: ROAD) were among the worst performers. Aurora gets downgraded Shares of Aurora Cannabis dropped more than 8% after the Canadian marijuana stock got poor comments from analysts. American Airlines to get hit at the pump American Airlines Group saw its shares fall 7% as airline stocks in general reacted negatively to the move higher in energy prices. | Aurora Cannabis (NYSE: ACB), American Airlines Group (NASDAQ: AAL), and Construction Partners (NASDAQ: ROAD) were among the worst performers. Aurora gets downgraded Shares of Aurora Cannabis dropped more than 8% after the Canadian marijuana stock got poor comments from analysts. The Alabama-based civil infrastructure company announced a secondary stock offering, saying that major shareholder SunTx Capital Management intends to sell 5 million shares. |
38131.0 | 2019-09-16 00:00:00 UTC | Health Care Sector Update for 09/16/2019: AMRN,TSLA,ALDR,ACB,ACB.TO | ACB | https://www.nasdaq.com/articles/health-care-sector-update-for-09-16-2019%3A-amrntslaaldracbacb.to-2019-09-16 | nan | nan | Top Health Care Stocks
JNJ -1.02%
PFE -0.07%
ABT -1.03%
MRK -0.73%
AMGN -0.54%
Health care stocks fell Monday, including a 0.3% decline for the NYSE Health Care Index while the shares of health care companies in the S&P 500 also were down over 0.2% as a group. The Nasdaq Biotechnology index was climbing almost 0.8%.
Among health care stocks moving on news:
(+) Amarin (AMRN) climbed almost 3% on Monday after the National Lipid Association issued its highest Level B-R recommendation for using icosapent ethyl-based medications like the company's Vascepa drug candidate to lower elevated triglyceride levels in statin-managed patients 45 years old and older. The US Food and Drug Administration is expected to decide whether to approve Vascepa for US sales by Dec. 19.
In other sector news:
(+) Alder BioPharmaceuticals (ALDR) raced 88% to a new 13-month high of $18.88 a share after agreeing to a $1.95 billion buyout offer from Danish drugmaker Lundbeck. Under the terms of the proposed deal, Alder investors will receive an $18.00 per share cash payment plus one contingent value right to another $2.00 per share after its eptinezumab drug candidate is approved by the European Medicines Agency.
(-) Tiziana Life Sciences (TLSA) turned higher again in late trade, rising 3.5%, after the FDA authorized the start of phase 1 testing of a capsule formulation of the company's Foralumab drug candidate for the treatment of autoimmune and inflammatory diseases.
(-) Aurora Cannabis (ACB) dropped nearly 8% after a downgrade to sell at Stifel, citing "less robust in-market performance and difficulty to continue positioning for the larger global opportunity." Stifel also cut its price target on the Canadian company's shares by CAD2 to CAD7.
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) dropped nearly 8% after a downgrade to sell at Stifel, citing "less robust in-market performance and difficulty to continue positioning for the larger global opportunity." In other sector news: (+) Alder BioPharmaceuticals (ALDR) raced 88% to a new 13-month high of $18.88 a share after agreeing to a $1.95 billion buyout offer from Danish drugmaker Lundbeck. (-) Tiziana Life Sciences (TLSA) turned higher again in late trade, rising 3.5%, after the FDA authorized the start of phase 1 testing of a capsule formulation of the company's Foralumab drug candidate for the treatment of autoimmune and inflammatory diseases. | (-) Aurora Cannabis (ACB) dropped nearly 8% after a downgrade to sell at Stifel, citing "less robust in-market performance and difficulty to continue positioning for the larger global opportunity." Top Health Care Stocks Health care stocks fell Monday, including a 0.3% decline for the NYSE Health Care Index while the shares of health care companies in the S&P 500 also were down over 0.2% as a group. | (-) Aurora Cannabis (ACB) dropped nearly 8% after a downgrade to sell at Stifel, citing "less robust in-market performance and difficulty to continue positioning for the larger global opportunity." Health care stocks fell Monday, including a 0.3% decline for the NYSE Health Care Index while the shares of health care companies in the S&P 500 also were down over 0.2% as a group. Among health care stocks moving on news: (+) Amarin (AMRN) climbed almost 3% on Monday after the National Lipid Association issued its highest Level B-R recommendation for using icosapent ethyl-based medications like the company's Vascepa drug candidate to lower elevated triglyceride levels in statin-managed patients 45 years old and older. | (-) Aurora Cannabis (ACB) dropped nearly 8% after a downgrade to sell at Stifel, citing "less robust in-market performance and difficulty to continue positioning for the larger global opportunity." Top Health Care Stocks Health care stocks fell Monday, including a 0.3% decline for the NYSE Health Care Index while the shares of health care companies in the S&P 500 also were down over 0.2% as a group. |
38132.0 | 2019-09-16 00:00:00 UTC | Health Care Sector Update for 09/16/2019: TSLA,ALDR,ACB | ACB | https://www.nasdaq.com/articles/health-care-sector-update-for-09-16-2019%3A-tslaaldracb-2019-09-16 | nan | nan | Top Health Care Stocks
JNJ -0.73%
PFE -0.22%
ABT -0.98%
MRK -0.83%
AMGN -0.67%
Health care stocks were falling Monday, including a nearly 0.3% decline for the NYSE Health Care Index while the shares of health care companies in the S&P 500 also were down over 0.2% as a group. The Nasdaq Biotechnology index was climbing over 0.8%.
Among health care stocks moving on news:
(+) Tiziana Life Sciences (TLSA) turned lower in recent trade after the US Food and Drug Administration authorized the biopharmaceuticals company to begin phase 1 testing of a capsule formulation of its Foralumab drug candidate for the treatment of autoimmune and inflammatory diseases.
In other sector news:
(+) Alder BioPharmaceuticals (ALDR) raced 88% to a new 13-month high of $18.88 a share after agreeing to a $1.95 billion buyout offer from Danish drug maker Lundbeck. Under the terms of the proposed deal, Alder investors will receive an 18.00 per share cash payment plus one contingent value right to another $2.00 per share after its eptinezumab drug candidate is approved by the European Medicines Agency.
(-) Aurora Cannabis (ACB) dropped 7% after a downgrade to sell at Stifel, citing "less robust in-market performance and difficulty to continue positioning for the larger global opportunity." Stifel also cut its price target on the Canadian company's shares by CAD2 to CAD7.
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) dropped 7% after a downgrade to sell at Stifel, citing "less robust in-market performance and difficulty to continue positioning for the larger global opportunity." Among health care stocks moving on news: (+) Tiziana Life Sciences (TLSA) turned lower in recent trade after the US Food and Drug Administration authorized the biopharmaceuticals company to begin phase 1 testing of a capsule formulation of its Foralumab drug candidate for the treatment of autoimmune and inflammatory diseases. In other sector news: (+) Alder BioPharmaceuticals (ALDR) raced 88% to a new 13-month high of $18.88 a share after agreeing to a $1.95 billion buyout offer from Danish drug maker Lundbeck. | (-) Aurora Cannabis (ACB) dropped 7% after a downgrade to sell at Stifel, citing "less robust in-market performance and difficulty to continue positioning for the larger global opportunity." Top Health Care Stocks Health care stocks were falling Monday, including a nearly 0.3% decline for the NYSE Health Care Index while the shares of health care companies in the S&P 500 also were down over 0.2% as a group. | (-) Aurora Cannabis (ACB) dropped 7% after a downgrade to sell at Stifel, citing "less robust in-market performance and difficulty to continue positioning for the larger global opportunity." Health care stocks were falling Monday, including a nearly 0.3% decline for the NYSE Health Care Index while the shares of health care companies in the S&P 500 also were down over 0.2% as a group. Among health care stocks moving on news: (+) Tiziana Life Sciences (TLSA) turned lower in recent trade after the US Food and Drug Administration authorized the biopharmaceuticals company to begin phase 1 testing of a capsule formulation of its Foralumab drug candidate for the treatment of autoimmune and inflammatory diseases. | (-) Aurora Cannabis (ACB) dropped 7% after a downgrade to sell at Stifel, citing "less robust in-market performance and difficulty to continue positioning for the larger global opportunity." Top Health Care Stocks Health care stocks were falling Monday, including a nearly 0.3% decline for the NYSE Health Care Index while the shares of health care companies in the S&P 500 also were down over 0.2% as a group. |
38133.0 | 2019-09-16 00:00:00 UTC | Interesting ACB Put And Call Options For January 2022 | ACB | https://www.nasdaq.com/articles/interesting-acb-put-and-call-options-for-january-2022-2019-09-16 | nan | nan | Investors in Aurora Cannabis Inc (Symbol: ACB) saw new options become available today, for the January 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 858 days until expiration the newly available 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 January 2022 contracts and identified one put and one call contract of particular interest.
The put contract at the $5.00 strike price has a current bid of $1.12. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $5.00, but will also collect the premium, putting the cost basis of the shares at $3.88 (before broker commissions). To an investor already interested in purchasing shares of ACB, that could represent an attractive alternative to paying $5.63/share today.
Because the $5.00 strike represents an approximate 11% 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 75%. 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 22.40% return on the cash commitment, or 9.53% 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 $5.00 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $7.00 strike price has a current bid of $1.00. If an investor was to purchase shares of ACB stock at the current price level of $5.63/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $7.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 42.10% if the stock gets called away at the January 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 $7.00 strike highlighted in red:
Considering the fact that the $7.00 strike represents an approximate 24% 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 35%. 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 17.76% boost of extra return to the investor, or 7.56% annualized, which we refer to as the YieldBoost.
The implied volatility in the put contract example is 130%, while the implied volatility in the call contract example is 71%.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 250 trading day closing values as well as today's price of $5.63) to be 70%. 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 $7.00 strike highlighted in red: Considering the fact that the $7.00 strike represents an approximate 24% 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 become available today, for the January 2022 expiration. | Below is a chart showing ACB's trailing twelve month trading history, with the $7.00 strike highlighted in red: Considering the fact that the $7.00 strike represents an approximate 24% 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 become available today, for the January 2022 expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the ACB options chain for the new January 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 $7.00 strike highlighted in red: Considering the fact that the $7.00 strike represents an approximate 24% 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 become available today, for the January 2022 expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the ACB options chain for the new January 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 January 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 $7.00 strike highlighted in red: Considering the fact that the $7.00 strike represents an approximate 24% 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 become available today, for the January 2022 expiration. |
38134.0 | 2019-09-16 00:00:00 UTC | Here's What Aurora Cannabis Said That Should Have the Marijuana Industry Terrified | ACB | https://www.nasdaq.com/articles/heres-what-aurora-cannabis-said-that-should-have-the-marijuana-industry-terrified-2019-09 | nan | nan | Last week, marijuana stock investors were privy to one of the most highly anticipated events of the third quarter -- namely, the release of Aurora Cannabis' (NYSE: ACB) fiscal fourth-quarter operating results.
Even though Aurora trails Canopy Growth in market cap, it's a leader in many respects. The company projects as Canada's leading producer, with an estimated 625,000 kilos of annual run-rate output by the end of fiscal 2020 (which comes on June 30, 2020), and it has a broader international presence than any other marijuana company. Many years down the line, if oversupply and commoditization strikes the dried flower landscape in Canada, this overseas presence should begin to really pay off.
It's also a company that's apparently loved by investors. It's the most-held stock on online investing app Robinhood (an app that's particularly popular with millennials), putting Aurora Cannabis ahead of the likes of Apple and Amazon.com. I also don't doubt that its relatively low share price has a psychological impact on attracting investors, too.
Image source: Getty Images.
Aurora Cannabis whiffs on its own guidance
But if you took the time to really dig into Aurora Cannabis' fourth-quarter report, which was released after the closing bell on Wednesday, Sept. 11, you likely walked away feeling pretty nervous about the near-term outlook for the marijuana industry.
One of more mind-boggling aspects of Aurora's Q4 report is that the company missed its own previous sales guidance. Just five weeks before lifting the hood on its operating results, the company offered an unaudited update that called for 4100 million Canadian to CA$107 million in Q4 net sales, inclusive of excise taxes paid. You'd think with Aurora giving such a reasonably broad range only five weeks prior to releasing its results that this would have been an accurate assessment of its performance. But that turned out to be wrong, with Aurora's net revenue tallying "only" CA$98.9 million, missing its own guidance, as well as Wall Street's.
For what it's worth, the company's initial projections (from much earlier in 2019) of positive recurring adjusted EBITDA for the fourth quarter were also dashed.
Image source: Getty Images.
This should seriously worry the cannabis industry
As embarrassing as this might be, though, it pales in comparison to one particular comment in the company' Q4 report. When discussing the company's push toward positive adjusted EBITDA, the press release reads:
In Q4 2019, adjusted EBITDA loss improved 68% to [CA]$11.7 million from [CA]$36.6 million in the prior quarter. Developing a profitable and robust global cannabis company is extremely important to Aurora. In fiscal 2019 Aurora was focused on excellence in execution, and the Company's KPIs [key performance indicators] show its success in this regard. Furthermore, Aurora has addressed previously identified production bottlenecks and continues to see strong sell-through of the Company's products at the retail level. However, the Canadian consumer channel continues to experience challenges at the retail level in key markets and resolution of this issue is beyond the Company's control. Aurora is working closely with all our regulatory and channel partners to streamline distribution as the Company continues to track toward positive adjusted EBITDA on a consolidated basis.
While it's a positive that Aurora saw notable improvements in gross margin, a decrease in "production bottlenecks," and a significant decline in per-gram production costs as economies of scale take shape, it's extremely worrisome that consumer channel challenges are "beyond the Company's control."
Image source: Getty Images.
Dried flower supply issues will take a while to resolve
It's no secret that supply issues have plagued the recreational Canadian pot industry since adult-use sales were launched on Oct. 17, 2018. These supply problems have manifested in four ways:
Health Canada has been bogged down with cultivation, processing, and sales license applications. When the year began, it had more than 800 to review, which has led to long wait times for growers.
Select provinces have been slow to approve physical cannabis store retail licenses.
Growers and retailers have dealt with a shortage of compliant packaging solutions, leaving unprocessed cannabis sitting in inventory.
Growers had to wait until they were certain the Cannabis Act would become law before undertaking expensive capacity expansion projects. In many instances, these construction or expansion projects are still under way.
However, we've witnessed progress on the capacity expansion front over the past year, and there's been little talk of compliant packaging shortages among growers of late.
What hasn't ceased, though, are the licensing delays at Health Canada and among certain provinces. Aurora Cannabis' Q4 commentary in its press release confirms that this pervasive problem is going to take a long time to work through, even with changes being implemented by Health Canada.
Image source: Getty Images.
But wait -- it gets worse
Unfortunately, Aurora's commentary isn't just limited to the dried cannabis spectrum.
On Oct. 17, laws governing derivatives (e.g., edibles, vapes, infused beverages, topicals, and concentrates) are set to go into effect, with these products making their way onto dispensary shelves by mid-December. Although dried cannabis is the most-sold weed product, it tends to generate low margins for marijuana stocks. Meanwhile, derivatives shouldn't face any near-term supply issues or pricing pressures, meaning they'll deliver much juicier margins.
But it's looking like derivative products may not make the splash that was initially expected. That's because all of the supply issues that have plagued the dried cannabis space are now going to be impacting alternative consumption options as well. Even Health Canada has warned that the rollout of these new products will be similar to dried cannabis -- i.e., it could take time for supply to really show up in licensed stores.
That's bad news, because Aurora Cannabis and its peers have been spending a lot of time and money to broaden their product portfolios in advance of this mid-December launch. That probably means that already depressed sale and profit projections for 2019 and/or 2020 are going to need to be trimmed even further.
While the cannabis industry still offers incredible long-term growth potential, these near-term bumps could prove significant.
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 – 10 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
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Sean Williams has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and Apple. The Motley Fool has the following options: short January 2020 $155 calls on Apple, long January 2020 $150 calls on Apple, short January 2020 $155 calls on Apple, and long January 2020 $150 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. | Last week, marijuana stock investors were privy to one of the most highly anticipated events of the third quarter -- namely, the release of Aurora Cannabis' (NYSE: ACB) fiscal fourth-quarter operating results. Aurora is working closely with all our regulatory and channel partners to streamline distribution as the Company continues to track toward positive adjusted EBITDA on a consolidated basis. On Oct. 17, laws governing derivatives (e.g., edibles, vapes, infused beverages, topicals, and concentrates) are set to go into effect, with these products making their way onto dispensary shelves by mid-December. | Last week, marijuana stock investors were privy to one of the most highly anticipated events of the third quarter -- namely, the release of Aurora Cannabis' (NYSE: ACB) fiscal fourth-quarter operating results. When discussing the company's push toward positive adjusted EBITDA, the press release reads: In Q4 2019, adjusted EBITDA loss improved 68% to [CA]$11.7 million from [CA]$36.6 million in the prior quarter. However, the Canadian consumer channel continues to experience challenges at the retail level in key markets and resolution of this issue is beyond the Company's control. | Last week, marijuana stock investors were privy to one of the most highly anticipated events of the third quarter -- namely, the release of Aurora Cannabis' (NYSE: ACB) fiscal fourth-quarter operating results. Aurora Cannabis whiffs on its own guidance But if you took the time to really dig into Aurora Cannabis' fourth-quarter report, which was released after the closing bell on Wednesday, Sept. 11, you likely walked away feeling pretty nervous about the near-term outlook for the marijuana industry. While it's a positive that Aurora saw notable improvements in gross margin, a decrease in "production bottlenecks," and a significant decline in per-gram production costs as economies of scale take shape, it's extremely worrisome that consumer channel challenges are "beyond the Company's control." | Last week, marijuana stock investors were privy to one of the most highly anticipated events of the third quarter -- namely, the release of Aurora Cannabis' (NYSE: ACB) fiscal fourth-quarter operating results. Even Health Canada has warned that the rollout of these new products will be similar to dried cannabis -- i.e., it could take time for supply to really show up in licensed stores. 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. |
38135.0 | 2019-09-15 00:00:00 UTC | Marijuana Stock Aurora Cannabis' Sales Soar 349% | ACB | https://www.nasdaq.com/articles/marijuana-stock-aurora-cannabis-sales-soar-349-2019-09-15 | nan | nan | Aurora Cannabis (NYSE: ACB) is doing everything it can to capture its share of the marijuana industry's torrid growth.
The Canadian cannabis company has ramped up its production capabilities over the past year. It produced 57,442 kilograms of cannabis and sold 36,628 kilograms in fiscal 2019. That represented growth of 920% and 629%, respectively, compared to the prior year.
Aurora's higher production capacity helped to fuel a 349% year-over-year increase in revenue, to 247.9 million Canadian dollars.
"In 2019 Aurora took its place as the global leader in cannabis production, research, innovation, and international market development," CEO Terry Booth said in a press release.
Image source: Getty Images.
For the fourth quarter, Aurora's net cannabis revenue rose 61% sequentially to CA$94.6 million. The company's Canadian consumer cannabis revenue climbed 52% to CA$44.9 million, while its medical cannabis revenue increased 10% to CA$29.7 million. Its wholesale bulk cannabis revenue, meanwhile, grew by nearly 10 times from the third quarter to CA$20.1 million. "We continue to see strong growth in cannabis revenues in both medical and consumer categories," CFO Glen Ibbott said.
Importantly, Aurora's profit margins are improving as it scales its cannabis production. The marijuana company's production costs declined 20% sequentially to CA$1.14 per gram in the fourth quarter. That helped Aurora's gross margin on its cannabis net revenue improve by 3 percentage points, to 58%.
Still, Aurora is not yet profitable. The cannabis company's earnings before interest, taxes, depreciation, and amortization (EBITDA) came in at a loss of CA$11.7 million. That is, however, a significant improvement from a loss of CA$36.6 million in the third quarter.
Looking forward
Aurora is gearing up for the impending legalization of cannabis derivative products -- such as edibles and beverages -- in Canada. The company said it plans to have a "robust product line-up" set to launch by December.
"With the Canadian launch of derivative products in the coming months, we have made the necessary investments to ensure readiness and focus on a variety of value-added products," Ibbott said. "We are very excited to supply an expanded consumer market with premium cannabis and new product forms."
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 – 10 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 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 doing everything it can to capture its share of the marijuana industry's torrid growth. Aurora's higher production capacity helped to fuel a 349% year-over-year increase in revenue, to 247.9 million Canadian dollars. "In 2019 Aurora took its place as the global leader in cannabis production, research, innovation, and international market development," CEO Terry Booth said in a press release. | Aurora Cannabis (NYSE: ACB) is doing everything it can to capture its share of the marijuana industry's torrid growth. For the fourth quarter, Aurora's net cannabis revenue rose 61% sequentially to CA$94.6 million. The company's Canadian consumer cannabis revenue climbed 52% to CA$44.9 million, while its medical cannabis revenue increased 10% to CA$29.7 million. | Aurora Cannabis (NYSE: ACB) is doing everything it can to capture its share of the marijuana industry's torrid growth. The Canadian cannabis company has ramped up its production capabilities over the past year. For the fourth quarter, Aurora's net cannabis revenue rose 61% sequentially to CA$94.6 million. | Aurora Cannabis (NYSE: ACB) is doing everything it can to capture its share of the marijuana industry's torrid growth. For the fourth quarter, Aurora's net cannabis revenue rose 61% sequentially to CA$94.6 million. The company's Canadian consumer cannabis revenue climbed 52% to CA$44.9 million, while its medical cannabis revenue increased 10% to CA$29.7 million. |
38136.0 | 2019-09-14 00:00:00 UTC | 4 Signs of Life in Aurora Cannabis' Latest Earnings Report | ACB | https://www.nasdaq.com/articles/4-signs-of-life-in-aurora-cannabis-latest-earnings-report-2019-09-14 | nan | nan | Since Canada began allowing recreational marijuana sales last October, Aurora Cannabis (NYSE: ACB) stock has fallen around 44% thanks to underwhelming sales and heavy operating losses. Recently released revenue results for the period ended June 30, 2019, disappointed analysts that were expecting more, but investors shouldn't give hope just yet.
Despite missing some lofty revenue expectations, there were signs of positive cash flows ahead. These are the top four that investors should know about.
1. Narrowing losses
Aurora Cannabis is still losing money, but it took a significant step in the right direction during the company's fiscal fourth quarter, which ended on June 30, 2019. If revenues and expenses recorded during the last three months of fiscal 2019 stays glued in place for all of fiscal 2020, shareholders won't have a lot to complain about.
Data source: Aurora Cannabis. Q4 = fourth quarter; FV Adj. = fair value adjustments; SG&A = sales, general and administration.
During the past year, Aurora's operating expenses exceeded the gross profit available to meet those expenses by CA$339 million, which just isn't sustainable. Simply repeating results of the latest three month period without any growth in fiscal 2020 would lead to a CA$49 million operating loss, which is a lot easier to swallow than previous losses.
Image source: Getty Images.
2. Economies of scale
It looks like a lot more topline revenue will end up hitting the bottom line in the quarters ahead. The cash cost to produce a gram of cannabis fell to just CA$1.14 from CA$1.42 during the previous three-month period.
New contributions from two of Aurora's gigantic automated production facilities came into the picture earlier this year and the difference is enormous. The two facilities raised the company's overall production capacity ninefold to 150,000 kilograms annually.
3. Pricing is better than it looks
Aurora's average selling price fell by CA$1.08 per gram to CA$5.32 per gram in the fiscal fourth quarter, but that's largely because of a huge uptick in wholesale bulk cannabis sales from CA$2.1 million in the first three months of 2019 to CA$20.1 million during the quarter ended June 30, 2019.
Aurora recorded an average selling price of CA$3.61 for bulk cannabis, $5.14 for consumer cannabis, and CA$8.51 for medical cannabis. Despite the wide pricing range, the gross margin reported for bulk sales, 61% was actually better than the margins on consumer and medical sales.
Image source: Getty Images.
4. Never mind the consumer price decrease
Consumer marijuana sales rose 52% from the previous quarter to $44.9 million, but it was dried flower sales that did most of the lifting. As a result, the average net selling price of products in the consumer segment fell by $0.34 compared to the previous quarter.
Products extracted from marijuana flower are generally much more expensive than the flower itself, but they're also a lot more expensive to produce. That's why the gross margin on consumer cannabis revenue rose to 55% from 50% in the previous quarter despite a falling average sale price.
A good pot stock to buy now?
Aurora Cannabis and plenty of other marijuana stocks have tumbled recently, but now isn't the right time to start a long position. The company might be able to produce an operating profit in the quarters ahead, but that profit won't be large enough to support a $6 billion market cap in the foreseeable future.
During the six months between last December and this June, Statistics Canada recorded dried flower sales that rose 37% to an annualized 119,700 kilograms, and cannabis oil sales that rose 23% to an annualized 115,400 liters.
Remember, Aurora's already capable of producing 150,000 kg of dry flower per year, and it's not the only Canadian producer that can supply more flower than the entire country seems willing to buy. There are literally dozens of licensed producers fighting over a domestic market that simply isn't large enough to support Aurora's valuation.
Perhaps the rollout of popular cannabis extracts and vape pens will pull some business away from an illicit market that's been providing popular extracts for years. Until there's proof these products won't simply cannibalize sales of less popular goods, though, it's better to watch this show from a safe distance.
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Cory Renauer 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. | Since Canada began allowing recreational marijuana sales last October, Aurora Cannabis (NYSE: ACB) stock has fallen around 44% thanks to underwhelming sales and heavy operating losses. Recently released revenue results for the period ended June 30, 2019, disappointed analysts that were expecting more, but investors shouldn't give hope just yet. Narrowing losses Aurora Cannabis is still losing money, but it took a significant step in the right direction during the company's fiscal fourth quarter, which ended on June 30, 2019. | Since Canada began allowing recreational marijuana sales last October, Aurora Cannabis (NYSE: ACB) stock has fallen around 44% thanks to underwhelming sales and heavy operating losses. Pricing is better than it looks Aurora's average selling price fell by CA$1.08 per gram to CA$5.32 per gram in the fiscal fourth quarter, but that's largely because of a huge uptick in wholesale bulk cannabis sales from CA$2.1 million in the first three months of 2019 to CA$20.1 million during the quarter ended June 30, 2019. Aurora recorded an average selling price of CA$3.61 for bulk cannabis, $5.14 for consumer cannabis, and CA$8.51 for medical cannabis. | Since Canada began allowing recreational marijuana sales last October, Aurora Cannabis (NYSE: ACB) stock has fallen around 44% thanks to underwhelming sales and heavy operating losses. Pricing is better than it looks Aurora's average selling price fell by CA$1.08 per gram to CA$5.32 per gram in the fiscal fourth quarter, but that's largely because of a huge uptick in wholesale bulk cannabis sales from CA$2.1 million in the first three months of 2019 to CA$20.1 million during the quarter ended June 30, 2019. Aurora recorded an average selling price of CA$3.61 for bulk cannabis, $5.14 for consumer cannabis, and CA$8.51 for medical cannabis. | Since Canada began allowing recreational marijuana sales last October, Aurora Cannabis (NYSE: ACB) stock has fallen around 44% thanks to underwhelming sales and heavy operating losses. Pricing is better than it looks Aurora's average selling price fell by CA$1.08 per gram to CA$5.32 per gram in the fiscal fourth quarter, but that's largely because of a huge uptick in wholesale bulk cannabis sales from CA$2.1 million in the first three months of 2019 to CA$20.1 million during the quarter ended June 30, 2019. Products extracted from marijuana flower are generally much more expensive than the flower itself, but they're also a lot more expensive to produce. |
38137.0 | 2019-09-13 00:00:00 UTC | Aurora Cannabis Inc. (NYSE: ACB) Q4 2019 Earnings Call Transcript | ACB | https://www.nasdaq.com/articles/aurora-cannabis-inc.-nyse%3A-acb-q4-2019-earnings-call-transcript-2019-09-13 | nan | nan | Image source: The Motley Fool.
Aurora Cannabis Inc. (NYSE: ACB)
Q4 2019 Earnings Call
September 12, 2019, 9:00 a.m. ET
Contents:
Prepared Remarks
Questions and Answers
Call Participants
Prepared Remarks:
Operator
Good morning, everyone. Welcome to the Aurora Cannabis fourth quarter fiscal 2019 conference call for the three months ending June 30th, 2019. During today's call, Aurora will be referring to an earnings presentation, which listeners are encouraged to download from the financial reports section of the company's investor website, investor.auroramga.com.
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. These documents may be accessed via SEDAR and EDGAR databases. I'd like to remind everyone that this call is being recorded today, Thursday, September 12th, 2019.
I would now like to introduce Mr. Cam Battley, Chief Corporate Officer of Aurora Cannabis. Please go ahead, Mr. Battley.
Cam Battley -- Chief Corporate Officer
Thanks very much, Operator. Good morning, everyone. Thank you for joining today's call. With me today are our Chief Executive Officer, Terry Booth, our Chief Financial Officer Glen Ibbott, and our Executive Chairman, Michael Singer. For today's call, I'll start by discussing some of our operational highlights and then Glen will discuss our financial results. I'll then briefly return to present our outlook for the rest of the year and beyond and then we'll take your questions.
As we do every quarter, we'll start with a few initial framing comments before shifting into the formal comments. As mentioned by the Operator, I'd like to draw everyone's attention to the dashboard of key performance indicators that we provided, once again viewable on our investor website at investor.aurormj.com.
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This is a really useful tool, one of our innovations, essentially a green light, yellow light, and red light tool to help track the company's performance. As you'll see, most of the KPIs are in the green. We've highlighted two that we've identified as yellow. We'll speak to each of these in more detail, but for now, I'd like to focus on the big picture for Aurora in our fiscal Q4, the quarter ending this past June 2019.
It was yet another strong quarter for ACB. Among the highlights included continued growth across all our distribution channels, Canadian medical, Canadian consumer, and international medical, a massive increase in kilograms produced, increasing 86% quarter-over-quarter, a further 20% decrease in our cash cost to produce, now reaching $1.14 per gram. I should note that our flagship highly automated Aurora Sky facility at Edmonton International Airport, we're producing at about $1.00 a gram with further improvement anticipated.
In addition, our gross margin improved by a further 3%, reaching 58%. The two KPIs that we've designated as yellow are average net selling price per gram and our SG&A. We wanted to call them out as a matter of transparency. The reasons for this are as follows -- our average net selling price per gram, which we'll get into more detail a little bit later, came down as a result of actually increased sales in the consumer market as well as some bulk wholesale sales that we actually managed to achieve an attractive margin on, higher than our overall gross margin.
Then our SG&A, obviously, is increasing a little bit at 9%. It's higher than it was in the last quarter at 1% growth. But I think that's explainable in large part because we are heading into essentially cannabis 2.0 with the new product forms coming onboard toward the end of this year.
I also want to acknowledge that we slightly missed our guidance on our overall net revenue. We projected $100 million to $107 million in overall net revenue. We came in 1% below that at approximately $99 million. That shouldn't have happened. The reason why it happened we will discuss a little bit more.
It's essentially these things -- one, these were not our core cannabis revenues. On our core cannabis revenues, we came in right at the top of our guidance at $95 million -- by the way, the largest revenue figure in a quarter that any cannabis company has ever recorded for cannabis revenues. On the overall net revenue, we missed slightly based on our ancillary or non-cannabis revenue.
A couple of reasons for that -- one, those are more variable than our cannabis revenues. We also have a little bit less visibility into the performance of our non-cannabis units that are independent that have a separate governance structure. And then finally, we actually required a lot of some of our ancillary companies and operations, specifically with respect to our analytical testing and our patient counseling. And we can't record revenue internally for inter-company transfers.
Now, the big picture, the most important takeaways here before we get into the formal comments -- I'd emphasize the fact that we've established at Aurora leadership in this sector with respect to not just production, but also revenues on a global basis in terms of innovation and this is the biggest quarter, the biggest revenue, that any company in this sector has ever recorded. So, we're very pleased at the progress that we've made. Now, we'll shift into the formal comments.
Now, the past year has been transformational for the cannabis industry overall. It's rapidly maturing into an established operating industry. At Aurora, we've prudently built a business that is efficient, scalable, and highly adaptable. We are a leader in markets around the world. We're committed to defining the future of cannabis globally and that commitment underpins everything we do.
In the quarter, Aurora continued to be a strong performer in the Canadian consumer market with leading market share and brand awareness. We achieved 52% growth in consolidated revenue compared to Q3, driven by a strong increase in production, particularly at Aurora Sky. While retail distribution in key provinces has been a constraint in fiscal 2019, we will see retail infrastructure expand in 2020 through the launch of new brick and mortar stores across Canada. With more stores, we expect to see further consumer engagement.
Providing safe and reliable access to medical cannabis remains at the core of Aurora's business and our revenues from this market increased 10% compared to Q3. Domestically, our patient roster increased by 10% to over 84,000 patients. Driving this growth are continued referrals from our cannabis Rx clinics and a network of over 60 clinic partners.
Internationally, Aurora continues to be the leader in working closely with government regulators and policymakers to implement medical cannabis programs and open new markets. In Italy, we were selected as the only winner of a public tender to supply that market with medical cannabis for a period of two years. While the initial quantities are small, this is an important opportunity to build our connection with patients, doctors, and pharmacies who have come to know and appreciate our products over the past two years.
This also underscores our ability to open new global markets by engaging with local governments and acting as a trusted partner as we continue to work to ensure patients have access to the high-quality medicine they need.
As well, in addition to the two EUGMP -- that's European Union Good Manufacturing Practices -- certified facilities we currently operate, we are in the final stages of certification for our Aurora River and Aurora V facilities, one in Ontario and one in Quebec. This will bring our EUGMP-certified facilities count to four, making us the license producer with the most EUGMP certifications, something that's rapidly becoming a global standard and ensuring our growing access to international markets where this certification is simply a requirement.
We recently announced our first major partnership in the United States market, our science-driven partnership with the UFC, the mixed martial arts organization, to study the effectiveness of CBD, cannabidiol, as a treatment for pain and recovery in high-performance athletes. This groundbreaking research will generate the data required to establish CBD as an accepted therapeutic ingredient.
The intellectual property from this research will lead to the creation of science-backed, hemp-derived CBD products that will combat the rapidly growing market of untested CBD treatments. We're excited about the opportunities ahead for us in the US market and we'll continue to take a measured but strategic approach to how we enter this space.
Furthering our scientific leadership, we also announced we began cultivating cannabis outdoors. The new sites at Aurora O in Quebec and Aurora Valley in British Columbia will be used for cultivation research to develop new technologies, genetics, and intellectual property to gain further efficiencies in our indoor growth facilities and advance learnings about cannabis cultivation. This is important work that needs to be done to ensure sustainable cannabis agricultural practices that are developed to safeguard both our environment and global consumers.
The first harvest of our outdoor growth cannabis is expected to occur later next week at Aurora O in Quebec. This cannabis will be sent for extraction and further testing and we look forward to applying the learnings from these test sites to next year's crops. We're committed to defining the future of cannabis on a global basis and we're well on our way. While we may still be our early innings of the cannabis industry, the work we've accomplished to date has created a company that is uniquely positioned to lead.
That concludes my opening remarks. I'd like to turn the call over to Glen now, who will discuss the financial highlights of the quarter.
Glen Ibbott -- Chief Financial Officer
Thanks, Cam and good morning, everyone. My comments here today reflect the success that Aurora has achieved as we continue our focus on the execution of our business plan. The figures I'll be going over can be found in our financial statements and MD&A and all are in Canadian dollars.
As Cam mentioned, our fourth quarter fiscal 2019 results showcase the drivers of our continued strong quarter-over-quarter growth. We reported total net revenue of $99 million, a 52% increase over the $65 million in the third quarter. Our cannabis net revenue was $95 million, representing 61% sequential growth. This growth was predominately fueled by additional production capacity and available supply from our Aurora Sky and Aurora River, formerly MedReleaf Bradford, facilities which drove a $15 million increase in consumer cannabis net revenues as well as an $18 million increase in wholesale bulk cannabis trim sales.
For the full 2019 fiscal year ending June 30th, net revenue was $248 million. Of this, $226 million was cannabis net revenue, an increase of over 427% compared to the prior year.
Our fourth quarter 2019 Canadian medical cannabis sales increased 9% to $25 million, driven by our continued success and growing our patient base, which currently stands just shy of 90,000 clients. International medical cannabis revenue for the quarter was $4.5 million, up 12% over the prior quarter. For the year ended June 30th, 2019, overall medical cannabis net revenue increased by 150% to $107 million. This increase was primarily due to the addition of revenue from MedReleaf and CannaMed acquisitions, increased European sales, as well as a ramp up in production across our production facilities.
During the fourth quarter, our growth in the consumer cannabis market continued, with net revenue of $45 million, an increase of 52% over the prior quarter. We finished the full fiscal year with $97 million in consumer cannabis revenue.
As you'll note, our fiscal Q4 included approximately $20 million in wholesale bulk cannabis revenue. We sold cannabis trim for an average price of $3.51 and a margin of 61%. In the future, we expect to sell into the wholesale channel opportunistically and when pricing and terms are appropriate. I would caution against expecting bulk sales of the magnitude we achieved in Q4 2019 to be consistent or repeatable. However, we do maintain a focus on the bulk sales market and we do believe there will be further opportunities there in the future.
Given our patient first commitment and belief that medical cannabis should not be subject to excise tax, we continue to absorb the cost of these excise taxes on behalf of our medical cannabis patients. As a result, excise taxes negatively impacted our Canadian medical cannabis net revenue and gross margin by $3.3 million and 4% respectively.
Let me address our reported revenue as compared to our updated outlook in August in a bit more detail. We reported that the top end of the range for our cannabis revenue at $95 million. This is our core business and we are proud to have delivered such a strong quarter. However, revenues from our auxiliary businesses, particularly those that are purposefully managed independently at arm's length were lower than expected. We had expected relative consistency from quarter to quarter, but when they reported into us, we needed to eliminate significantly more revenue than expected for inter-company work.
While we do not have day to day visibility into these businesses, we do need to improve our ability to forecast these businesses. However, because of the lumpiness of these revenues and their relative financial immateriality, we will not be including them in future guidance. Now, continuing further down the P&L, our gross margin on cannabis net revenue increased to 58% in Q4 2019 compared to 55% in the prior quarter. The increase in gross margin is primarily due to ongoing improvement in our production cash costs per gram.
As Cam mentioned, our cash costs to produce per gram of dry cannabis decreased to $1.14 per gram, down by $0.28 or 20% during the quarter as compared to the last quarter. This is primarily attributable to the positive impact of the greater economies of scale and manufacturing efficiencies achieved from the increase in production in the period, particularly at our Aurora Sky facility.
On a stand-alone basis, our Sky facility is now in around $1.00 per gram and we expect further improvements in the coming quarters with the resulting increases to overall gross margin. We are strength in highly efficient production and the resulting industry-leading gross margins as core to our future success. It allows us the opportunity to continue to invest heavily in the future growth of our business at the same time as progressing toward positive EBITDA.
During Q4 2019, Aurora produced just over 29,000 kilograms of dry cannabis compared to 15,590 kilograms in Q3. The production from our higher volume facilities increasing through the quarter, we expect to see a further increase in production in Q1 2020. We've also ramped up our internal extraction capacity and now have enough to meet our current and future needs.
In Q4, we continue to invest in the corporate infrastructure and talent required for expansion and growth of market share globally. The increase in SG&A expense compared to prior periods was primarily attributable to increased shipping and fulfillment costs related to higher revenues in preparation for the launch of new products including product development and branding development, which includes our UFC research initiative. Reflecting the year end audit adjustments that Cam mentioned earlier, our Q4 SG&A would have been about $88 million, an increase of approximately $20 million over the prior quarter.
We have built a diversified and vertically integrated company currently capitalizing on the tremendous opportunity of the global cannabis markets. In Q4, our reported adjusted EBITDA loss decreased to $11.7 million as compared to $36.6 million in the prior quarter. Considering the impact of year end audit adjustments, we estimate our delivered EBITDA loss to be approximately $25 million, an improvement of over 32% from the previous quarter.
I'm extremely happy with the underlying achievements we've made in the last nine months and driving toward our EBITDA target. We have more work to do, but I'd highlight that nearly all of our KPIs are showing sequential improvements. We've solved previously identified production bottlenecks and we're seeing strong sell through on our products at the retail level.
There are remaining constraints to the pace of growth in the Canadian market that we would like to see resolved, including the timing of currently approved and future retail stores. The resolution of these constraints will impact the timing of our EBTIDA-positive target, but we do expect these constraints to become less of an issue over the next several quarters.
As we continue to execute on our strategy, the company expects adjusted EBTIDA to improve in the future due to higher sales, improved gross margins, and prudent SG&A growth. As of June 30th, 2019, we had $218 million in cash and cash equivalents compared to $89 million last year. In August, we announced the upsizing of our secured term debt facility to $360 million with a coordinating feature for an additional $40 million of capacity.
Further, as I'm sure many of you have seen on September 3rd, we announced the disposition of our remaining equity investment in the Green Organic Dutchman, generating approximately $86 million in gross proceeds.
With these two transactions now closed, we believe we have more than adequate financial resources in the near-term to execute our growth plans. I should also note that we continue to evaluate our global capacity expansion. We have identified opportunities to defer certain capex as we rebalance the growth of demand with our increasing supply. We are continuing to build out our full production facility pipeline but in concert with the total global cannabis market.
As I conclude my remarks, I would like to note that I am proud to be a part of the best-performing LP in the Canadian industry. Aurora delivered strong revenues and patient numbers, improved on already robust margins, produced a consistent and meaningful supply of high quality cannabis, and is well-positioned to continue to keep the gas pedal down for growth while also moving to EBITDA positive in the short-term, not the long-term. This makes Aurora unique in the Canadian industry.
I am very pleased with how the Aurora team is focused on solid execution and operational improvements this past year. We are in a good financial position and we have numerous options at our disposal to execute on a growth strategy.
I'll now pass the call back to Cam.
Cam Battley -- Chief Corporate Officer
Thanks, Glen. As you've heard today, we have built a solid platform for growth that's generating continued positive results. Before I open the call for questions, I wanted to provide an update for our outlook for fiscal 2020. The opportunity in the global cannabis and hemp markets is tremendous. Aurora will continue to make the necessary investments today to build long-term value for shareholders. However, Aurora will take a balanced approach to these investments with a focus on operating a sustainable and profitable business.
As part of the US market strategy, the company is considering its shareholders and how various state and federal regulations will affect its business prospects. A number of alternatives to grow its presence in the US market are under evaluation right now and the company is committed to only engage in activities which are permissible under both state and federal laws.
There are market opportunities that are legal at both state and federal levels that can add operating cash flows and be critical pillars of Aurora's strategy and long-term success. The introduction of new product formats to the Canadian consumer market this fall represent a significant opportunity for the company.
We're very excited to introduce a line of new high-quality products across the country in a variety of product categories. We have invested the time to study consumer habits in legal US markets, which have driven the development of products that consumers will desire and that are compliant with Health Canada's regulations here in Canada.
As we previously discussed, our initial focus in the derivative product market will initially be on vapes and edibles. To support these new product formats, we've invested significant capital to staff up and scale our operations in terms of both our cultivation and extraction capacity and in developing new production hubs to ensure that sufficient product is on store shelves for December 17th.
On that front, both of our Aurora Air and Polaris facilities are progressing very well and I can say that as of today, we are in commercial production of vape pens, mints, gummies, and chocolates, and in the late-stage development in other product categories.
As I said off the top of the call, while many in the industry are trying to decide how they will build their cannabis business, we already have built a solid growing business, integrated across all value chains. In fact, the global leader.
I'd now like to ask the operator to open the call up for questions.
Questions and Answers:
Operator
If you would like to ask a question at this time, please press * then the number 1 on your telephone keypad. If you would like to withdraw your question, press the # key. Please limit yourself to one question and one follow-up question, after which, you can return the queue.
Your first question comes from Tammy Chen with BMO Capital Markets.
Tammy Chen -- BMO Capital Markets -- Analyst
Thanks. Glen, can you talk about in the EBITDA reconciliation you've got from net income to adjusted EBITDA, there was a note there about some change in accounting where it reduced the operating expenses in the quarter by about $15 million. Can you just talk about what was the accounting change there?
Glen Ibbott -- Chief Financial Officer
Hi, Tammy. It wasn't a change. It was our year end audit adjustment. As we went through our year end scrubbed our financials, we identified some adjustments from prior periods that we needed to correct in order to satisfy our audit and get our full year financial statements in good shape. Effectively, what happened there is we did record some adjustments in Q4 that possibly should have occurred in previous quarters. Our previous quarter, the results should have looked slightly better. We reported those through Q4.
Overall, nonmaterial adjustments but part of the audit cleanup. They fall into a couple of different buckets, mainly driven by the level of acquisitions and integrations we did as we scrubbed through some of those acquisitions to find some costs that had been recorded. We also identified some costs that should have been capitalized earlier in the year. We made those corrections part of our audit.
Tammy Chen -- BMO Capital Markets -- Analyst
My follow-up, I just wanted to understand the capex spend in the quarter. I think it increased quite a bit sequentially. How should we think about that? What was the capital deployed into during the quarter? Is this the go forward rate? Commentary about that would be helpful.
Glen Ibbott -- Chief Financial Officer
Sure. I can start on that. Tammy, you know a couple of the major facilities that are under construction -- Sun and Nordic and we've mentioned a couple of others. You're also aware that we've got Polaris and air and an innovation center in Comox for our research. There is a lot of work going on in Aurora right now as we scale up not only for international, but within Canada to make sure we're efficient distributors. So, distribution centers across the country and manufacturing for the new products, things like authority.
The capex, I'd say Q4 and spilling into Q1 a little bit would be peak capex. We're over $100 million in Aurora Sun build. It's progressing quite nicely. As we indicated earlier in our comments, we are looking at the timing of capex and matching our supply to the demand. As you saw when we launched Sky, we were able to get certain bays licensed in operation before the entire facility was built in a phased approach. We're taking that approach to the larger production facility.
We've just got an awful lot going on. As you know, we're heavily into technology, automation, things like that. So, these are long-term investments that have paid off in our reduced operating costs, reduced production costs. That's where we're at right now. Tammy, I think you would expect in Q1 to still see a significant capex spend and it will start to reduce over future quarters, particularly most of these facilities are nearing completion and then we'll just have a couple of larger productions.
Operator
Next question comes from Matt Bottomley with Canaccord Genuity.
Matt Bottomley -- Canaccord Genuity -- Analyst
Thanks for taking the questions. Two items, one on some of the commentary on potential volatility going forward and then again on the EBITDA commentary as well -- on the volatility side, given that you had a good wholesale bump in the quarter and then within your recreational consumer revenues, there could be some speed bumps there depending on how retail is rolled out.
What's the best way for analysts to look at this considering the wholesale may not be repeatable and the recreational revenues could still see potential headwinds? Just trying to anticipate the potential magnitude of the lumpiness going forward.
Cam Battley -- Chief Corporate Officer
I'll take the first crack at this and then hand off to Glen. First, the demand is actually there for wholesale product. You'll note that we got an extremely attractive price for trim, $3.61 a gram. The margins were even better than overall gross margin. So, if we have opportunities, and it's likely we will, we will proceed with additional bulk wholesale.
The bigger question you're asking is with respect to volatility. I think what we're signaling here is just to be aware. As a lot of observers have suggested, there's anticipating that there may be a bit if a plateau between now and the advent of the cannabis legalization 2.0 products anticipated somewhere around the end of the year. I think that's really what we're anticipating. There's likely to be across the sector a little bit of a plateau between now and then.
Glen, did you want to add to that?
Glen Ibbott -- Chief Financial Officer
Yeah, Matt, what we're signaling there -- you know Aurora and you know how consistently our revenue has continued to ramp quarter to quarter to quarter, the revenue curve is a nice, smooth, continuously increasing curve. I just want to call out the fact that there are constraints on the consumer system right now.
The provinces are starting to show that as well. I've seen in July and August where they're trying to work through some of the inventories they have and have slowed their buying and we expect it to continue to pick up through the next quarter. We did want to signal that our continued quarter-over-quarter growth may take a bit of a pause due to industry dynamics. That being said, we still expect to see a growth in the core businesses. As Cam said, the bulk opportunities may be there but if the pricing is right, we'll execute on those as well.
As I look forward, from the provinces, we are number one in the country in sell through rates. We're delivering the rigth products, right quality consumers are preferring. As long as we continue to sell through at healthy rates, then the bumps work themselves out and the retail stores roll out then we'll benefit disproportionately from that increased market size.
Terry Booth -- Chief Executive Officer
I just want to reiterate on what Glen was talking about on retail. A good example would be Alberta. Alberta lifted the moratorium on retail stores, stocked up on a considerable amount of cannabis. Those stores have been granted licenses but are not yet open. They're doing their buildouts. All we're providing right now are tinctures, joints, bud, and gel caps. We have another cannabis 2.0 coming into Canada, which we think will significant drive revenues for value add.
Matt Bottomley -- Canaccord Genuity -- Analyst
Maybe tying that to some of the comments you made on EBITDA -- in prior quarters and discussions, you've kind of been hoping to reach that inflection point in calendar Q4 this year. Now, the wording is sounding like short-term, which sounds like similar points in time. Is the reason for that slight change given that plateau until the December cannabis 2.0 comes on and then it's a reset with respect to that inflection point toward EBITDA positive?
Cam Battley -- Chief Corporate Officer
Glen, maybe I can frame this and then hand off to you for the details. We put out guidance at the beginning of the year that we were targeting positive EBITDA. That created a sea change in our behavior and I think people have noticed. We went from a period of very rapid M&A to shifting gears to a period of really focused and disciplined execution. That's been reflected in our results.
Would we have liked to have been at positive EBITDA at this point? Sure. Part of the reason we're still working toward that -- we would have liked to have seen greater retail infrastructure in Canada. More stores, obviously, is better to the whole sector and disproportionately beneficial to us as the leaders in the consumer market. We still are focusing on that.
I think it distinguishes us a little bit from our peers, some of whom have not emphasized that pathway to profitability as we have. This is something where we have listened to what institutions have told us about the importance of having a credible pathway to profitability and we're sticking to that. Glen?
Glen Ibbott -- Chief Financial Officer
I think Cam's done a great job describing that. in terms of our language, we are still at the mercy of the timing of the retail footprint rollout. We're excited Ontario has licensed a number of new stores but they should be licensing hundreds of new stores. The timing of that will dictate how large the market grows over what period of time.
Certainly, we don't yet know when the provinces will start loading in for the new products for consumer 2.0. Will they start buying in advance for December or will they wait until the end of the year? There's some timing there quarter to quarter that we're a little uncomfortable with. We'll have to wait and see how that rolls out specifically.
Operator
The next question is from Vivien Azer with Cowen and Company.
Steve Schneiderman -- Cowen and Company -- Analyst
Hi, this is Steve Schneiderman pinch-hitting for Vivien today. So, in reference to some of the performance in oils, some of the commentary we've heard from some of the other LPs have been that there's been a little bit of destocking across the board. How much has that impacted you and are you seeing a similar trend in your oil and extract sales?
Glen Ibbott -- Chief Financial Officer
So, Steve, for sure, the consumer market -- let me start with medical. Our medical market is still running at roughly the two-thirds dry flour, one-third extract-based that it has for a number of quarters now. We had a small increase, 37% in Q4 in terms of extract-based products. The consumer market seems to be a heavy preference right now with the products they have to choose from for dry cannabis. They prefer to smoke the cannabis right now until they get new product forms launched 2.0.
Our quarter Q4 was over 90% dried flour. I think we've seen a few of our peers that floated in on extract-based products and have recognized some returns in the recent past. We don't have that issue. We haven't had that issue. For sure, the consumer market right now is heavily dominated by dried flour, not a lot of extract-based sales.
Steve Schneiderman -- Cowen and Company -- Analyst
Just a follow-up to your earlier point about what we're seeing in the channel, how do we reconcile that with the narrative that the market has been grossly undersupplied in the past? Are there other factors that are weighing in on that?
Glen Ibbott -- Chief Financial Officer
I can take that initially. When we've talked in the past, Steve -- certainly, we've been fairly consistent -- we expect that this is such a new market. We're truly at the launch of a new market. We haven't launched most of the products that should be in this market. There is going to be month to month and quarter to quarter, there will be a continuing mismatch of demand and supply.
Certainly, I think what we're seeing is that several months ago, there wasn't enough supply in the market and the provinces would buy whenever they could. Now, in certain SKUs, they've overloaded. As I said earlier, our strong sell through is important to us, an indicator that our products are moving, but they have overshot in terms of inventory build on some SKUs and they're going to have to work that our as we wait for retail.
Terry Booth -- Chief Executive Officer
If you look at the statistics on retail sales of adult usage, again, we're limited in the number of products that we supply that, but Alberta outpaced Ontario and British Columbia. That is not statistically, historically correct. British Columbia and Ontario have a lot more cannabis people and I think it's a reflection of a number of retail stores that are open in those two provinces.
They both are on a little bit of a slow role but they both had government changes on the rollout on October 17th. They're a little bit behind the eight ball in getting retail rolling. But we're starting to see a significant uptick in British Columbia and certainly we expect the same in Ontario. If they start selling as much cannabis per capita as Alberta, you're going to see quite a bump there. We know it's going to happen in the next six months, but it may not be next week.
Cam Battley -- Chief Corporate Officer
Let me add to that. Further to Glen's comments, we are seeing some interesting developments beyond straight supply and demand for product in the Canadian consumer market. That is discrimination by consumers toward higher quality products. We're seeing in the results of that. If you think about how some companies in the sector have had to deal with significant returns in the quarter, that's not an issue that we're facing.
So, there is some increase in discrimination where consumers are voting with their dollars as to which products they want and we anticipate that that will continue on a go forward basis. Once again, we think that militates toward Aurora because we have this reputation for producing particularly high-quality cannabis products.
Steve Schneiderman -- Cowen and Company -- Analyst
The next question comes from Doug Miehm with RBC Capital Markets.
Doug Miehm -- RBC Capital Markets -- Analyst
Thank you. This question is for Terry and Michael and it has to do more with strategy. I know you've slowed down the acquisition pace, but I was wondering if you could elaborate a little bit further on what you were thinking -- I know everything is going to be approached fully legally at a state level, but what you're thinking about in the US, if you could give us more information about your approach and perhaps timing, that would be great.
Terry Booth -- Chief Executive Officer
You wouldn't think that our M&A activity has slowed with the amount of work that we're doing and amount of opportunities we have in the United States. We started in the United States with their little brother, Australis Capital, which we have some backing rights. They've done nine deals themselves, smaller deals, but they've set a footprint and activity teed up some good people to help us with the different regulatory issues in the various provinces.
We've gone on a significant MSO review tour of the states. I think that's common knowledge out there in the markets and we are laser-focused on CBD derived from hemp and the various opportunities that exist from that. When USA passed the Farm Act, they leapfrogged over the rest of the world in CBD derived from hemp. Some call it a CBD frenzy, but I don't believe it is because we know it works. Having it be scheduled in the US is a tremendous boon to the CBD industry.
Our strategic partners are helping us talk to some of the top companies in the world with respect to that in itself. There are a couple more hurdles in the CBD industry including the FDA ruling on indigestible. We have a good idea of how that's going to go. To say we slowed our M&A activity, I'm very busy in that regard, probably 90% of my time is dealt on new opportunities.
Michael Singer -- Executive Chairman
It's Michael. I'll just add that we see the US market as a tremendous opportunity. I can tell you that this is now a key objective for us in fiscal 2020. Based on what Terry just described, we expect to have a significant footprint in coming quarters. UFC is an example of a great first step in that direction. We're encouraged with the progress we're making. Stay tuned because we're excited about our opportunities.
Doug Miehm -- RBC Capital Markets -- Analyst
Just a follow-up. You mentioned having an idea of how FDA might regulate ingestibles. I wonder if you can elaborate.
Terry Booth -- Chief Executive Officer
Sure. I think I said before what keeps me up at night is the supply of cannabis, but that's no longer an issue with Aurora now that Sky is almost at full production. What keeps me up at night now is the FDA decision, not the decision they'll make to the negative, but which way they'll go with respect to isolates versus broad spectrum. We are anticipating that the isolate will be the first step from the FDA as an ingestible mainly because the other 112 or 113 cannabinoids in cannabis and in hemp have not been tested by the World Health Organization.
The WHO has come out and said that CBD is safe as an ingestible but they've put brackets around that sentence that this is only for pure CBD. I think the phrase is commonly misused of broad spectrum CBD. It's broad spectrum cannabinoids minus the THC derived from hemp and/or cannabis.
We're hoping the broad spectrum is something that is approved for ingestibles as we feel it's more effective, but the first step in those ingestible may be an isolate. So, we're making sure both of those bases are covered in our review of companies that participate in that industry in the United States.
Operator
Your next question is from Brett Hundley with Seaport Global.
Brett Hundley -- Seaport Global Securities -- Analyst
I just wanted to go back to the capex question, if I can. Glen, what might be helpful at least for me personally is can you share with us an assumption on where longer-term capex might be able to shake out so that some of us on the street can kind of do the math on using Q4 on the top and then working down toward that target?
Glen Ibbott -- Chief Financial Officer
I hope I can help with that a little bit. As I said, we're kind of at peak capex spend right now with the major facilities under way. A lot of the construction going on right now will be complete over the next quarter or two on the manufacturing and distribution facilities across Canada. So, what we're then starting to look at is the timing of the capex on our major production facilities, Nordic and Sun.
So, as it stands right now, our current plans are to bring those in and phase them in as demand requires. You can consider that to be over the next year or two. Hopefully and ideally in my world, we need to phase them in earlier because the demand is there. But those are really the drivers.
Now, I need to caution you that as we stand right now, that's our capex plans should we decide part of our move into the US requires more capex, then we'll reset and recalibrate at that point. That's really how I've kind of characterized the capex over the next eight quarters is continued spend in this quarter and you start to see it trailing off then over the next couple of quarters and then you're really just looking at the timing in Nordic.
Brett Hundley -- Seaport Global Securities -- Analyst
My follow-up question is coming back to a previous one around vapes. I appreciate your answering that question as taking a wait and see and having the value of time here. But for all of us that need to look forward and try and make guesses about the forward market, can you give us a sense of what your overall capital investment in 2.0 products has been to this point and what percentage might be vapes?
I guess what I'm trying to tie into this discussion too is do you have any concern that the Canadian government might overreact in the interim and put a pause on vapes while things get figured out in the United States? Thank you.
Cam Battley -- Chief Corporate Officer
I'm not sure we actually want to break down percentage-wise how much of our investment is in each of our priority products that we intend to launch with cannabis legalization 2.0. But we have consistently indicated that we are looking at vapes. We're looking at certain edibles including mints and chocolates and other forms. We do intend to proceed with each of those.
Now, your next question as to what the Canadian government might do. That's pure speculation. We try not to engage in that business. I will add -- thus far, according to the best information we have today, these illnesses have not popped up in Canada. We have to abide by what regulators say. We're going to watch these developments. We'll be responsible about the whole thing, but I want to be careful not to speculate.
Terry Booth -- Chief Executive Officer
Just to add to that, when someone says the word vapes, that's got a lot of information in it. What the US government are pulling off the shelves right now are flavored e-cigarettes. We don't intend to sell flavored e-cigarettes, as far as I know. The cutting agent of those flavored e-cigarettes and flavored vapes is largely expected to be the cause of these issues. I'm not going to make a prediction, but that's what we're hearing.
The chemical that's been largely accused of being involved in that is something called vitamin E acetate. We would never consider using something like that for a cutting agent in Canada or anywhere unless it's been tested. I think vapes are getting lumped into one big basket and it's really a focused set of vapes coming through the black market that cutting agents are being used to add more robust flavor and a bigger plume, if you will.
Operator
Next question comes from Michael Lavery with Piper Jaffray.
Michael Lavery -- Piper Jaffray -- Analyst
Can you give us a sense for your outlook for industry capacity, which obviously has projections to rise pretty rapidly and how that compares to demand and how that evolves over the next, say, 12-18 months?
Cam Battley -- Chief Corporate Officer
In Canada alone?
Michael Lavery -- Piper Jaffray -- Analyst
Exactly.
Cam Battley -- Chief Corporate Officer
So, we don't have official figures for the industry. But here's what I can tell you. We do see capacity increasing, but once again, as we mentioned earlier, there's discrimination based on quality. Some producers will be seen as higher quality producers than others. As we discussed on previous occasions, one of the things that we've done to make sure that we're winners in whatever scenario emerges is to be a low-cost producer.
With our further improvements in our program cost to produce on a cash basis, that puts us, I think, further in the lead as the mass producer able to produce cannabis consistently at the lowest cost. So, that's the Canadian situation. We don't know exactly when there's going to be sufficient supply to meet all demand. Also, that calculation changes significantly with the advent of the cannabis legalization 2.0 products coming toward the end of the year.
On a global basis, it's a very different story. Because of the very small number of licensed regulated producers of cannabis in the whole world, we see a long-term, like multi-year situation where there will be a massive excess of demand over supply for legal regulated cannabis. So, that's one of the reasons why we have put so much effort into being first or second mover into international markets and establishing the biggest global footprint of any cannabis company and we're now operating in 25 countries.
Terry Booth -- Chief Executive Officer
I'd like to add to that. I mentioned earlier the cannabis per capita. Analysts have to look at the fact that the Alberta numbers are higher than anywhere else mainly because of retail availability. As to other provinces, Quebec as well, more retail, you will see an increase in supply and probably do some math on that. I'd like to make an example of Australia, which will be an export market for some time from Canada until they get their production under way. It's gone to over 12,000 patients. Month over month it's growing by 30%, Cam?
Cam Battley -- Chief Corporate Officer
Yeah.
Terry Booth -- Chief Executive Officer
Very similar to what happened in Canada under the MMPR. So, we're seeing countries that put Canadian-type regulations in place have significant uptick in demand. Australia, until a couple of rules and a couple of pieces of red tape were cut were very slow grown. They then cut the restriction on doctors and improved the application process and now, it's growing at a rapid pace and we see other countries taking that same sort of approach.
The German market, you'll see that we didn't have a big increase, a decent increase in European sales or outside sales, but we didn't have the capacity to supply it up until now. We're seeing the boots on the ground in Germany now educate physicians and demand for cannabis will go up as the number of physicians are prescribing. So, it's all a matter of math. It's still a medical entry into countries outside of Canada and the US and there's no better medical cannabis company in the world than Aurora.
Cam Battley -- Chief Corporate Officer
To add to what Terry said, everybody knows we identify ourselves primarily as a medical cannabis company. That's on a global basis, albeit a medical cannabis company that happens to be killing it in the Canadian consumer market. I want to emphasize that everywhere we go in the world, our reputation proceeds us, our reputation as a serious pharmaceutical grade, medically oriented research investing company precedes us.
That's really important to us. It opens doors to us with policymakers and regulators and allows us to have important conversations with respect to how new medical cannabis systems should evolve and to be able to speak to the need for well-regulated systems that actually have real access and proper access for patients. That reputation of ours, our positioning has been incredibly valuable. It's been an asset for the company.
Operator
Next question comes from Glenn Matson with Ladenburg Thalmann.
Glenn Mattson -- Ladenburg Thalmann -- Analyst
Hi, appreciate you guys taking the call. I wanted to touch on wholesale one more time. You guys talked about tapping the wholesale market opportunistically. I just wondered what are the parameters around what's going to make you decide when to tap it or not and is there a range you can give us? Is there maybe a couple hundred basis points of gross margin range of when you'll tap that market? Being that we're well into the first quarter here, are the conditions currently in line with the conditions you would want to see when you tap the wholesale market?
Glen Ibbott -- Chief Financial Officer
Hi, Glenn. We're just trying to be cautious here. We do see a need for that type of sale in the Canadian market. There is demand. As I said in my comments, there are a number of LPs that are looking for product as well. The trend that we saw with a couple of the major extraction companies in Canada looking for input products of high quality and there are other LPs looking for product as well.
But because this isn't an ongoing relationship right now, I'm not gonna count on those revenues until we have a signature and a contract and cash in the bank. We're being a little cautious looking forward here. The current market dynamics do lead you to believe there will be opportunities, but we don't want you to build that into a forecast until we start to see how sustainable and regular that business is.
We do have teams internally that are working on this and also looking at other opportunities to take advantage of our capacity for production and extraction and bottling and all the manufacturing aspects. There's potential to create more business for those in the industry that aren't necessarily interested in producing or, in fact, can't produce at the quality and the levels they'd like.
So, I expect more business to come out of that segment. It's just right now, it's early and a little less predictable than I would like before we put a stake in the ground on that.
Operator
The next question comes from Graeme Kreindler with Eight Capital.
Graeme Kreindler -- Eight Capital -- Analyst
I just wanted to get a quick follow-up with respect to the comments on the US market, particularly on the CBD side of things. There's been some commentary about the FDA giving some more clarity on regulations, really being a catalyst to unlock a lot of value in that market and make the operating environment really de-risk that. Is the entrance into that market in terms of an opportunity that will have a big commercial impact, is that something where you are going to be awaiting more clarity from the FDA or can you be potentially be advancing ahead of that on a state by state basis?
Terry Booth -- Chief Executive Officer
I expect we'll advance ahead of that.
Graeme Kreindler -- Eight Capital -- Analyst
Are there any particular states you've highlighted that you think are making strides faster than others?
Terry Booth -- Chief Executive Officer
I've got to be very careful. I narrow the pipe tremendously when I name the states. So, I'll leave that one alone. It's obviously the states where this is allowed at a high scale.
Operator
The next question comes from Andrew Carter with Stifel.
Andrew Carter -- Stifel Nicolaus -- Analyst
Good morning. Thanks for the question. I guess I wanted to ask about your Canadian medical business. You're the leader in Canada right now. It's a pretty significant portion of your revenue. The sales did flatten out this quarter. I guess what I wanted to understand is your outlook for that business, given your visibility and your patient base. How sustainable is that number right now? What are the opportunities for a truly differentiated Canadian medical offering as you see it?
Cam Battley -- Chief Corporate Officer
So, we actually saw double-digit growth. We had over 10% growth in that market and then subsequent to the quarter, we reached almost 90,000 registered patients, which makes us by far the leader in Canadian medical. We are obviously seeing continued demand differentiated from the consumer system for medical cannabis. There are a couple of good reasons for that. Currently in Canada, medical patients can write off the cost of medical cannabis as a prescription product on their federal taxes and we're also seeing an increase in insurance coverage.
So, more and more people in the country who have prescriptions for medical cannabis are able to gain insurance reimbursement for it. So, there's some good reasons to do that. Let me add to that -- we always emphasize to patients that if you're using medical cannabis, it should be under the care of a physician, just like any other prescription product. We do anticipate that that medical market will continue. Certainly, we are seeing patients come over to us from some of the other licensed producers. We expect that that will remain a health portion of the business for us and frankly, one of our defining features.
Andrew Carter -- Stifel Nicolaus -- Analyst
Then separately on that topic, nice growth in export this quarter, but just over $4 million Canadian of your total sales. Do you have an outlook of where the pace of commercial opportunities will evolve for you to where that's a real significant portion of your business, developing a real critical mask. Then separately, kind of an outlook on when some of your lower cost cultivations are going to be available to you so you can be even more cost-competitive versus shipping from Canada.
Cam Battley -- Chief Corporate Officer
The first thing I want to remind you of is what we're talking about right now is the June quarter. We're kind of looking back in time. Think about the fact that as we mentioned before, our production ramped up back end loaded in that quarter, right in June, probably in the last six weeks of the quarter. That's when we had a massive increase in production that allowed us to ship additional product over to Europe.
Obviously, what we want to do, we want to ship more product to Europe. Why not? We get a premium price, not just for our flour, but for our derivative products. We now have the ability to continue to do so. In addition, we also, as mentioned earlier, we have two additional facilities in Canada, one in Ontario, in one in Quebec that we anticipate achieving EUGMP certification. Once again, that will make it easier for us to ship more product to Europe. What was the second part of your question? I think the operator cut him off. Does anybody remember the second part?
Terry Booth -- Chief Executive Officer
We'll get back to him on that.
Operator
Our last question comes from John Chu with Desjardins Capital.
John Chu -- Desjardins Capital Markets -- Analyst
Just a couple quick questions -- so, just on the path to positive EBITDA, obviously, with 2.0 coming online, that will be a higher margin business, but I have to assume that in the early days, it's going to be a drag on margins. So, if it goes according to how you think it's going to go in terms of the rollout, how quickly do you think that business 2.0 can become positive EBITDA. Tied into that, you're increasing your extraction capacity. So, I'm just curious -- how much of a boost can that be to the path toward positive EBITDA?
Glen Ibbott -- Chief Financial Officer
I'll start with that. I guess I dispute your proposition that this would be a drag. Right out of the gate, we're manufacturing commercial scale all of our products right now. Our pricing is set. We believe in sustainable pricing at levels that will produce margins that are higher than our current products. I see no reason why that would be a drag on earnings.
Of course, it's going to be highly dependent on how much the provinces load in and at what point in time they load in. So, in terms of timing, we'll wait and see on that. We've made the investments necessary and have the operating and manufacturing facilities already efficient and relatively optimized so that we are delivering efficiently produced products. So, no, I don't see that as a particular issue for us.
In terms of extraction, we have been ramping up our internal extraction capacity. And we're now at a point where we can extract every bit of material that we need. So, when we look forward, it's not necessarily -- what we've done is removed a constraint we had previously, but it doesn't necessarily inflect our future revenues. It's just part of the puzzle for introducing this new generation of products. That's part of the manufacturing process that exists for us and isn't a constraint anymore. I understand your question, but I think it's part of the generation 2.0 products that are coming out and we're well prepared for those.
Operator
At this time, we have no further question. I will turn the call over to the presenters.
Cam Battley -- Chief Corporate Officer
All right. Well, listen, thank you for everybody who joined this call. Once again, we are very proud of the quarter we delivered. I also want to emphasize one more thing. In addition to the positives we've achieved, it's also fairly significant what didn't happen at Aurora. I'm speaking about some of the tumultuous developments that have occurred in the sector.
At Aurora, we've had no crises, no scandals, no regulatory problems, no changes in senior management, no production problems, and no crop loss. We're going to continue executing with that same discipline that we've demonstrated throughout calendar 2019 and we're going to carry that over into our 2020 fiscal year. Thanks again to everybody.
Terry Booth -- Chief Executive Officer
One final note to everybody -- I'm very, very proud of the team at Aurora. We've crossed over 3,000 employees now across the globe and all of those positives that Cam mentioned is attributable to key teams and team members. Becoming the partner of choice and employer of choice is a very powerful position to be in and I thank all the team for an excellent quarter.
Operator
This concludes today's conference call. You may now disconnect.
Duration: 75 minutes
Call participants:
Cam Battley -- Chief Corporate Officer
Terry Booth -- Chief Executive Officer
Glen Ibbott -- Chief Financial Officer
Michael Singer -- Executive Chairman
Tammy Chen -- BMO Capital Markets -- Analyst
Matt Bottomley -- Canaccord Genuity -- Analyst
Steve Schneiderman -- Cowen and Company -- Analyst
Doug Miehm -- RBC Capital Markets -- Analyst
Brett Hundley -- Seaport Global Securities -- Analyst
Michael Lavery -- Piper Jaffray -- Analyst
Glenn Mattson -- Ladenburg Thalmann -- Analyst
Graeme Kreindler -- Eight Capital -- Analyst
Andrew Carter -- Stifel Nicolaus -- Analyst
John Chu -- Desjardins Capital Markets -- Analyst
More ACB analysis
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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) Q4 2019 Earnings Call September 12, 2019, 9:00 a.m. It was yet another strong quarter for ACB. Duration: 75 minutes Call participants: Cam Battley -- Chief Corporate Officer Terry Booth -- Chief Executive Officer Glen Ibbott -- Chief Financial Officer Michael Singer -- Executive Chairman Tammy Chen -- BMO Capital Markets -- Analyst Matt Bottomley -- Canaccord Genuity -- Analyst Steve Schneiderman -- Cowen and Company -- Analyst Doug Miehm -- RBC Capital Markets -- Analyst Brett Hundley -- Seaport Global Securities -- Analyst Michael Lavery -- Piper Jaffray -- Analyst Glenn Mattson -- Ladenburg Thalmann -- Analyst Graeme Kreindler -- Eight Capital -- Analyst Andrew Carter -- Stifel Nicolaus -- Analyst John Chu -- Desjardins Capital Markets -- Analyst More ACB analysis All earnings call transcripts This article is a transcript of this conference call produced for The Motley Fool. | Duration: 75 minutes Call participants: Cam Battley -- Chief Corporate Officer Terry Booth -- Chief Executive Officer Glen Ibbott -- Chief Financial Officer Michael Singer -- Executive Chairman Tammy Chen -- BMO Capital Markets -- Analyst Matt Bottomley -- Canaccord Genuity -- Analyst Steve Schneiderman -- Cowen and Company -- Analyst Doug Miehm -- RBC Capital Markets -- Analyst Brett Hundley -- Seaport Global Securities -- Analyst Michael Lavery -- Piper Jaffray -- Analyst Glenn Mattson -- Ladenburg Thalmann -- Analyst Graeme Kreindler -- Eight Capital -- Analyst Andrew Carter -- Stifel Nicolaus -- Analyst John Chu -- Desjardins Capital Markets -- 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) Q4 2019 Earnings Call September 12, 2019, 9:00 a.m. It was yet another strong quarter for ACB. | Duration: 75 minutes Call participants: Cam Battley -- Chief Corporate Officer Terry Booth -- Chief Executive Officer Glen Ibbott -- Chief Financial Officer Michael Singer -- Executive Chairman Tammy Chen -- BMO Capital Markets -- Analyst Matt Bottomley -- Canaccord Genuity -- Analyst Steve Schneiderman -- Cowen and Company -- Analyst Doug Miehm -- RBC Capital Markets -- Analyst Brett Hundley -- Seaport Global Securities -- Analyst Michael Lavery -- Piper Jaffray -- Analyst Glenn Mattson -- Ladenburg Thalmann -- Analyst Graeme Kreindler -- Eight Capital -- Analyst Andrew Carter -- Stifel Nicolaus -- Analyst John Chu -- Desjardins Capital Markets -- 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) Q4 2019 Earnings Call September 12, 2019, 9:00 a.m. It was yet another strong quarter for ACB. | Duration: 75 minutes Call participants: Cam Battley -- Chief Corporate Officer Terry Booth -- Chief Executive Officer Glen Ibbott -- Chief Financial Officer Michael Singer -- Executive Chairman Tammy Chen -- BMO Capital Markets -- Analyst Matt Bottomley -- Canaccord Genuity -- Analyst Steve Schneiderman -- Cowen and Company -- Analyst Doug Miehm -- RBC Capital Markets -- Analyst Brett Hundley -- Seaport Global Securities -- Analyst Michael Lavery -- Piper Jaffray -- Analyst Glenn Mattson -- Ladenburg Thalmann -- Analyst Graeme Kreindler -- Eight Capital -- Analyst Andrew Carter -- Stifel Nicolaus -- Analyst John Chu -- Desjardins Capital Markets -- 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) Q4 2019 Earnings Call September 12, 2019, 9:00 a.m. It was yet another strong quarter for ACB. |
38138.0 | 2019-09-13 00:00:00 UTC | 3 Reasons Altria’s Investment in Cronos Group Stock Is Positive for CRON | ACB | https://www.nasdaq.com/articles/3-reasons-altrias-investment-in-cronos-group-stock-is-positive-for-cron-2019-09-13 | nan | nan | Cronos Group (NASDAQ:) stock fell 5.2% on Sept. 9 as a result of investors’ concerns about the cannabis company’s focus on vaping products. Those offerings have come under severe scrutiny in recent weeks, due to the death of six people from lung disease related to their use.
Source: Shutterstock
Cronos isn’t the only cannabis company to have a vested interest in the success of vaping pens, but at the moment, it appears to be the biggest player taking it on the chin as a result of the recent health scare.
If you own CRON stock, now is the time to be thankful that Altria (NYSE:) owns 45% of the cannabis company, with an option to buy an additional 10% in the future.
Here are three reasons why that’s the case.
Altria Understands Lungs Better Than Most
Who would have more knowledge about how our lungs operate than a company whose products are directly responsible for harming them?
Altria would not have made a $12.8 billion investment in Juul Labs or a $1.8 billion investment in CRON stock if it didn’t understand the health risks associated with vaping. MO has been down this road many times with cigarettes.
The fact that President Trump and his administration are trying to crack down on the sale of flavored e-cigarettes, while understandable, isn’t really crucial for CRON stock.
According to the Center for Disease Control and Prevention, Americans die each year due to smoking. That’s a staggering amount. However, we haven’t seen cigarettes outlawed as a result of that sad situation.
In fact, the FDA is currently trying to the sale of menthol cigarettes, but the tobacco companies will continue to fight the agency’s legal efforts for years to come. Flavored e-cigarettes will likely take a long time to ban.
The reality is that Altria understands what’s at stake when it comes to vaping and e-cigarettes. They, along with the rest of the industry, are not going to go quietly into the night.
Remember, the NRA isn’t the only trade group in the U.S. with a powerful .
CRON Stock and a Potential Merger
In recent weeks, Altria’s been negotiating with Philip Morris International (NYSE:), the owners of the Marlboro brand outside the U.S., to reunite after 11 years as separate companies.
Last October, before Altria bought up a big chunk of CRON stock, I suggested that Philip Morris should make a play for one of Canada’s big cannabis companies.
“The tobacco companies were born to manufacture and sell the various by-products of the cannabis plant which includes marijuana and hemp,” I at the time. “The fact that only now are they considering a move — after legalization in Canada — suggests they’ve been irreparably scarred by years of tobacco litigation.”
Cowen & Co. analyst Vivien Azer recently that the crackdown on vaping flavoring might be the nudge CRON and MO needed to officially tie the knot.
After an acquisition, CRON would be controlled by a company with $54.7 billion pf annual revenue and $14.3 billion in free cash flow, providing it with plenty of capital to fight any potential opposition to cannabis vaping in the future.
Altria Has a Beverage Unit
Cronos isn’t the only cannabis company with a big focus on vaping. Aurora Cannabis (NYSE:) is focusing on vape pens and edibles while ignoring cannabis beverages.
I believe that’s a mistake. Perhaps not a lethal one, but a mistake nonetheless. The older people get, the less they want to be messing with their lungs,. That’s why I think cannabis-infused drinks will win in the end.
Altria, although not nearly as involved in the alcoholic beverages industry as it once was, still owns premium wine producer Ste Michelle Wine Estates. In addition, as a result of Anheuser-Busch’s (NYSE:) $100-billion acquisition of SABMiller in 2016, Altria owns 10% of BUD stock.
It’s hard to imagine Budweiser turning down an opportunity to partner with Atria and Cronos to produce cannabis-infused drinks on a global basis.
As long as Altria continues to own a big chunk of Cronos Group stock, I don’t think investors need to overreact to the latest health concerns surrounding vaping.
At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.
The post 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 Cronos isn’t the only cannabis company to have a vested interest in the success of vaping pens, but at the moment, it appears to be the biggest player taking it on the chin as a result of the recent health scare. CRON Stock and a Potential Merger In recent weeks, Altria’s been negotiating with Philip Morris International (NYSE:), the owners of the Marlboro brand outside the U.S., to reunite after 11 years as separate companies. “The fact that only now are they considering a move — after legalization in Canada — suggests they’ve been irreparably scarred by years of tobacco litigation.” Cowen & Co. analyst Vivien Azer recently that the crackdown on vaping flavoring might be the nudge CRON and MO needed to officially tie the knot. | Cronos Group (NASDAQ:) stock fell 5.2% on Sept. 9 as a result of investors’ concerns about the cannabis company’s focus on vaping products. Last October, before Altria bought up a big chunk of CRON stock, I suggested that Philip Morris should make a play for one of Canada’s big cannabis companies. As long as Altria continues to own a big chunk of Cronos Group stock, I don’t think investors need to overreact to the latest health concerns surrounding vaping. | Cronos Group (NASDAQ:) stock fell 5.2% on Sept. 9 as a result of investors’ concerns about the cannabis company’s focus on vaping products. If you own CRON stock, now is the time to be thankful that Altria (NYSE:) owns 45% of the cannabis company, with an option to buy an additional 10% in the future. Altria Has a Beverage Unit Cronos isn’t the only cannabis company with a big focus on vaping. | Cronos Group (NASDAQ:) stock fell 5.2% on Sept. 9 as a result of investors’ concerns about the cannabis company’s focus on vaping products. Those offerings have come under severe scrutiny in recent weeks, due to the death of six people from lung disease related to their use. If you own CRON stock, now is the time to be thankful that Altria (NYSE:) owns 45% of the cannabis company, with an option to buy an additional 10% in the future. |
38139.0 | 2019-09-13 00:00:00 UTC | Aurora Cannabis Stock Share Price Might Still Move Up | ACB | https://www.nasdaq.com/articles/aurora-cannabis-stock-share-price-might-still-move-up-2019-09-13 | nan | nan | On Sep. 11, results from Alberta-based Aurora Cannabis (NYSE:) stock took the center stage in the cannabis space. To the surprise of analysts, ACB stock posted disappointing earnings. Earlier in August, ACB stock has already decreased the forecast. So when Aurora Cannabis stock missed the diminished expectations, investors were not forgiving.
For cannabis investors, ACB stock needs little introduction. At present, Aurora Cannabis is of cannabis, which gives the company certain economies of scale. Especially in its early days, Aurora Cannabis stock was a can’t-miss for investors. Yet since March, it has come off a long way from peak performance.
The ACB stock price is now hovering around $5.90, close to January’s lows in the $5 range. Understandably, investors are wondering what may be next for ACB stock given the recent decline in the price. Let’s look at the company’s fundamentals, industry developments, as well as the stock price.
ACB Stock’s Q4 Results Failed to Impress
When it released Q4 results for the fiscal year ended June 30, Aurora Cannabis stock missed revenue expectations. ACB stock’s net loss came at C$2.26 million on net revenue of C$98.94 million, with an adjusted EBITDA loss of C$11.7 million (or $8.9 million).
Analysts had estimated revenue of C$108 million. In Q4 last year, Aurora stock had reported net income of C$79.9 million, on net revenue of C$19.1 million.
Like many other cannabis producers — such as Canopy Growth (NYSE:) or Tilray (NASDAQ:) — ACB has so far not able to convert the revenue growth into real profits.
ACB stock’s disappointing earnings follow several other poor results from large Canadian cannabis companies. And not everyone is convinced that Canadian recreational pot sales .
Most pot stocks are burning through loads of cash and losing money like there’s no tomorrow. Cash flows are far from predictable. Investors are concerned that the initial hype surrounding the industry could be decreasing further.
It is likely that the rich valuations in this commodity-based consumer market may take a further hit in the coming months. The recent price weakness in most pot stocks including ACB has improved relative valuations, but these stocks aren’t cheap.
Headwinds That May Affect Aurora Cannabis Stock
It is important to remember that weed is an agricultural commodity. In late 2018, during the early weeks following legalization, Canadians spent about $40 million on legal weed. However, since then sales haven’t really held up. Instead the figures have come in much less robust than initially anticipated.
In other words, there are possibly too many players in Canada, a relatively small market. Annual Canadian sales are not likely to exceed $4 billion. In the legal retail market there is an oversupply. And as the largest producer, Aurora Cannabis is likely to have a major supply in its inventory.
On the other hand, the black market is still thriving in Canada. Thus, how can a producer like Aurora Cannabis maintain high margins in an industry that does not have meaningful growth potential?
No one knows when (or if) federal legalization will happen in the U.S. And other international sales outside these two countries are not big enough to act as a substantial catalyst for the share price of ACB as well as other pot stocks.
Could consolidation be a way forward for most of these cannabis producers like Aurora stock?
Could Canadian Legalization 2.0 Help ACB Stock?
In Canada, pot edibles and beverages will become legal on Oct. 17, one year from the original legalization of cannabis in the country. Industry watchers are referring to this new era in Canadian pot markets as “Legalization 2.0.”
New products are not expected to hit shelves till Dec. 16 as license holders will have to give Health Canada 60 days notice if they intend to sell them. Upcoming Canadian regulations what types of consumables can be produced and marketed. For example, manufacturers cannot legally combine pot and alcohol in products.
In some ways, this significant legal development feels like déjà-vu. Many industry watchers regard the legalization of edibles and beverages as another another significant milestone for pot companies. So what does that mean for ACB stock?
Around this time last year, Canadian cannabis stocks had started rallying in anticipation of the nationwide adult-use legalization. For example in mid-August, 2018, Aurora Cannabis stock touched a low of $4.05. By mid-October, ACB stock saw a high of $12.53.
Therefore, the hype surrounding the launch of pot edibles and drinks in Canada is likely to give a bit of fizz to ACB stock in the coming weeks, too. However I don’t expect as big of a jump this September.
In other words, it might become a classic case of “buy the rumor; sell the news.”
The Bottom Line on ACB Stock
In the coming weeks, I expect ACB stock to trade between $5 and $7. From a valuation standpoint, the stock is not necessarily a bargain at $5. However, I expect the second stage of legalization in Canada to give a boost to most pot stocks.
For Aurora stock, $7 level would be likely to act as strong resistance. Only after the stock is able to push through and stay above $7 can Aurora shareholders begin to relax for the longer-term prospects.
The cannabis industry remains speculative at best. Yet there may still be an opportunity for those with a high risk tolerance. Given the new steps in legalization in Canada, this quarter might be an opportune time to start a position ACB stock.
As of this writing, Tezcan Gecgil did not hold a position in any of the aforementioned securities.
The post 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. | No one knows when (or if) federal legalization will happen in the U.S. And other international sales outside these two countries are not big enough to act as a substantial catalyst for the share price of ACB as well as other pot stocks. Therefore, the hype surrounding the launch of pot edibles and drinks in Canada is likely to give a bit of fizz to ACB stock in the coming weeks, too. To the surprise of analysts, ACB stock posted disappointing earnings. | To the surprise of analysts, ACB stock posted disappointing earnings. ACB Stock’s Q4 Results Failed to Impress When it released Q4 results for the fiscal year ended June 30, Aurora Cannabis stock missed revenue expectations. Earlier in August, ACB stock has already decreased the forecast. | ACB Stock’s Q4 Results Failed to Impress When it released Q4 results for the fiscal year ended June 30, Aurora Cannabis stock missed revenue expectations. The recent price weakness in most pot stocks including ACB has improved relative valuations, but these stocks aren’t cheap. In other words, it might become a classic case of “buy the rumor; sell the news.” The Bottom Line on ACB Stock In the coming weeks, I expect ACB stock to trade between $5 and $7. | Could Canadian Legalization 2.0 Help ACB Stock? So what does that mean for ACB stock? To the surprise of analysts, ACB stock posted disappointing earnings. |
38140.0 | 2019-09-13 00:00:00 UTC | Where Is Aurora Cannabis Stock Headed? | ACB | https://www.nasdaq.com/articles/where-is-aurora-cannabis-stock-headed-2019-09-13 | nan | nan | Like many other companies in the cannabis industry, Aurora Cannabis Inc (NYSE:) is facing some challenges. These challenges have caused the price of Aurora Cannabis stock to fall over the past few months. In March, it traded over $10 per share, while ACB stock price is currently below $6.
Aurora just announced its Q4 earnings. Here is a look at the nine Key Performance Indicators that the company likes to focus on. The comparisons below reflect changes from the company’s third quarter to its fourth quarter, which ended on June 30. All of the monetary figures are in Canadian dollars.
Consumer Revenue grew about 53% from $29.6 million to $44.9 million.
Medical Revenue grew almost 10% to $29.6 million from $27 million.
International Revenue increased 12% from $4 million to $4.5 million.
Cash Cost to Produce a Gram dropped an impressive 20% from $1.43 to $1.14.
Average Net Selling Price per Gram fell 17% to $5.32 from $6.40.
Gross Margin on Cannabis Net Revenue increased three percentage points to 58%.
Kilograms Produced grew by 86% to 29,034.
Selling, General, and Administrative costs rose 9% to $72.9 million.
Active Registered Patients increased by 10% from 77,136 to 84,729.
At first glance, these numbers appear to be pretty impressive. Other than SG&A costs growing by a small amount and the drop in the average selling price per gram, the numbers increased considerably.
However, something that wasn’t in the press release announcing the earnings may give more insight into how the company is performing. And that would be its actual earnings.
That’s right. The company’s profits (or, in the case of its 2019 results, its losses) were not mentioned in the earnings release. That has to be a sign that its earnings were not good because if they were, you can bet they would have been highlighted. I found them on the
Its net income for 2019 was a loss of $297,924,000 Canadian dollars. That was a dramatic drop verses the previous year’s income of $69,227,000 CAD. In 2019, ACB reported a loss per share of 29 cents CAD, versus its 2018 EPS of 16 cents CAD. In Q4, its EPS came in at 13 cents, unchanged versus the same period a year earlier.
I suppose that I can’t blame ACB for not wanting people to focus on the fact that the company is losing a lot of money. Obviously, however, you should be aware of this if you own Aurora Cannabis stock or are considering buying shares. At some point, ACB will need to make some significant changes because if it keeps losing money, then ACB stock price will probably keep going down.
What’s next for Aurora Cannabis Stock?
ACB stock has been consolidating over the past few days, since it broke out of its recent downtrend. If Aurora Cannabis stock trends lower, it will probably find some short-term support around the $5.50 level because that is where its most recent low was two weeks ago. If ACB stock rallies, there will most likely be resistance again around the $7 level because that was where it hit resistance in early August. If Aurora Cannabis stock falls, look for support around $5 because that is where its lows were in January and December.
At the time of this writing, Mark Putrino did not hold any positions in any of the aforementioned securities.
The post 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. | I suppose that I can’t blame ACB for not wanting people to focus on the fact that the company is losing a lot of money. In March, it traded over $10 per share, while ACB stock price is currently below $6. In 2019, ACB reported a loss per share of 29 cents CAD, versus its 2018 EPS of 16 cents CAD. | In 2019, ACB reported a loss per share of 29 cents CAD, versus its 2018 EPS of 16 cents CAD. In March, it traded over $10 per share, while ACB stock price is currently below $6. I suppose that I can’t blame ACB for not wanting people to focus on the fact that the company is losing a lot of money. | At some point, ACB will need to make some significant changes because if it keeps losing money, then ACB stock price will probably keep going down. In March, it traded over $10 per share, while ACB stock price is currently below $6. In 2019, ACB reported a loss per share of 29 cents CAD, versus its 2018 EPS of 16 cents CAD. | At some point, ACB will need to make some significant changes because if it keeps losing money, then ACB stock price will probably keep going down. In March, it traded over $10 per share, while ACB stock price is currently below $6. In 2019, ACB reported a loss per share of 29 cents CAD, versus its 2018 EPS of 16 cents CAD. |
38141.0 | 2019-09-13 00:00:00 UTC | Aurora Cannabis Missed Its Own Sales Guidance... From 5 Weeks Ago | ACB | https://www.nasdaq.com/articles/aurora-cannabis-missed-its-own-sales-guidance...-from-5-weeks-ago-2019-09-13 | nan | nan | We may be in the traditional lull for earnings reports, but news never sleeps when it comes to the cannabis industry.
On Wednesday, Sept. 11, after the closing bell, the second-largest marijuana stock in the world by market cap, the industry's largest producer, and easily the most popular stock among millennial investors, Aurora Cannabis (NYSE: ACB) released its highly anticipated fourth-quarter and full-year operating results.
Image source: Getty Images.
No joke: Aurora Cannabis missed its own recently issued guidance
To many investors, the headline figures for this quarterly report looked like nothing more than a formality, with a number of other underlying numbers expected to take precedence. That's because, five weeks ago on Aug. 6, Aurora Cannabis provided an update on its fourth-quarter operating results.
Included in that update was (unaudited) guidance to expect 100 million Canadian dollars (CA$100 million) to CA$107 million in fourth-quarter net revenue after accounting for net excise taxes paid. The company also guided for CA$90 million to CA$95 million in cannabis revenue and upped its quarterly production from a previous forecast of 25,000 kilos to a fresh range of 25,000 kilos to 30,000 kilos. Lastly, the company suggested that it was continuing to "track toward positive adjusted EBITDA [earnings before interest, taxes, depreciation, and amortization]."
Put a bow on it and it's ready to serve, right? Well, not exactly.
When Aurora reported its fiscal fourth-quarter results on Wednesday, a few things were... amiss. For starters, even though the company's adjusted EBITDA headed in the right direction -- negative CA$11.7 million in Q4 2019, vs. negative CA$36.6 million in Q3 2019 -- this isn't exactly "on track toward positive adjusted EBITDA." Aurora has made it seem for months that the company would be turning the corner to recurring positive adjusted EBITDA by the fourth quarter, and that simply wasn't the case.
More egregious, though, was the fact that Aurora Cannabis only generated CA$98.9 million in net revenue. That's right. Despite providing quarterly guidance just five weeks earlier, Aurora Cannabis missed its own range by more than CA$1 million. It also missed Wall Street's consensus revenue figure by more than CA$9 million.
Image source: Getty Images.
Three things to like about Aurora's Q4 results
Putting aside the ridiculousness of Aurora whiffing on its own recently issued guidance, the quarter wasn't a complete mess. Despite my criticism of the company, three figures stand out as being particularly impressive.
First, how about Aurora's 3 percentage-point increase in gross margin before fair-value adjustments on biological assets from the sequential quarter? The company's 58% gross margin is exactly what investors need to see when peers like Canopy Growth are producing an eye-poppingly bad gross margin of 15%, as it did during its fiscal first quarter.
Mind you, this increase in gross margin was generated despite a considerable uptick in lower margin bulk wholesale sales. It's pretty evident that Aurora is doing a pretty good job of reducing its production costs and pushing higher-margin products when it can.
Secondly, the company's 29,034 kilos produced in the fourth quarter was near the high-end of its own guidance and equaled more than the company produced in the three previous quarters combined. Having Aurora Sky and both of MedReleaf's smaller facilities (now known as Aurora River and Aurora Ridge) fully operational has allowed Aurora Cannabis to maintain its production lead. Still producing at an annual run rate of more than 150,000 kilos, the company has previously guided for an increase in annual run-rate output to at least 625,000 kilos by the end of its fiscal year (June 30, 2020).
Thirdly, the company's SEDAR filing in Canada shows that Aurora ended the quarter with about 1.017 billion shares outstanding. Although the company has crushed investors with dilutive activity in the past, this is the first quarter in a long while where Aurora really didn't issue that many new shares. Now, this doesn't mean Aurora is done aggressively expanding. However, it might make the company more attractive for long-term-oriented investors.
Image source: Getty Images.
Three things that should seriously worry investors
Then again, there's another side to this story.
Maybe the most damning thing in Aurora Cannabis' report, other than its egregious guidance miss, was the following commentary taken from the EBITDA section of the company's press release:
In Q4 2019, adjusted EBITDA loss improved 68% to [CA]$11.7 million from [CA]$36.6 million in the prior quarter. Developing a profitable and robust global cannabis company is extremely important to Aurora. In fiscal 2019, Aurora was focused on excellence in execution, and the Company's KPIs [key performance indicators] show its success in this regard. Furthermore, Aurora has addressed previously identified production bottlenecks and continues to see strong sell-through of the Company's products at the retail level. However, the Canadian consumer channel continues to experience challenges at the retail level in key markets and resolution of this issue is beyond the Company's control. Aurora is working closely with all our regulatory and channel partners to streamline distribution as the Company continues to track toward positive adjusted EBITDA on a consolidated basis.
Note that part about consumer channel supply issues being out of Aurora's control? That's really bad news. It appeared at first that Aurora's August sales guidance meant that changes implemented by Health Canada to expedite licensing and marijuana sales were resolving the supply bottleneck. However, this commentary implies that the existing supply-chain issues aren't going away anytime soon. This is especially sour news considering the upcoming launch of derivative products in three months, which are liable to face the same supply issues as dried flower.
Investors should also be notably disappointed with the company's CA$4.5 million in fourth-quarter dried cannabis sales to the European Union. That's up a meager 12% from the sequential third quarter.
Even though domestic production is bound to take precedence, no marijuana grower has a larger international presence than Aurora. This is a company whose future depends on its success in reaching overseas markets. To see Aurora boost overseas sales by such a small amount, especially with production in the fourth-quarter soaring, is extremely disappointing.
Image source: Getty Images.
A final figure that should worry investors is Aurora's goodwill. Goodwill represents the amount of premium a company paid above and beyond tangible assets when making an acquisition.
Over the past three years, Aurora has made more than a dozen acquisitions and built up a large amount of goodwill on its balance sheet in the process. Even though the amount of goodwill on its balance sheet declined fractionally to CA$3.17 billion from the sequential third quarter, a larger decline was seen in the company's total assets. Long story short, the company's goodwill as a percentage of total assets ticked up 1 percentage point to 58%. That's a lot of goodwill to be lugging around, which in my opinion makes Aurora a likely candidate for substantial writedowns in the future.
There's no doubt that Aurora did some things right in the fiscal fourth quarter. Nevertheless, it remains a very pricey -- and therefore avoidable -- pot stock.
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 – 10 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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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. | On Wednesday, Sept. 11, after the closing bell, the second-largest marijuana stock in the world by market cap, the industry's largest producer, and easily the most popular stock among millennial investors, Aurora Cannabis (NYSE: ACB) released its highly anticipated fourth-quarter and full-year operating results. Aurora has made it seem for months that the company would be turning the corner to recurring positive adjusted EBITDA by the fourth quarter, and that simply wasn't the case. Aurora is working closely with all our regulatory and channel partners to streamline distribution as the Company continues to track toward positive adjusted EBITDA on a consolidated basis. | On Wednesday, Sept. 11, after the closing bell, the second-largest marijuana stock in the world by market cap, the industry's largest producer, and easily the most popular stock among millennial investors, Aurora Cannabis (NYSE: ACB) released its highly anticipated fourth-quarter and full-year operating results. Included in that update was (unaudited) guidance to expect 100 million Canadian dollars (CA$100 million) to CA$107 million in fourth-quarter net revenue after accounting for net excise taxes paid. The company also guided for CA$90 million to CA$95 million in cannabis revenue and upped its quarterly production from a previous forecast of 25,000 kilos to a fresh range of 25,000 kilos to 30,000 kilos. | On Wednesday, Sept. 11, after the closing bell, the second-largest marijuana stock in the world by market cap, the industry's largest producer, and easily the most popular stock among millennial investors, Aurora Cannabis (NYSE: ACB) released its highly anticipated fourth-quarter and full-year operating results. The company also guided for CA$90 million to CA$95 million in cannabis revenue and upped its quarterly production from a previous forecast of 25,000 kilos to a fresh range of 25,000 kilos to 30,000 kilos. Having Aurora Sky and both of MedReleaf's smaller facilities (now known as Aurora River and Aurora Ridge) fully operational has allowed Aurora Cannabis to maintain its production lead. | On Wednesday, Sept. 11, after the closing bell, the second-largest marijuana stock in the world by market cap, the industry's largest producer, and easily the most popular stock among millennial investors, Aurora Cannabis (NYSE: ACB) released its highly anticipated fourth-quarter and full-year operating results. Three things to like about Aurora's Q4 results Putting aside the ridiculousness of Aurora whiffing on its own recently issued guidance, the quarter wasn't a complete mess. Maybe the most damning thing in Aurora Cannabis' report, other than its egregious guidance miss, was the following commentary taken from the EBITDA section of the company's press release: In Q4 2019, adjusted EBITDA loss improved 68% to [CA]$11.7 million from [CA]$36.6 million in the prior quarter. |
38142.0 | 2019-09-13 00:00:00 UTC | Here’s Why Aurora Cannabis Stock Stumbled | ACB | https://www.nasdaq.com/articles/heres-why-aurora-cannabis-stock-stumbled-2019-09-13 | nan | nan | Among investment sectors, few have incurred the kind of volatility as legal marijuana. Major Canadian cannabis players like Tilray (NASDAQ:), Canopy Growth (NYSE:) and Cronos (NASDAQ:) forwarded disappointing earnings reports. Thus, with Aurora Cannabis (NYSE:) set to launch its fiscal fourth-quarter results, many had hopeful eyes on Aurora Cannabis stock.
Source: Shutterstock
Unfortunately, those expectations were badly misplaced. Aurora disclosed its Q4 numbers after Wednesday’s close, and Wall Street did not react kindly. On the top line, the medical-cannabis specialist rang up $98.9 million CAD, which represented a 52% lift from the prior quarter. However, Aurora Q4 sales to come in between $100 million CAD to $107 million CAD. As a result of the revenue miss, the ACB stock price tanked in after-hours trading.
After a night’s rest to digest the news, the Street immediately hit the “sell” button. Due to the mini-panic, Aurora Cannabis stock closed Sept. 12 below the $6 level. From a technical perspective, this was an unfortunate development. ACB stock was finally looking interesting since the beginning of this month. Now, questions have sprouted about this once-vaunted cannabis player.
Another factor that has raised concerns among investors is Aurora’s international business. One of the biggest investment arguments for Aurora Cannabis stock is its international footprint, the biggest in the sector. However, most of the company’s financial performance comes from its local Canadian market.
But in Europe, for example, the company generated $4.5 million CAD in medical-cannabis sales. That’s up 12%, a very modest rate compared to its Canadian growth rate. With management continuing to make , can ACB stock survive?
Aurora Cannabis Stock Tanked for Understandable Reasons
Heading into the Q4 earnings report, the ACB stock price had robust technical momentum. At the same time, on a fundamental basis, the organization was going up against a wall of pressure.
Primarily, every other major cannabis player had failed to impress the Street. Unlike in late 2017, Aurora Cannabis stock and its ilk did not benefit from the honeymoon effect. Cannabis investments no longer moved on compelling narratives, such as Canada . Instead, prospective buyers were placing extra attention on the “boring” stuff, like fiscal sustainability.
That created a major problem. Let me be blunt: There are two reasons why mainstream financial institutions take a pass on cannabis-related businesses. First, legal uncertainties — and political controversies — surround the sector. Second, the financials for most of these names are rough.
And that’s been the story for Aurora Cannabis stock and its peers throughout this year. Undoubtedly, Aurora and the rest of the marijuana market offer tremendous potential in their narratives. For example, if the U.S. legalizes marijuana, it changes the calculus for ACB stock.
But before the narrative comes the reality. While Aurora’s revenue growth has been impressive on a mathematical scale, so has its debt load. Sure, companies like Aurora have healthy cash balances, in part due to strategic partnerships. Yet the concern is this: Aurora cannot keep spending without turning at least some of its narrative potential into hard results.
Ultimately, I think that’s why the Street was so disappointed. The cannabis market has stepped out of the honeymoon phase and into the “show me” phase. In other words, investors are tired of hearing bedtime stories. Instead, they want some evidence that these tales are based on facts.
If you looked at the Q4 results, you really didn’t get that impression from Aurora Cannabis stock.
Should You Dump ACB Stock?
Part of being a good investor is knowing when to give up. Unlike sports, there’s no such thing as a moral victory in the markets. Either you’re making money or you’re not.
Under this framework, Aurora Cannabis stock looks like a candidate to sell. And I don’t blame you if you decide to go that route.
That said, here’s the plain truth about ACB stock: No matter what anybody says about the financials, the play here has always been the narrative. When companies in established industries show the kind of quarterly results that Aurora does, you should jettison immediately — we know approximately the upper boundaries of traditional industries.
But we really don’t know anything about marijuana. Maybe the segment peaked in Ottawa, and everybody else doesn’t know it yet. Or, the U.S. and other regions will start opening the legalization door.
Clearly, Aurora Cannabis is banking aggressively on this latter possibility. Whether you believe in the same will determine how you approach ACB stock.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.
The post 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. | As a result of the revenue miss, the ACB stock price tanked in after-hours trading. ACB stock was finally looking interesting since the beginning of this month. With management continuing to make , can ACB stock survive? | Aurora Cannabis Stock Tanked for Understandable Reasons Heading into the Q4 earnings report, the ACB stock price had robust technical momentum. As a result of the revenue miss, the ACB stock price tanked in after-hours trading. ACB stock was finally looking interesting since the beginning of this month. | Aurora Cannabis Stock Tanked for Understandable Reasons Heading into the Q4 earnings report, the ACB stock price had robust technical momentum. As a result of the revenue miss, the ACB stock price tanked in after-hours trading. ACB stock was finally looking interesting since the beginning of this month. | For example, if the U.S. legalizes marijuana, it changes the calculus for ACB stock. As a result of the revenue miss, the ACB stock price tanked in after-hours trading. ACB stock was finally looking interesting since the beginning of this month. |
38143.0 | 2019-09-12 00:00:00 UTC | Aurora Cannabis (ACB) Stock: The Real Story With This Earnings Report | ACB | https://www.nasdaq.com/articles/aurora-cannabis-acb-stock%3A-the-real-story-with-this-earnings-report-2019-09-12 | nan | nan | Just a few giants still dominate the emerging cannabis industry, so it’s always news when one reports earnings. Number two by market cap is Aurora Cannabis (NYSE:) stock, which dropped roughly 9.5% today on last night’s quarterly results. But there’s a lot more to this story behind the headlines – and a major upside catalyst on the horizon. So let’s take a look.
The sell-off tells me that investors reacted to analyst expectations and not reality. Wall Street had been looking for roughly 103 million Canadian dollars in revenues, and Aurora turned in C$98.9 million.
Now, first of all, only a handful of analysts follow ACB stock at this point, so it’s hard to extrapolate anything meaningful from that. Today had nearly 25 million shares changing hands based on, like, five guys’ opinions.
Secondly, keep in mind that Aurora’s revenues are growing faster than you’ll see with almost any other industry.
Specifically, in this latest quarter (fiscal Q4 2019), Aurora’s C$98.9 million was a 52% increase from fiscal Q3 2019 revenues of C$65.1 million. When you look at the year-ago quarter, that’s a 72% increase (from C$55.2 million). And when you look at the same quarter two years ago, that’s a 447% increase (from C$18.1 million).
And then you’ve got to look at future projections. In the chart below you see that the trend is still strong. For 2020, we’re looking at potentially $521 million in annual revenues – more than double where we are now. And by 2022, Aurora Cannabis is projected to be a $1.7 billion company by revenue. That’s just three years from now. (And that’s U.S. dollars, not Canadian.)
Source: YCharts
So for Aurora to miss by C$4 million … that’s a drop in the bucket. Especially when you look at the bigger trend.
Now, I mention this not to prove my commitment to ACB stock or really any particular cannabis company. I mention it to illustrate that the sellers today are falling into a trap that we at avoid:
…namely, getting caught up in short-term thinking for what should be a long-term play.
And the sellers are about to miss out on what could be a major bullish event.
Get Ready for “Legalization 2.0”
Now is a particularly bad time to be selling Canadian pot stocks. Because “Legalization 2.0” is about to hit.
Next month, on October 17, companies can apply for a license from Health Canada to sell cannabis edibles, beverages, and vaping products, as well as extracts and topicals. Then, 60 days later – in December – these products will actually hit the store shelves.
A year into full legalization, Canada has over 200 licensed growers and sellers of the marijuana flower – for a country of less than 40 million people. If the cannabis giants want to stay dominant, there’s a big opportunity among edibles and vapes in particular. These products have higher profit margins than the flower – as high as 92%. What’s more, they open the doors to a deeper pool of customers… including folks more likely to use cannabis if they can do so more discreetly, without the smoke.
And this is clearly on executives’ minds. Aurora Cannabis already warned in May that it would be building up inventory, preparing to release edibles, vapes, and concentrates – and that, in fact, this buildup may hold back revenues a bit for this latest quarter.
Aurora’s strategy here is telling. The company has made it pretty clear that this specific product line-up takes the “U.S. consumer” into account. And when you look at the numbers, it’s obvious why.
Canada is Just The Beginning
The California marijuana market alone is bigger than all of Canada… and it’s growing. If and when U.S. legalization occurs, the United States will immediately become the largest market in the world. In fact, it will be bigger than the rest of the world combined.
I expect federal legalization – and again, you need to be invested well BEFORE a big catalyst hits.
And aside from legalization nationwide, U.S. stocks are already the best buying opportunity in marijuana.
At , we were able to ride Canadian stocks like Canopy Growth (NYSE:) much of the way higher, which I’m quite proud of. But a lot of attractive U.S. stocks are both undervalued and still in “penny stock” territory.
Penny stocks often get a bad rap. But they are actually critical to the global marketplace. The world NEEDS tiny companies — just as much as bigger ones. They’re the job creators. The innovators.
You just want to be VERY choosy about which ones you buy.
I use strict guidelines to pick penny stocks — and I tell you all about them in .
You’ll see my five-step evaluation process for early investments, including in the marijuana market. Then you’ll see how to get a free copy of America’s Top 4 Marijuana Moonshot Stocks… I’ll even give you a fifth bonus name just for fun.
Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. The power of being “first” gave Matt’s readers the chance to bank +2,438% in Stamps.com (STMP), +1,523% in Ulta Beauty (ULTA) and +1,044% in Tesla (TSLA), just to name a few. .
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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. | Now, first of all, only a handful of analysts follow ACB stock at this point, so it’s hard to extrapolate anything meaningful from that. Now, I mention this not to prove my commitment to ACB stock or really any particular cannabis company. Number two by market cap is Aurora Cannabis (NYSE:) stock, which dropped roughly 9.5% today on last night’s quarterly results. | Now, first of all, only a handful of analysts follow ACB stock at this point, so it’s hard to extrapolate anything meaningful from that. Now, I mention this not to prove my commitment to ACB stock or really any particular cannabis company. Number two by market cap is Aurora Cannabis (NYSE:) stock, which dropped roughly 9.5% today on last night’s quarterly results. | Now, first of all, only a handful of analysts follow ACB stock at this point, so it’s hard to extrapolate anything meaningful from that. Now, I mention this not to prove my commitment to ACB stock or really any particular cannabis company. Number two by market cap is Aurora Cannabis (NYSE:) stock, which dropped roughly 9.5% today on last night’s quarterly results. | Now, first of all, only a handful of analysts follow ACB stock at this point, so it’s hard to extrapolate anything meaningful from that. Now, I mention this not to prove my commitment to ACB stock or really any particular cannabis company. Wall Street had been looking for roughly 103 million Canadian dollars in revenues, and Aurora turned in C$98.9 million. |
38144.0 | 2019-09-12 00:00:00 UTC | Stock Market Today: Should Investors Expect More Quantitative Easing? | ACB | https://www.nasdaq.com/articles/stock-market-today%3A-should-investors-expect-more-quantitative-easing-2019-09-12 | nan | nan | The SPDR S&P 500 (NYSEARCA:) hit new all-time highs on Thursday. Who would have predicted that for thestock market today
Not many were looking for such a robust rally to take place over the past few trading sessions. But InvestorPlace readers were ready. They knew that the stock market was trading in a well-defined range throughout the month of August and they knew when that .
Once resistance gave way and we saw follow through from the bulls, that’s when it was clear new highs were possible. : “Above resistance could send the S&P 500 back to 3,000, while a move below support likely brings up a test of the 200-day moving average.”
So what’s causing this rally anyway? Markets liked the de-escalating tone between China and the U.S., even though there some reports say the trade war will not likely be resolved any time soon.
More Quantitative Easing, Please?
For those looking for more quantitative easing from the Federal Reserve, don’t hold your breath. The Fed is scheduled to make its next week on Wednesday, Sept. 18. As it currently stands, the Fed Funds Rate is pricing in an 88.8% probability of a 25 basis point cut next week. The other 11.2% probability has the Fed keeping rates unchanged.
Put simply, the U.S. is not in the economic position — either with low growth or negative interest rates — to warrant more stimulus. .
The European Central Bank announced a 10-basis-point cut in its deposit rate to -0.5%, in-line with expectations. The ECB also announced that it will restart its QE program to the tune of $20 billion per month beginning Nov. 1. While ECB president Mario Draghi says there’s only a low chance chance of an E.U. recession, those odds have increased.
QE should be a boost, but it’s concerning that it’s needed after a near-decade of various policies.
Movers in the Stock Market Today
It was an exciting day in thestock market today if not just because equities are flirting with their all-time highs. However, not all assets are moving favorably.
While gold prices — and the SPDR Gold Shares (NYSEARCA:) — closed higher on the day, GLD finished well off its morning highs. The can be said for bonds too, via the iShares 20+ Year Treasury Bond ETF (NASDAQ:). The fall in bonds helped pave the way for bank stocks to continue their rally on Thursday, even as they approach resistance.
The took a closer look at the bank stocks earlier today.
What else was moving?
Aurora Cannabis (NYSE:) fell roughly 10% and hovered near its session lows in thestock market today The decline came after the company reported its quarterly results, missing revenue expectations and showing margin pressure. The woes of the cannabis space continue.
Shares of General Electric (NYSE:) fell 1.2%, but Baker Hughes (NYSE:) was making waves after the former became a seller of the latter.
BHGE opened notably lower on the day and fell to $21.36. However, it finished higher by 1.5% at $22.63 despite GE from 50.3% to roughly 39.5% as it looks to raise capital.
The IPO market remains a mixed bag, with the latest shake-up coming from SmileDirectClub (NASDAQ:). Shares priced at $23, above the $19-$22 range. But that didn’t please investors, as shares tumbled 27.5% in their debut. Ouch.
Heard on the Street
Shares of Activision Blizzard (NASDAQ:) got off to a hot start in thestock market today However, the stock only managed to climb 1% by the time the market closed. That’s despite Nomura analysts upgrading the stock to “buy” and raising their price target from $49 all the way to $64. The target implies more than 16% upside from Wednesday’s closing price.
Wells Fargo analysts are ringing the bell on Caterpillar (NYSE:) and Deere (NYSE:). They downgraded both stocks from “outperform” to “market perform,” assigning price targets of $170 and $143, respectively.
Bret Kenwell is the manager and author of and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities.
The post 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. | Put simply, the U.S. is not in the economic position — either with low growth or negative interest rates — to warrant more stimulus. The fall in bonds helped pave the way for bank stocks to continue their rally on Thursday, even as they approach resistance. Aurora Cannabis (NYSE:) fell roughly 10% and hovered near its session lows in thestock market today The decline came after the company reported its quarterly results, missing revenue expectations and showing margin pressure. | Movers in the Stock Market Today It was an exciting day in thestock market today if not just because equities are flirting with their all-time highs. While gold prices — and the SPDR Gold Shares (NYSEARCA:) — closed higher on the day, GLD finished well off its morning highs. Aurora Cannabis (NYSE:) fell roughly 10% and hovered near its session lows in thestock market today The decline came after the company reported its quarterly results, missing revenue expectations and showing margin pressure. | Movers in the Stock Market Today It was an exciting day in thestock market today if not just because equities are flirting with their all-time highs. Aurora Cannabis (NYSE:) fell roughly 10% and hovered near its session lows in thestock market today The decline came after the company reported its quarterly results, missing revenue expectations and showing margin pressure. Heard on the Street Shares of Activision Blizzard (NASDAQ:) got off to a hot start in thestock market today However, the stock only managed to climb 1% by the time the market closed. | Movers in the Stock Market Today It was an exciting day in thestock market today if not just because equities are flirting with their all-time highs. The fall in bonds helped pave the way for bank stocks to continue their rally on Thursday, even as they approach resistance. Shares priced at $23, above the $19-$22 range. |
38145.0 | 2019-09-12 00:00:00 UTC | Health Care Sector Update for 09/12/2019: VXRT,PDLI,ACB,CPRX | ACB | https://www.nasdaq.com/articles/health-care-sector-update-for-09-12-2019%3A-vxrtpdliacbcprx-2019-09-12 | nan | nan | Top Health Care Stocks
JNJ -0.47%
PFE -0.07%
ABT +1.22%
MRK +0.80%
AMGN -0.62%
Health care stocks were hanging on to narrow gains late in Thursday trading, with the NYSE Health Care Index climbing nearly 0.2% while the shares of health care companies in the S&P 500 also were up more than 0.1% as a group. The Nasdaq Biotechnology index was falling nearly 0.4%.
Among health care stocks moving on news:
(-) Vaxart (VXRT) declined nearly 14% after the specialty drugmaker disclosed plans to raise up to $11.5 million through the sale of shares and warrants. Net proceeds will be used to fund preclinical and clinical development of its product candidates, including studies of its bivalent norovirus vaccine and its HPV vaccine candidate.
In other sector news:
(+) PDL BioPharma (PDLI) climbed nearly 1% after a New York state court late Wednesday ruled that $44.1 million in loan guarantees owed by Wellstat Diagnostics were enforceable and ordered an inquest to determine how much is owed PDL.
(-) Aurora Cannabis (ACB) dropped 9.5% after reporting a 52% increase in fiscal Q4 revenue over year-ago levels to CAD98.9 million but still missing its own forecast expecting between CAD100 million to CAD107 million for the June quarter.
(-) Catalyst Pharmaceuticals (CPRX) slid 17% after late Wednesday disclosing plans to sell 8 million shares of stock to support commercialization of its Firdapse muscle disease medication in the US and Japan.
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) dropped 9.5% after reporting a 52% increase in fiscal Q4 revenue over year-ago levels to CAD98.9 million but still missing its own forecast expecting between CAD100 million to CAD107 million for the June quarter. Among health care stocks moving on news: (-) Vaxart (VXRT) declined nearly 14% after the specialty drugmaker disclosed plans to raise up to $11.5 million through the sale of shares and warrants. In other sector news: (+) PDL BioPharma (PDLI) climbed nearly 1% after a New York state court late Wednesday ruled that $44.1 million in loan guarantees owed by Wellstat Diagnostics were enforceable and ordered an inquest to determine how much is owed PDL. | (-) Aurora Cannabis (ACB) dropped 9.5% after reporting a 52% increase in fiscal Q4 revenue over year-ago levels to CAD98.9 million but still missing its own forecast expecting between CAD100 million to CAD107 million for the June quarter. Top Health Care Stocks Health care stocks were hanging on to narrow gains late in Thursday trading, with the NYSE Health Care Index climbing nearly 0.2% while the shares of health care companies in the S&P 500 also were up more than 0.1% as a group. | (-) Aurora Cannabis (ACB) dropped 9.5% after reporting a 52% increase in fiscal Q4 revenue over year-ago levels to CAD98.9 million but still missing its own forecast expecting between CAD100 million to CAD107 million for the June quarter. Health care stocks were hanging on to narrow gains late in Thursday trading, with the NYSE Health Care Index climbing nearly 0.2% while the shares of health care companies in the S&P 500 also were up more than 0.1% as a group. Among health care stocks moving on news: (-) Vaxart (VXRT) declined nearly 14% after the specialty drugmaker disclosed plans to raise up to $11.5 million through the sale of shares and warrants. | (-) Aurora Cannabis (ACB) dropped 9.5% after reporting a 52% increase in fiscal Q4 revenue over year-ago levels to CAD98.9 million but still missing its own forecast expecting between CAD100 million to CAD107 million for the June quarter. The Nasdaq Biotechnology index was falling nearly 0.4%. Among health care stocks moving on news: (-) Vaxart (VXRT) declined nearly 14% after the specialty drugmaker disclosed plans to raise up to $11.5 million through the sale of shares and warrants. |
38146.0 | 2019-09-12 00:00:00 UTC | Stock Market News Today: Sept. 12, 2019 | ACB | https://www.nasdaq.com/articles/stock-market-news-today%3A-sept.-12-2019-2019-09-12 | nan | nan | The stock market had logged a solid rally by Thursday afternoon as trade tensions eased. The U.S. postponed the implementation of 5% extra tariffs on certain Chinese goods by two weeks, while China is considering increasing imports of American farm goods.
Data source: Yahoo! Finance.
Weak earnings reports from menswear retailer Tailored Brands (NYSE: TLRD) and cannabis producer Aurora Cannabis (NYSE: ACB) prevented those stocks from participating in the rally. Here's what happened.
Tailored Brands drops a bombshell
Shares of menswear retailer Tailored Brands fell off a cliff Thursday, down 27.8% by 1:45 p.m. EDT. The company behind Men's Wearhouse and Jos. A. Bank provided abysmal guidance for the third quarter, and it announced that it was suspending its dividend to focus on debt repayment and share buybacks.
Tailored Brands' second-quarter results weren't great. Sales were down 4.1%, with comparable sales down across all its brands. The core Men's Wearhouse brand was the weakest link, with comps down 4.3%. Non-GAAP (adjusted) earnings per share came in at $0.82, down from $1.07 in the prior-year period.
Image source: Tailored Brands.
The third quarter will be even worse for the retailer. Tailored Brands expects to produce adjusted EPS between $0.40 and $0.45, down from $1.01 in the prior-year period. Comparable sales will be down again, with the company expecting a 3% to 5% decline for Men's Wearhouse, and a 2% to 4% decline for Jos. A. Bank.
Beginning in the fourth quarter, Tailored Brands will no longer pay its regular quarterly dividend. That will save the company $36.5 million annually, which it will use to pay down debt and buy back shares. Tailored Brands currently has about $1.15 billion of long-term debt, so this will barely make a dent.
If there's one kind of company that the market does not like right now, on the potential eve of a recession, it's a not-trendy retailer with tumbling sales and crashing profits.
A tough quarter for Aurora Cannabis
Canadian cannabis producer Aurora Cannabis didn't live up to expectations with its fiscal fourth-quarter report. Revenue grew 52% year over year to $98.9 million in Canadian dollars, but that was more than CA$4.5 million below the average analyst estimate. It was also below the company's guidance, issued in August, calling for revenue between CA$100 million and CA$107 million. The stock was down 9.6% at 1:45 p.m. EDT.
Aurora isn't even in the ballpark of being profitable, but that was expected. Adjusted EBITDA was a loss of $11.7 million, a big improvement over the third quarter, but negative nonetheless. "Developing a profitable and robust global cannabis company is extremely important to Aurora," reads the company's earnings release. It's not there yet.
Looking forward, Aurora expects its sales volumes and revenues to be volatile as it launches new products in December. It sees adjusted EBITDA improving in the future, driven by higher revenue, a rising gross margin, and keeping costs in check.
With Aurora valued at roughly $6 billion, this is certainly a risky stock.
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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. | Weak earnings reports from menswear retailer Tailored Brands (NYSE: TLRD) and cannabis producer Aurora Cannabis (NYSE: ACB) prevented those stocks from participating in the rally. Bank provided abysmal guidance for the third quarter, and it announced that it was suspending its dividend to focus on debt repayment and share buybacks. If there's one kind of company that the market does not like right now, on the potential eve of a recession, it's a not-trendy retailer with tumbling sales and crashing profits. | Weak earnings reports from menswear retailer Tailored Brands (NYSE: TLRD) and cannabis producer Aurora Cannabis (NYSE: ACB) prevented those stocks from participating in the rally. Tailored Brands drops a bombshell Shares of menswear retailer Tailored Brands fell off a cliff Thursday, down 27.8% by 1:45 p.m. EDT. A tough quarter for Aurora Cannabis Canadian cannabis producer Aurora Cannabis didn't live up to expectations with its fiscal fourth-quarter report. | Weak earnings reports from menswear retailer Tailored Brands (NYSE: TLRD) and cannabis producer Aurora Cannabis (NYSE: ACB) prevented those stocks from participating in the rally. Tailored Brands drops a bombshell Shares of menswear retailer Tailored Brands fell off a cliff Thursday, down 27.8% by 1:45 p.m. EDT. 10 stocks we like better than Tailored Brands Inc When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. | Weak earnings reports from menswear retailer Tailored Brands (NYSE: TLRD) and cannabis producer Aurora Cannabis (NYSE: ACB) prevented those stocks from participating in the rally. Tailored Brands drops a bombshell Shares of menswear retailer Tailored Brands fell off a cliff Thursday, down 27.8% by 1:45 p.m. EDT. Image source: Tailored Brands. |
38147.0 | 2019-09-12 00:00:00 UTC | Health Care Sector Update for 09/12/2019: ACB,PDLI,CPRX | ACB | https://www.nasdaq.com/articles/health-care-sector-update-for-09-12-2019%3A-acbpdlicprx-2019-09-12 | nan | nan | Top Health Care Stocks
JNJ -0.74%
PFE +0.44%
ABT +0.98%
MRK +1.22%
AMGN -0.20%
Health care stocks were posting moderate gains, including a nearly 0.4% advance for the NYSE Health Care Index in recent trade while the shares of health care companies in the S&P 500 also were up slightly more than 0.4% as a group. The Nasdaq Biotechnology index was falling 0.4%.
Among health care stocks moving on news:
(-) Aurora Cannabis (ACB) dropped 9.5% after reporting a 52% increase in fiscal Q4 revenue over year-ago levels to CAD98.9 million but still missing its own forecast expecting between CAD100 million to CAD107 million for the June quarter.
In other sector news:
(+) PDL BioPharma (PDLI) climbed more than 1% after a New York state court late Wednesday ruled that $44.1 million in loan guarantees owed by Wellstat Diagnostics were enforceable and ordered an inquest to determine how much is owed PDL.
(-) Catalyst Pharmaceuticals (CPRX) slid 17% after late Wednesday disclosing plans to sell 8 million shares of stock to support commercialization of its Firdapse muscle disease medication in the US and Japan.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Among health care stocks moving on news: (-) Aurora Cannabis (ACB) dropped 9.5% after reporting a 52% increase in fiscal Q4 revenue over year-ago levels to CAD98.9 million but still missing its own forecast expecting between CAD100 million to CAD107 million for the June quarter. In other sector news: (+) PDL BioPharma (PDLI) climbed more than 1% after a New York state court late Wednesday ruled that $44.1 million in loan guarantees owed by Wellstat Diagnostics were enforceable and ordered an inquest to determine how much is owed PDL. (-) Catalyst Pharmaceuticals (CPRX) slid 17% after late Wednesday disclosing plans to sell 8 million shares of stock to support commercialization of its Firdapse muscle disease medication in the US and Japan. | Among health care stocks moving on news: (-) Aurora Cannabis (ACB) dropped 9.5% after reporting a 52% increase in fiscal Q4 revenue over year-ago levels to CAD98.9 million but still missing its own forecast expecting between CAD100 million to CAD107 million for the June quarter. Top Health Care Stocks Health care stocks were posting moderate gains, including a nearly 0.4% advance for the NYSE Health Care Index in recent trade while the shares of health care companies in the S&P 500 also were up slightly more than 0.4% as a group. | Among health care stocks moving on news: (-) Aurora Cannabis (ACB) dropped 9.5% after reporting a 52% increase in fiscal Q4 revenue over year-ago levels to CAD98.9 million but still missing its own forecast expecting between CAD100 million to CAD107 million for the June quarter. Health care stocks were posting moderate gains, including a nearly 0.4% advance for the NYSE Health Care Index in recent trade while the shares of health care companies in the S&P 500 also were up slightly more than 0.4% as a group. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. | Among health care stocks moving on news: (-) Aurora Cannabis (ACB) dropped 9.5% after reporting a 52% increase in fiscal Q4 revenue over year-ago levels to CAD98.9 million but still missing its own forecast expecting between CAD100 million to CAD107 million for the June quarter. Top Health Care Stocks Health care stocks were posting moderate gains, including a nearly 0.4% advance for the NYSE Health Care Index in recent trade while the shares of health care companies in the S&P 500 also were up slightly more than 0.4% as a group. |
38148.0 | 2019-09-12 00:00:00 UTC | Thursday’s Vital Data: Aurora Cannabis, Boeing and Apple | ACB | https://www.nasdaq.com/articles/thursdays-vital-data%3A-aurora-cannabis-boeing-and-apple-2019-09-12 | nan | nan | U.S. stock futures are extending yesterday’s gains. The big boost came last night when President Trump announced via Twitter a delay in the planned increase of tariffs toward China.
Source: Shutterstock
Heading into the open, futures on the Dow Jones Industrial Average are up 0.22%, and S&P 500 futures are higher by 0.22%. Nasdaq-100 futures have added 0.63%.
Wednesday’s optimism in equities spilled into the options pits with call volume running hot. Approximately 22.4 million calls and 18.6 million puts changed hands on the session. The call surge made waves at the CBOE as well. The equity put/call volume ratio dropped to 0.54, while the 10-day moving average dropped toward 0.62 — a six-week low.
Options activity was a mixed bag on Wednesday (Options traders zeroed in on analyst actions yesterday). Aurora Cannabis (NYSE:) saw renewed options interest ahead of fourth-quarter earnings, which disappointed. Boeing (NYSE:) boomed to a five-month high on strong volume. Finally, Apple (NASDAQ:) rallied to a new 2019 high after unveiling its Apple TV+ service.
Let’s take a closer look:
Aurora Cannabis (ACB)
A powerful rally carried Aurora Cannabis into last night’s earnings release. Unfortunately, the optimism was misplaced and ACB stock is trading down 10.5% premarket. For the fourth quarter, the Canadian Cannabis company posted net revenue of C$98.9 million, which came in below the range Aurora Cannabis forecasted just last month.
The adjusted EBITDA loss was C$11.7 million. Last quarter, the company had stated they expected positive earnings for Q4.
On the bright side, because ACB stock experienced a run-up ahead of the number, this morning’s thrashing is only returning its price to Monday’s low. Continued weakness could lead to a retest of its 52-week low at $5.38, though.
As far as options trading goes, traders were chasing calls throughout the session. The mad dash pushed total activity to 325% of the average daily volume, with 123,106 contracts traded. Calls accounted for 75% of the day’s take.
Pumped up premiums were pricing in an earnings gap of 72 cents or 11%. So, with ACB set to open down just shy of 11%, I’d say the derivatives market absolutely nailed the move — three cheers for market efficiency.
Boeing (BA)
Boeing shares exploded higher yesterday, breaking a key short-term resistance zone. Volume pushed to 8.4 million shares reflecting a buying stampede. The culprit seems to be the ongoing rotation seen in the overall market. Over the past week, we’ve seen many leaders lag while laggards have led.
This week’s behavior in BA stock provides a teachable moment. My morning Google search revealed a spate of ominous-sounding news headlines for the wounded Aerospace company. Here are a few: “,” “New Blow for Boeing,” and “.” And yet, despite the drama, BA stock is booming over the last two trading sessions, proving once again that news is often noise and price is king.
BA now sits above all major moving averages and has seen a ton of improvement in volume patterns. Distribution days have disappeared, and accumulation is making a comeback. Consider $400 the next upside target
On the options trading front, calls outpaced puts by a modest margin. Activity swelled to 209% of the average daily volume, with 174,949 total contracts traded. Calls added 63% to the session’s sum.
Fear and uncertainty have all but unwound. Implied volatility tumbled to 27% or the 21st percentile of its one-year range. Premiums are now baking in daily moves of $6.50 or 1.7%.
Apple (AAPL)
After a volatile ride post-earnings, Apple shares are back to booming. The stock rocketed 3.2% higher yesterday finally eclipsing a ceiling which had kept a lid on it for four months. Volume soared alongside the rally with over 44.3 million shares changing hands.
With resistance cleared, AAPL stock is now positioned to attack last year’s $233.47 peak. That’s your next upside target.
Not surprisingly, calls dominated the options trading. Total activity climbed to 206% of the average daily volume, with 933,345 contracts; 65% of the trading came from call options alone.
The improving price trend has taken the wind out of implied volatility’s sails. Yesterday it dropped to 26% or the 22nd percentile of its one-year range. With premiums now only pricing in daily moves of $3.63 or 1.6%, buying options is better than selling them right now.
As of this writing, Tyler Craig didn’t hold a position in any of the aforementioned securities. Check out his recently released to learn how to defend your portfolio against market volatility.
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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. | On the bright side, because ACB stock experienced a run-up ahead of the number, this morning’s thrashing is only returning its price to Monday’s low. Let’s take a closer look: Aurora Cannabis (ACB) A powerful rally carried Aurora Cannabis into last night’s earnings release. Unfortunately, the optimism was misplaced and ACB stock is trading down 10.5% premarket. | Let’s take a closer look: Aurora Cannabis (ACB) A powerful rally carried Aurora Cannabis into last night’s earnings release. Unfortunately, the optimism was misplaced and ACB stock is trading down 10.5% premarket. On the bright side, because ACB stock experienced a run-up ahead of the number, this morning’s thrashing is only returning its price to Monday’s low. | Let’s take a closer look: Aurora Cannabis (ACB) A powerful rally carried Aurora Cannabis into last night’s earnings release. Unfortunately, the optimism was misplaced and ACB stock is trading down 10.5% premarket. On the bright side, because ACB stock experienced a run-up ahead of the number, this morning’s thrashing is only returning its price to Monday’s low. | Let’s take a closer look: Aurora Cannabis (ACB) A powerful rally carried Aurora Cannabis into last night’s earnings release. Unfortunately, the optimism was misplaced and ACB stock is trading down 10.5% premarket. On the bright side, because ACB stock experienced a run-up ahead of the number, this morning’s thrashing is only returning its price to Monday’s low. |
38149.0 | 2019-09-12 00:00:00 UTC | Weak Earnings Might Cause Aurora Cannabis Stock to Keep Falling | ACB | https://www.nasdaq.com/articles/weak-earnings-might-cause-aurora-cannabis-stock-to-keep-falling-2019-09-12 | nan | nan | Aurora Cannabis (NYSE:) stock dropped in after-hours trading on a weak earnings report. Shares fell from $6.49 at the close Sept. 11 to below the $6 level. With results failing to meet consensus, investor sentiment for ACB stock could become more negative. But is this recent stumble an opportunity to load up on Aurora Cannabis stock?
Source: Jarretera / Shutterstock.com
Shares continue to trade at a high valuation. But the long-term strategy for Aurora may still be in motion. Let’s take a closer look and see if there’s short-term upside for the ACB stock price.
ACB Stock Earnings Fall Shy of Consensus
On Sept. 11, Aurora released for their fourth quarter which ended June 30. Net cannabis revenue grew 61% from the prior year’s quarter, to $94.6 million CAD. The company’s cash cost to produce per gram fell 20% to $1.14 CAD per gram. Gross margins grew to 58% from 55% in the prior year’s quarter. Thanks to increased margins, the company’s adjusted EBITDA losses shrunk from $36.6 million CAD in Q3 2019 to a $11.7 million CAD loss in Q4 2019.
For fiscal year 2019, sales were $247.9 million CAD. This is an 349% increase from the prior fiscal year. But despite this growth, Aurora fell short of consensus. Earlier in 2019, ACB positive adjusted EBITDA by the end of FY19. But the company revised this guidance in August. After yesterday’s earnings, the company is no longer referencing “positive adjusted EBITDA.” Instead, Aurora “expects adjusted EBITDA to improve.”
The analyst community also pared down their estimates after the August walk-back. According to FactSet (NYSE:), prior to August, analysts estimated Q4 revenue of roughly $112 million CAD. This was cut to a range of $100 million CAD-$107 million CAD. With actual Q4 performance falling short of this revised consensus, there are new challenges to the growth story with ACB stock.
Other cannabis stocks have posted weak results in the past few months. Weak numbers at Canopy Growth (NYSE:) pushed shares down 25% since mid-August. Tilray (NASDAQ:) shares have fallen from $41.16 per share to near $30 per share since its August earnings release. Reality is bringing pot stock valuations back to earth. Does this mean it’s time to buy on the dip? Let’s take a look at the valuation of ACB stock relative to peers.
Aurora Cannabis Stock Trades at a Premium to Peers
ACB stock trades at a premium to most of its peers. Aurora Cannabis stock trades at an enterprise value/sales ratio of 53. Compare this to Canopy Growth, which trades at an EV/Sales ratio of 40.5. Tilray trades at an EV/Sales of 36.2. Aphria (NYSE:) trades at a low EV/Sales ratio of 9.7. The only major pot stock trading at a higher valuation is Cronos (NASDAQ:). Cronos trades at a staggering EV/Sales ratio of 106.4.
But does this make ACB stock overvalued? The cannabis sector in general continues to be richly priced. Despite stumbles, investors anticipate a bright future for the marijuana industry. But with top-line performance falling short of expectations, can investors expect a short-term rebound? The Canadian marijuana market continues to be over saturated. A fully open U.S. market continues to be out of reach. Congress has made little progress on federal marijuana legislation.
A saving grace for Aurora Cannabis stock is the company’s global diversification. As I have mentioned previously, Aurora’s markets has been a strength. Aurora has also focused more on the stable medical segment. But other risks counter the bullish case. The company’s heavy use of convertible debt could cause problems down the road. Additional issuance of shares could drive the ACB stock price down further.
Stay on the Sidelines With Aurora
It’s tough to stomach the current ACB stock price. While the company has many strengths, the path to profitability remains unclear. There needs to be a shakeout in the Canadian cannabis market before it can become profitable. Solid movement on the U.S. federal legalization front needs to happen. One of the major marijuana stocks needs to hit profitability. Even if said “profitability” is adjusted positive EBITDA.
I believe marijuana stocks will fall further. Aurora Cannabis stock is no exception. The company’s shares could rebound on a crumb of good news. But in the short term, all bets are off with regards to the ACB stock price. To play it safe, stay on the sidelines with Aurora. Wait for a more opportune moment. If valuations turn irrationally low, make your move. But otherwise do not enter a position.
As of this writing, Thomas Niel did not hold a position in any of the aforementioned securities.
The post 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. | ACB Stock Earnings Fall Shy of Consensus On Sept. 11, Aurora released for their fourth quarter which ended June 30. With actual Q4 performance falling short of this revised consensus, there are new challenges to the growth story with ACB stock. With results failing to meet consensus, investor sentiment for ACB stock could become more negative. | Aurora Cannabis Stock Trades at a Premium to Peers ACB stock trades at a premium to most of its peers. With results failing to meet consensus, investor sentiment for ACB stock could become more negative. Let’s take a closer look and see if there’s short-term upside for the ACB stock price. | Aurora Cannabis Stock Trades at a Premium to Peers ACB stock trades at a premium to most of its peers. With results failing to meet consensus, investor sentiment for ACB stock could become more negative. Let’s take a closer look and see if there’s short-term upside for the ACB stock price. | Let’s take a look at the valuation of ACB stock relative to peers. With results failing to meet consensus, investor sentiment for ACB stock could become more negative. Let’s take a closer look and see if there’s short-term upside for the ACB stock price. |
38150.0 | 2019-09-11 00:00:00 UTC | Aurora Cannabis' Q4 Shocker: What You Need to Know | ACB | https://www.nasdaq.com/articles/aurora-cannabis-q4-shocker%3A-what-you-need-to-know-2019-09-12 | nan | nan | Imagine Babe Ruth pointing to the outfield fence before stepping up to the plate, confidently predicting that a home run is on the way. The pitch comes. He swings -- and hits a pop-up that's easily caught by an infielder. What a letdown that would have been, right?
That scenario isn't too terribly different from what Aurora Cannabis (NYSE: ACB) just did. In August, the Canadian cannabis producer provided guidance for its fiscal 2019 fourth quarter. It predicted net revenue between $100 million and $107 million in Canadian dollars ($76 million to $81.3 million). That range reflected impressive quarter-over-quarter growth of 59%. A home run.
Aurora stepped up to the plate after the market closed Wednesday to report its actual Q4 results. And the company failed to hit that predicted home run. Here's what you need to know.
Image source: Getty Images.
Overpromising, underdelivering
Q4 net revenue was CA$98.9 million. Not only was that lower than the range the company projected just a few weeks ago, but it also came in well below the CA$108.3 million expected by analysts.
What happened? Aurora committed the age-old business mistake of overpromising and underdelivering.
In several respects, the company's Q4 top-line results were very good. Net revenue jumped a whopping 52% over the previous quarter. That kind of growth possibly would have been well received had expectations not been set too high.
Consumer cannabis net revenue, which reflects sales in the Canadian adult-use recreational cannabis market, increased 52% quarter over quarter to CA$44.9 million. Aurora also sold a lot more cannabis in the wholesale bulk market -- CA$20.1 million in Q4 versus less than CA$2.1 million in the previous quarter. The company's medical cannabis net revenue climbed 10% to nearly CA$29.7 million.
But the average selling prices in the consumer and wholesale bulk markets are much lower than average prices in the medical cannabis market. As a result, its overall average net selling price fell from CA$6.40 per gram in the third quarter to CA$5.32 in the fourth quarter.
Perhaps the most telling sign of Aurora's challenges is the company's statement that "the Canadian consumer channel continues to experience challenges at the retail level in key markets, and resolution of this issue is beyond the Company's control." In other words, provinces aren't opening enough retail outlets yet, causing problems for Aurora and its peers.
Chief Corporate Officer Cam Battley also stated in the company's Q3 conference call that he expected positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in the fourth quarter. That didn't happen. Aurora instead announced an adjusted EBITDA loss of CA$11.7 million.
What to like
While the glaring revenue miss is the big story with Aurora's Q4 results, there were several things for investors to like with the company's latest update. The supply constraints of the past don't appear to be a big issue now. Aurora said that its facilities currently have an annualized run-rate of more than 150,000 kilograms of cannabis. The company produced 29,034 kilograms of cannabis in the fourth quarter, up from 15,590 kilograms in the prior quarter.
Gross margin also improved, rising to 58% in Q4 versus 55% in the third quarter. This increase reflected continued progress in reducing its production costs per gram.
Despite failing to deliver positive adjusted EBITDA, the company is tracking in the right direction. Its Q4 adjusted EBITDA loss of CA$11.7 million was a whole lot better than the adjusted EBITDA loss of CA$36.6 million in the previous quarter.
More at-bats to come
Aurora shouldn't have provided revenue guidance that it wasn't able to hit. And it shouldn't have talked about delivering positive adjusted EBITDA if it wasn't fully confident that it could meet that goal. But the Q4 results weren't horrible from an objective perspective, putting aside estimates and predictions.
More importantly, the company should be able to continue on its path to profitability. The Cannabis 2.0 market (referring to the upcoming legalization of derivatives in Canada) presents new growth opportunities for Aurora, which plans to launch multiple new products in December. The company is also evaluating what it said were "a number of alternatives to grow Aurora's presence in the U.S. market."
Investing in marijuana stocks comes with the kinds of ups and downs we're seeing with Aurora. The company itself stated that "quarter-to-quarter sales volumes and revenues may be volatile." Its share price could mirror that volatility.
Aurora demonstrated that it's not the Babe Ruth of cannabis. But there are more at-bats 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 – 10 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 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. | That scenario isn't too terribly different from what Aurora Cannabis (NYSE: ACB) just did. Chief Corporate Officer Cam Battley also stated in the company's Q3 conference call that he expected positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in the fourth quarter. The Cannabis 2.0 market (referring to the upcoming legalization of derivatives in Canada) presents new growth opportunities for Aurora, which plans to launch multiple new products in December. | That scenario isn't too terribly different from what Aurora Cannabis (NYSE: ACB) just did. Consumer cannabis net revenue, which reflects sales in the Canadian adult-use recreational cannabis market, increased 52% quarter over quarter to CA$44.9 million. But the average selling prices in the consumer and wholesale bulk markets are much lower than average prices in the medical cannabis market. | That scenario isn't too terribly different from what Aurora Cannabis (NYSE: ACB) just did. Consumer cannabis net revenue, which reflects sales in the Canadian adult-use recreational cannabis market, increased 52% quarter over quarter to CA$44.9 million. Aurora also sold a lot more cannabis in the wholesale bulk market -- CA$20.1 million in Q4 versus less than CA$2.1 million in the previous quarter. | That scenario isn't too terribly different from what Aurora Cannabis (NYSE: ACB) just did. Consumer cannabis net revenue, which reflects sales in the Canadian adult-use recreational cannabis market, increased 52% quarter over quarter to CA$44.9 million. That didn't happen. |
38151.0 | 2019-09-11 00:00:00 UTC | Aurora Cannabis Q4 Revenue Grows Sharply but Misses Estimates | ACB | https://www.nasdaq.com/articles/aurora-cannabis-q4-revenue-grows-sharply-but-misses-estimates-2019-09-12 | nan | nan | Bellwether marijuana stock Aurora Cannabis (NYSE: ACB) released its Q4 of fiscal 2019 results after market close on Wednesday.
For the quarter, the company -- which reports in Canadian dollars -- booked 98.9 million Canadian dollars in net revenue. This was up by 52% over the previous quarter and 415% higher on a year-over-year basis. It was also on the back of an 86% quarter-over-quarter increase in production volume, to 29,034 kilos. The rise in production was due in no small measure to the addition of two new cultivation facilities.
Aurora's average net selling price per gram for consumer cannabis fell 6% sequentially to land at CA$5.14. That for medical cannabis held steady at CA$8.51.
Image source: Getty Images.
The highest share (47%) of the company's cannabis revenue, not surprisingly, came from the consumer segment. Recreational marijuana has been legal in Aurora's native Canada for nearly a year. Medical cannabis comprised 31%, while wholesale bulk product made up the remainder.
In terms of profitability, Aurora's headline net loss for the quarter came in at CA$2.3 million (less than CA$0.01 per share), a vast improvement over the Q3 deficit of CA$160.2 million but quite some distance from the Q4 2018 net profit of CA$79.9 million.
On average, analysts who track the stock were expecting a top-line result of CA$108 million, and a per-share adjusted net loss of CA$0.06 (Aurora has not yet provided a per-share net loss figure for Q4). The company had guided investors to expect CA$100 million to CA$107 million on the top line, and production available for sale toward the upper end of the 25,000 to 30,000 kilos range.
For the entirety of fiscal 2019, Aurora's net revenue was CA$247.9 million, more than four times higher than the CA$55.2 million it posted in the previous year. The company produced 57,442 kilos of product in fiscal 2018, a 920% year-over-year increase. On the bottom line the company flipped to a net loss of CA$297.9 million from a net profit of CA$69.2 million in 2018.
The company did not provide guidance for future periods in its earnings release.
Aurora's stock price is down by 9% in after-market trading in the wake of the results announcement.
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 – 10 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 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. | Bellwether marijuana stock Aurora Cannabis (NYSE: ACB) released its Q4 of fiscal 2019 results after market close on Wednesday. Aurora's average net selling price per gram for consumer cannabis fell 6% sequentially to land at CA$5.14. 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. | Bellwether marijuana stock Aurora Cannabis (NYSE: ACB) released its Q4 of fiscal 2019 results after market close on Wednesday. For the quarter, the company -- which reports in Canadian dollars -- booked 98.9 million Canadian dollars in net revenue. On average, analysts who track the stock were expecting a top-line result of CA$108 million, and a per-share adjusted net loss of CA$0.06 (Aurora has not yet provided a per-share net loss figure for Q4). | Bellwether marijuana stock Aurora Cannabis (NYSE: ACB) released its Q4 of fiscal 2019 results after market close on Wednesday. In terms of profitability, Aurora's headline net loss for the quarter came in at CA$2.3 million (less than CA$0.01 per share), a vast improvement over the Q3 deficit of CA$160.2 million but quite some distance from the Q4 2018 net profit of CA$79.9 million. On average, analysts who track the stock were expecting a top-line result of CA$108 million, and a per-share adjusted net loss of CA$0.06 (Aurora has not yet provided a per-share net loss figure for Q4). | Bellwether marijuana stock Aurora Cannabis (NYSE: ACB) released its Q4 of fiscal 2019 results after market close on Wednesday. Aurora's average net selling price per gram for consumer cannabis fell 6% sequentially to land at CA$5.14. For the entirety of fiscal 2019, Aurora's net revenue was CA$247.9 million, more than four times higher than the CA$55.2 million it posted in the previous year. |
38152.0 | 2019-09-11 00:00:00 UTC | Aurora Cannabis Stock Still Eyeing $8 | ACB | https://www.nasdaq.com/articles/aurora-cannabis-stock-still-eyeing-%248-2019-09-11 | nan | nan | A few weeks ago I shared an opinion on Aurora Cannabis (NYSE:) stock when it had upside potential. The celebration was short since after a just a brief pop, the whole cannabis sector fell apart in heavy selling. ACB, Canopy Growth (NYSE:), Cronos (NYSE:), and ETFMG Alternative Harvest ETF (NYSEARCA:) stocks all fell 10% to 20% in a matter of hours.
Needless to say, consequently, the ACB stock bulls left a $3 potential spike on the table. The good news is that they have since found footing and now again there is another upside opportunity in the making.
The pot stocks are still in the process of recovering the losses. Aurora Cannabis stock looks relatively strong among them in this effort. Even with its recent misfortunes, Aurora Cannabis stock is still up 21% year-to-date. So a few bad days on a chart don’t necessarily kill the whole story of a stock.
In my last Aurora Cannabis stock write-up, I also noted that equities in general were headed into geopolitical headline hell, so it was a risky trade at the time. The idea was that ACB had support below $6 per share so that the bulls had a solid base from which to spring.
The good news is that this latest test proved that support held. In spite of resistance above, there should be another attempt at a rally in ACB stock even from here.
Aurora Cannabis Stock Still Eyeing $8
For almost four months, Aurora Cannabis stock has slid inside a descending channel of lower highs and lower lows. This last dip from mid-August may have forced the issue because it formed a short-term bottom.
If so, then all the ACB bulls need to do is maintain a series of higher highs to close above $6.4 per share. Then they would retake the reins and have the opportunity to finally breakout from the descending trend. The result would be the opportunity to target $8 per share or higher. Aurora Cannabis is a momentum stock so it runs fast enough that they could plow through resistance.
I caution against heavy conviction in this trade. The fundamentals for ACB and the entire sector are horrendous. ACB stock sells at 140 times sales so it is very bloated from the traditional sense. Unless the investor knows otherwise, I treat this like a trade and not an investment and set tight stops.
The important levels below are between $5.9 and $5.6 per share. Below that and ACB could easily lose another dollar, so traders need to be nimble on bad days. Because just like there is upside potential to $8, there is downside risk to $5 or lower.
The mid-term technical oscillators and price-to-moving-averages relationships support the theory that there is an upswing in momentum brewing: One that could fuel this rally in Aurora Cannabis stock. Experts in the field remain unanimous in their optimism.
But again I caution about the nature of the opportunity. This is a speculative stock. Unless the timeline is long for the bet, traders need to be spry and aware of the levels.
Bottom Line on ACB Stock
These are risky stocks. This is nothing against ACB, but this industry didn’t even exist just mere months ago. Furthermore, it is still illegal in the United States. Yes, there are states that have legalized marijuana but the federal government still has not followed suit.
The enthusiasm on Wall Street for these stocks stems from the wide application for cannabis. Recreational use is already popular but investors’ interests extend far beyond that. Companies from all industries are interested in cannabis including the medical, cosmetics, dermatology, beverage, food, and many more industries. It’s only a matter of time before it finds its way to retail store shelves.
Long term, the game changer source of optimism will probably be a favorable change in U.S. federal law. Imagine what ACB stock and its brethren would do if the U.S. follows Canada and legalizes cannabis nationwide.
Nicolas Chahine is the managing director of . As of this writing, he did not hold a position in any of the aforementioned securities. Join his live chat room for free here.
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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, Canopy Growth (NYSE:), Cronos (NYSE:), and ETFMG Alternative Harvest ETF (NYSEARCA:) stocks all fell 10% to 20% in a matter of hours. Needless to say, consequently, the ACB stock bulls left a $3 potential spike on the table. The idea was that ACB had support below $6 per share so that the bulls had a solid base from which to spring. | ACB, Canopy Growth (NYSE:), Cronos (NYSE:), and ETFMG Alternative Harvest ETF (NYSEARCA:) stocks all fell 10% to 20% in a matter of hours. Needless to say, consequently, the ACB stock bulls left a $3 potential spike on the table. The idea was that ACB had support below $6 per share so that the bulls had a solid base from which to spring. | Bottom Line on ACB Stock These are risky stocks. ACB, Canopy Growth (NYSE:), Cronos (NYSE:), and ETFMG Alternative Harvest ETF (NYSEARCA:) stocks all fell 10% to 20% in a matter of hours. Needless to say, consequently, the ACB stock bulls left a $3 potential spike on the table. | ACB, Canopy Growth (NYSE:), Cronos (NYSE:), and ETFMG Alternative Harvest ETF (NYSEARCA:) stocks all fell 10% to 20% in a matter of hours. Needless to say, consequently, the ACB stock bulls left a $3 potential spike on the table. The idea was that ACB had support below $6 per share so that the bulls had a solid base from which to spring. |
38153.0 | 2019-09-11 00:00:00 UTC | You Won’t Find Better Value Than Hexo Stock in the Canna-business | ACB | https://www.nasdaq.com/articles/you-wont-find-better-value-than-hexo-stock-in-the-canna-business-2019-09-11 | nan | nan | The summer of 2019 was a period of malaise for the cannabis sector, and unfortunately that meant a selloff in Hexo (NYSE:) stock, whether it deserved the downward price pressure or not. As I see it, adverse developments from well-known names like Canopy Growth (NYSE:), and Aurora Cannabis (NYSE:) induced a panic that spilled over into the rest of the cannabis sector.
Source: Shutterstock
Since many outlets predict Sept. 12 earnings, it might be a smart idea to wait and see which way the Hexo stock price goes before taking a position. It’s also fine to start a position if you believe in the recovery of cannabis stocks.
Hexo in particular has great potential as a turnaround story.
Hexo Is Growing by Leaps and Bounds
I recall when Hexo reported its third-quarter 2019 earnings, and it’s no exaggeration to say that the were outstanding. For one thing, Hexo completed its acquisition of Newstrike Brands during that quarter and in doing so, increased its production space to an astonishing 1.8 million square feet and its estimated annual cannabis production capacity to 150,000 kilograms.
Sebastien St.-Louis, the CEO and co-founder of Hexo, also delighted shareholders with the that the company will earn $400 million in revenues during fiscal year 2020. He also forecasted that Hexo will double its net revenues in the fiscal Q4.
I’ve heard analysts refer to 2019’s market as or “Legalization 2.0,” and Hexo is a prime example of what they’re referring to. The company is not only bigger and better than it was before. It’s also proactively preparing for the future. Hexo’s agreement with Molson Coors (NYSE:) to sell cannabis-enhanced beverages is a perfect example of how the industry is moving forward.
Analysts’ Projections on HEXO
An upcoming earnings announcement means that analysts are coming out of the woodwork to share their opinions on HEXO stock. For the fourth quarter of 2019, analysts Hexo will announce revenues of $25.5 million CAD. They expect the company to sustain a loss of 5 cents per share for the Canadian version of Hexo stock.
These are very modest expectations influenced by the dismal performance of the cannabis sector as a whole. I don’t see any reason why the actual results won’t exceed analyst expectations. And I wouldn’t be surprised if the Hexo stock price retraces upwards.
My Takeaway on Hexo Stock
Don’t get me wrong. Hexo is a much smaller company than CGC, ACB and other famous brands in the legalized cannabis space. I do not recommend taking a large position in HEXO stock shares, even after the upcoming earnings announcement. There are future developments that could create volatility for the entire cannabis market.
The event that immediately comes to mind is the day when Health Canada will allow an array of cannabis products (edibles, extracts, creams, etc.) to be consumed. That day for Dec. 16, but I won’t be shocked if the legalization date gets delayed for one reason or another.
Therefore, I will advise that prospective HEXO buyers exercise due caution. Accumulate shares gradually, prepare for possible downside in the price, respect your stop-losses if you use them and always keep your position sizes reasonable.
Despite my warnings, I remain bullish on the Hexo stock price as I see the company as proactive. It’s expanding quickly and preparing for a new and exciting era in legalized cannabis.
As of this writing, David Moadel did not hold a position in any of the aforementioned securities.
The post 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. | Hexo is a much smaller company than CGC, ACB and other famous brands in the legalized cannabis space. The summer of 2019 was a period of malaise for the cannabis sector, and unfortunately that meant a selloff in Hexo (NYSE:) stock, whether it deserved the downward price pressure or not. Source: Shutterstock Since many outlets predict Sept. 12 earnings, it might be a smart idea to wait and see which way the Hexo stock price goes before taking a position. | Hexo is a much smaller company than CGC, ACB and other famous brands in the legalized cannabis space. Analysts’ Projections on HEXO An upcoming earnings announcement means that analysts are coming out of the woodwork to share their opinions on HEXO stock. For the fourth quarter of 2019, analysts Hexo will announce revenues of $25.5 million CAD. | Hexo is a much smaller company than CGC, ACB and other famous brands in the legalized cannabis space. The summer of 2019 was a period of malaise for the cannabis sector, and unfortunately that meant a selloff in Hexo (NYSE:) stock, whether it deserved the downward price pressure or not. Analysts’ Projections on HEXO An upcoming earnings announcement means that analysts are coming out of the woodwork to share their opinions on HEXO stock. | Hexo is a much smaller company than CGC, ACB and other famous brands in the legalized cannabis space. Analysts’ Projections on HEXO An upcoming earnings announcement means that analysts are coming out of the woodwork to share their opinions on HEXO stock. I don’t see any reason why the actual results won’t exceed analyst expectations. |
38154.0 | 2019-09-10 00:00:00 UTC | Cronos Group Stock Suffers Sharply Amid Vaping Crisis | ACB | https://www.nasdaq.com/articles/cronos-group-stock-suffers-sharply-amid-vaping-crisis-2019-09-10 | nan | nan | Although its target product is green, Cronos Group (NASDAQ:) and its legal marijuana peers have been seeing red lately. CRON stock in particular absorbed a severe beating to start off the second week of September, falling over 5%.
Source: Shutterstock
Of course, volatility in marijuana-based investments is nothing new. When the good times are rolling, investments like Cronos Group stock are akin to cryptocurrencies. In the height of the emotions, you don’t anticipate that things can sour.
Unfortunately, the downside is also very much like blockchain-based assets. If you’re not prepared for the whiplash, CRON stock is simply not for you.
Nevertheless, the 5% decline is surprising because compared to other major weed players, Cronos is the most stable. For instance, our own Chris Markoch recently wrote about the that make CRON stock stand out.
Primarily, Cronos refuses to perform the secondary share offering that has almost become a meme in this industry. One of the biggest criticisms of this tactic is that it dilutes equity. Instead, CRON is focused on sustainable expansionary strategies.
As a prime example, the cannabis firm paid for its Redwood Holding Group in cash. Such measures have helped mitigate its debt exposure, which stands at around $15 million. In contrast, Canopy Growth’s (NYSE:) debt load is $700 million. Right there, Cronos Group stock has an advantage in terms of likely forward stability.
Yet on Monday, CGC only took a 1.6% hit. A fellow Canadian marijuana firm, Aurora Cannabis (NYSE:), only dropped 1.2%. If Cronos Group stock is so stable, why is it taking the most punishment?
CRON Stock Must Ride Out Nearer-Term Hysteria
A possible explanation into the severe decline for Cronos Group stock is the underlying company’s aggressive investments toward . Coincidentally, Markoch mentioned vaping pens and other derivative products as future viable revenue-making channels.
I wholeheartedly agree. However, a recent surge in supposedly vaping-related acute lung illnesses have captured the public’s attention. Recently, New York Governor Andrew Cuomo urged his constituents to . At present, the Centers for Disease Control and Prevention is investigating 450 cases across 33 states.
But how does this relate to cannabis and CRON stock? According to The New England Journal of Medicine, the vast majority (80%) of people who vaped and suffered acute lung injury used both nicotine and tetrahydrocannabinol (THC) or cannabidiol (CBD) products.
Even more damaging, The New England Journal of Medicine’s findings were by other sources, most notably the Illinois Department of Public Health. According to the latter’s research, several lung-illness patients had vaped materials containing THC.
As you might imagine, this news is not at all conducive for CRON stock. Even if there is no connection between vaping cannabis-based products and the lung-illness epidemic, the optics are terrible.
If this wasn’t bad enough, the Food and Drug Administration warned consumers not to use products containing THC. In Cronos Group’s defense, the company emphasizes the therapeutic component of the cannabis plant. Still, as I mentioned earlier, the stigma remains, potentially hurting Cronos Group stock.
Moreover, the mainstream media is really latching onto this controversial story. For example, Dr. Mehmet Oz of “The Dr. Oz Show” fame on Monday . Essentially, he urged viewers to cease vaping until the medical community can figure out what’s going on.
For CRON, it appears that a core revenue channel is being taken away.
Should Cronos Stock Stakeholders Worry?
Admittedly, the news does not look good. Again, even if the arguments lacked merit, the anti-vaping establishment has the upper hand to frame the narrative. As CRON stock is more levered to vaping than other cannabis investments, it has taken the brunt of the damage.
In the nearer term, shares might be more volatile than usual. However, in the long run, I don’t see this impacting the company.
One of the leading online vape shops in the country, Vapor Authority, recently posted a against the supposed connection between vaping and acute lung illnesses. Among their many arguments, the vaping retailer noted that neither the CDC nor the FDA have forwarded a causal factor. Moreover, it’s likely that illegal products or substances from the black market are responsible for this crisis.
It will take time for this issue to cool down. But once it does, CRON stock can get back to its business of growing cannabis in a fiscally sustainable manner.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.
The post 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. | Coincidentally, Markoch mentioned vaping pens and other derivative products as future viable revenue-making channels. According to The New England Journal of Medicine, the vast majority (80%) of people who vaped and suffered acute lung injury used both nicotine and tetrahydrocannabinol (THC) or cannabidiol (CBD) products. Even more damaging, The New England Journal of Medicine’s findings were by other sources, most notably the Illinois Department of Public Health. | When the good times are rolling, investments like Cronos Group stock are akin to cryptocurrencies. CRON Stock Must Ride Out Nearer-Term Hysteria A possible explanation into the severe decline for Cronos Group stock is the underlying company’s aggressive investments toward . One of the leading online vape shops in the country, Vapor Authority, recently posted a against the supposed connection between vaping and acute lung illnesses. | When the good times are rolling, investments like Cronos Group stock are akin to cryptocurrencies. CRON Stock Must Ride Out Nearer-Term Hysteria A possible explanation into the severe decline for Cronos Group stock is the underlying company’s aggressive investments toward . As CRON stock is more levered to vaping than other cannabis investments, it has taken the brunt of the damage. | When the good times are rolling, investments like Cronos Group stock are akin to cryptocurrencies. CRON Stock Must Ride Out Nearer-Term Hysteria A possible explanation into the severe decline for Cronos Group stock is the underlying company’s aggressive investments toward . But how does this relate to cannabis and CRON stock? |
38155.0 | 2019-09-10 00:00:00 UTC | CRON Stock Will Require a Lot of Patience | ACB | https://www.nasdaq.com/articles/cron-stock-will-require-a-lot-of-patience-2019-09-10 | nan | nan | Cronos Group (NASDAQ:) is taking a different path than the rest of the cannabis industry. Long-term, that looks like a good thing for Cronos Group stock. It’s the short-term trading in CRON stock that looks like a potential problem.
Source: Shutterstock
To be sure, CRON stock already has lost more than half its value just since early March. And the stock did put in a bit of a bottom starting in late August, though a decline on Monday suggests the selling pressure might not yet be over.
That said, the problem for Cronos Group stock seems the same as : it’s the cannabis play for investors who worry that cannabis plays still look overvalued.
That doesn’t mean the long-term strategy will fail, of course. As one of those investors who in the sector, I see the Cronos stock strategy as particularly wise. But Q2 earnings last month further highlight the near-term issue: even if Cronos Group is right, CRON stock still lacks an immediate catalyst.
The Long-Term Strategy for Cronos Group Stock
One of the core principles of Cronos’ strategy is that producing cannabis is likely to be a narrowly profitable or even unprofitable endeavor. It’s copying the strategy of Altria Group (NYSE:), looking to build a network of contract producers instead of building out capacity itself.
Using that third-party supply, Cronos then plans to enter differentiated, value-added, and higher-margin markets. Its Cronos Device Labs focuses on designing new and improved vaporizer products. A research and development partnership looks to create new cultured cannabinoids. It’s looking to edibles and topicals as well.
As CEO Mike Gorenstein phrased it early in his prepared remarks on the , “We have often discussed our view that in the mature market, capacity is a means to an end, not the key driver of value.”
That view makes sense. Prices in several regulated U.S. markets . Recent earnings from Tilray (NASDAQ:) showed a big, and worrisome, drop in average price per gram. Cannabis bears long have argued that production will be a capital-intensive and low-margin endeavor. In other words, not a great business — even if demand for legalized cannabis soars over the long haul.
The Near-Term Problem for CRON Stock
One issue for CRON stock is that the strategy goes against sector bulls. Investors who see a cannabis boom on the way are going to choose the likes of Canopy Growth (NYSE:) and Aurora Cannabis (NYSE:). Both companies have used acquisitions to build out production and worldwide reach.
But a new issue seems to have popped up after last month’s Q2 report. On the Q2 call, Cronos forecast that its Adjusted EBITDA loss would increase in the second half. Investments in branding and R&D are the key culprits.
That’s likely not what investors want to hear at the moment. Across the sector, worries about the bottom line seem to be offsetting any good news on the top line.
Cronos handily beat revenue estimates in its Q2 report — yet Cronos stock, after a brief pop, continued its downward trend. Cowen, a long-time CRON bull, after earnings, citing worries about Cronos’ “path to profitability.”
If investors are going to choose a cannabis stock on profitability, CRON probably isn’t it, at least through the second half of this year. Those ‘value’ seekers might look to Aphria (NYSE:), who is guiding for positive Adjusted EBITDA.
If investors want revenue, CRON similarly isn’t the choice. Its revenue and production numbers will look lower than peers. CEO Gorenstein himself admitted as such on the Q2 call. “Now, we understand that many investors are modeling cannabis companies off of their production capacity,” he told listeners. “However, our business model is not to be the farmer.”
In the short term, there’s yet another issue. The company’s focus on edibles and vaporizers means key revenue isn’t coming until 2020, as regulatory body Health Canada has been slow to approve cannabis derivatives. As such, in terms of both revenue and profits, Cronos looks like a 2020 story at best.
How to Play CRON Stock
For the next six months at least, whatever the fundamental metric, CRON stock is going to look less attractive than its peers. Neither its production nor its revenue is going to be as high as that of companies building out capacity. Its earnings, at least in Q3 and Q4, are going to stay negative. Revenue contributions from derivatives won’t come until next year.
And, at least for the moment, cannabis investors seem to be more focused on the fundamentals. That’s truthfully an odd focus to have. Regulated cannabis is a nascent market. Legalization of recreational marijuana will take years, if not decades, to play out worldwide.
It’s a doubly odd focus for investors to have when it comes to Cronos. The company has roughly US$1.5 billion in cash after its of U.S. CBD player Redwood. There’s almost no risk of bankruptcy unless Cronos decides to splurge big on an acquisition — something that seems highly unlikely given its strategy.
More broadly, this is a stock and a market that require patience. Investors right now don’t seem to have that patience. That likely goes double for CRON stock, whose markets will take longer to develop than those of peers moving to build out significant capacity.
Until that changes, Cronos Group stock, and the sector as a whole, are unlikely to rebound. After Q4 earnings in particular, it looks like a rebound in CRON is a ways off.
What can an investor do? Selling puts is a strategy only for investors who truly understand options trading, which can be risky. But premiums on CRON stock are reasonably high, leaving an investor with either attractive returns or the ability to own CRON below $10.
That aside, patience is likely wise here. The sector is struggling. Cronos is going to post losses in the next two quarters at least. The wisdom — or folly — of its strategy will take years to be proven. Until then, sideways trading might be the best investors can hope for. Of course, that sideways trading could be an opportunity, if treated correctly.
As of this writing, Vince Martin has no positions in any securities mentioned.
The post 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. | And the stock did put in a bit of a bottom starting in late August, though a decline on Monday suggests the selling pressure might not yet be over. The company’s focus on edibles and vaporizers means key revenue isn’t coming until 2020, as regulatory body Health Canada has been slow to approve cannabis derivatives. That likely goes double for CRON stock, whose markets will take longer to develop than those of peers moving to build out significant capacity. | The Near-Term Problem for CRON Stock One issue for CRON stock is that the strategy goes against sector bulls. Cowen, a long-time CRON bull, after earnings, citing worries about Cronos’ “path to profitability.” If investors are going to choose a cannabis stock on profitability, CRON probably isn’t it, at least through the second half of this year. The company’s focus on edibles and vaporizers means key revenue isn’t coming until 2020, as regulatory body Health Canada has been slow to approve cannabis derivatives. | That said, the problem for Cronos Group stock seems the same as : it’s the cannabis play for investors who worry that cannabis plays still look overvalued. The Long-Term Strategy for Cronos Group Stock One of the core principles of Cronos’ strategy is that producing cannabis is likely to be a narrowly profitable or even unprofitable endeavor. Cowen, a long-time CRON bull, after earnings, citing worries about Cronos’ “path to profitability.” If investors are going to choose a cannabis stock on profitability, CRON probably isn’t it, at least through the second half of this year. | As one of those investors who in the sector, I see the Cronos stock strategy as particularly wise. The Long-Term Strategy for Cronos Group Stock One of the core principles of Cronos’ strategy is that producing cannabis is likely to be a narrowly profitable or even unprofitable endeavor. Neither its production nor its revenue is going to be as high as that of companies building out capacity. |
38156.0 | 2019-09-10 00:00:00 UTC | Aurora Cannabis: 3 Off-the-Radar Numbers in Its Q4 Report You'll Want to Know | ACB | https://www.nasdaq.com/articles/aurora-cannabis%3A-3-off-the-radar-numbers-in-its-q4-report-youll-want-to-know-2019-09-10 | nan | nan | The big day is nearly here for cannabis investors. On Wednesday, Sept. 11, following the market close, Aurora Cannabis (NYSE: ACB) will release its highly anticipated fiscal fourth-quarter operating results.
As you're probably aware, Aurora Cannabis is expected to be Canada's leading cannabis producer, with at least 625,000 kilos of run-rate production by the end of June 2020. It's also been leading its peers in terms of run-rate production thus far in 2019, with more than 150,000 kilos of run-rate annual output through the end of March. Thus, investors are very interested to see what another quarter of ramping up has done to Aurora's bottom line.
Image source: Getty Images.
Aurora's preliminary guidance laid the groundwork for the fiscal fourth quarter
But unlike most marijuana stocks, Aurora has been relatively transparent with regard to providing sales guidance well in advance of its quarterly reports. In August, the company guided Wall Street to expect 100 million Canadian dollars to CA$107 million in net fourth-quarter sales, which includes the reduction of excise taxes paid from gross revenue. This suggests gross revenue might come in closer to CA$120 million, which was higher than analysts had been forecasting at the time of its preliminary sales update.
The company also reiterated that it was on track to achieve positive recurring EBITDA during the fourth quarter. However, keep in mind that positive EBITDA doesn't mean that Aurora Cannabis will necessarily be profitable, especially taking into account the bounty of one-time benefits and expenses it regularly accounts for on its income statement. Wall Street's consensus continues to call for a modest net loss for the company in fiscal 2020.
Aurora's preliminary guidance increased its quarterly production available for sale as well to a new range of 25,000 kilos to 30,000 kilos. The company's previous forecast had called for 25,000 kilos. This boost jibes with the company's message that production ramp-up is commencing on schedule.
In other words, with Aurora spilling the beans on its sales guidance and production, the headline numbers for Aurora's fourth-quarter report are already pretty well known. But if you wind up looking past the headlines, there are three numbers you'll want to pay very close attention to.
Image source: Getty Images.
1. Aurora's gross margin
Maybe one of the most exciting things about Aurora Cannabis is that it has a chance to be one of the lowest-cost marijuana producers in the world. It's not necessarily the techniques that the company is using to grow cannabis, so much as the sheer size of Aurora's operations that could allow economies of scale to really come into play. The fourth quarter could be our first real look at how a large-scale grower pushes production costs down.
Of course, production costs are one side of the coin. We're also going to want to see how well dried cannabis prices held up on a per-gram basis, as well as cannabis extracts. Given the persistent supply shortages throughout Canada, I'd expect prices to have held up pretty well from the sequential third quarter.
Putting these factors together will give us our first under-the-radar figure: gross margin. Aurora's gross margin has consistently been higher than its mid-cap peers in recent quarters, but I'm still not convinced that operating profitability is imminent. Nevertheless, an improvement of a few percentage points in gross margin from the sequential third quarter (Q3 gross margin was 55%) would go a long way to confirming to Wall Street that Aurora is on the path to profitability in fiscal 2021, if not 2020.
Image source: Getty Images.
2. International sales
The next figure investors should keep a close eye on is international sales, which in the sequential third quarter came in at a pretty anemic CA$4 million -- although this was a 40% increase from the sequential second quarter.
International sales are pretty much the future for Aurora Cannabis. Aurora has a cultivation, export, or research presence in more countries worldwide (25) than any other marijuana producer. These overseas markets are going to be especially important if and when dried cannabis production overwhelms the Canadian marketplace. Having up to two dozen external sales channels at its disposal should help ensure that Aurora's gross margin doesn't nosedive because of domestic oversupply.
Furthermore, the company has a very clear stated purpose of focusing on the medical side of the industry. Even though the medical cannabis patient pool is considerably smaller than recreational weed, the margins and pricing power are substantially higher. Medical patients tend to use cannabis more frequently, buy regularly, and are more willing to purchase high-margin derivative products. With the exception of Uruguay and Canada, the other roughly 40 countries worldwide to have legalized marijuana to some degree have done so for medical purposes.
While I'm not expecting international revenue to make up a large portion of sales, it would be nice to see Aurora tack on far more than the CA$4 million registered in the fiscal third quarter.
Image source: Getty Images.
3. Goodwill
A final figure you'll want to know that Aurora Cannabis is certain not to highlight in its operating results or conference call is the company's ballooning goodwill, which stood at CA$3.18 billion at the end of March. This CA$3.18 billion represents 57% of Aurora's total assets.
Goodwill is simply the premium that one company pays for another above and beyond tangible assets. Some amount of premium is perfectly normal when making a purchase, as it's the dangling carrot that can entice a board of directors to approve being bought out by a larger peer. In an ideal world, the purchasing company will monetize patents and expand upon existing assets to fully recoup the premium that's been paid for another business. Unfortunately, things aren't always ideal.
In the case of Aurora Cannabis, it's made well over a dozen acquisitions over the past three years, and they've nearly all contributed to its rapidly rising goodwill. Of course, none has been a bigger culprit than its CA$2.64 billion all-stock purchase of MedReleaf, of which CA$2 billion has been classified as goodwill. In my personal opinion, it's going to be virtually impossible for Aurora to recoup CA$3.18 billion in goodwill. Rather, I find it likely that Aurora will admit that it overpaid for some of its deals and eventually write down a portion of its goodwill.
For the fiscal fourth quarter, investors should keep a close eye on whether or not goodwill rises significantly, as well as whether or not it grows as a percentage of total assets. In my view, a positive result would be seeing goodwill stay relatively flat, with its value as a percentage of total assets declining below 55%.
Now that you know what to watch out for, we simply wait for Aurora Cannabis to deliver the goods after the bell on Wednesday.
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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. | On Wednesday, Sept. 11, following the market close, Aurora Cannabis (NYSE: ACB) will release its highly anticipated fiscal fourth-quarter operating results. While I'm not expecting international revenue to make up a large portion of sales, it would be nice to see Aurora tack on far more than the CA$4 million registered in the fiscal third quarter. Some amount of premium is perfectly normal when making a purchase, as it's the dangling carrot that can entice a board of directors to approve being bought out by a larger peer. | On Wednesday, Sept. 11, following the market close, Aurora Cannabis (NYSE: ACB) will release its highly anticipated fiscal fourth-quarter operating results. As you're probably aware, Aurora Cannabis is expected to be Canada's leading cannabis producer, with at least 625,000 kilos of run-rate production by the end of June 2020. In August, the company guided Wall Street to expect 100 million Canadian dollars to CA$107 million in net fourth-quarter sales, which includes the reduction of excise taxes paid from gross revenue. | On Wednesday, Sept. 11, following the market close, Aurora Cannabis (NYSE: ACB) will release its highly anticipated fiscal fourth-quarter operating results. Aurora's preliminary guidance laid the groundwork for the fiscal fourth quarter But unlike most marijuana stocks, Aurora has been relatively transparent with regard to providing sales guidance well in advance of its quarterly reports. Aurora's gross margin Maybe one of the most exciting things about Aurora Cannabis is that it has a chance to be one of the lowest-cost marijuana producers in the world. | On Wednesday, Sept. 11, following the market close, Aurora Cannabis (NYSE: ACB) will release its highly anticipated fiscal fourth-quarter operating results. 2. International sales The next figure investors should keep a close eye on is international sales, which in the sequential third quarter came in at a pretty anemic CA$4 million -- although this was a 40% increase from the sequential second quarter. Goodwill A final figure you'll want to know that Aurora Cannabis is certain not to highlight in its operating results or conference call is the company's ballooning goodwill, which stood at CA$3.18 billion at the end of March. |
38157.0 | 2019-09-09 00:00:00 UTC | Why Aurora Cannabis Fell 10.9% in August | ACB | https://www.nasdaq.com/articles/why-aurora-cannabis-fell-10.9-in-august-2019-09-10 | nan | nan | What happened
Shares of Aurora Cannabis (NYSE: ACB) fell 10.9% in the month of August, according to data from S&P Global Market Intelligence. Aurora is one of the leading Canadian cannabis producers -- in fact, Aurora has the highest production potential of any cannabis company in the world.
Therefore, Aurora's stock feels the heat whenever the overall cannabis sector falls out of favor. That's apparently what happened in August, as Aurora's big decline came not after any company-specific news, but rather after the earnings reports of peers Canopy Growth (NYSE: CGC) and Tilray (NASDAQ: TLRY).
Image source: Getty Images.
So what
In early August, Aurora actually gave preliminary revenue numbers for the quarter ended June 30, though the company wont reportofficial earnings until Sept. 12. Aurora expects revenue between $100 million and $107 million, compared to $19.1 million a year ago and $65.1 million in the March quarter. That was enough to please analysts, which initially pushed Aurora's stock up.
However, in mid-August, Canopy Growth filed its earnings report, which missed both revenue and profit expectations by a wide margin. Tilray also delivered an earnings report that missed profit expectations, though it did beat analyst expectations for revenue. Of particular note was Tilray's reported 28% decline in average price per gram during the quarter. That may have led investors to believe that the Canadian market is oversupplied.
It was odd that Aurora's stock declined so much with its peers after it had already given quarterly revenue numbers. Nevertheless, the whole sector has been under pressure in the second half of this year. Concerns about valuation, combined with a risk-off mentality in the markets, have weighed on all cannabis producers since the spring.
Now what
Aurora officially reports fourth-quarter and full-year earnings on Sept. 12, when management will add additional color to the revenue guidance. Of note, Aurora recently won a big overseas contract in Italy in July, and also bought hemp and CBD company Hempco Food and Fiber Inc. for 63.4 million Canadian dollars in the middle of August.
Of course, the most important thing for investors to monitor is the state of supply and demand in the Canadian market, as well as the ramp-up of Aurora's industry-leading production facilities.
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Billy Duberstein has no position in any of the stocks mentioned. His clients may own shares of the companies 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. | What happened Shares of Aurora Cannabis (NYSE: ACB) fell 10.9% in the month of August, according to data from S&P Global Market Intelligence. That's apparently what happened in August, as Aurora's big decline came not after any company-specific news, but rather after the earnings reports of peers Canopy Growth (NYSE: CGC) and Tilray (NASDAQ: TLRY). Of note, Aurora recently won a big overseas contract in Italy in July, and also bought hemp and CBD company Hempco Food and Fiber Inc. for 63.4 million Canadian dollars in the middle of August. | What happened Shares of Aurora Cannabis (NYSE: ACB) fell 10.9% in the month of August, according to data from S&P Global Market Intelligence. That's apparently what happened in August, as Aurora's big decline came not after any company-specific news, but rather after the earnings reports of peers Canopy Growth (NYSE: CGC) and Tilray (NASDAQ: TLRY). Aurora expects revenue between $100 million and $107 million, compared to $19.1 million a year ago and $65.1 million in the March quarter. | What happened Shares of Aurora Cannabis (NYSE: ACB) fell 10.9% in the month of August, according to data from S&P Global Market Intelligence. Aurora is one of the leading Canadian cannabis producers -- in fact, Aurora has the highest production potential of any cannabis company in the world. Aurora expects revenue between $100 million and $107 million, compared to $19.1 million a year ago and $65.1 million in the March quarter. | What happened Shares of Aurora Cannabis (NYSE: ACB) fell 10.9% in the month of August, according to data from S&P Global Market Intelligence. Tilray also delivered an earnings report that missed profit expectations, though it did beat analyst expectations for revenue. 10 stocks we like better than Aurora Cannabis Inc. |
38158.0 | 2019-09-09 00:00:00 UTC | Should Investors Buy Aurora Stock Before It Releases Year-End Results? | ACB | https://www.nasdaq.com/articles/should-investors-buy-aurora-stock-before-it-releases-year-end-results-2019-09-09 | nan | nan | Aurora Cannabis (NYSE: ACB) is expected to release its year-end results later this week. The company has lost more than 20% of its value in just the past three months, so a strong finish to the fiscal year could help send the stock back up. Let's take a closer look to see whether this cannabis company could be a good buy before its latest earnings report comes out.
Expecting big sales growth
In August, Aurora gave investors an update on its operations in which it stated that based on preliminary and unaudited results, it expected sales for Q4 to come in between 100 million and 107 million Canadian dollars. That's more than five times what the company generated a year ago, back when the adult-use market in Canada hadn't yet opened for business. Those are some impressive sales numbers, and they would be even higher than what rival Canopy Growth (NYSE: CGC) was able to generate in its latest results, when it posted revenues of just CA$90.5 million.
As good as those sales numbers would be for Aurora, the problem is that this isn't new information anymore. When the company released that update on Aug. 6, the stock got a big boost, climbing as high as $7.20 that day. Effectively, those sales figures are now priced into the stock, and they're going to be the benchmark for analysts. Sales landing in the lower end of that range could have a negative impact on the stock. Sales would likely need to finish near the top end of the range for the share price to benefit from the impressive growth.
IMAGE SOURCE: GETTY IMAGES.
Even though Aurora may be expecting a good quarter in terms of sales, some of those benefits were likely already realized in August.
The bottom line will likely make the difference
The number that investors will be looking at in Q4 is the company's net income and whether it can follow up competitor Aphria's (NYSE: APHA) impressive results. Unfortunately, that might be a long shot at best for Aurora this quarter. Coming off a loss of CA$158 million in Q3, the company has posted an operating loss of more than CA$74 million in each of the past three quarters. Last quarter, Aurora came in well below estimates, and analysts aren't expecting the company to turn a profit this time around.
Takeaway for investors
Barring a big announcement in the year-end report, the odds are that Aurora won't get a big bump in price even if it does fall within the range of sales that it forecast last month. The saving grace for the stock could be that since it is already near its low for 2019, a large drop in price now might be unlikely. However, given the industry's track record of disappointing investors and analysts, it might be a safer idea to wait until after the company releases its earnings to make a purchase decision. There's simply no compelling reason to buy the stock any earlier.
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 – 10 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. | Aurora Cannabis (NYSE: ACB) is expected to release its year-end results later this week. Those are some impressive sales numbers, and they would be even higher than what rival Canopy Growth (NYSE: CGC) was able to generate in its latest results, when it posted revenues of just CA$90.5 million. The bottom line will likely make the difference The number that investors will be looking at in Q4 is the company's net income and whether it can follow up competitor Aphria's (NYSE: APHA) impressive results. | Aurora Cannabis (NYSE: ACB) is expected to release its year-end results later this week. Let's take a closer look to see whether this cannabis company could be a good buy before its latest earnings report comes out. Expecting big sales growth In August, Aurora gave investors an update on its operations in which it stated that based on preliminary and unaudited results, it expected sales for Q4 to come in between 100 million and 107 million Canadian dollars. | Aurora Cannabis (NYSE: ACB) is expected to release its year-end results later this week. Expecting big sales growth In August, Aurora gave investors an update on its operations in which it stated that based on preliminary and unaudited results, it expected sales for Q4 to come in between 100 million and 107 million Canadian dollars. Takeaway for investors Barring a big announcement in the year-end report, the odds are that Aurora won't get a big bump in price even if it does fall within the range of sales that it forecast last month. | Aurora Cannabis (NYSE: ACB) is expected to release its year-end results later this week. Expecting big sales growth In August, Aurora gave investors an update on its operations in which it stated that based on preliminary and unaudited results, it expected sales for Q4 to come in between 100 million and 107 million Canadian dollars. Sales would likely need to finish near the top end of the range for the share price to benefit from the impressive growth. |
38159.0 | 2019-09-09 00:00:00 UTC | Aurora Cannabis Stock: Pot and the Hype Cycle | ACB | https://www.nasdaq.com/articles/aurora-cannabis-stock%3A-pot-and-the-hype-cycle-2019-09-09 | nan | nan | Technology reporters often use the Gartner (NYSE:) Hype Cycle to describe how the market adapts to new technologies.
Source: ElRoi / Shutterstock.com
In the Hype Cycle, a peak of inflated expectations is followed by a trough of disillusionment, then a gradual slope of enlightenment toward a plateau of productivity.
The measurements of the Hype Cycle are inexact. The trough may be short-lived and the plateau high, as it was with the internet 20 years ago. Or the trough may be very long and the plateau low, as companies like 3D Systems (NYSE:) are finding five years after 3D printing peaked.
Aurora Cannabis (NYSE:) and other marijuana stocks are now in the trough. They peaked almost a year ago. The market has developed more slowly than they anticipated.
The question is whether we’re looking at another internet crash-and-boom, or another 3D printing disaster.
The Pot Bust and ACB Stock
Even at its Sept. 6 opening price of $5.93 per share and a market cap of $5.9 billion, the ACB stock price still reflects great expectations. Trailing year sales are just $166 million. The last year shows more losses ($210 million) than sales.
Yet there is a lot of pessimism among investors. Our Faisal Humayun says it’s to buy. The big growers are still finding it hard to move the product. Aurora alone has 625,000 kilograms of growing capacity per year.
Faisal is not alone. Other analysts also consider Aurora
Despite growing moves to legalize marijuana there is still a Wild West aspect to the market. People vaping the stuff because they don’t know how to use it. Even if you treat pot the way you do alcohol, there’s still a law enforcement system to ramp up. The law itself remains a patchwork. It’s still technically classed with heroin on a federal level, but it’s perfectly fine in many states.
The most important asset marijuana companies like Aurora Cannabis would seem to need today is time. Time for the law to settle and for supply and demand in Canada (where pot has been legal for almost a year) . It also needs time for the U.S. market to develop.
Aurora’s Big Move
This brings us to
It sold its holdings in another pot company, Green Organic Dutchman (TSZ:), at $3 per share, netting over $86 million from over 28 million shares. ACB still holds warrants on over 16 million shares, but the cash is the key.
The cash, along with $149 million in cash and short-term investments , buys Aurora time to wait on the market. While rival Canopy Growth (NYSE:) is now down for the year, Aurora stock is up about 10%.
Aurora is next due to announce earnings Sept. 11, with a loss of about $20 million or 2 cents per share expected Since August marks the fourth quarter of Aurora’s fiscal year, it means earnings are down year-over-year, but revenue is up 432%.
Bottom Line on Aurora Cannabis Stock
Financial sustainability is the name of the game as marijuana growers navigate the trough of disillusionment. The short-term looks dark, but as Luke Lango observes,
Aurora now has cash to burn through the market’s night and stable management under co-founder Terry Booth. Rival has jettisoned its founding managers under the guidance of liquor company Constellation Brands (NYSE:).
To those who like pot stocks this makes Aurora Were I a speculator I might throw a few Loonies at it. But with my retirement money on the line I’ll leave that to younger folks.
is a financial and technology journalist. He is the author of the mystery thriller, The Reluctant Detective Finds Her Family, available at the Amazon Kindle store. Write him at or follow him on Twitter at @danablankenhorn. As of this writing he owned no shares in companies mentioned in this article.
The post 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 Pot Bust and ACB Stock Even at its Sept. 6 opening price of $5.93 per share and a market cap of $5.9 billion, the ACB stock price still reflects great expectations. ACB still holds warrants on over 16 million shares, but the cash is the key. Source: ElRoi / Shutterstock.com In the Hype Cycle, a peak of inflated expectations is followed by a trough of disillusionment, then a gradual slope of enlightenment toward a plateau of productivity. | The Pot Bust and ACB Stock Even at its Sept. 6 opening price of $5.93 per share and a market cap of $5.9 billion, the ACB stock price still reflects great expectations. ACB still holds warrants on over 16 million shares, but the cash is the key. Or the trough may be very long and the plateau low, as companies like 3D Systems (NYSE:) are finding five years after 3D printing peaked. | The Pot Bust and ACB Stock Even at its Sept. 6 opening price of $5.93 per share and a market cap of $5.9 billion, the ACB stock price still reflects great expectations. ACB still holds warrants on over 16 million shares, but the cash is the key. Aurora’s Big Move This brings us to It sold its holdings in another pot company, Green Organic Dutchman (TSZ:), at $3 per share, netting over $86 million from over 28 million shares. | The Pot Bust and ACB Stock Even at its Sept. 6 opening price of $5.93 per share and a market cap of $5.9 billion, the ACB stock price still reflects great expectations. ACB still holds warrants on over 16 million shares, but the cash is the key. Or the trough may be very long and the plateau low, as companies like 3D Systems (NYSE:) are finding five years after 3D printing peaked. |
38160.0 | 2019-09-08 00:00:00 UTC | Marijuana's "Big Four" Are Burning Through Cash at an Alarming Rate | ACB | https://www.nasdaq.com/articles/marijuanas-big-four-are-burning-through-cash-at-an-alarming-rate-2019-09-08 | nan | nan | There are few industries garnering more attention right now than legal marijuana, and it's not hard to understand why. Over the next decade, sales for the green rush could grow more than 18-fold, if the most aggressive sales estimate on Wall Street come to fruition. These estimates, along with well-known demand in the black market, has Wall Street and investors very excited about the potential for pot stocks.
With legal marijuana being such a new concept, there's plenty of market share up for grabs in Canada, Europe, and the crown jewel of the cannabis movement, the United States. That means marijuana stocks big and small have been more than willing to spend aggressively to gobble up as much market share as possible.
There's only one problem Cannabis stocks are burning through their cash at an alarming rate. This has been especially true of marijuana's "Big Four": Canopy Growth (NYSE: CGC), Aurora Cannabis (NYSE: ACB), Tilray (NASDAQ: TLRY), and Cronos Group (NASDAQ: CRON).
Image source: Getty Images.
Canopy Growth
If I didn't know any better, I'd think Canopy Growth, the largest marijuana stock in the world by market cap, was spending Monopoly money. Since the beginning of the year, Canopy Growth's cash, cash equivalents, and short-term investments has declined by 1.77 billion Canadian dollars. The bulk of Canopy's war chest is the result of a $4 billion equity investment (about CA$5 billion at closing) that closed in November from Modelo and Corona beer producer Constellation Brands.
Part of this decline can be attributed to Canopy's numerous acquisitions. Having already acquired Colorado-based intellectual property company ebbu, Canopy has also agreed to buy Acreage Holdings on a contingent-rights basis for $3.4 billion, when announced. Though this deal is primarily being paid for with Canopy's stock, it'll still involve Acreage shareholders receiving $300 million in cash, or $2.55 per share, up front.
Canopy has also spent liberally on pushing into new markets, especially the United States. Plans are for $150 million to be spent on a hemp-processing facility in New York State following the award of a processing license in January. Coupled with growing administrative and marketing expenses, Canopy's once unsurpassable war chest isn't nearly as large as it once was.
Image source: Getty Images.
Aurora Cannabis
Although Aurora Cannabis has yet to report its results for the fiscal fourth quarter, ended in June, the company's third-quarter report featured cash used in operating activities of CA$187.6 million. Mind you, Aurora Cannabis does have capital at its disposal, with a $750 million shelf offering (that's U.S.), as well as the recent disposition of its stake in The Green Organic Dutchman.
What's worked in Aurora's favor is that the company's aggressive inorganic growth strategy hasn't involved much in the way of cash outlays. Since completing its CanniMed purchase early in 2018, Aurora has almost exclusively bought other businesses by using its stock as capital. While this is dilutive to existing shareholders, it ensures that the company's cash pile lasts longer.
The concern is that as Aurora's business and employee count grow, so will its expenses and cash needs. Again, Aurora does have access to cash via its shelf offering, and it raised a tidy sum by disposing of its TGOD investment. Nevertheless, its existing war chest appears to be dwindling.
Image source: Getty Images.
Tilray
It's a similar story with Tilray, which has seen its aggregate cash, cash equivalents, and short-term investments shrink by $296.7 million since the year began (Tilray reports in U.S. dollars).
As with its peers, Tilray has been active on the acquisition front, albeit not to the same degree as Aurora Cannabis or Canopy Growth. Tilray's purchase of hemp-foods company Manitoba Harvest in March is important in that it'll give the company access to more than 16,000 retail doors throughout North America. These retail doors will be pivotal in helping Tilray distribute cannabidiol products in Canada and the United States.
Tilray also announced a $32.6 million investment in May that'll see the expansion of 203,000 square feet in production and processing space.
Between its acquisition of Manitoba Harvest, its capacity expansion, and rising administrative and sales expenses, Tilray has been losing money and burning through its cash pile at an extraordinary pace. Further, the company's losses are unlikely to ease anytime soon, with Tilray now focusing its attention on the U.S. and Europe, as opposed to Canada. In my opinion, this increases the likelihood of Tilray needing to raise capital in the not-so-distant future.
Image source: Getty Images.
Cronos Group
Lastly, there's Cronos Group, which has recently upped its spending.
Like Canopy Growth, Cronos Group had the fortune of landing a major equity investor in tobacco giant Altria. In March, Cronos Group went from having less than $25 million in cash to its name to having closer to $1.8 billion, in exchange for Altria owning a non-diluted 45% stake in the company.
However, since the beginning of the year, Cronos Group has used CA$76 million in cash for operating activities, and recently announced the acquisition of Redwood Holdings for $300 million (again, U.S.). Normally, marijuana stocks utilize their common stock as collateral for these deals, but Cronos will be using $225 million in cash to pay for its newest portfolio puzzle piece. Inclusive of operating costs, it would not be surprising if Cronos Group's cash position has shrunk to $1.5 billion from $1.8 billion in just over a three-month period, once the Redwood deal is finalized.
With supply issues haunting Canadian growers and these supply chain concerns not expected to ebb anytime soon, cash could become a scarcer commodity among Canada's "Big Four."
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 – 10 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 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. | This has been especially true of marijuana's "Big Four": Canopy Growth (NYSE: CGC), Aurora Cannabis (NYSE: ACB), Tilray (NASDAQ: TLRY), and Cronos Group (NASDAQ: CRON). With legal marijuana being such a new concept, there's plenty of market share up for grabs in Canada, Europe, and the crown jewel of the cannabis movement, the United States. Having already acquired Colorado-based intellectual property company ebbu, Canopy has also agreed to buy Acreage Holdings on a contingent-rights basis for $3.4 billion, when announced. | This has been especially true of marijuana's "Big Four": Canopy Growth (NYSE: CGC), Aurora Cannabis (NYSE: ACB), Tilray (NASDAQ: TLRY), and Cronos Group (NASDAQ: CRON). Since the beginning of the year, Canopy Growth's cash, cash equivalents, and short-term investments has declined by 1.77 billion Canadian dollars. However, since the beginning of the year, Cronos Group has used CA$76 million in cash for operating activities, and recently announced the acquisition of Redwood Holdings for $300 million (again, U.S.). | This has been especially true of marijuana's "Big Four": Canopy Growth (NYSE: CGC), Aurora Cannabis (NYSE: ACB), Tilray (NASDAQ: TLRY), and Cronos Group (NASDAQ: CRON). Aurora Cannabis Although Aurora Cannabis has yet to report its results for the fiscal fourth quarter, ended in June, the company's third-quarter report featured cash used in operating activities of CA$187.6 million. Tilray It's a similar story with Tilray, which has seen its aggregate cash, cash equivalents, and short-term investments shrink by $296.7 million since the year began (Tilray reports in U.S. dollars). | This has been especially true of marijuana's "Big Four": Canopy Growth (NYSE: CGC), Aurora Cannabis (NYSE: ACB), Tilray (NASDAQ: TLRY), and Cronos Group (NASDAQ: CRON). Canopy Growth If I didn't know any better, I'd think Canopy Growth, the largest marijuana stock in the world by market cap, was spending Monopoly money. Between its acquisition of Manitoba Harvest, its capacity expansion, and rising administrative and sales expenses, Tilray has been losing money and burning through its cash pile at an extraordinary pace. |
38161.0 | 2019-09-08 00:00:00 UTC | 3 Pot Stocks Poised to Win in Canada's Cannabis 2.0 Market | ACB | https://www.nasdaq.com/articles/3-pot-stocks-poised-to-win-in-canadas-cannabis-2.0-market-2019-09-08 | nan | nan | Analysts are calling it "Cannabis 2.0." The term references the next wave of the Canadian adult-use recreational marijuana market. On Oct. 17, 2019, the country's legalization of cannabis derivatives, including beverages, edibles, and vapes, will go into effect. Canada's current "Cannabis 1.0" recreational market legalized only cannabis flower, oils, plants, and seeds.
Don't expect the Cannabis 2.0 market to take off immediately, though. Companies must file a notice with Health Canada 60 days in advance before beginning to market new cannabis products. This means that the first cannabis derivatives products will be available for sale in mid-December.
Deloitte estimates that the Cannabis 2.0 market could be worth 2.7 billion in Canadian dollars (a little over US$2 billion). Which stocks are poised to profit the most in the expanded Canadian recreational pot market? Here's why Canopy Growth (NYSE: CGC), Aurora Cannabis (NYSE: ACB), and HEXO (NYSE: HEXO) could be the biggest winners.
Image source: Getty Images.
1. Canopy Growth
Canopy Growth has been talking about the potential for cannabis-infused beverages at least since big alcoholic beverage maker Constellation Brands bought an initial 9.9% stake in the company back in 2017. In Canopy's fiscal 2020 first-quarter conference call in August, CEO Mark Zekulin reaffirmed the company's belief that cannabis beverages will "expand the cannabis consumer category to reach a larger portion of the population." The company plans to market multiple cannabis beverages later this year, including zero and low-calorie drinks.
But don't think for a second that Canopy Growth's Cannabis 2.0 focus will be limited to beverages. Zekulin noted in the company's Q1 call that Canopy occupies a former Hershey chocolate factory. He said that Canopy will roll out a variety of cannabis edibles, particularly including chocolate products.
The company could also shine in the vapes market. Canopy has conducted significant market research into vaping to develop devices that it thinks will be differentiated from current vape products. The company plans to launch over 15 new vape-related products in December.
Many investors have focused primarily on Canopy Growth's recent struggles, particularly its huge net loss in the last quarter. However, probably no company has dedicated as much time and money toward the forthcoming Cannabis 2.0 market as Canopy has. I expect that Canopy Growth and its stock will reap the rewards from this effort.
2. Aurora Cannabis
Aurora Cannabis is taking a somewhat different approach to the Cannabis 2.0 market than Canopy Growth is. Although Aurora is developing cannabis-infused beverages, chief corporate officer Cam Battley said in the company's Q3 conference call in May that it anticipates "a relatively low market share of these products" and isn't rushing into the beverages market.
The company isn't hesitant about launching cannabis edibles, though. Battley stated that Aurora plans to roll out a variety of edibles products, including hard baked goods, chocolates, and mints. Aurora CEO Terry Booth mentioned that there could also be an opportunity for organic edibles and sugar-free edibles.
In the U.S., vape products have been huge winners. Battley thinks that vape products in the Canadian Cannabis 2.0 market will also be "a terrific market segment that doesn't need a lot of market development." Aurora has partnered with Pax Labs to market its Pax Era vape devices in Canada.
One of the biggest advantages for Aurora as the Cannabis 2.0 market ramps up is its capacity. The company's 300,000 square foot Aurora Polaris facility should be completed by the end of this year and will produce high-margin products including edibles.
3. HEXO
HEXO isn't nearly as large as Canopy or Aurora, but it should be one of the top winners in the Cannabis 2.0 market. For one thing, HEXO and big beer maker Molson Coors Brewing formed a joint venture, Truss, to develop and market cannabis-infused beverages.
Although Aurora's executives are skeptical about the Cannabis 2.0 beverages market, HEXO is making it a primary focus. HEXO CEO Sebastien St.-Louis said in June that he hasn't "seen anything else in the industry right now that compares to what we have today" with the first version of its cannabis-infused beverage.
The company isn't betting everything on beverages, however. HEXO is also developing gummies and premium vape products. St.-Louis thinks that vapes could rival beverages in terms of market opportunity. He also expects that gummies will be the biggest part of the edibles segment, a view that is supported by surveys conducted by Deloitte.
Another reason why I think that HEXO is well positioned in the Cannabis 2.0 market is the company's dominance in Quebec. HEXO has a leading market share of 30% in the province, which ranks behind only Ontario based on population.
Cannabis 2.0 isn't enough
While investors should pay attention to the winners and losers in the Canadian Cannabis 2.0 market, it's important to remember that this market isn't enough by itself to justify the valuations of cannabis producers. For that matter, the entire Canadian market isn't enough to do so.
The biggest opportunity from investing in marijuana stocks will be with companies that have a global presence. Canopy Growth and Aurora Cannabis are already key players in international markets. HEXO's CEO predicts that the company will add major partners to expand internationally, particularly in the United States. Cannabis 2.0 is a piece of the puzzle for pot stocks to win, but it's not the most important piece.
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 – 10 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 Molson Coors Brewing. The Motley Fool recommends Constellation Brands 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. | Here's why Canopy Growth (NYSE: CGC), Aurora Cannabis (NYSE: ACB), and HEXO (NYSE: HEXO) could be the biggest winners. Battley stated that Aurora plans to roll out a variety of edibles products, including hard baked goods, chocolates, and mints. The company's 300,000 square foot Aurora Polaris facility should be completed by the end of this year and will produce high-margin products including edibles. | Here's why Canopy Growth (NYSE: CGC), Aurora Cannabis (NYSE: ACB), and HEXO (NYSE: HEXO) could be the biggest winners. Canada's current "Cannabis 1.0" recreational market legalized only cannabis flower, oils, plants, and seeds. Battley stated that Aurora plans to roll out a variety of edibles products, including hard baked goods, chocolates, and mints. | Here's why Canopy Growth (NYSE: CGC), Aurora Cannabis (NYSE: ACB), and HEXO (NYSE: HEXO) could be the biggest winners. Aurora Cannabis Aurora Cannabis is taking a somewhat different approach to the Cannabis 2.0 market than Canopy Growth is. Battley thinks that vape products in the Canadian Cannabis 2.0 market will also be "a terrific market segment that doesn't need a lot of market development." | Here's why Canopy Growth (NYSE: CGC), Aurora Cannabis (NYSE: ACB), and HEXO (NYSE: HEXO) could be the biggest winners. On Oct. 17, 2019, the country's legalization of cannabis derivatives, including beverages, edibles, and vapes, will go into effect. But don't think for a second that Canopy Growth's Cannabis 2.0 focus will be limited to beverages. |
38162.0 | 2019-09-08 00:00:00 UTC | Better Buy: Aphria vs. Aurora Cannabis | ACB | https://www.nasdaq.com/articles/better-buy%3A-aphria-vs.-aurora-cannabis-2019-09-08 | nan | nan | Every stock has a story. Aphria's (NYSE: APHA) story is of a scandal-plagued Canadian cannabis producer that has quietly emerged as one of the more intriguing comeback candidates in the industry. Aurora Cannabis' (NYSE: ACB) story is about a giant that grew big by gobbling up one smaller cannabis company after another.
The most important part of the story for any stock, though, is the chapters that haven't been heard or read yet. Which of these two top Canadian pot stocks is more likely to have a happy ending for investors? Here's what you need to know about Aphria and Aurora that could make the most impact on how their stories turn out.
Image source: Getty Images.
The case for Aphria
Pretty much every Canadian cannabis producer is enjoying solid revenue growth. But the bottom line is a different matter altogether for most of them. However, Aphria delivered a big profit in its latest quarter.
The main secret behind Aphria's success is its CC Pharma operations. Aphria acquired the German medical cannabis and pharmaceuticals distributor earlier this year. CC Pharma generated over three-fourths of Aphria's total revenue in the company's fiscal 2019 fourth quarter and made that nice profit in the quarter possible.
However, Aphria continues to enjoy strong momentum in the Canadian adult-use recreational marijuana market, too. The company reported recreational marijuana revenue of 18.5 million Canadian dollars in fiscal Q4, up 158% from the previous quarter.
Aphria appears to be in a great position to build on its strength in international markets. In addition to the CC Pharma acquisition, the company was awarded one of three licenses to cultivate medical cannabis inside Germany. Aphria Chairman and interim CEO Irwin Simon said in the company's Q4 conference call that Aphria expects to secure European Union Good Manufacturing Practices (GMP) certification for bulk and finished products in the first half of fiscal 2020. This will enable the company to export even more cannabis products to Europe and South America.
One open question for Aphria pertains to its U.S. strategy. So far, the company hasn't announced specific plans for entering the U.S. hemp CBD market. However, Simon mentioned in the Q4 call that Aphria is focusing on establishing strategic partnerships in the U.S. and expects to "generate strong growth in the U.S. over time."
Aphria is on track to have an annual production capacity of 255,000 kilograms. That impressive level ranks the company in third place among Canadian cannabis producers based on production capacity. But Aphria's market cap is only the fifth-highest in the industry. This gap reflects Aphria's relatively attractive valuation compared to several of its peers.
The case for Aurora Cannabis
Aurora leads the industry in the scramble to build capacity. The company expects to be able to produce 625,000 kilograms of cannabis annually by the end of 2020. This edge in production capacity is allowing Aurora to establish its products as leaders in key global markets.
The company's revenue growth reflects its leadership position. Aurora provided a sneak peek at its forthcoming fiscal 2019 fourth-quarter results last month. It expects to announce sales between CA$100 million and CA$107 million, up 59% quarter over quarter
Unlike Aphria, Aurora isn't profitable yet. However, Chief Corporate Officer Cam Battley stated in Aurora's fiscal 2019 Q3 conference call that the company expects to report positive earnings before interest, taxes, depreciation, and amortization (EBITDA) in the fiscal 2019 fourth quarter. Battley said that Aurora is on a "pathway to profitability."
Aurora's success thus far stems primarily from the Canadian adult-use recreational market. The company should be able to keep up its winning ways, especially with the impending opening of the Canadian cannabis derivatives market. Aurora is focusing heavily on the cannabis vape market.
But Aurora is also one of the top players in the international cannabis market. It, along with Aphria, won a thumbs-up to grow medical cannabis inside Germany. Aurora already has EU GMP certified facilities and expects to complete construction of a large-scale production facility in Denmark next year.
It's still not clear what path Aurora will take to enter the U.S. market. The company is actively seeking partners from outside the cannabis industry and brought billionaire investor Nelson Peltz on board as a strategic advisor earlier this year to facilitate those efforts.
Better buy
Aurora is bigger, but I think there's a strong argument to be made that Aphria is the better stock. Aphria's high production capacity and lower market cap could make it more attractive for a major partner looking to make an equity investment. The company's CC Pharma business should continue to be a big plus.
There are plenty of risks associated with investing in marijuana stocks, though, and Aphria isn't an exception. The potential for a supply glut in Canada could hurt Aphria. So could slower-than-expected growth in any of the company's key markets.
My view is that Aphria is the better stock to buy over Aurora, but it's suitable only for aggressive investors with a high tolerance for risk and volatility. Aphria's story might end happily ever after, but it could be a bumpy ride in the meantime.
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 – 10 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 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) story is about a giant that grew big by gobbling up one smaller cannabis company after another. Aphria's (NYSE: APHA) story is of a scandal-plagued Canadian cannabis producer that has quietly emerged as one of the more intriguing comeback candidates in the industry. However, Simon mentioned in the Q4 call that Aphria is focusing on establishing strategic partnerships in the U.S. and expects to "generate strong growth in the U.S. over time." | Aurora Cannabis' (NYSE: ACB) story is about a giant that grew big by gobbling up one smaller cannabis company after another. CC Pharma generated over three-fourths of Aphria's total revenue in the company's fiscal 2019 fourth quarter and made that nice profit in the quarter possible. It expects to announce sales between CA$100 million and CA$107 million, up 59% quarter over quarter Unlike Aphria, Aurora isn't profitable yet. | Aurora Cannabis' (NYSE: ACB) story is about a giant that grew big by gobbling up one smaller cannabis company after another. CC Pharma generated over three-fourths of Aphria's total revenue in the company's fiscal 2019 fourth quarter and made that nice profit in the quarter possible. Aphria Chairman and interim CEO Irwin Simon said in the company's Q4 conference call that Aphria expects to secure European Union Good Manufacturing Practices (GMP) certification for bulk and finished products in the first half of fiscal 2020. | Aurora Cannabis' (NYSE: ACB) story is about a giant that grew big by gobbling up one smaller cannabis company after another. Every stock has a story. The company's revenue growth reflects its leadership position. |
38163.0 | 2019-09-08 00:00:00 UTC | 5 Countries With the Highest Cannabis Spending by 2024 | ACB | https://www.nasdaq.com/articles/5-countries-with-the-highest-cannabis-spending-by-2024-2019-09-08 | nan | nan | Marijuana is one of the fastest growing industries on the planet. Legal weed sales have more than tripled between 2014 and 2018, and they're on track to roughly quadruple between the $10.9 billion generated in licensed cannabis stores 2018 and the projected $40.6 billion in worldwide licensed store sales by 2024. That's according to the 2019 "State of the Legal Cannabis Markets" report released earlier this year by Arcview Market Research and BDS Analytics.
Yet, what you might find intriguing about this rapid growth is that it'll wind up being attributed to just a select few countries. Even though more than three dozen countries around the world have legalized medical marijuana, five countries are forecast by Arcview and BDS to account for $38.2 billion of this aforementioned $40.6 billion in licensed-store sales by 2024. Note, licensed-store sales doesn't include general retailers selling cannabidiol (CBD) products, or cannabinoid-based drug developers selling pot-derived pharmaceuticals.
Image source: Getty Images.
1. United States: $30.1 billion in cannabis spending by 2024
As should be no surprise, the U.S. projects as the leading marijuana market in the world by sales in 2024. In fact, the $30.1 billion in licensed-store revenue should comprise almost three-quarters of global licensed sales. According to Arcview and BDS, $9 billion of these sales are expected to come from the medical side of the equation, up from $4 billion in 2018, with the remaining $21.1 billion derived from recreational marijuana, up from $5.9 billion last year.
The thing about the U.S. is that cannabis stocks can still thrive even if the federal government doesn't change its classification of marijuana from Schedule I. As long as Congress and the president continue to respect the right of states to make their own choices on cannabis, the industry could have plenty of runway.
One of the fastest early stage growers looks to be multistate dispensary operator Cresco Labs (OTC: CRLBF). Cresco, which holds the licenses to more than four dozen retail locations in 11 states, made a bold move in April when it announced an all-stock deal to acquire Origin House (OTC: ORHOF). Origin House is one of only a few companies to hold a cannabis distribution license in California, the state responsible for a quarter of all U.S. marijuana spending by 2024. Thus, Cresco Labs' purchase of Origin House will give it access to more than 500 Californian dispensaries, and over 700 nationwide. Cresco and its vertically integrated peers appear well-positioned to take advantage of this huge growth opportunity.
Image source: Getty Images.
2. Canada: $5.18 billion by 2024
Despite being the first industrialized country in the world to legalize recreational weed, Canada looks to take a distant second to the United States by 2024 in terms of sales. Arcview and BDS are projecting that $4.8 billion in sales will come from the recreational market by then, with the remainder made up of medical cannabis sales. It's not uncommon for the medical industry to get cannibalized when adult-use marijuana is legalized, because it means patients no longer have to wait for a doctor's approval and prescription to buy weed.
There's a lot of competition in Canada right now, so it's still unclear which company will be Canada's kingpin. However, Aurora Cannabis (NYSE: ACB) is a relatively good bet to be near the top of the pack solely based on its production potential. Aurora is already leaps and bounds ahead of its next-closest competitors with an annual run-rate output of 150,000 kilos as of the end of March, and plans to be producing at least 625,000 kilos on a run-rate basis by the end of June 2020. With most of this production located in Canada, and the company sporting a number of large-scale grow farms, Aurora Cannabis should be able to take advantage of economies of scale to drive down its growing costs per gram.
Of course, the real near-term excitement revolves around the upcoming launch of derivative products (e.g,, edibles, vapes, topicals, concentrates, and infused beverages) by mid-December. Derivatives have much better margins and pricing power than dried cannabis flower, which is why Aurora Cannabis and its peers have been busy beefing up their product offerings over the past year in preparation for this upcoming launch date.
Image source: Getty Images.
3. Germany: $1.35 billion by 2024
Even though Arcview and BDS are not expecting Germany to legalize recreational cannabis, the company's highly permissive stance toward medical marijuana, and the fact that health insurers cover medical weed in the country, should allow sales to soar from $79 million in 2018 to $1.35 billion by 2024.
Interestingly enough, Canadian cannabis stocks were actually big-time winners of the German cultivation licensing process. Both Aurora Cannabis and Aphria (NYSE: APHA) were awarded licenses to grow cannabis in Germany. For its part, Aphria plans to have an 8,000-square-meter facility in Germany that'll begin supplying the country with medical marijuana in the early part of 2020. In addition to growing cannabis, Aphria introduced CannRelief in Germany, which is a CBD-based nutraceutical and cosmetics product line.
As for Aurora Cannabis, its approval to construct a growing facility will allow the company to supply the German market with 4,000 kilos of marijuana over four years, with shipments expected to commence October 2020. Of course, this production capacity is liable to be bumped up if patient demand merits it.
Image source: Getty Images.
4. Mexico: $1.02 billion by 2024
Arguably one of the oddest "legality" situations concerning marijuana right now is with Mexico. The nation's Supreme Court has ruled five times since 2015 that imposing a ban on recreational cannabis is unconstitutional. That's important, because when Mexico's Supreme Court reaches five similar decisions on an issue, it becomes the standard throughout the country. Or, in layman's terms, the Supreme Court has essentially affirmed the legality of recreational marijuana and is simply waiting for lawmakers in the country to hash out the details.
According to Arcview and BDS, Mexico will have legalized adult-use cannabis by 2024, although the ramp-up of legal sales could be slow. By 2024, recreational weed sales are only expected total $582 million, with an additional $441 million in medical spending, for a combined $1.02 billion. Mexico's considerably larger population than Canada makes for an attractive market opportunity, but it's unclear how well legal industries will fare with the noted presence of illicit producers.
One company that hasn't been shy about its push into Mexico is Medical Marijuana, Inc. (OTC: MJNA), the very first publicly listed pot stock. Southern California-based Medical Marijuana was the first company to import CBD-rich oils into Mexico in 2016, giving it a head start on building important relationships with the country's medical community. You'll note that even with recreational legalization likely on the horizon, medical spending should continue to grow in Mexico. That gives Medical Marijuana and its RSHO-X hemp oil a real shot to continue penetrating the Mexico's medical cannabis market.
Image source: Getty Images.
5. United Kingdom: $546.9 million by 2024
Although it may not be on track to tip the scales at $1 billion in sales by 2024, the U.K. is poised to be one of the fastest growing countries in the world based on cannabis spending. After only $9.9 million in medical spending last year, Britain is forecast for almost $547 million in medical marijuana revenue by 2024, representing a compound annual growth rate of 95.2%.
This sudden push to legalize and normalize medical pot use in the U.K. can be partially attributed to the success of GW Pharmaceuticals (NASDAQ: GWPH), the cannabinoid-based drug developer that had the U.S. Food and Drug Administration approve the very first cannabis-derived drug last year. GW Pharmaceuticals' CBD-based oral solution known as Epidiolex dazzled in late-stage studies and wound up reducing seizure frequency for patients with two rare forms of childhood-onset epilepsy by 30% to 40%. Additionally, GW Pharmaceuticals' Sativex, an oromucosal spray containing both CBD and tetrahydrocannabinol (THC), is approved in more than a dozen markets in Europe (but not the U.S.).
Britain's citizens and its government have seen what the U.K.-based GW Pharmaceuticals can do with cannabinoids, and its government has been open to the possibility of expanding access to marijuana-based products for medical patients.
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 – 10 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 Origin House. 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. | However, Aurora Cannabis (NYSE: ACB) is a relatively good bet to be near the top of the pack solely based on its production potential. Cresco, which holds the licenses to more than four dozen retail locations in 11 states, made a bold move in April when it announced an all-stock deal to acquire Origin House (OTC: ORHOF). As for Aurora Cannabis, its approval to construct a growing facility will allow the company to supply the German market with 4,000 kilos of marijuana over four years, with shipments expected to commence October 2020. | However, Aurora Cannabis (NYSE: ACB) is a relatively good bet to be near the top of the pack solely based on its production potential. Even though more than three dozen countries around the world have legalized medical marijuana, five countries are forecast by Arcview and BDS to account for $38.2 billion of this aforementioned $40.6 billion in licensed-store sales by 2024. Note, licensed-store sales doesn't include general retailers selling cannabidiol (CBD) products, or cannabinoid-based drug developers selling pot-derived pharmaceuticals. | However, Aurora Cannabis (NYSE: ACB) is a relatively good bet to be near the top of the pack solely based on its production potential. Even though more than three dozen countries around the world have legalized medical marijuana, five countries are forecast by Arcview and BDS to account for $38.2 billion of this aforementioned $40.6 billion in licensed-store sales by 2024. According to Arcview and BDS, $9 billion of these sales are expected to come from the medical side of the equation, up from $4 billion in 2018, with the remaining $21.1 billion derived from recreational marijuana, up from $5.9 billion last year. | However, Aurora Cannabis (NYSE: ACB) is a relatively good bet to be near the top of the pack solely based on its production potential. Canada: $5.18 billion by 2024 Despite being the first industrialized country in the world to legalize recreational weed, Canada looks to take a distant second to the United States by 2024 in terms of sales. Germany: $1.35 billion by 2024 Even though Arcview and BDS are not expecting Germany to legalize recreational cannabis, the company's highly permissive stance toward medical marijuana, and the fact that health insurers cover medical weed in the country, should allow sales to soar from $79 million in 2018 to $1.35 billion by 2024. |
38164.0 | 2019-09-06 00:00:00 UTC | Is Cronos Group Ready to Make a Comeback? | ACB | https://www.nasdaq.com/articles/is-cronos-group-ready-to-make-a-comeback-2019-09-06 | nan | nan | Marijuana companies started the year on a strong note. A wave of new laws that were enacted late last year helped drive many pot stocks to new heights. Things look much less impressive at the moment, though. The past few months have been brutal for the marijuana sector, and Cronos Group Inc (NASDAQ: CRON) has not escaped this apocalypse. A round of disappointing financial results -- coupled with a series of downgrades from several analysts -- have taken a toll on the Toronto-based firm. As a result, Cronos' shares are only worth a fraction of what they were in mid-March. While I do not think Cronos' investment thesis is particularly compelling, maybe these recent headwinds have created an excellent entry point for long-term investors. Is Cronos worth buying at current levels?
Why Cronos might still be a Buy
Perhaps the best argument for Cronos still being an attractive option is its partnership with Altria Group (NYSE: MO). By way of a reminder, the tobacco company invested $1.8 billion for a 45% stake in Cronos. This partnership allows Cronos to have access to some much needed cash. The firm seems to be putting these funds to good use, too. Back in May, the marijuana company announced the opening of a research facility, or more precisely, a cannabinoid device R&D facility, in Israel. The goal is to develop state of the art vaporizer devices for cannabis consumption. This move may be a stepping stone to Cronos entering the high-margin cannabis derivative market, which is set to open in Canada sometime this fall.
More recently, Cronos announced it would acquire four of Redwood Holding Group, LLC's subsidiaries. Redwood is a manufacturer of CBD skincare products that operates in the US under the brand name Lord Jones. The deal cost Cronos about $300 million, most of which the company will pay in cash ($225 million to be exact). Of course, Cronos' partnership with Altria provides benefits beyond money to splurge on acquisitions and other growth initiatives. Altria has extensive experience with controlled substances and a wide distribution network it can leverage to reach otherwise unattainable clients. Put Cronos' high-margin ventures together with Altria's expertise and connections, and the potential seems enticing.
Image Source: Getty Images
Why there might be reservations about Cronos
The other side of the argument is a lot less flattering. First, Cronos' revenues pale in comparison to those of its peers, and the firm's top line growth isn't as impressive as it's peers. Cronos' second quarter net revenues were about CA$10 million, a 202% increase year over year. By contrast, Canopy Growth Corp (NYSE: CGC) delivered revenues of CA$90 million during its latest reported quarter, a 249% year over year. Similarly, Aurora Cannabis (NYSE: ACB) reported revenues of CA$65 million, a 304% increase year over year. While Cronos recently posted stronger sequential top line growth recently, the firm is still very far from showing revenues on par with similarly sized cannabis companies.
Second, Cronos is lagging behind in terms of production capacity. The pot company's peak production capacity of about 110,000 kilograms per year falls short of that of much smaller competitors. For instance, Aleafia Health Inc (OTC: ALEAF) only has a market cap of $201 million, but edges out Cronos (whose market cap is about 15 times that of Aleafia) in this department. Finally, Cronos has failed to secure enough supply deals to keep up with its competitors. About a handful of Canadian pot growers have signed supply deals with every Canadian province, including Aphria, Canopy Growth, and OrganiGram Holdings Inc (NASDAQ: OGI). Cronos, though, only has such agreements in place with two provinces.
Should you buy?
Cronos seems well-positioned to profit from the launch of derivative products, and its venture into the hemp-based CBD market may turn out to be fruitful. Maybe excellent revenues and earnings will come later. After all, many of the top marijuana companies aren't even profitable yet. Still, Cronos is already falling far behind many of its competitors in several key aspects, and these firms are equally anxious to dip their toes into the upcoming derivative market. In other words, Cronos will have to capture a significant share of this market to post revenues comparable to that of its peers. While that certainly seems possible, especially given the company's partnership with Altria, whether Cronos can pull it off remains to be seen. With that in mind, a wait-and-see approach might be the right one to take with Cronos at the moment.
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 – 10 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
Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool recommends OrganiGram 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. | Similarly, Aurora Cannabis (NYSE: ACB) reported revenues of CA$65 million, a 304% increase year over year. This move may be a stepping stone to Cronos entering the high-margin cannabis derivative market, which is set to open in Canada sometime this fall. Still, Cronos is already falling far behind many of its competitors in several key aspects, and these firms are equally anxious to dip their toes into the upcoming derivative market. | Similarly, Aurora Cannabis (NYSE: ACB) reported revenues of CA$65 million, a 304% increase year over year. While Cronos recently posted stronger sequential top line growth recently, the firm is still very far from showing revenues on par with similarly sized cannabis companies. About a handful of Canadian pot growers have signed supply deals with every Canadian province, including Aphria, Canopy Growth, and OrganiGram Holdings Inc (NASDAQ: OGI). | Similarly, Aurora Cannabis (NYSE: ACB) reported revenues of CA$65 million, a 304% increase year over year. Why Cronos might still be a Buy Perhaps the best argument for Cronos still being an attractive option is its partnership with Altria Group (NYSE: MO). Cronos' second quarter net revenues were about CA$10 million, a 202% increase year over year. | Similarly, Aurora Cannabis (NYSE: ACB) reported revenues of CA$65 million, a 304% increase year over year. Why Cronos might still be a Buy Perhaps the best argument for Cronos still being an attractive option is its partnership with Altria Group (NYSE: MO). Cronos seems well-positioned to profit from the launch of derivative products, and its venture into the hemp-based CBD market may turn out to be fruitful. |
38165.0 | 2019-09-06 00:00:00 UTC | In Battered Cannabis Space, Aphria Stock May Be Worth a Look | ACB | https://www.nasdaq.com/articles/in-battered-cannabis-space-aphria-stock-may-be-worth-a-look-2019-09-06 | nan | nan | Aphria (NYSE:) stock rose nicely last month. After falling to as low as $5.02/share, Aphria stock rallied in early August on strong earnings. APHA has since declined from $7.45/share to around $6.95/share.
At its current valuation, APHA stock trades at a discount to Aurora Cannabis (NYSE:) and Canopy Growth (NYSE:). But does this make Aphria stock a value play? APHA has a tarnished reputation. But the company’s recent earnings success could be a signal that Aphria’s future prospects remain strong.
Let’s take a closer look at APHA stock, and see if now’s the time to buy.
Source: Shutterstock
A Closer Look at APHA
, Aphria has focused on the medical side of cannabis. The medical space is less “cool” than the recreational side. But it offers a more stable opportunity. Similar to Aurora, Aphria has focused its efforts on international markets. With the Canadian market still suffering a supply glut, geographic diversification is a smart move.
APHA has had the most success in Europe, particularly Germany, and in Latin America. After acquiring , Aphria is now one of three companies with a cultivation license in Germany. With a solid foothold in that market, Aphria is doubling down on that market.
. That was up from C$73.6M in the prior quarter. Gross profits doubled from C$17.3M to C$36M.
After these improvements, APHA has high hopes for fiscal 2020. . Its guidance calls for adjusted EBITDA of between C$88m and C$95m. That means APHA is getting close to profitability.
But APHA stock has many red flags. As InvestorPlace contributor Josh Enomoto , the company suffered a big scandal, as a short seller accused the company’ top executives of looking to personally profit from acquisitions. As a result, the company’s CEO and co-founder were ousted. The company’s use of figures such as “Adjusted EBITDA” and other non-GAAP figures is also worrisome. True profitability could be many years off for APHA.
With this in mind, investors may want to assess the company’s projections with a critical eye. But has this scandal created a buying opportunity? Let’s see how the valuation of Aphria stock stacks up to its peers.
APHA Trades at a Lower Valuation Than Its Peers
When comparing marijuana stocks, I typically use Enterprise Value/Sales ratio. For now, that remains the most clear valuation metric. Based on this ratio, Aphria stock is undervalued. The company’s current EV/Sales ratio is 9.5, representing a sharp discount compared to its peers:
Aurora Cannabis: EV/Sales of 46.1
Canopy Growth: EV/Sales of 36.2
Cronos (NASDAQ:): EV/Sales of 98.7
Hexo (NYSE:): EV/Sales of 40
But this discount could be the canary in the coal mine. The company has had asset write-downs in the past, and Nuuvera . Given that the market cap of Aphria stock is $1.7 billion, that is a serious impairment charge. And , the dilution of APHA stock is a concern. To fund its operations, APHA issued convertible debentures. These debentures are convertible into 37.3M shares of Aphria stock. This dilution could minimize the gains of Aphria stock.
The Bottom Line on APHA Stock: High Risk and a Huge Opportunity
Aphria stock sells at a discount to its peers. But the company’s tarnished reputation is a concern. Be cautious before buying into the company’s elevator pitch. However, the company is focused on a more stable market, medical marijuana, than some of its peers. Moreover, tts success in Germany has given it a blueprint for success. That success could be duplicated in other European markets.
The cannabis industry remains overvalued. Negative investor sentiment could push marijuana stocks down further. It is tough to call a bottom. But marijuana stocks could soon be selling at more reasonable valuations. If that scenario unfolds, APHA may become a solid play. Keep APHA on your radar, but be cautious about buying Aphria stock.
As of this writing, Thomas Niel did not hold a position in any of the aforementioned securities.
The post 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. | After falling to as low as $5.02/share, Aphria stock rallied in early August on strong earnings. But the company’s recent earnings success could be a signal that Aphria’s future prospects remain strong. APHA Trades at a Lower Valuation Than Its Peers When comparing marijuana stocks, I typically use Enterprise Value/Sales ratio. | At its current valuation, APHA stock trades at a discount to Aurora Cannabis (NYSE:) and Canopy Growth (NYSE:). Source: Shutterstock A Closer Look at APHA , Aphria has focused on the medical side of cannabis. The company’s current EV/Sales ratio is 9.5, representing a sharp discount compared to its peers: Aurora Cannabis: EV/Sales of 46.1 Canopy Growth: EV/Sales of 36.2 Cronos (NASDAQ:): EV/Sales of 98.7 Hexo (NYSE:): EV/Sales of 40 But this discount could be the canary in the coal mine. | At its current valuation, APHA stock trades at a discount to Aurora Cannabis (NYSE:) and Canopy Growth (NYSE:). The Bottom Line on APHA Stock: High Risk and a Huge Opportunity Aphria stock sells at a discount to its peers. Keep APHA on your radar, but be cautious about buying Aphria stock. | With a solid foothold in that market, Aphria is doubling down on that market. The Bottom Line on APHA Stock: High Risk and a Huge Opportunity Aphria stock sells at a discount to its peers. However, the company is focused on a more stable market, medical marijuana, than some of its peers. |
38166.0 | 2019-09-06 00:00:00 UTC | Aurora Cannabis Should Spend Latest Cash Infusion on Infusions of Its Own | ACB | https://www.nasdaq.com/articles/aurora-cannabis-should-spend-latest-cash-infusion-on-infusions-of-its-own-2019-09-06 | nan | nan | Aurora Cannabis (NYSE:) announced September 4 that it sold its 10.5% stake in Green Organic Dutchman Holdings (OTCMKTS:TGODF) for gross proceeds of CAD $86.5 million or CAD $3 a share. Owners of Aurora Cannabis stock will be pleased to learn the sale resulted in a 50% internal rate of return.
Source: Shutterstock
In addition, it still holds warrants to buy another of TGODF that are exercisable at $3 share. With the stock currently trading around $3, it’s going to be a while before ACB could cash in those warrants.
In the meantime, Aurora has more than $40 million in pre-tax profits to put to work. Here’s where I think the owners of ACB stock will get the most bang for their buck.
These Pretzels Are Making Me Thirsty
I couldn’t resist the Seinfeld reference but the one area where Aurora has been slow to the party is in the cannabis-infused drinks market.
Sure, it won’t be able to legally sell these drinks in its Canadian home market until mid-December of this year, but that’s left it with plenty of time to organize a game plan for the drinks market. It’s disappointing that it hasn’t.
Instead, Aurora is going to focus on vape pens and concentrates for its growth beyond the dried flower.
“You’re going to start seeing people shift over from the illicit market, the minute vape pens become available. And we have a head start on that,” Aurora Chief Corporate Officer Cam Battley in June.
Given the recent about vaping that have cropped up in 16 U.S. states suggests that the failure to have a backup plan could hurt Aurora in the near term. Long term, I’m sure the vaping issues will get sorted, but there is definitely more investigation to be done.
However, Aurora’s lack of cannabis-infused drinks is a big reason why I’m (pardon the pun) high on both Canopy Growth (NYSE:) and Hexo (NYSE:HEXO), whose Big Alcohol partners bring knowledge and distribution capabilities to the table, making them attractive cannabis investments in my opinion.
Don’t get me wrong. There’s a lot to like about Aurora. Here’s what I said about it :
“Aurora Cannabis continues to use its industry-leading size in both Canada and abroad to capture a big part of the global cannabis market. The fact that it doesn’t have a U.S. business plan at the moment doesn’t mean it won’t enter the market in the future.”
“Furthermore, while it doesn’t have a huge strategic partner, if it continues to implement innovative ideas such as cultivating , I don’t think it will have a problem attracting a huge strategic investor.”
Why Not Partner With Coke?
Back in 2018, Aurora held talks with Coca-Cola (NYSE:) but those seemed to have fizzled out.
However, the fact that it recruited billionaire , whose Trian Fund Management has several high-profile consumer goods investments, to help guide the company through its ongoing growth suggests that it might reconsider a partnership with a company such as Coke in the future.
In my opinion, the owners of Aurora Cannabis stock would be well served by the company reconsidering its stance on cannabis-infused drinks. I can say with certainty that my age group (mid-50s) are far more inclined to try THC/CBD drinks or edibles than they are vapes or dried flower.
If you haven’t smoked cigarettes your entire life or for many years, why would you start with weed? You wouldn’t.
The Bottom Line on Aurora Stock
You can’t be all things to all people. That I get. So, it makes sense that Aurora’s focused its efforts on products that have done well in the U.S. states where recreational pot is legal.
However, tastes can change. Few have delivered cannabis-infused drinks that taste good. If Canopy or Hexo can break through that barrier, I’m confident they’ll roll those drinks out across the U.S. as more states and the feds legalize pot.
In the meantime, all Aurora can do is hope that they don’t. A better plan would be to join the party. It’s got 40 million reasons to do so.
At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.
The post 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. | With the stock currently trading around $3, it’s going to be a while before ACB could cash in those warrants. Here’s where I think the owners of ACB stock will get the most bang for their buck. These Pretzels Are Making Me Thirsty I couldn’t resist the Seinfeld reference but the one area where Aurora has been slow to the party is in the cannabis-infused drinks market. | With the stock currently trading around $3, it’s going to be a while before ACB could cash in those warrants. Here’s where I think the owners of ACB stock will get the most bang for their buck. Owners of Aurora Cannabis stock will be pleased to learn the sale resulted in a 50% internal rate of return. | With the stock currently trading around $3, it’s going to be a while before ACB could cash in those warrants. Here’s where I think the owners of ACB stock will get the most bang for their buck. Aurora Cannabis (NYSE:) announced September 4 that it sold its 10.5% stake in Green Organic Dutchman Holdings (OTCMKTS:TGODF) for gross proceeds of CAD $86.5 million or CAD $3 a share. | With the stock currently trading around $3, it’s going to be a while before ACB could cash in those warrants. Here’s where I think the owners of ACB stock will get the most bang for their buck. Instead, Aurora is going to focus on vape pens and concentrates for its growth beyond the dried flower. |
38167.0 | 2019-09-06 00:00:00 UTC | Canopy Growth Stock Suddenly Has Become a Turnaround Play | ACB | https://www.nasdaq.com/articles/canopy-growth-stock-suddenly-has-become-a-turnaround-play-2019-09-06 | nan | nan | From a broad standpoint, the case for Canopy Growth (NYSE:) stock has been relatively simple. Specifically, the argument has been that CGC stock offers the simplest way to play the cannabis boom, largely thanks to the multi-billion dollar investment in the company by Constellation Brands (NYSE:,NYSE:STZ.B).
Source: Shutterstock
That gave CGC a war chest it can use to capitalize on opportunities. The funds enable the company to execute acquisitions to build out its business, and it already has tied up with U.S. operator Acreage Holdings (OTCMKTS:). Additionally, the cash has enabled CGC to develop its distribution and processing capabilities.
In theory, Canopy can go wherever cannabis demand is growing. And bulls saw plenty of growth coming for the industry.
Canopy’s Outlook Has Deteriorated
That story now looks broken. The industry on the whole doesn’t look quite as healthy as optimists had hoped. Canopy appears to be losing market share in Canada. The combination has pressured Canopy Growth stock, which has fallen by half in a little over four months.
There’s a case to buy CGC stock after its decline, and indeed some investors have done just that in recent sessions. The long-term opportunity provided by Canopy Growth stock still looks reasonably intact. CGC even looks potentially cheap from the right angle. Its execution can, and perhaps should, improve.
But for the shares to rise, Canopy Growth is going to have to regain the confidence of investors. To do that, Canopy will need to improve itself, and it may need some external help as well.
CGC Stock Falls (Again) After Its Earnings
There are several reasons why Canopy Growth stock has steadily dropped since late April. For one, the entire sector has sold off.
Major cannabis plays like Cronos Group (NASDAQ:), Hexo (NYSE:), and Aurora Cannabis (NYSE:) all have dropped at least 19% in the last three months. Aphria (NYSE:) posted probably the sector’s best earnings report this year and is up just 5% over the past quarter. However, it’s still down about one-third from its April highs.
But that alone doesn’t explain the pressure on Canopy Growth stock. It’s been the worst performer among major marijuana stocks over the past three months, dropping 36%. And the company’s last two earnings reports have been a key factor in the decline of its shares.
In fiscal Q4, its cannabis revenue surprisingly . In Q1, Canopy’s sales did rise compared with the previous quarter . But its revenue still missed expectations, and the company also booked a C$8 million reserve for customers’ returns of oil and softgel products.
Its gross margin of 15% seems far too low. Even excluding about 17 percentage points of pressure from factories that were either underutilized or not yet producing, its 32% gross margin was notably weaker than its recent performances.
Two quarters don’t necessarily make a trend, but they’ve been more than enough to worry investors. CGC’s revenue growth is slower than that of its peers. Its margins and profitability have been disappointing. The company was supposed to be the undisputed leader in cannabis, particularly in Canada. Its rivals are catching up in terms of revenue and Canopy, at least in the early going, is much less profitable than investors had hoped.
Industry Worries Add to the Pressure on Canopy Growth Stock
The issue is that Canopy’s earnings match some of the concerns facing the industry as a whole. The growth of recreational cannabis in Canada has been slowed by permitting backlogs, leading to much lower-than-expected overall sales.
Production continues to ramp across the sector, leading to worries about oversupply and pricing pressure. Canopy’s forecast of overly saturated oils and softgel markets – which should be higher-margin products – augments those worries. So does by Tilray (NASDAQ:) the day before Canopy’s fiscal Q1 release.
The takeaway from Canopy earnings – and those of the sector – is that maybe this business isn’t quite as attractive as bulls had thought a few months ago. Cannabis companies’ long-term profit margins may be lower than expected. Movement on legalization outside of Canada has been modest. In Canada, the sheer number of players means “race to the bottom” pricing may pressure companies’ near-term results.
All told, worries are mounting. And with CGC, even net of cash, trading at something like eight times average fiscal 2020 revenue estimates, it’s not surprising that the stock has pulled back.
How CGC Stock Can Rebound
All that said, bulls can – and do – argue that the long-term outlook of CGC stock really hasn’t changed all that much. Canopy still has its war chest, with US$1.5 billion of cash net of debt. Its production leads the industry. The weakness of its earnings per share isn’t a surprise; indeed, it’s part of the plan, as Canopy extends its capabilities in flower and derivatives, and develops its supply chain.
Canopy is looking to redefine the vaping experience, as management detailed on the company’s . It has a presence in the medical and pharmaceutical end markets. It’s entering the U.S. CBD market, and can participate in that market via Acreage when and if the federal government legalizes cannabis.
Even the company’s long-term financial targets remain intact, including guidance for EBITDA profitability (excluding some items) in FY22. So what really has changed?
The answer is confidence, in terms of both Canopy itself and the industry as a whole. Clear market-share losses at this early stage are a real concern. So are potential price declines for cannabis flower, and weaker-than-expected demand for derivative products. Canopy is reiterating its targets, but investors are less likely to believe them.
Simple sector momentum no longer can carry Canopy Growth stock higher. The “easy” bull case of buying the leader in the space doesn’t make sense if investors worry the company won’t be the leader in the long-term. Canopy Growth – and the industry as a whole – need to answer key questions before investors can become confident in CGC again, and before CGC stock can rally.
As of this writing, Vince Martin has no positions in any securities mentioned.
The post 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. | Specifically, the argument has been that CGC stock offers the simplest way to play the cannabis boom, largely thanks to the multi-billion dollar investment in the company by Constellation Brands (NYSE:,NYSE:STZ.B). And with CGC, even net of cash, trading at something like eight times average fiscal 2020 revenue estimates, it’s not surprising that the stock has pulled back. The weakness of its earnings per share isn’t a surprise; indeed, it’s part of the plan, as Canopy extends its capabilities in flower and derivatives, and develops its supply chain. | Cannabis companies’ long-term profit margins may be lower than expected. So are potential price declines for cannabis flower, and weaker-than-expected demand for derivative products. The “easy” bull case of buying the leader in the space doesn’t make sense if investors worry the company won’t be the leader in the long-term. | CGC Stock Falls (Again) After Its Earnings There are several reasons why Canopy Growth stock has steadily dropped since late April. Industry Worries Add to the Pressure on Canopy Growth Stock The issue is that Canopy’s earnings match some of the concerns facing the industry as a whole. Canopy Growth – and the industry as a whole – need to answer key questions before investors can become confident in CGC again, and before CGC stock can rally. | CGC Stock Falls (Again) After Its Earnings There are several reasons why Canopy Growth stock has steadily dropped since late April. In fiscal Q4, its cannabis revenue surprisingly . How CGC Stock Can Rebound All that said, bulls can – and do – argue that the long-term outlook of CGC stock really hasn’t changed all that much. |
38168.0 | 2019-09-06 00:00:00 UTC | Here’s How Millennials Can Save Hexo Stock … and Maybe its Cannabis Peers | ACB | https://www.nasdaq.com/articles/heres-how-millennials-can-save-hexo-stock-...-and-maybe-its-cannabis-peers-2019-09-06 | nan | nan | It’s becoming a sad, familiar scene in the broader marijuana industry. Like so many other sector players, Hexo (NYSE:) started out this year on fire. But as we flipped the pages of the calendar, investors started to see less appeal for botanical goods. As a result, the Hexo stock price has charted a severely bearish trend channel since late April.
Source: Shutterstock
In my opinion, some of the negativity is unwarranted. Whether we like it or not, cannabis stocks tend to move in sympathy with each other. That’s great when we have collectively bullish news, such as Canada legalizing recreational weed. But , such as the CannTrust (NYSE:) controversy, have hurt the Hexo stock price.
In early July, Canadian health officials discovered that CannTrust illegally grew cannabis in unlicensed rooms. That within the industry, which so far culminated in CannTrust firing its CEO. While this incident has nothing to do with HEXO, cannabis companies eagerly seek legitimacy and credibility.
Unfortunately, this incident was incredibly unhelpful for Hexo stock. Since the incident came to light, the company’s equity has plunged roughly 16%.
That said, let’s face facts: Hexo stock has enough of its own problems on paper to justify its volatility. For instance, while its fiscal third-quarter weren’t terrible, they failed to meet analysts’ expectations for per-share profitability. And this is where the honeymoon phase has dried up for HEXO: Wall Street wants substantive results, and they’re not getting it.
Naturally, many folks are saying to hold off on buying Hexo stock until this situation improves.
Hexo Stock Primed to Advantage Key Demographic Reality
Personally, I’m speculating on HEXO, so I’m biased. Nevertheless, I can see the wisdom in a patient approach. For example, my InvestorPlace colleague Todd Shriber recommended until they stabilize.
This is very sound advice. If we were talking about blue chips, I would say the same thing ad nauseum. However, we’re talking about the cannabis industry. It’s unlike any other sector because we don’t know legal marijuana’s ceiling.
If we see federal legalization of weed in the U.S., it can skyrocket the Hexo stock price, like Aurora Cannabis (NYSE:) and Cronos Group (NASDAQ:). But if Canadian legalization is the industry’s peak, well, I would have made one of my dumbest moves yet.
Logically, most cannabis companies are banking on the U.S. legalization potential. Politically, I believe . Thus, I’m not overly concerned about HEXO’s expansionary efforts because I believe their efforts will be rewarded in the long run.
But along the lines of marijuana being an unprecedented market, we must also appreciate their target consumer base: millennials. While most of the country supports marijuana legalization, millennials overwhelmingly (74%) support the cause.
More importantly for the Hexo stock price, evidence indicates that millennials are . CNBC calls it emotional investing. But the bottom line is that young people are guided by purpose and principles. Therefore, their investments are more likely to reflect their lifestyle or personal ethos.
And that truly augurs well for HEXO. I’ll concede again that on paper and against traditional financial metrics, the company doesn’t look too hot. But really, who cares? I don’t mean to sound flippant, but their target audience is youthful investors, not stodgy, “by the book” baby boomers.
Look at HEXO Through a Young Person’s Lens
Lately, bearish stories about legal marijuana have a recurring theme: don’t jump aboard because the industry is unproven and unstable. They may throw in specific details about the financial statements, such as negative income trends.
All of these things and more are true for Hexo stock. But again, bear in mind that the underlying company’s target audience is young people. They’re least likely to care as much about the financials. Instead, they’re looking for a convincing narrative.
HEXO has that in spades. Moreover, shares have a cheap ticket price. That’s also important for younger millennials, who are burdened with college debt and other life expenses.
Don’t get me wrong: Hexo stock is still an incredibly speculative and risky name. But its potential for an upswing isn’t nearly as ludicrous as you might think.
As of this writing, Josh Enomoto is long HEXO.
The post 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 early July, Canadian health officials discovered that CannTrust illegally grew cannabis in unlicensed rooms. If we see federal legalization of weed in the U.S., it can skyrocket the Hexo stock price, like Aurora Cannabis (NYSE:) and Cronos Group (NASDAQ:). Look at HEXO Through a Young Person’s Lens Lately, bearish stories about legal marijuana have a recurring theme: don’t jump aboard because the industry is unproven and unstable. | If we see federal legalization of weed in the U.S., it can skyrocket the Hexo stock price, like Aurora Cannabis (NYSE:) and Cronos Group (NASDAQ:). While most of the country supports marijuana legalization, millennials overwhelmingly (74%) support the cause. But again, bear in mind that the underlying company’s target audience is young people. | Hexo Stock Primed to Advantage Key Demographic Reality Personally, I’m speculating on HEXO, so I’m biased. If we see federal legalization of weed in the U.S., it can skyrocket the Hexo stock price, like Aurora Cannabis (NYSE:) and Cronos Group (NASDAQ:). Look at HEXO Through a Young Person’s Lens Lately, bearish stories about legal marijuana have a recurring theme: don’t jump aboard because the industry is unproven and unstable. | However, we’re talking about the cannabis industry. If we see federal legalization of weed in the U.S., it can skyrocket the Hexo stock price, like Aurora Cannabis (NYSE:) and Cronos Group (NASDAQ:). More importantly for the Hexo stock price, evidence indicates that millennials are . |
38169.0 | 2019-09-05 00:00:00 UTC | Aurora Cannabis Divests The Green Organic Dutchman Stake | ACB | https://www.nasdaq.com/articles/aurora-cannabis-divests-the-green-organic-dutchman-stake-2019-09-06 | nan | nan | Aurora Cannabis (NYSE: ACB) has unloaded one of its assets. The company announced in a press release that it has entirely sold out of its stake in peer marijuana stock The Green Organic Dutchman Holdings (OTC: TGODF).
All told, Aurora sold just over 28.8 million shares of TGOD. The price was 3 Canadian dollars per share, bringing in a total of CA$86.5 million. Aurora said this gives it a roughly 50% internal rate of return on the holding, which it acquired in early 2018.
Image source: Getty Images.
The company did not specify how, or to whom, it sold the shares. That CA$3 per share converts roughly to the level of the stock's latest U.S. closing price of $2.24. Like many marijuana stocks, TGOD's price has been choppy of late. It's up nearly 24% year to date, but has slipped by almost 5% over the past month.
That nearly 29-million-share position gave Aurora a 10.5% stake in its peer. Although the sale means Aurora no longer has any equity in The Green Organic Dutchman, it does possess warrants that allow it to potentially buy nearly 16.7 million shares of stock in the company.
Aurora said its decision to unload the stake was due to a more recent purchase. "When we acquired Whistler Medical Marijuana Corporation... our interest in TGOD became less important to our core strategy," the company stated in the press release announcing the sale.
"Our return on our TGOD investment is significant and will add non-dilutive capital and further enhance our strategy to remain a dominant force in the global cannabis industry," Aurora added.
TGOD was one of a number of cannabis companies in which Aurora holds a stake. As with many of the more prominent businesses in the sector, Aurora is an active and eager buyer of complementary assets.
The Green Organic Dutchman is a cannabis producer and seller based in Canada. Similar to other marijuana companies, it has enjoyed robust top-line growth lately, although it has yet to post a net profit. In the company's Q2, it managed to grow its revenue by 20% on a quarter-over-quarter basis. It currently trades only on the over-the-counter market in the U.S., although it recently indicated an ambition to get a Nasdaq listing.
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Eric Volkman 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. | Aurora Cannabis (NYSE: ACB) has unloaded one of its assets. Although the sale means Aurora no longer has any equity in The Green Organic Dutchman, it does possess warrants that allow it to potentially buy nearly 16.7 million shares of stock in the company. "When we acquired Whistler Medical Marijuana Corporation... our interest in TGOD became less important to our core strategy," the company stated in the press release announcing the sale. | Aurora Cannabis (NYSE: ACB) has unloaded one of its assets. The company announced in a press release that it has entirely sold out of its stake in peer marijuana stock The Green Organic Dutchman Holdings (OTC: TGODF). Like many marijuana stocks, TGOD's price has been choppy of late. | Aurora Cannabis (NYSE: ACB) has unloaded one of its assets. The company announced in a press release that it has entirely sold out of its stake in peer marijuana stock The Green Organic Dutchman Holdings (OTC: TGODF). Although the sale means Aurora no longer has any equity in The Green Organic Dutchman, it does possess warrants that allow it to potentially buy nearly 16.7 million shares of stock in the company. | Aurora Cannabis (NYSE: ACB) has unloaded one of its assets. The company announced in a press release that it has entirely sold out of its stake in peer marijuana stock The Green Organic Dutchman Holdings (OTC: TGODF). TGOD was one of a number of cannabis companies in which Aurora holds a stake. |
38170.0 | 2019-09-05 00:00:00 UTC | Aurora Cannabis Dumps Green Organic Dutchman Stake Ahead of Earnings | ACB | https://www.nasdaq.com/articles/aurora-cannabis-dumps-green-organic-dutchman-stake-ahead-of-earnings-2019-09-05 | nan | nan | August was a nasty month for the marijuana sector. It had its share of bad news, the crushing oversupply continued to mount in the Canadian market, and marijuana stock prices slumped all month. Traders are hoping that September will prove more prosperous. There are some reasons for hope on that front. Tilray (NASDAQ:), for example, started the month with a 17% jump on Tuesday.
So where does Aurora Cannabis (NYSE:) stock fit into the picture? As long-time readers know, I’ve been negative on the marijuana space for a long time now. Primarily, I don’t like the huge oversupply in the Canadian market. Every month, Health Canada publishes more and more discouraging supply and demand figures for the recreational market. In both dried cannabis and CBD, the available product greatly exceeds customer demand.
Aurora Cannabis Dumps The Green Organic Dutchman
Aurora Cannabis started September on an interesting note. That’s because The Green Organic Dutchman Holdings (OTCMKTS:) or “TGOD” announced a sizable share offering at 3 CAD. That was a discount from the 3.51 CAD closing price Tuesday for TGODF stock. The TGOD stock offering serves the sole purpose of allowing Aurora Cannabis to dump its position in TGOD and raise cash.
This equity offering should remind investors of two things. One, marijuana companies are continuing to burn through tons of cash and need to raise more of it. And two, make sure you are comfortable with the companies you own. I say that because there will be more excitement ahead, even after this crushing sector selloff.
Aurora Is Making the Right Move
Investors have had mixed feelings about Aurora’s involvement with The Green Organic Dutchman for a while. But I give management credit for a well-played trade. In fact, it served as a shrewd investment.
In early 2018, Aurora Cannabis acquired a substantial chunk of TGOD for just 1.65 CAD per share. It ultimately purchased a little more at higher prices. But on net, Aurora cleaned up on the transaction. It sold off some TGOD stock over the past 12 months at attractive prices. It’s now unloading the rest at 3 CAD for nearly double of their original cost basis.
In 2019, TGOD stock has traded consistently below 5 CAD. Plus, the price is still well above where it bottomed at the end of last year. Thus, Aurora is unloading its stock at a favorable price, at least in comparison to other more beaten-up marijuana equities.
Let’s face it: given current conditions in the marijuana industry, it’s much better to have cash on your balance sheet than in the form of stock at a company that is still in the early stages of commercializing its business.
TGOD has failed to reach significant revenues while most of the industry has already hit that point. Further, critics question the management team’s ability to deliver on its stated goals. Perhaps with that in mind, Aurora pivoted and went in a different direction.
Rather than investing further in TGOD when it had the opportunity, Aurora instead purchased Whistler Medical Marijuana for 175 million CAD. This gave Aurora Cannabis access to 100% organic marijuana supplies without having to rely on its slow-to-production TGOD partner. Who knows, Aurora may even use cash from its successful TGOD stock investment to help fund further development of its competing products at Whistler.
TGOD Deal Adds More Intrigue to Upcoming Earnings
It will be interesting to see if Aurora has any more surprises coming up with their earnings announcement. As I detailed recently, Aurora pulled ahead of its peers by offering an early taste of its , which are due out next week. Aurora said that revenues for the quarter will come in strong. That’s despite the general weakness that many other cannabis companies have reported so far this earnings cycle.
And now we have this TGOD divestiture as well. Remember that Aurora already had a decent cash balance. As of March 31, Aurora had 391 million CAD (nearly $300 million) in cash on its balance sheet. It’s likely used a fair chunk of that in operations and growth expenses since then. Still, ACB stock is associated to a reasonably well-positioned treasury.
Thus, it adds mystery to the timing of the TGOD stock sale. Is Aurora about to make another big acquisition? Will management announce a large new growth initiative? Did something go wrong with operations, causing them to want to raise capital from the TGOD sale at this time? Or will they simply let the cash sit on their balance sheet for a while?
The Verdict on ACB Stock
It’s hard to get excited about any of these marijuana stocks right now with the industry facing such drastic oversupply. That said, these investments are deeply oversold. And at some point, they simply have to bounce back, at least in the short run. If you’re looking for such a bounce trade, Aurora Cannabis stock looks intriguing.
ACB stock – based on its U.S. listing – has strong support at the $5 level. With shares trading around $5.60 now, that limits your downside if support holds.
Meanwhile, Aurora Cannabis stock could jump sharply once that support holds and buyers come back into the picture. If you’re looking for a catalyst, let’s see what happens with that upcoming earnings report. As additional cash comes in from the TGOD sale, ACB stock may be ready for another big move.
At the time of this writing, Ian Bezek held no positions in any of the aforementioned securities. You can reach him on Twitter at @irbezek.
The post 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. | Still, ACB stock is associated to a reasonably well-positioned treasury. The Verdict on ACB Stock It’s hard to get excited about any of these marijuana stocks right now with the industry facing such drastic oversupply. ACB stock – based on its U.S. listing – has strong support at the $5 level. | Still, ACB stock is associated to a reasonably well-positioned treasury. The Verdict on ACB Stock It’s hard to get excited about any of these marijuana stocks right now with the industry facing such drastic oversupply. ACB stock – based on its U.S. listing – has strong support at the $5 level. | Still, ACB stock is associated to a reasonably well-positioned treasury. The Verdict on ACB Stock It’s hard to get excited about any of these marijuana stocks right now with the industry facing such drastic oversupply. ACB stock – based on its U.S. listing – has strong support at the $5 level. | Still, ACB stock is associated to a reasonably well-positioned treasury. The Verdict on ACB Stock It’s hard to get excited about any of these marijuana stocks right now with the industry facing such drastic oversupply. ACB stock – based on its U.S. listing – has strong support at the $5 level. |
38171.0 | 2019-09-04 00:00:00 UTC | Strong Fundamentals Make Cronos Stock a Value Play | ACB | https://www.nasdaq.com/articles/strong-fundamentals-make-cronos-stock-a-value-play-2019-09-04 | nan | nan | Over the summer, the marijuana stock sector has been hard hit. One of the broader exchange-traded funds for cannabis stocks, Alternative Harvest ETF (NYSEARCA:), is hovering close to its 52-week low of $24.01 after a long slow slide from $38 earlier this March.
Source: Shutterstock
and oldest ETF to track the global cannabis industry. The year-to-date return on MJ of -2% compared to the S&P 500 gain of 17% shows that pot stocks are definitely lagging. Yet, when the summer doldrums pass and investors return to the market, and bottom fishing a few cheap buys.
Although it has fallen considerably, closing Tuesday at $11.30 from its 52-week high of $25.10, Cronos Group (NASDAQ:) stock might be just the hidden downtrodden stock that starts to rebound fastest.
Here are three key reasons why CRON stock could be an excellent value play when the sector .
Cronos’ Strong Top-Line Revenue Growth
Cronos may not be the in terms of market cap or production in comparison with Canopy Growth (NYSE:) or Aurora (NYSE:). However, CRON stock delivers outstanding rock-solid sales growth — and will likely get stronger.
According to the of CRON stock earlier in August, revenue was $10.2 million CAD in Q2 2019, representing a 202% increase from $3.4 million CAD on year-over-year basis. This massive growth was due to the launch of the adult-use market in Canada.
Net revenue increased 58% quarter-over-quarter from $6.5 million CAD in the first quarter of 2019, primarily driven by increased sales in CBD oil, a product line also gaining rapid ground in the U.S. market.
Global Tobacco Giant Altria Holds a 45% Stake in CRON Stock
Given CRON’s global distribution ambition, with Altria (NYSE:) should help drive growth by opening a wide variety of new distribution channels far beyond Canada and the U.S. For example, CRON has entered into an exclusive 5-year supply agreement with the German-based Pohl-Boskamp, a global pharmaceutical manufacturer that distributes to over 10,000 German pharmacies.
On top of another with Delfarma, which sells to some 5,000 Polish pharmacies and 200 hospitals, Cronos is already generating revenues in eight European markets as well as Israel and Australia.
In short, CRON stock will not be standing still waiting for legislative development in Washington, nor the cumbersome licensing process in Canada, to meet or beat its long-term revenue targets.
U.S. Federal Legalization Gains Steam
Recently, the U.S. Food and Drug Administration (FDA) issued a notice that it is to discuss dropping cannabis from the list of the most restricted illegal controlled substances. Even if the FDA does drop cannabis from their restricted list, this will not, of course, immediately legalize marijuana at the federal level. However, it is another step in the long and winding journey towards national legalization. And that journey will as the 2020 presidential election year approaches. Most Democratic candidates have come out unequivocally in favor of legalization.
Yes, Cronos has given away all of the 2019 gains Yes, there will be considerable debate among politicians and investors alike about how long it may take the U.S. Congress to legalize marijuana given that the Republican majority in the Senate may continue past 2020 into 2022 or beyond. However, Cronos stock has strong underlying fundamentals; deep pockets form their strategic partnership with Altria and an up-and-running global distribution infrastructure.
When the volatile pot stock sector rebounds, CRON stock may bounce back towards its 52-week high.
As of this writing, Theodore Kim did not hold a position in any of the aforementioned securities.
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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. | One of the broader exchange-traded funds for cannabis stocks, Alternative Harvest ETF (NYSEARCA:), is hovering close to its 52-week low of $24.01 after a long slow slide from $38 earlier this March. In short, CRON stock will not be standing still waiting for legislative development in Washington, nor the cumbersome licensing process in Canada, to meet or beat its long-term revenue targets. U.S. Federal Legalization Gains Steam Recently, the U.S. Food and Drug Administration (FDA) issued a notice that it is to discuss dropping cannabis from the list of the most restricted illegal controlled substances. | According to the of CRON stock earlier in August, revenue was $10.2 million CAD in Q2 2019, representing a 202% increase from $3.4 million CAD on year-over-year basis. Global Tobacco Giant Altria Holds a 45% Stake in CRON Stock Given CRON’s global distribution ambition, with Altria (NYSE:) should help drive growth by opening a wide variety of new distribution channels far beyond Canada and the U.S. For example, CRON has entered into an exclusive 5-year supply agreement with the German-based Pohl-Boskamp, a global pharmaceutical manufacturer that distributes to over 10,000 German pharmacies. When the volatile pot stock sector rebounds, CRON stock may bounce back towards its 52-week high. | Although it has fallen considerably, closing Tuesday at $11.30 from its 52-week high of $25.10, Cronos Group (NASDAQ:) stock might be just the hidden downtrodden stock that starts to rebound fastest. Global Tobacco Giant Altria Holds a 45% Stake in CRON Stock Given CRON’s global distribution ambition, with Altria (NYSE:) should help drive growth by opening a wide variety of new distribution channels far beyond Canada and the U.S. For example, CRON has entered into an exclusive 5-year supply agreement with the German-based Pohl-Boskamp, a global pharmaceutical manufacturer that distributes to over 10,000 German pharmacies. When the volatile pot stock sector rebounds, CRON stock may bounce back towards its 52-week high. | Over the summer, the marijuana stock sector has been hard hit. Cronos’ Strong Top-Line Revenue Growth Cronos may not be the in terms of market cap or production in comparison with Canopy Growth (NYSE:) or Aurora (NYSE:). When the volatile pot stock sector rebounds, CRON stock may bounce back towards its 52-week high. |
38172.0 | 2019-09-04 00:00:00 UTC | Expect the Transformation of Cronos Group to Change CRON Stock | ACB | https://www.nasdaq.com/articles/expect-the-transformation-of-cronos-group-to-change-cron-stock-2019-09-04 | nan | nan | Cronos Group (NASDAQ:) stock remains on a separate wavelength from its parent company. Thanks to the $1.8 billion cash infusion from Altria (NYSE:), Cronos appears on track to become the marijuana-based version of the tobacco giant.
Source: Shutterstock
However, investors seem unaware of how such an investment affects a stock too. Tobacco is an old, established industry. It has become known for generating profits and dividends, and in recent years, controversy. Cronos has much to learn from this experienced master. Until Altria can transform both the company and CRON stock, investors should stay out of this equity.
How Much Further Will CRON Stock Fall?
As I stated in a , investors need to look at Cronos and Cronos Group stock differently.
So far, my thesis has held up. When I made that statement a few weeks ago, CRON stock traded for slightly above $15 per share. Today, it has fallen to the $11 per share level. This also happens to match up well to the highs of September 2018. As many traders recall, that’s the level where it traded before it began its journey to as low as $6.50 per share following the post-Canadian legalization selloff.
The question now hinges on how much further it will fall. Is that it has support at $10 per share? Does it retest $6.50 per share lows? Does it perhaps fall further?
The marijuana bubble burst of 2018 saw a partial reinflation early this year. However, it has now dropped back. Unfortunately for bulls of CRON stock, much of that bubble remains as the S&P 500 struggles to gain traction. The price-to-sales (PS) ratio stands at over 191. Even CRON stock optimist that valuation remains a “big near term issue.”
Moreover, the near-term profit picture remains precarious. Thanks to derivative liability revaluations, analysts expect a profit of 78 cents CAD (58 cents) per share. Those offer only a one-time benefit, and the company maintains a loss operationally. Previous predictions of positive earnings in 2020 have given way to forecasts of further losses.
Altria Will Change Cronos in Multiple Ways
Much like my colleague Mr. Lango, I am a long-term bull in Cronos Group stock. However, investors need to realize that its education comes from Altria. To be sure, this will bring valuable advice in improving cultivation, distribution, and marketing.
For this reason, I do not see Cronos’ lower revenues compared to Canopy Growth (NYSE:) or Aurora Cannabis (NYSE:) as a particular concern. The knowledge and resources from Altria will hold CRON stock in good stead as the company becomes a mainstream player.
However, as I stated in earlier articles, this education sets themselves up to become a different kind of equity. Those who know Altria know it as a low-valuation, high-dividend stock. Altria has maintained a low price-earnings (PE) ratio historically. It has also struggled as of late. MO has lost more than 40% of its value over the last two years. This has left it with a generous 7.7% dividend yield, but also an uncertain future.
I do not foresee CRON stock dealing with the level of liability facing MO. However, I think low PEs and high dividend payouts will define Cronos years from now.
To get there, CRON needs first to fall much lower, or at least pause while revenues catch up. It also has to earn an operating profit to become an eventual dividend equity. It will take years for Cronos stock to reach either level.
The Bottom Line on CRON Stock
Investors should realize that Cronos Group stock is in a transition phase. Therefore, this is a name to avoid for now. Like many burgeoning industries before it, CRON benefitted from stratospheric valuations driven by excitement about this emerging industry. After a partial bounce-back early in the year, multiples across the board have fallen. I see no apparent catalyst that can reinflate this bubble.
Moreover, Cronos is now under the tutelage of Altria. This relationship gives CRON both a financial and knowledge advantage that should add efficiencies to growing, processing, distributing, and ultimately, selling marijuana-based products.
However, it will also change CRON stock. That process will take years, but high valuations are not its future. At a PS ratio of over 191, investors should stay away. The bubble still needs to pop before Cronos becomes a buy.
But once this company fully embraces its future as a dividend payer, I think future generations of investors will see CRON stock as a valuable source of dividend income.
As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can at @HealyWriting.
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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. | Thanks to the $1.8 billion cash infusion from Altria (NYSE:), Cronos appears on track to become the marijuana-based version of the tobacco giant. The knowledge and resources from Altria will hold CRON stock in good stead as the company becomes a mainstream player. This relationship gives CRON both a financial and knowledge advantage that should add efficiencies to growing, processing, distributing, and ultimately, selling marijuana-based products. | Cronos Group (NASDAQ:) stock remains on a separate wavelength from its parent company. The Bottom Line on CRON Stock Investors should realize that Cronos Group stock is in a transition phase. But once this company fully embraces its future as a dividend payer, I think future generations of investors will see CRON stock as a valuable source of dividend income. | As I stated in a , investors need to look at Cronos and Cronos Group stock differently. The Bottom Line on CRON Stock Investors should realize that Cronos Group stock is in a transition phase. But once this company fully embraces its future as a dividend payer, I think future generations of investors will see CRON stock as a valuable source of dividend income. | Until Altria can transform both the company and CRON stock, investors should stay out of this equity. As I stated in a , investors need to look at Cronos and Cronos Group stock differently. That process will take years, but high valuations are not its future. |
38173.0 | 2019-09-04 00:00:00 UTC | Aurora Cannabis Needs to Keep its Finger on the Marijuana Pulse | ACB | https://www.nasdaq.com/articles/aurora-cannabis-needs-to-keep-its-finger-on-the-marijuana-pulse | nan | nan | Aurora Cannabis (NYSE:) is coming off a brutal August, the latest in a long line of rough months for the Canadian cannabis company. With each month of struggles, the shares become a little more tempting.
Source: Shutterstock
With an annual cannabis output that now exceeds , it’s easy to see why some investors may find Aurora stock attractive. The company offers scale in an often fragmented market. It’s one of the world’s largest cannabis producers and some of its core competencies include industry-leading output and logistical capabilities.
Last month, the company released , including a forecast of sales of $100 million CAD to $107 million CAD. That’s good for a roughly five-fold increase from the year-earlier period and 60% quarter-over-quarter growth. Those headlines temporarily bought ACB stock some goodwill among investors. However, as Aurora stock has often shown, making the good times last is easier said than done.
The company’s official quarterly earnings report is due out Sept. 15 and that should be a catalyst, in one way or another, for Aurora Cannabis stock. Management also upped its production outlook to 25,000 kilograms to 30,000 kilograms, above a previous forecast calling for 25,000 kilograms at the high end.
Cowen analyst that these preliminary results imply stronger-than-expected yields, which could help the company approach a cost per gram of less than $1 CAD, or 75 U.S. cents.
Sourcing Growth for Aurora Cannabis
Integral to the long-term thesis for Aurora stock is management’s ability to find growth channels outside of Canada and the medicinal marijuana market. Those are viable growth opportunities, but they are largely baked into Aurora stock. , medicinal marijuana will see some contraction in the coming years.
Morningstar’s that he believes the medical market will shrink as recreational use is legalized. He also forecasts 20% average annual growth for the next decade, thanks to “black-market” consumers moving towards legal use.
That’s a perfect segue into talking about the U.S. Cannabis companies and investors are betting that increased U.S. legalization will bring recreational use out of the shadows. While some states have signed off on it, cannabis for medical and recreational purposes is illegal at the federal level in the U.S.
Aurora Cannabis is eyeing the U.S. market in its own way, and acknowledges that a footprint south of it home market There are plenty of other reasons why ACB stock could get a jolt. The company just needs U.S. policymakers’ attitude toward cannabis to loosen up.
“Not only is the U.S. a larger opportunity, but it has a better economic model,” GMP Securities analyst Rob Fagan told Barron’s. “In most states, you’re allowed to go direct to your customer — from production right up to retail — cashing in on more of the value chain. There are also fewer restrictions on product forms and advertising than in Canada.”
Finding a Partner for ACB Stock
Unlike some of its rivals, Aurora Cannabis is currently without partners from the tobacco or beverage industries, although the company has admitted Coca-Cola (NYSE:) would make for an appealing partner.
This goes back to Aurora’s relationship with . Peltz has famously (and successfully) pushed for change at companies such as Procter & Gamble (NYSE:), Mondelez (NASDAQ:) and Wendy’s (NASDAQ:). However, the relationship with Peltz is something that is also baked into Aurora Cannabis stock. Investors are now demanding something substantive to come of his involvement.
Inton said that Aurora Cannabis is limited in its potential to benefit from new partnerships. This is because of its lack of exposure in the U.S. market.
For ACB stock, the writing is on the wall. The company must make a credible foray into the U.S. and execute on that endeavor, or risk generating dissatisfaction.
The U.S. market remains an “X factor” for Canadian cannabis companies. But, the good news is that Aurora Cannabis stock is well below a credible fair value estimate of $9-$10.
Todd Shriber does not own any of the aforementioned securities.
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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. | Those headlines temporarily bought ACB stock some goodwill among investors. While some states have signed off on it, cannabis for medical and recreational purposes is illegal at the federal level in the U.S. Aurora Cannabis is eyeing the U.S. market in its own way, and acknowledges that a footprint south of it home market There are plenty of other reasons why ACB stock could get a jolt. There are also fewer restrictions on product forms and advertising than in Canada.” Finding a Partner for ACB Stock Unlike some of its rivals, Aurora Cannabis is currently without partners from the tobacco or beverage industries, although the company has admitted Coca-Cola (NYSE:) would make for an appealing partner. | Those headlines temporarily bought ACB stock some goodwill among investors. While some states have signed off on it, cannabis for medical and recreational purposes is illegal at the federal level in the U.S. Aurora Cannabis is eyeing the U.S. market in its own way, and acknowledges that a footprint south of it home market There are plenty of other reasons why ACB stock could get a jolt. There are also fewer restrictions on product forms and advertising than in Canada.” Finding a Partner for ACB Stock Unlike some of its rivals, Aurora Cannabis is currently without partners from the tobacco or beverage industries, although the company has admitted Coca-Cola (NYSE:) would make for an appealing partner. | While some states have signed off on it, cannabis for medical and recreational purposes is illegal at the federal level in the U.S. Aurora Cannabis is eyeing the U.S. market in its own way, and acknowledges that a footprint south of it home market There are plenty of other reasons why ACB stock could get a jolt. There are also fewer restrictions on product forms and advertising than in Canada.” Finding a Partner for ACB Stock Unlike some of its rivals, Aurora Cannabis is currently without partners from the tobacco or beverage industries, although the company has admitted Coca-Cola (NYSE:) would make for an appealing partner. Those headlines temporarily bought ACB stock some goodwill among investors. | Those headlines temporarily bought ACB stock some goodwill among investors. While some states have signed off on it, cannabis for medical and recreational purposes is illegal at the federal level in the U.S. Aurora Cannabis is eyeing the U.S. market in its own way, and acknowledges that a footprint south of it home market There are plenty of other reasons why ACB stock could get a jolt. There are also fewer restrictions on product forms and advertising than in Canada.” Finding a Partner for ACB Stock Unlike some of its rivals, Aurora Cannabis is currently without partners from the tobacco or beverage industries, although the company has admitted Coca-Cola (NYSE:) would make for an appealing partner. |
38174.0 | 2019-09-04 00:00:00 UTC | 4 Canadian Cannabis Producers With the Highest International Sales | ACB | https://www.nasdaq.com/articles/4-canadian-cannabis-producers-with-the-highest-international-sales-2019-09-04 | nan | nan | Investors have rightfully focused a lot of their attention on the opportunity for Canadian cannabis producers in their home country. After all, the Canadian adult-use recreational marijuana market is driving most of the growth for these companies. In addition, the next phase of this market -- cannabis derivatives, including beverages, edibles, and vapes -- is scheduled to launch later this year.
But an even bigger long-term opportunity for Canadian cannabis producers lies in international markets. Which of these companies already claim the greatest head starts outside of Canada?
Image source: Getty Images.
1. Aphria
Aphria (NYSE: APHA) stands as the clear No. 1 Canadian cannabis producer in terms of international sales. In its fiscal fourth-quarter results announced in August, the company reported international revenue of at least 96.9 million Canadian dollars.
There's one thing you should know about Aphria's international revenue, though. The company's impressive Q4 figure came from its acquisition earlier this year of German medical cannabis and pharmaceutical distributor CC Pharma. The additional sales from this acquisition generated most of Aphria's revenue growth in the fourth quarter.
Aphria didnt reportdetails on how much medical cannabis it sold in international markets apart from the sales contribution from CC Pharma. However, the company appears to be in good shape to profit in Germany thanks to being selected as one of three companies allowed to cultivate medical cannabis in the country.
2. Tilray
Tilray (NASDAQ: TLRY) certainly ranks in second place among Canadian cannabis producers based on international sales. What isn't certain, however, is exactly what the company's total international sales are.
In August, Tilray reported second-quarter international medical cannabis revenue of nearly $1.9 million. The company also announced over $19.9 million in revenue from Manitoba Harvest, a hemp foods business Tilray acquired earlier this year. The problem is that Tilray didn't give details of exactly how much of that revenue was made outside of Canada.
We can calculate a ballpark estimate, though. Tilray CEO Brendan Kennedy noted in his comments during the company's Q2 conference call that Manitoba's products are carried in roughly 16,000 stores in North America, around 13,000 of which are in the U.S. If we assume similar average sales per store and use these numbers to prorate Manitoba's total revenue in the second quarter, the subsidiary's international revenue comes to around $16.2 million. Adding that amount to Tilray's international medical cannabis sales gives a total international revenue figure of around $18.1 million.
3. Canopy Growth
Canopy Growth (NYSE: CGC) would have taken the No. 2 spot if we had limited our ranking criteria solely to international medical cannabis sales and excluded hemp sales. The big Canadian cannabis producer reported international medical cannabis revenue of CA$10.5 million in its fiscal 2020 first-quarter results announced in August.
International sales were one of the few bright spots in Canopy's otherwise horrible Q1 update. The company's international medical cannabis revenue more than quintupled the amount made in the previous sequential quarter thanks in part to higher production capacity.
However, like Aphria, Canopy Growth benefited primarily from a key acquisition. The company attributed most of its quarter-over-quarter international revenue gain to its buyout in May 2019 of C3, Europe's largest cannabinoid-focused pharmaceuticals company.
4. Aurora Cannabis
Aurora Cannabis (NYSE: ACB) hasn't yet announced its results for the quarter ending June 30, 2019. However, we can make an educated guess about the company's international medical cannabis revenue.
In May, Aurora announced international medical cannabis revenue of CA$4 million in its fiscal 2019 third quarter. Even if the company merely maintained that level of international sales, it would deserve the No. 4 spot on our list. However, it seems likely that Aurora's international sales will be much higher when the company reports its Q4 results later this month.
For one thing, Aurora's international medical cannabis sales have been growing even faster than its Canadian adult-use recreational marijuana sales. Also, the company has already provided a sneak peek at its overall Q4 sales, projecting net cannabis revenue of between CA$90 million and CA$95 million, compared to net cannabis revenue of CA$58.6 million in the previous quarter. Based on this growth rate, Aurora could report international medical cannabis sales in Q4 of at least CA$6 million.
Most likely to succeed internationally
All four of these Canadian cannabis producers seem likely to keep the momentum going in international markets. I suspect, though, that Canopy Growth is the company most likely to succeed internationally in the future.
Canopy already has a strong position in the European medical cannabis market. Its acquisition of Germany-based C3 will likely fuel more international revenue growth in the future. The company has also jumped into the U.S. hemp cannabidiol (CBD) market and expects to launch its first products later this year.
The biggest opportunity for Canopy Growth would be competing in the U.S. marijuana market. Canopy's deal to acquire U.S.-based cannabis operator Acreage Holdings puts it in a prime position to enter the lucrative U.S. market. However, the transaction can't be triggered until federal marijuana laws are revised.
This roadblock that prevents the major Canadian cannabis producers from establishing a presence in the U.S. pot market underscores one of the risks associated with investing in marijuana stocks. The sky-high valuations of several big Canadian cannabis producers reflect the expectations that they'll be able to compete in the U.S. But until federal laws are changed, those expectations won't become reality. That means international opportunities, for now, will be limited largely to Europe, Australia, Latin America, and the U.S. hemp market.
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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 Aurora Cannabis (NYSE: ACB) hasn't yet announced its results for the quarter ending June 30, 2019. Tilray CEO Brendan Kennedy noted in his comments during the company's Q2 conference call that Manitoba's products are carried in roughly 16,000 stores in North America, around 13,000 of which are in the U.S. The company's international medical cannabis revenue more than quintupled the amount made in the previous sequential quarter thanks in part to higher production capacity. | Aurora Cannabis Aurora Cannabis (NYSE: ACB) hasn't yet announced its results for the quarter ending June 30, 2019. Adding that amount to Tilray's international medical cannabis sales gives a total international revenue figure of around $18.1 million. The big Canadian cannabis producer reported international medical cannabis revenue of CA$10.5 million in its fiscal 2020 first-quarter results announced in August. | Aurora Cannabis Aurora Cannabis (NYSE: ACB) hasn't yet announced its results for the quarter ending June 30, 2019. Adding that amount to Tilray's international medical cannabis sales gives a total international revenue figure of around $18.1 million. The big Canadian cannabis producer reported international medical cannabis revenue of CA$10.5 million in its fiscal 2020 first-quarter results announced in August. | Aurora Cannabis Aurora Cannabis (NYSE: ACB) hasn't yet announced its results for the quarter ending June 30, 2019. Adding that amount to Tilray's international medical cannabis sales gives a total international revenue figure of around $18.1 million. Canopy Growth Canopy Growth (NYSE: CGC) would have taken the No. |
38175.0 | 2019-09-03 00:00:00 UTC | What the Johnson & Johnson Opioid Ruling Means for the Cannabis Industry | ACB | https://www.nasdaq.com/articles/what-the-johnson-johnson-opioid-ruling-means-for-the-cannabis-industry-2019-09-03 | nan | nan | In late August, Johnson & Johnson (NYSE: JNJ) was hit with a hefty $572 million fine for its role in the opioid crisis in Oklahoma, which was still not as bad as it could have been. In what could prove to be a monumental case in the U.S., it could just be the beginning of a much larger fallout. As many as 130 people die daily as a result of overdosing on opioids.
Johnson & Johnson and other pharmaceuticals have reason to be worried, as Oklahoma's opioid problem is not nearly as severe as it is in other states. According to 2017 data from the Centers for Disease Control and Prevention, the state had a death rate relating to drug overdoses of 20.1 per 100,000 people, with 775 total deaths occurring that year. In contrast, West Virginia had the highest rate of death at 57.8 per 100,000 people while Pennsylvania, Florida, and Ohio each had more than 5,000 people lose their lives as a result of overdosing. While the fine in Oklahoma may not be that big of a burden for Johnson & Johnson, the amount could be a drop in the bucket compared to what a potential payout may be in other states should they be successful in pursuing similar types of litigation. The company said it plans to appeal the ruling.
The cannabis impact
The importance of the issue is evident from a cost standpoint, especially if the ruling against Johnson & Johnson holds up. Companies are likely to start taking opioids more seriously and look into alternative treatment options. One industry where healthcare companies may start to focus on is cannabis. Colorado, New York, and Illinois already allow doctors to recommend cannabis in place of opioids.
IMAGE SOURCE: GETTY IMAGES.
The challenge when it comes to cannabis is that while there's a lot of anecdotal evidence claiming marijuana use helps users deal with pain, there just isn't hard data to support that. To make matters worse, it's also hard to get research done on cannabis to be able to even prove or disprove its effectiveness since it remains a Schedule I drug, illegal on a federal level. These limitations make it difficult to prove whether cannabis can help the situation or not.
In addition, there has been research to suggest that cannabis is not a blanket solution to the opioid crisis. However, the research is by no means comprehensive and there's a clear need for more research before any definitive links can be drawn. Even one of the more critical studies acknowledged that "a great majority of adults who used cannabis did not go on to initiate or increase their nonmedical opioid use." Meanwhile, veterans are urging the government to help them access medical marijuana, which has been more effective for some in treating post-traumatic stress disorder than opioids.
Unfortunately, there's no one right answer to the question of whether cannabis can help the opioid crisis. What is evident, though, is that more research is needed to help understand in which circumstances it may be helpful and in which it may not be. To say conclusively that it does or doesn't help would be premature given the conflicting data.
We're still early in the process
To date, only GW Pharmaceuticals (NASDAQ: GWPH) has successfully launched a cannabis-based drug in the U.S., called Epidiolex. And it could be a long time before we see any others get approved as well given the legal hurdles involved. However, the Johnson & Johnson ruling could be the catalyst that at least gets pharmaceutical companies looking into potential alternatives, ones that include cannabis.
Why this matters for investors
From an investment standpoint, there's obviously a lot of potential growth that could be at hand for a company with a significant position in the medical marijuana segment like Aurora Cannabis. If cannabis is shown to be an effective treatment option in place of opioids, we could see much more demand for Aurora's products and for the industry as a whole. It could also lead to a big pharmaceutical company finally dipping its toes into the medical marijuana market. It's very early on, but last week's ruling could help lead to some medical professionals taking another look at cannabis, and that could be huge for the 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. | The challenge when it comes to cannabis is that while there's a lot of anecdotal evidence claiming marijuana use helps users deal with pain, there just isn't hard data to support that. To make matters worse, it's also hard to get research done on cannabis to be able to even prove or disprove its effectiveness since it remains a Schedule I drug, illegal on a federal level. Why this matters for investors From an investment standpoint, there's obviously a lot of potential growth that could be at hand for a company with a significant position in the medical marijuana segment like Aurora Cannabis. | According to 2017 data from the Centers for Disease Control and Prevention, the state had a death rate relating to drug overdoses of 20.1 per 100,000 people, with 775 total deaths occurring that year. If cannabis is shown to be an effective treatment option in place of opioids, we could see much more demand for Aurora's products and for the industry as a whole. The Motley Fool recommends Johnson & Johnson. | The cannabis impact The importance of the issue is evident from a cost standpoint, especially if the ruling against Johnson & Johnson holds up. However, the Johnson & Johnson ruling could be the catalyst that at least gets pharmaceutical companies looking into potential alternatives, ones that include cannabis. 10 stocks we like better than Johnson & Johnson When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. | However, the Johnson & Johnson ruling could be the catalyst that at least gets pharmaceutical companies looking into potential alternatives, ones that include cannabis. * David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Johnson & Johnson wasn't one of them! The Motley Fool recommends Johnson & Johnson. |
38176.0 | 2019-09-03 00:00:00 UTC | Here’s How to Buy Hexo Stock Now | ACB | https://www.nasdaq.com/articles/heres-how-to-buy-hexo-stock-now-2019-09-03 | nan | nan | It’s been a tough summer for Hexo (NYSE:) shareholders. But for investors seeking exposure to the cannabis market, the price is nearly right for a less speculative investment.
Source: Shutterstock
I’ve said it before and it bears repeating, Hexo, along with competitors Aurora Cannabis (NYSE:), Canopy Growth (NYSE:) or a New Age Beverages (NASDAQ:) face very real challenges despite the potential opportunity within the cannabis industry. Universally, the group is mired in losses as companies spend aggressively to gain market share. All the while, the opening up of new markets due to regulatory red tape remains much easier said than done.
It’s a tough combination that’s resulted in supply dwarfing demand and a business environment which will undoubtedly see casualties. In large part these difficult realities are why cannabis stocks have cratered and why Hexo stock has lost more than 50% over the past four months. But turning your back on HEXO could be a big mistake.
The fact remains that Hexo is well-positioned for success within the niche edibles and cannabis-infused beverages market. With a partner in beverage giant Molson Coors (NYSE:), Hexo maintains resources ranging from financial support to Molson’s marketing, distribution and operational expertise.
Hexo stock’s partnership isn’t a guarantee of survival. For the reasons already stressed, it’s simply too early to know if Hexo will ever be a viable business. But it would be unfair to not appreciate Molson Coors as a significant advantage as Hexo looks to build its brand in this up-and-coming, but still speculative market.
Hexo Stock Weekly Chart
Hexo’s technical wherewithal relative to its peers also makes it a standout in the cannabis space. Obviously, the deep corrective move over the past few months hasn’t been pleasant. However, HEXO stock is technically unique. Shares remain in an uptrend supported by it’s late April higher high pattern and today’s higher low relative to its December bottom.
With a small double bottom having formed on the weekly chart, HEXO is nearly ready for investors to buy. With this second pivot low finishing in a weekly hammer as of Friday’s close, shares are in position to buy on confirmation of this reversal candlestick.
My recommendation for buying Hexo stock would be to buy shares above $4.18. That’s 8 cents through the high of the weekly hammer. This approach gives up a few pennies of profit in return for trying to purchase HEXO on sustainable momentum to avoid the possibility of a weaker buy signal in Hexo stock price that’s doomed to fail.
Similarly, and to contain risk, I’d place an initial stop at $3.63 and 8 cents beneath the pattern low. This exit looks to evade being an easy target for a bear raid hitting picture perfect stops at $3.70.
In exchange for the position risk of 65 cents, I’d take partial profits in between $5.00-$5.15. The targeted area is slightly above the double bottom’s July high and may draw in fresh buying interest. But with no guarantees and profits approaching 1.5x the risk, this spot reasonably makes sense off and on the price chart.
Investment accounts under Christopher Tyler’s management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies and related musings, follow Chris on Twitter and StockTwits.
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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. | But it would be unfair to not appreciate Molson Coors as a significant advantage as Hexo looks to build its brand in this up-and-coming, but still speculative market. With this second pivot low finishing in a weekly hammer as of Friday’s close, shares are in position to buy on confirmation of this reversal candlestick. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. | With a partner in beverage giant Molson Coors (NYSE:), Hexo maintains resources ranging from financial support to Molson’s marketing, distribution and operational expertise. Hexo Stock Weekly Chart Hexo’s technical wherewithal relative to its peers also makes it a standout in the cannabis space. Shares remain in an uptrend supported by it’s late April higher high pattern and today’s higher low relative to its December bottom. | Hexo Stock Weekly Chart Hexo’s technical wherewithal relative to its peers also makes it a standout in the cannabis space. My recommendation for buying Hexo stock would be to buy shares above $4.18. This approach gives up a few pennies of profit in return for trying to purchase HEXO on sustainable momentum to avoid the possibility of a weaker buy signal in Hexo stock price that’s doomed to fail. | In large part these difficult realities are why cannabis stocks have cratered and why Hexo stock has lost more than 50% over the past four months. My recommendation for buying Hexo stock would be to buy shares above $4.18. That’s 8 cents through the high of the weekly hammer. |
38177.0 | 2019-09-03 00:00:00 UTC | Can Aurora Cannabis Sales Overcome the Black Market? | ACB | https://www.nasdaq.com/articles/can-aurora-cannabis-sales-overcome-the-black-market-2019-09-03 | nan | nan | Aurora Cannabis (NYSE:) has a well-defined path to profitability. Its near-term goal is to drive down costs by leveraging its massive scale to improve margins. Its medium-term goal is to leverage R&D to work on higher-margin products and to harvest the Canadian cash flow that is generated from its near-term goals. Long-term, the goal is to use extensive R&D to develop and brand higher-margin products.
Source: Shutterstock
Wall Street likes ACB stock. Out of the 17 firms that follow it, 10 of them have it ranked either as a buy or overweight. The average target price is more than two times higher than where it is currently trading.
In addition, unlike many of the other large industrial growers, this company reported an actual profit last year, something that is rarely seen in this industry. In fiscal 2019, the company earned a share.
Despite all of these positives, the price of ACB stock continues to decline. Why is this happening? Being a veteran of the markets I know that it is impossible to give an exact and definitive reason.
But I believe that a challenge facing Aurora Cannabis and other cannabis growing companies which isn’t discussed too often is the negative effect that the supply from the black market has on their sales.
The Black-Green Market
If you follow the cannabis markets you are probably aware that two recent stories involve litigation issues other than legalization. Canntrust (NYSE:) is alleged to have operated unlicensed, and therefore untaxed and illegal, grow rooms. These were literally hidden behind fake walls.
In addition, the FBI that it will be investigating the industry. Sources tell me that their main focus will be on the alleged kickbacks that are required in some places in order to obtain a growing license. I believe that their investigation will expose and shed light on the enormous size of the black market of cannabis.
Is the cannabis black market efficient and profitable? You bet it is. As someone who has many connections in law enforcement and the cannabis industry, I can tell you that the black market for recreational cannabis is enormous. And this market is virtually, if not literally, impossible to control.
Consider a cannabis farm of 2,000 acres. You don’t need a vivid imagination to understand how easy it will be for employees and others to walk off with product or to send it out the proverbial back door. In fact, I have talked to recreational marijuana enthusiasts in Canada that enjoy it daily. Yet none have purchased it from a licensed retailer since it became legal almost a year ago. Why go to the store when someone in the park across the street has the same thing for half the price?
As long as these dynamics exist, industrial growers like Aurora Cannabis will have to accept and face this challenge as part of their growth strategies.
A Look at Aurora Cannabis Stock
ACB stock has been trending lower since it failed at resistance at the $7 level in early August. If it continues to trend lower, there may be support around the $5 level. This is where support was in December and January and it is also important psychologically.
At the time of this writing, Mark Putrino did not hold a position in any of the aforementioned securities.
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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. | Source: Shutterstock Wall Street likes ACB stock. Despite all of these positives, the price of ACB stock continues to decline. A Look at Aurora Cannabis Stock ACB stock has been trending lower since it failed at resistance at the $7 level in early August. | Source: Shutterstock Wall Street likes ACB stock. A Look at Aurora Cannabis Stock ACB stock has been trending lower since it failed at resistance at the $7 level in early August. Despite all of these positives, the price of ACB stock continues to decline. | A Look at Aurora Cannabis Stock ACB stock has been trending lower since it failed at resistance at the $7 level in early August. Source: Shutterstock Wall Street likes ACB stock. Despite all of these positives, the price of ACB stock continues to decline. | Source: Shutterstock Wall Street likes ACB stock. Despite all of these positives, the price of ACB stock continues to decline. A Look at Aurora Cannabis Stock ACB stock has been trending lower since it failed at resistance at the $7 level in early August. |
38178.0 | 2019-09-01 00:00:00 UTC | 5 of the Most Cash-Rich Cannabis Stocks | ACB | https://www.nasdaq.com/articles/5-of-the-most-cash-rich-cannabis-stocks-2019-09-01 | nan | nan | Over the long run, the marijuana industry is expected to show a lot of promise. Various Wall Street forecasts suggest that worldwide legal weed sales can grow from $10.9 billion in 2018 to anywhere between $50 billion and $200 billion in about a decade's time. That's growth that Wall Street and investors would be foolish (with a small "f") to overlook.
But the thing is, all next-big-thing investments need time to mature and find their footing. That's where the legal cannabis industry is right now. Despite a long runway to grow sales throughout North America, and eventually the world, supply issues in Canada, along with high tax rates and a persistent black market in the U.S., have stymied sales growth. In many instances, cannabis stocks are losing money, and that could continue throughout most of 2020.
In order for pot stocks to thrive over the long run, they're going to need a healthy cash pile in the interim to offset aggressive spending and losses. Based on their most recent quarterly reports, the following five marijuana stocks are among the most cash-rich in the industry.
Image source: Getty Images.
Canopy Growth: $3.14 billion Canadian ($2.36 billion)
It should come as no surprise that among pure-play pot stocks, Canopy Growth (NYSE: CGC) has more cash at its disposal than any other company. After all, part of the reason Canopy has been able to maintain its status as the largest cannabis stock is the fact that it has so much cash and short-term investments in its coffers.
Although Canopy did wind up selling CA$600 million worth of convertible notes in June 2018, the bulk of the company's cash came from Modelo and Corona beer maker Constellation Brands' $4 billion equity investment, which closed in November. This actually marked the third time that Constellation had directly or indirectly bought into Canopy Growth, and it lifted its equity stake in the largest marijuana stock in the world to 37%.
For its part, Canopy Growth has been a busy bee. It agreed to acquire Acreage Holdings on a contingent-rights basis in a cash-and-stock deal, acquired Colorado-based intellectual property company ebbu, and is spending $150 million (that's U.S. dollars) on a hemp-processing facility in New York State. Between its ongoing operating losses and aggressive expansion, Canopy Growth's cash pile is expected to continue shrinking.
Image source: Getty Images.
Cronos Group: CA$2.32 billion ($1.74 billion)
Once miles away in terms of cash on hand, Cronos Group (NASDAQ: CRON) is suddenly within striking distance of dethroning Canopy as the most cash-rich cannabis stock. Inclusive of short-term investments, Cronos had about $1.74 billion available as of the end of June. It should be noted, though, that its recently announced $300 million acquisition of Redwood Holdings is being paid for with $225 million in cash.
Like Canopy Growth, Cronos Group's monstrous cash pile is the result of an equity investment – in this case from tobacco giant Altria. The deal, which closed in March, saw Altria take a 45% non-diluted equity stake in Cronos in exchange for $1.8 billion. Given the cash figure noted above, Cronos has had far less cash burn than Canopy, although it will be parting with a notable chunk of cash tied to its Redwood deal to gain hold of the Lord Jones topical brands.
Cronos Group's cash is a big reason the company's market cap has held up as well as it has (it's still around $4 billion). From an operating perspective, Cronos Group's results haven't been impressive. Sure, it's reported huge profits on the back of derivative liability revaluations, but these are one-time benefits. Speaking purely of the company's operating results, Cronos is still losing money, and that's not expected to change anytime soon.
Image source: GW Pharmaceuticals.
GW Pharmaceuticals: $583.7 million
The largest cannabinoid-based drug developer in the world by market cap, GW Pharmaceuticals (NASDAQ: GWPH), also has an impressive war chest of capital at its disposal, which should be expected given the need to research and develop new therapies.
The majority of GW Pharmaceuticals' cash was generated in early Oct. 2018, when the company sold 1.9 million shares of stock and had the underwriters of the offering fully exercise their option to purchase 285,000 additional shares. The offering wound up raising $345.2 million in gross proceeds before underwriting discounts, commissions, and offering expenses.
Why raise so much capital, you ask? In November, GW Pharmaceuticals launched Epidiolex, which is the very first cannabis-derived drug approved by the Food and Drug Administration (FDA). After leading to a statistically significant decline in seizure frequency for patients with two types of childhood-onset epilepsy – one of which had no FDA-approved treatment – Epidiolex was easily approved by the FDA. GW Pharmaceuticals needed a healthy amount of cash to market its new drug, as well as bolster its clinical pipeline to hopefully expand its label, as well as complement it with other cannabinoid-based compounds.
GW Pharmaceuticals is also losing quite a bit of money as it ramps up sales of Epidiolex, which more than doubled in the second quarter from the sequential first quarter. The company's cash balance will help offset these near-term losses as Epidiolex helps GW push toward recurring profitability.
Image source: Getty Images.
Aphria: CA$571 million ($428.3 million)
Another well-known pot stock with plenty of capital on its balance sheet is Aphria (NYSE: APHA). At the end of Aphria's fiscal 2020 (May 31, 2019), the company had close to CA$550 million in cash, with the remainder in short-term investments.
Unlike cultivation peers Canopy and Cronos, Aphria's cash was mostly derived from a convertible note offering in April. The company sold $350 million (U.S.) in convertible notes, with the underwriters of the deal exercising their full allotment. These notes, which come due in 2024, bear a 5.25% annual rate, but supplied Aphria with abundant capital to expand into overseas markets, as well as make acquisitions.
Like its peers, Aphria has been active on the acquisition front. Unfortunately, the company's acquisitions haven't been well-received by Wall Street. Its purchase of Nuuvera in March 2018 wound up drawing the ire of investors after it was disclosed that some Aphria execs owned a stake in Nuuvera. While it's not unheard of for execs of an acquiring company to own a stake in the company being acquired, it's odd to find out about it just a day prior to the closing of the deal. Then, in December, Aphria was hit with allegations of fraud from a scathing short-seller report regarding its Latin American assets. Although these allegations were proved false, an independent committee found that a few executives had conflicts of interest in the deal.
Long story short, Aphria has a long way to go to rebuild trust with investors, and it's unclear how it'll use its cash to make that happen.
Image source: Getty Images.
Aurora Cannabis: CA$391.5 million ($293.6 million)
Last, but not least, the largest Canadian producer, Aurora Cannabis (NYSE: ACB), has a healthy sum of capital at its disposal. It should be noted that the CA$391.5 million figure above includes about CA$43.6 million in restricted cash, and that this cash total represents what Aurora had on its balance sheet through March 31, 2019. It's likely changed substantially since then.
Although CA$391.5 million might not seem like a lot of cash for a company that's made more than a dozen acquisitions over the past three years, Aurora isn't known for using its cash on hand to fund acquisitions. With the exception of the CanniMed deal in early 2018, Aurora has funded practically every deal solely by issuing shares of its stock. This is a big reason why the company's outstanding share count has risen from 16 million shares to north of 1 billion in less than five years. While cash is important to all pot stocks, a huge cash pile would be unnecessary for Aurora Cannabis.
Furthermore, keep in mind that Aurora filed a shelf prospectus in early April that could allow it to raise up to $750 million (U.S.) in the 25-month period following the effective date of the shelf offering. This money can be raised by selling stock, offering convertible notes, and a number of other methods. So, even though Aurora has far less cash on hand than Canopy, Cronos, and Aphria, it has ample access to cash, should the company need it.
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Sean Williams has no position in any of the stocks mentioned. The Motley Fool 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. | Aurora Cannabis: CA$391.5 million ($293.6 million) Last, but not least, the largest Canadian producer, Aurora Cannabis (NYSE: ACB), has a healthy sum of capital at its disposal. Although Canopy did wind up selling CA$600 million worth of convertible notes in June 2018, the bulk of the company's cash came from Modelo and Corona beer maker Constellation Brands' $4 billion equity investment, which closed in November. After leading to a statistically significant decline in seizure frequency for patients with two types of childhood-onset epilepsy – one of which had no FDA-approved treatment – Epidiolex was easily approved by the FDA. | Aurora Cannabis: CA$391.5 million ($293.6 million) Last, but not least, the largest Canadian producer, Aurora Cannabis (NYSE: ACB), has a healthy sum of capital at its disposal. GW Pharmaceuticals: $583.7 million The largest cannabinoid-based drug developer in the world by market cap, GW Pharmaceuticals (NASDAQ: GWPH), also has an impressive war chest of capital at its disposal, which should be expected given the need to research and develop new therapies. The majority of GW Pharmaceuticals' cash was generated in early Oct. 2018, when the company sold 1.9 million shares of stock and had the underwriters of the offering fully exercise their option to purchase 285,000 additional shares. | Aurora Cannabis: CA$391.5 million ($293.6 million) Last, but not least, the largest Canadian producer, Aurora Cannabis (NYSE: ACB), has a healthy sum of capital at its disposal. Canopy Growth: $3.14 billion Canadian ($2.36 billion) It should come as no surprise that among pure-play pot stocks, Canopy Growth (NYSE: CGC) has more cash at its disposal than any other company. Although Canopy did wind up selling CA$600 million worth of convertible notes in June 2018, the bulk of the company's cash came from Modelo and Corona beer maker Constellation Brands' $4 billion equity investment, which closed in November. | Aurora Cannabis: CA$391.5 million ($293.6 million) Last, but not least, the largest Canadian producer, Aurora Cannabis (NYSE: ACB), has a healthy sum of capital at its disposal. Canopy Growth: $3.14 billion Canadian ($2.36 billion) It should come as no surprise that among pure-play pot stocks, Canopy Growth (NYSE: CGC) has more cash at its disposal than any other company. Image source: GW Pharmaceuticals. |
38179.0 | 2019-08-30 00:00:00 UTC | Aurora Cannabis Stock Is a Case of Near-Term Pain, Long-Term Gain | ACB | https://www.nasdaq.com/articles/aurora-cannabis-stock-is-a-case-of-near-term-pain-long-term-gain-2019-08-30 | nan | nan | The entire market has rallied in late August amid easing trade tensions, as both U.S. and China trade officials have said that the two countries are resuming trade talks. Since the favorable trade chatter started on Aug. 23, the S&P 500, Dow Jones, and Nasdaq are all up about 3%.
Source: Shutterstock
Marijuana stocks have not jumped along with the market Shares of Aurora Cannabis (NYSE:) – one of the biggest companies in the Canadian cannabis market – have fallen since Aug. 23. This relative weakness is nothing new. Over the past three months, all three major indices have posted gains of around 4%-5%, but Aurora Cannabis stock is down more than 30% over that stretch. ACB stock has underperformed over the last six months, too.
The underperformance of Aurora Cannabis and all marijuana stocks indicates that investors’ views of these equities have become so negative that not even stock market rallies have been able to save Aurora Cannabis from its multi-month slide.
The long-term growth fundamentals of Aurora Cannabis stock, however, remain favorable. These fundamentals indicate that ACB stock can rise tremendously from today’s depressed levels. But it’s important to note that while fundamentals ultimately dictate long-term price movements, perception dictates near-term price movements.
Thus, Aurora Cannabis stock increasingly looks like a “near-term pain, long-term gain” name. In the long-term, it can climb a great deal. But, until perception turns around, ACB stock won’t rebound from this multi-month slide.
ACB’s Long-Term Growth Fundamentals Remain Favorable
The long-term growth fundamentals of Aurora Cannabis remain very favorable.
The long-term bull thesis on ACB stock is based on three points. First, the global cannabis market will be huge one day. Second, Aurora Cannabis will be a sizable player in that gigantic market. Third, the price of ACB stock does not reflect its ability to turn into a sizable player in the soon-to-be huge cannabis market.
On the first point, current consumption trends indicate that consumers don’t just like to consume cannabis, but that they like to do so nearly as much as they like to smoke tobacco and drink alcohol. Due to changes in perception around the world, cannabis appears to be on a fast-track to global legalization. This combination indicates that the legal global cannabis market will one day be nearly as big as the global tobacco and alcoholic beverage markets. Those are multi-hundred billion dollar to trillion dollar markets.
As far as the second point, Aurora Cannabis is the second-biggest player in the Canadian cannabis market today, behind only Canopy Growth (NYSE:). Thus, Aurora doesn’t have to grow its market share over the next decade; it just has to defend its share. That seems doable, considering the company has been beating its peers over the past few quarters with huge volume growth, has a global distribution footprint that is second-to-none, and is one of the largest legal growers of cannabis in the world. Thus, Aurora should become a sizable player in the soon-to-be multi-hundred-billion-dollar global cannabis market.
Moving to the third point, the global tobacco and alcoholic beverage markets have each spawned several $100 billion-plus companies, and many more $50 billion-plus companies. The cannabis market should do the same. ACB could very well be one of those $50 billion-plus or $100 billion-plus companies. Aurora Cannabis has a $6 billion market cap today. Thus, either way, ACB stock’s potential upside in the long-run is huge.
Perception Issue Continue to Weigh on Aurora Cannabis
Although the long-term growth fundamentals supporting ACB stock remain favorable, the perception of ACB has become increasingly unfavorable over the past few months. Because perception drives near-term stock price movements, this deterioration has weighed on Aurora Cannabis stock.
The unfortunate reality is that negative perception will continue to weigh on ACB stock for the foreseeable future.
The current status of the cannabis sector is not pretty. Its volume and sales growth look fine. But the problem is that its growth is being driven by large investments. That is, everyone is spending a great deal on developing new products, building infrastructure, marketing to potential customers, etc. There has also been a great deal of price cutting across the sector.
As a result, cannabis companies’ margins are getting killed, and their cash is getting burned. That’s a big problem for Aurora Cannabis. Unlike many of its peers, Aurora does not have a large balance sheet. It had less than C$350 million of cash at the end of last quarter. Over the last nine months, its operating business has burned through nearly C$200 million.
Thus, ACB does not have a great deal of cash, and it’s burning money at an alarming rate. In fact, given its spending, it’s questionable how much longer the company can keep its doors open.
But, in the big picture, I don’t think this is an issue for ACB stock. Early leaders in young, high-growth markets frequently experience similar scenarios. They spend a great deal and burn through a lot of money in order to capture market share early-on, establish themselves as a market leader, and then reduce their spending as their market matures and rationalizes. Consequently, their profitability rises,. Aurora is following this playbook. which was also used successfully by Amazon (NASDAQ:) and Netflix (NASDAQ:). It will work for Aurora, too.
But, this playbook is always accompanied by growing pains. Aurora Cannabis is in the middle of those growing pains right now. As long as those pains hang around, ACB stock will have trouble rallying.
The Bottom Line on ACB Stock
I like Aurora Cannabis stock’s long-term outlook, because this company looks poised to become a sizable player in a multi-hundred billion dollar industry. It also has the potential to generate high profits after growing for awhile.
But its bullish long-term outlook is being clouded by near-term growing pains. That is, in order to become prosperous in the future, Aurora has to spend a lot of money today. All that spending results in high cash-burn rates, which causes investors to freak out in the near-term.
As long as these cash burn concerns persist, Aurora Cannabis stock will have a tough time rebounding. As a result, ACB stock looks like a classic case of near term pain, long term gain.
As of this writing, Luke Lango did not hold a position in any of the aforementioned securities.
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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. | Third, the price of ACB stock does not reflect its ability to turn into a sizable player in the soon-to-be huge cannabis market. ACB stock has underperformed over the last six months, too. These fundamentals indicate that ACB stock can rise tremendously from today’s depressed levels. | ACB’s Long-Term Growth Fundamentals Remain Favorable The long-term growth fundamentals of Aurora Cannabis remain very favorable. Perception Issue Continue to Weigh on Aurora Cannabis Although the long-term growth fundamentals supporting ACB stock remain favorable, the perception of ACB has become increasingly unfavorable over the past few months. ACB stock has underperformed over the last six months, too. | Perception Issue Continue to Weigh on Aurora Cannabis Although the long-term growth fundamentals supporting ACB stock remain favorable, the perception of ACB has become increasingly unfavorable over the past few months. ACB stock has underperformed over the last six months, too. These fundamentals indicate that ACB stock can rise tremendously from today’s depressed levels. | ACB stock has underperformed over the last six months, too. These fundamentals indicate that ACB stock can rise tremendously from today’s depressed levels. But, until perception turns around, ACB stock won’t rebound from this multi-month slide. |
38180.0 | 2019-08-30 00:00:00 UTC | Hexo’s “Smoke-Free” Strategy Is Solid, but Shares Remain Overvalued | ACB | https://www.nasdaq.com/articles/hexos-smoke-free-strategy-is-solid-but-shares-remain-overvalued-2019-08-30 | nan | nan | Hexo (NYSE:) stock has traded sideways this month. Shares rose from $3.98 on July 29 to as high as $4.95 on Aug. 13. But since mid-August, shares have fallen back, closing at $3.94 per share on Aug. 29. Compared to its larger peers, shares have held steady.
Source: Shutterstock
Shares in Canopy Growth (NYSE:) are down more than 28% for the month. Aurora Cannabis (NYSE:) stock has fallen roughly 12.7% since late July. Hexo is becoming increasingly focused on “smoke free” uses (beverages, edibles, etc.) than its peers. Focusing on this niche could be its key to success.
With , should investors take a position in HEXO ahead of this product launch? Or should investors take heed, given shares continue to trade at a high valuation? Let’s take a closer look at Hexo stock.
TAP Partnership Provides Scale with Minimal Dilution
As I discussed in , expectations for cannabis-infused products drive the Hexo stock price. The company has partnered with Molson Coors (NYSE:) to launch Truss. Truss is Hexo’s line of non-alcoholic, cannabis-infused beverages. This strategic partnership gives the company a greater chance of success in this space. With Molson Coors’s scale and infrastructure, Truss can be rolled out more efficiently.
Another positive of this partnership is the structure. So far, strategic partnership deals have been highly dilutive to cannabis company investors. With Canopy Growth, Constellation Brands (NYSE:) has quietly taken over the company. This with Cronos (NASDAQ:) and its partner Altria (NYSE:).
Molson Coors received warrants as part of the deal, but the partnership is structured as a joint venture. Molson Coors , with Hexo owning the remainder. This may limit upside if infused beverages are a success. But it limits Molson Coors’s control over the entire company. Molson Coors’s warrants only give it the right to buy 11.5 million shares at a strike price of $6 a share. With 256.9 million shares outstanding, and 50.9 million warrants outstanding, this hardly gives Molson Coors control over Hexo’s destiny.
Other catalysts could move the Hexo stock price. focuses on “smoke-free” cannabis products. This includes edibles, vapes, wellness products, and cosmetics. Selling plain old pot is a commodity business. The opportunity to develop high-margin brands is the key to long-term profitability.
Hexo is no slouch when it comes to selling pot. The company remains . The recent acquisition of Newstrike Brands helps scale up their cultivation infrastructure. But is all of this reflected in the Hexo stock price? Let’s take a look at how the stock’s valuation stacks up to peers.
Hexo’s Valuation in Line With Peers
Using the Enterprise Value/Sales (EV/Sales) ratio, the company trades in line with peers. The company’s current EV/Sales ratio is 36.4. Compare this to Aurora Cannabis (EV/Sales of 45.6), Canopy Growth (EV/Sales of 35.3), and Cronos (EV/Sales of 98.5). An EV/Sales ratio of over 30 is still a rich valuation.
The expectations of Truss and other products inflates the Hexo stock price. Investor enthusiasm has tapered off, as seen from the 53% drop from its all-time high in April. If Truss is a success, Hexo stock should see a massive boost. But with the current rich valuation, additional declines are a risk. If investors lose faith in Hexo shares could fall much further.
So what does this mean for investors entering the stock today? Cannabis shares have been beaten down. But marijuana stocks have yet to trade at fire sale prices. It’s impossible to predict the unpredictable. Only time will tell if we have reached a bottom in cannabis stock valuation. But long term, investors may be getting a bargain entering Hexo stock at the current trading price.
Hexo Has Potential, but Tread Carefully
Hexo stock offers a unique opportunity for cannabis investors. While its competitors try to dominate the smoked marijuana space, Hexo is going “smoke-free.” Focusing on beverages, edibles, and other cannabis-infused products, the company could find riches in niches. Their partnership with Molson Coors is a conservative way to get scale without sacrificing much equity. Unlike its larger peers, Molson Coors is in no position to quietly take over the company.
The Hexo stock price remains inflated. Investors are betting on the company’s future potential. Long-term, shares could see big gains. Short-term volatility is a risk. Keep HEXO on your radar, but tread carefully before entering a position.
As of this writing, Thomas Niel did not hold a position in any of the aforementioned securities.
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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. | TAP Partnership Provides Scale with Minimal Dilution As I discussed in , expectations for cannabis-infused products drive the Hexo stock price. Molson Coors received warrants as part of the deal, but the partnership is structured as a joint venture. While its competitors try to dominate the smoked marijuana space, Hexo is going “smoke-free.” Focusing on beverages, edibles, and other cannabis-infused products, the company could find riches in niches. | So far, strategic partnership deals have been highly dilutive to cannabis company investors. With 256.9 million shares outstanding, and 50.9 million warrants outstanding, this hardly gives Molson Coors control over Hexo’s destiny. While its competitors try to dominate the smoked marijuana space, Hexo is going “smoke-free.” Focusing on beverages, edibles, and other cannabis-infused products, the company could find riches in niches. | Hexo’s Valuation in Line With Peers Using the Enterprise Value/Sales (EV/Sales) ratio, the company trades in line with peers. But long term, investors may be getting a bargain entering Hexo stock at the current trading price. Hexo Has Potential, but Tread Carefully Hexo stock offers a unique opportunity for cannabis investors. | The company has partnered with Molson Coors (NYSE:) to launch Truss. Molson Coors’s warrants only give it the right to buy 11.5 million shares at a strike price of $6 a share. Unlike its larger peers, Molson Coors is in no position to quietly take over the company. |
38181.0 | 2019-08-30 00:00:00 UTC | Is Aurora Cannabis Stock the Top Pot Play? | ACB | https://www.nasdaq.com/articles/is-aurora-cannabis-stock-the-top-pot-play-2019-08-30 | nan | nan | Canada’s Aurora Cannabis (NYSE:) is down over 45% from its 2019 high of $9.96, after sliding 0.54% to close at $5.55 on Thursday. ACB stock surged briefly earlier in August after the company issued a fourth-quarter update suggesting cannabis production for the quarter would be at the high end of its previous guidance, but its since given that back. In fact, at the current price it is approaching its 2019 low of $5.03.
Source: ElRoi / Shutterstock.com
This makes ACB a tempting option for investors who are interested in getting in on the cannabis market. The company has been publicly traded for five years. And with a current production capacity in excess of 625,000 kilograms it’s not just Canada’s largest cannabis producer — it’s one of the largest in the world.
So, is ACB stock the one to choose? If so, is now the time to pull the trigger?
Should Aurora Cannabis Be Your Pot Stock?
There has been a huge increase in interest in the cannabis market over the past several years. Canada’s legalization of recreational pot last fall resulted in a rush to buy. With production ramping up, it’s turned out that some of these companies have been poorly run, resulting in a rash of corporate shakeups that have rattled investors.
Aurora Cannabis has been a stable presence amid the turmoil. In operation since 2013, the company has a solid business in producing medical marijuana in addition to recreational cannabis products. It has invested in 15 global production facilities including the highly automated, 800,000 square foot in Edmonton — capable of producing over 100,000 kilograms per year on its own. In addition, Aurora Cannabis has active operations in 25 countries.
It’s worth checking on how ACB stock has performed relative to other stocks in the industry. Despite the steep drop since March, Aurora Cannabis has performed better in year-to-date terms, showing modest growth of 5.7%. In comparison, Canopy Growth (NYSE:) is down by 13% so far in 2019. For a real horror story, investors in CannTrust Holdings (NYSE:CTST) — under investigation in Canada for illegal growing operations and one of the companies that this year — have taken a bath, with CTST down over 65% so far in 2019.
In short, if you want to invest in a cannabis stock, you could do a lot worse than choosing ACB stock.
Fourth-Quarter Earnings
The big wildcard here is Q4 earnings. Aurora Cannabis is expected to report in roughly two weeks and the results are going to have an immediate impact on ACB stock. As mentioned in the intro, the company already issued a that puts its production for the quarter at the high end of previous guidance. That was a positive that resulted in a 10% surge for Aurora Cannabis stock, which hit $6.83. However, its guidance for Q4 net revenue in the $100 million CAD to $107 million CAD range was well below the $114 million CAD that analysts had been expecting. And there was no mention of earnings. It’s been a downhill slide for ACB stock ever since.
Depending on what gets announced when Aurora Cannabis delivers its Q4 earnings report, which should be before Sept. 15, ACB stock will be on the move.
Is Now the Time to Buy ACB Stock?
Despite a slow start, Canada’s recreational marijuana sales have been picking up. In December the country will be legalizing edibles and other cannabis-infused products. Aurora Cannabis has been which could kick off another wave of growth among cannabis stocks. The long-term prospects for ACB stock seem good. More markets for its products are coming online. And, its investment in cutting-edge production facilities is poised to pay off.
The big question remains whether to buy Aurora Cannabis stock now, or wait two weeks for those Q4 results. Among the nine analysts , four currently have a hold on ACB stock, while two have it rated as a “Buy” and three call it a “Strong Buy.” It’s a bit of a roll-the-dice situation, but now might just be the time to buy ACB. Even if it slides a bit after those Q4 results are in, it’s a pretty safe bet for long-term growth.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
The post 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. | ACB stock surged briefly earlier in August after the company issued a fourth-quarter update suggesting cannabis production for the quarter would be at the high end of its previous guidance, but its since given that back. Source: ElRoi / Shutterstock.com This makes ACB a tempting option for investors who are interested in getting in on the cannabis market. So, is ACB stock the one to choose? | ACB stock surged briefly earlier in August after the company issued a fourth-quarter update suggesting cannabis production for the quarter would be at the high end of its previous guidance, but its since given that back. Source: ElRoi / Shutterstock.com This makes ACB a tempting option for investors who are interested in getting in on the cannabis market. So, is ACB stock the one to choose? | ACB stock surged briefly earlier in August after the company issued a fourth-quarter update suggesting cannabis production for the quarter would be at the high end of its previous guidance, but its since given that back. In short, if you want to invest in a cannabis stock, you could do a lot worse than choosing ACB stock. Source: ElRoi / Shutterstock.com This makes ACB a tempting option for investors who are interested in getting in on the cannabis market. | Is Now the Time to Buy ACB Stock? ACB stock surged briefly earlier in August after the company issued a fourth-quarter update suggesting cannabis production for the quarter would be at the high end of its previous guidance, but its since given that back. Source: ElRoi / Shutterstock.com This makes ACB a tempting option for investors who are interested in getting in on the cannabis market. |
38182.0 | 2019-08-29 00:00:00 UTC | Hexo Stock Smokes its Competition | ACB | https://www.nasdaq.com/articles/hexo-stock-smokes-its-competition-2019-08-29 | nan | nan | Investors tend to treat all cannabis stocks the same. That’s pretty common in an emerging market. However, this “one size fits all” mentality means one bad stock can spoil things for the bunch. Case in point, Hexo (NYSE:) had a bad second quarter. Awful, in fact. But when looking at the company as an investment, you have to look at their business model, which is distinct from other major players like Canopy Growth (NYSE:) and Aurora Cannabis (NYSE:).
Source: Shutterstock
For example, Aurora is concentrating its efforts on the medicinal marijuana market. Canopy, on the other hand, is dominating the recreational use market. Cultivating one or more niches is a hallmark of the cannabis market. And it’s no different for Hexo.
Hexo is focusing on the edibles and beverage market. While this is a small niche at the moment, the cannabis-infused beverage market may be by the end of 2019. The first example of this model paying dividends occurred in the fall of 2018 when Molson Coors Brewing (NYSE:) partnered with HEXO. The Canadian brewer is building a cannabis beverage brand, and the first drinks will be available for sale on Dec. 16. That’s the date when these products become legal in Canada.
The partnership between Molson Coors and Hexo may not seem much different than Constellation Brands (NYSE:) forming an alliance with Canopy. However, it’s worth noting that Molson chose Hexo over both CGC and Aurora Cannabis — among other cannabis companies it met with. One reason for this was the company’s history of innovation. It’s also worth noting that Hexo will have a deliverable for this space that the other cannabis companies will not. That deliverable can be significant for Hexo stock when, pending regulatory approval, it can launch these CBD-based drinks in a limited U.S. market in 2020.
Hexo Is Beating Some of the Big Players at Their Own Game
In terms of sales growth, Hexo is one of the best cannabis stories around. The company is delivering trailing 12-month revenue growth of 245%. This number is even more impressive when you consider that for quite some time, Hexo has been limited by its own production capacity.
That situation, however, appears to be changing.
Hexo recently completed a of its Gatineau, Quebec facility which previously operated at approximately 310,000 square feet of capacity. This growth will allow Hexo to become one of the top-10 cannabis producers in Canada by 2020. The company also recently acquired Newstrike Brands which will eventually push Hexo’s production capacity to 150,000 kilograms.
But what good is supply if you don’t have demand?
Not to worry. The Quebec-based company also has a large supply deal with the province that will insure about 30% of Hexo’s distribution over the next five years. There are few certainties in the cannabis industry. However, locking up 30% of Canada’s largest cannabis market should have a positive effect on Hexo stock.
Why Does HEXO’s Share Price Continue to Fall?
Since hitting its all-time high in mid-April, Hexo stock has declined over 50%. This selloff has taken the company below the symbolically important $1-billion valuation mark. And at its current price near $3.90 per share the stock is getting perilously close to going negative for the year. By all indications, this would make Hexo stock look like a classic falling knife, but I’m not so sure this is accurate.
Regulation in the Cannabis Market Will Remain an Anchor
Both medicinal and recreational use of marijuana is gaining mainstream acceptance. But voter approval is only the first step. The obstacle that all cannabis companies face is regulatory hurdles. Hexo has been stymied by Health Canada. Canada’s regulatory agency is swamped by the large amount of companies filing licensing applications for cannabis. And all of these new products must have compliant packaging which is creating another delay.
But as frustrating as this is for cannabis companies and their would-be investors, it’s not unexpected. The U.S. faces similar regulatory issues as it tries to assimilate products that still make many consumers wary.
What’s in Store for Hexo Stock?
The company provides its next quarterly earnings report on Sept. 12. The market will be looking to see if the regulatory environment improves and all systems are go for a successful launch of their CBD-infused beverages. If so, Hexo stock should get a nice lift going into 2020. If not, it’s still hard to ignore the potential of this stock — which investors can get at a sizable discount.
Hexo is a stock for the long haul, and like all cannabis stocks, it’s not for the faint of heart. But if you look at how Hexo is different from its competition, you’ll find a strong case for owning HEXO shares.
As of this writing, Chris Markoch did not hold a position in any of the aforementioned securities.
The post 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. | That deliverable can be significant for Hexo stock when, pending regulatory approval, it can launch these CBD-based drinks in a limited U.S. market in 2020. Hexo recently completed a of its Gatineau, Quebec facility which previously operated at approximately 310,000 square feet of capacity. Canada’s regulatory agency is swamped by the large amount of companies filing licensing applications for cannabis. | But when looking at the company as an investment, you have to look at their business model, which is distinct from other major players like Canopy Growth (NYSE:) and Aurora Cannabis (NYSE:). That deliverable can be significant for Hexo stock when, pending regulatory approval, it can launch these CBD-based drinks in a limited U.S. market in 2020. The obstacle that all cannabis companies face is regulatory hurdles. | However, it’s worth noting that Molson chose Hexo over both CGC and Aurora Cannabis — among other cannabis companies it met with. Hexo Is Beating Some of the Big Players at Their Own Game In terms of sales growth, Hexo is one of the best cannabis stories around. However, locking up 30% of Canada’s largest cannabis market should have a positive effect on Hexo stock. | Case in point, Hexo (NYSE:) had a bad second quarter. But when looking at the company as an investment, you have to look at their business model, which is distinct from other major players like Canopy Growth (NYSE:) and Aurora Cannabis (NYSE:). And it’s no different for Hexo. |
38183.0 | 2019-08-29 00:00:00 UTC | The Only 4 Pot Stocks Worth Considering Long Term | ACB | https://www.nasdaq.com/articles/the-only-4-pot-stocks-worth-considering-long-term-2019-08-29 | nan | nan | When it comes to investing in pot stocks, investors should pull out their history books and read up on the birth of the internet services industry in the late 1990s.
Much like the internet services industry of the late 90s, the cannabis market of today is a nascent market on the cusp of huge growth over the next ten-plus years. Also like the late 1990s internet services industry, the cannabis market comprises multiple companies looking to strike gold in the market.
But only a handful of those companies will actually strike gold in the long run. Back in 2000, there were in the Nasdaq composite index. Over the next several years, thousands of those companies were either . Today, nearly twenty years later and at the height of the global internet revolution, the Nasdaq composite index has less than 3,500 companies.
In other words, while the internet market did turn into the world’s most important market, the emergence of the internet market was not a rising tide that lifted all boats. Instead, a few huge ships were formed. The rest sank.
The same will be true in the cannabis market. Today, the market is pricing every pot stock as if it’s going to claim some share of the global cannabis industry at scale. That won’t happen. Instead, as this market develops, expands, and matures, it will also consolidate. The result? The top pot stocks will soar; the rest will flop.
Consequently, for long term investors, there are really only four pot stocks worth considering for the long run.
Canopy Growth (CGC)
Source: Shutterstock
At the top of this list is the undisputed cannabis market leader. It has the most visible and reasonable pathway towards becoming the Amazon (NASDAQ:)-equivalent of the cannabis market — Canopy Growth (NYSE:).
There are three big reasons to own CGC stock for the long haul. All three reasons support the thesis that Canopy projects as the leader in the global cannabis market at scale.
First, Canopy is the biggest player today. They sold nearly 10,000 kilograms of cannabis last quarter and produced revenues of over $70 million. Hardly anyone else in this space even comes close to rivaling this production scale. Thus, Canopy doesn’t have to gain share on anyone. All they have to do is maintain share.
Second, Canopy is equipped with nearly $3.5 billion in cash, cash equivalents, and marketable securities on the balance sheet, mostly thanks to a multi-billion dollar investment from alcoholic beverage giant Constellation Brands (NYSE:). That $3.5 billion in cash resources is unrivaled in the cannabis industry.
Thus, Canopy has the necessary firepower to outspend and out-invest all of its competitors, which will allow Canopy to lay the groundwork for market share expansion over time.
Third, Canopy is being very aggressive with its huge cash resources. The company has aggressively expanded its production, operational footprint, and distribution network over the past several quarters through various acquisitions and expansions.
Of utmost importance, the company has laid the groundwork for U.S. market expansion through its Acreage acquisition. Thus, this company is not just resting on its laurels as the Canadian cannabis market leader. It is appropriately allocating its resources to similarly dominate other cannabis markets.
Net net, Canopy is and projects to remain the leader in the cannabis market. That makes CGC stock the best pot stock to buy and hold for the long run.
Aurora Cannabis (ACB)
Source: Shutterstock
Next up, we have the cannabis market’s second-largest player, Aurora Cannabis (NYSE:) which, with a little help, could have just as much visibility to long-term cannabis giant status as Canopy.
Aurora is the only other cannabis company that somewhat rivals Canopy’s size and production scale. Last quarter, Aurora sold just over 9,000 kilograms of cannabis for total revenues of just under $50 million. Pretty much everyone else in this industry except Canopy sold less than 5,000 kilograms of cannabis last quarter and did revenues of less than $25 million.
Thus, based on current operations, Aurora has a nearly equal chance of Canopy to become a global cannabis giant at scale. But, Canopy has one thing which Aurora doesn’t — $3.5 billion in cash on the balance sheet.
Aurora hasn’t scored a big multi-billion dollar partnership from a global consumer staples giant like some of its peers have. Instead, Aurora only has a few hundred million dollars in cash on the balance sheet, and at current cash burn rates, that cash balance could by early 2020. Because of this lack of cash backing, investors have been unwilling to project Aurora as a potential long term cannabis winner.
A big infusion of cash, either from the debt markets or through an equity investment from a consumer staples giant, will change that. It will give Aurora the necessary backing and firepower to both keep its doors open, and maintain its leadership position in the cannabis market for the foreseeable future. In so doing, it will add significant clarity to the company’s long term growth narrative.
As such, if Aurora can raise a ton of capital within the next several months, ACB stock could become one of the best pot stocks to own for the long haul.
Tilray (TLRY)
Source: Shutterstock
The third pot stock worth considering long term is Tilray (NASDAQ:) because of its early leadership position in the potentially enormous medical marijuana market.
Tilray is best known as being the single pot stock that went parabolic back in mid-2018. In a matter of weeks, TLRY stock went from $20 to $300 as the cannabis craze swept through financial markets. That craze has since cooled. So has TLRY stock, which has done nothing but drop since then. Today, the stock trades hands around $40.
But, Tilray is still one of the most interesting pot stocks for the long haul. Why? This company is the early leader on the medical side of the market.
Specifically, Tilray has a market-leading portfolio of medical cannabis products. They were the first company to legally export medical cannabis from North America to four other continents. They have scored multiple big-time medical cannabis partnerships in several different countries. Additionally, they have the largest and most wide-reaching medical cannabis business.
Altogether, then, Tilray is the Canopy of the medical marijuana market, which projects to be very big one day. If Tilray can maintain a leadership position in this market, the company will benefit from robust revenue and profit growth in the long run.
All that long term revenue and profit growth potential makes TLRY stock one of the few pot stocks worth considering for the long haul.
Cronos (CRON)
Source: Shutterstock
Last on this list of pot stocks worth considering long term is Cronos (NASDAQ:), a small but rapidly-growing cannabis player that has the multi-billion dollar backing of global tobacco giant Altria (NYSE:).
The long-term bull thesis on CRON stock isn’t about what it is today. Instead, it’s about what it could be tomorrow. Today, Cronos is a small cannabis company. Cronos sold around 1,100 kilograms of cannabis last quarter. That’s about 10% of what Canopy and Aurora sold. Revenues were under $5 million. Canopy did nearly 15-fold that last quarter.
But, Cronos has what only one other cannabis company (Canopy) has — several billion dollars on the balance sheet and the backing of a giant global consumer staples company.
Recognizing that cannabis consumption is taking share from tobacco consumption, Altria (the parent company of Marlboro)wanted to invest in the cannabis space. They proceeded to pour $1.8 billion into Cronos. That investment did three things. First, it shored up CRON’s balance sheet. Second, it gave Cronos the necessary firepower to invest and expand. Third, it represented a huge vote of confidence from Altria.
Because of those three things, Cronos has developed into one of the few pot stocks worth considering for the long haul. To be sure, valuation concerns are a big near term issue. But, those concerns will pass with time. The long term outlook here is quite favorable given the big Altria investment.
As of this writing, Luke Lango was long AMZN, CGC, and ACB.
The post 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 (ACB) Source: Shutterstock Next up, we have the cannabis market’s second-largest player, Aurora Cannabis (NYSE:) which, with a little help, could have just as much visibility to long-term cannabis giant status as Canopy. As such, if Aurora can raise a ton of capital within the next several months, ACB stock could become one of the best pot stocks to own for the long haul. As of this writing, Luke Lango was long AMZN, CGC, and ACB. | Aurora Cannabis (ACB) Source: Shutterstock Next up, we have the cannabis market’s second-largest player, Aurora Cannabis (NYSE:) which, with a little help, could have just as much visibility to long-term cannabis giant status as Canopy. As such, if Aurora can raise a ton of capital within the next several months, ACB stock could become one of the best pot stocks to own for the long haul. As of this writing, Luke Lango was long AMZN, CGC, and ACB. | Aurora Cannabis (ACB) Source: Shutterstock Next up, we have the cannabis market’s second-largest player, Aurora Cannabis (NYSE:) which, with a little help, could have just as much visibility to long-term cannabis giant status as Canopy. As such, if Aurora can raise a ton of capital within the next several months, ACB stock could become one of the best pot stocks to own for the long haul. As of this writing, Luke Lango was long AMZN, CGC, and ACB. | Aurora Cannabis (ACB) Source: Shutterstock Next up, we have the cannabis market’s second-largest player, Aurora Cannabis (NYSE:) which, with a little help, could have just as much visibility to long-term cannabis giant status as Canopy. As such, if Aurora can raise a ton of capital within the next several months, ACB stock could become one of the best pot stocks to own for the long haul. As of this writing, Luke Lango was long AMZN, CGC, and ACB. |
38184.0 | 2019-08-29 00:00:00 UTC | Hedge Funds Absolutely Dumped Marijuana's "Big Three" in the Second Quarter | ACB | https://www.nasdaq.com/articles/hedge-funds-absolutely-dumped-marijuanas-big-three-in-the-second-quarter-2019-08-29 | nan | nan | For years, the marijuana industry has seemingly shown nothing but promise. For investors lucky enough to have bought into the "Big Three" of the cannabis world -- Canopy Growth (NYSE: CGC), Aurora Cannabis (NYSE: ACB), and Cronos Group (NASDAQ: CRON) -- at the beginning of 2016, they'd be sitting on quadruple-digit gains as of today.
Mind you, there's a very good reason why investors have been so bullish on the industry, and especially the Big Three. After global weed sales more than tripled between 2014 and 2018 to almost $11 billion, Wall Street analysts called for worldwide cannabis sales to soar to between $50 billion and $200 billion in roughly a decade's time. That's a ton of growth that investors simply can't overlook.
Image source: Getty Images.
Investors have been infatuated with the Big Three for years
The pedigree of the Big Three also suggests that they have a good shot at gobbling up significant market share.
Both Canopy Growth and Cronos Group have secured large equity investments, making them the respective No.'s 1 and 2 in terms of cash on hand. Canopy's 3.14 billion Canadian dollars and Cronos Group's CA$2.32 billion gives each company ample financial flexibility to push into new markets, develop existing infrastructure, and make acquisitions. Not to mention, Canopy's equity investment from Modelo and Corona beer maker Constellation Brands and Cronos Group's investment from tobacco giant Altria gives each company a time-tested business partner to lean on.
As for Aurora Cannabis, it's made more than a dozen acquisitions since August 2016 and is in line to be Canada's leading producer. Aside from the up to 700,000 kilos the company may produce annually when all 15 of its grow farms are fully operational, Aurora also has a presence in 25 countries, including Canada.
The ability of the Big Three to expand internationally, forge partnerships, build their production portfolio, and gain brand recognition is a major reason these stocks have been so popular.
But that popularity among hedge funds came to a crashing halt during the second quarter.
Image source: Getty Images.
Hedge funds headed for the exit on big-name pot stocks in Q2
Following the end of every quarter, money management firms with more than $100 million in assets under management have 45 days to file Form 13F with the Securities and Exchange Commission, which details their holdings at the end of the previous quarter. These filings are used by Wall Street professionals and retail investors alike to find out what the brightest investment minds have been up to over the previous couple of months. Even though they're not perfect -- after all, you're being shown holdings that are 45 days old and likely may have changed -- 13Fs are a great way to identify industry, sector, and innovative trends that are gaining or losing steam.
According to data found on 13F aggregator WhaleWisdom.com, while institutional investors as a whole added to their positions in the Big Three, hedge funds, which are essentially more aggressively managed investment portfolios, couldn't get to the exit quick enough. During the second quarter, hedge funds reduced their positions in:
Aurora Cannabis by 67%
Canopy Growth by 32%
Cronos Group by 30%
In aggregate, Aurora saw hedge fund ownership reduced by more than 10 million shares, with Canopy Growth and Cronos Group seeing a reduction of more than 1.1 million shares and nearly 1.2 million shares, respectively.
Image source: Getty Images.
Here's why the tide has turned on the Big Three
If Canopy, Aurora, and Cronos are set up to succeed, you might be wondering why hedge funds are suddenly heading to the sidelines. I believe the answer is a combination of factors.
First, Canada is contending with supply issues that aren't going to abate anytime soon. Regulatory agency Health Canada has been inundated with licensing applications for cultivation, processing, distribution, and sales. Although the agency did announce changes to its licensing application process, none of these changes should be expected to eliminate this backlog overnight. When combined with existing compliant packaging shortages in Canada, it's easy to see why product shortages have been prevalent.
To build on this point, select provinces have been slow to approve the licensing of physical cannabis stores. Without adequate physical locations, consumers have been left with few choices other than to buy online or wait out the shortage.
Another problem is that the U.S. doesn't look to be anywhere close to legalizing marijuana at the federal level. Even though Canopy and Cronos have begun pushing into the U.S. hemp or cannabidiol markets in order to lay the groundwork for a hopeful legalization of cannabis in the U.S., a Republican-run Senate led by Senate Majority Leader Mitch McConnell (R-Ky.) virtually ensures that no cannabis legislation will see the floor for a vote until 2021, at the earliest. This is a fancy way of saying that the U.S. weed market will remain off-limits for the foreseeable future.
Hedge funds are possibly also turned off by the lack of meat on bones when it comes to the Big Three's operating results. If we were to take out one-time benefits and costs, as well as the revaluation of derivative liabilities, Canopy Growth, Aurora Cannabis, and Cronos Group are all losing quite a bit of money on an operating basis. According to Wall Street, with persistent supply issues in Canada, none of these three companies is expected to deliver a full-year profit in fiscal 2020. Unfortunately for the Big Three, earnings actually matter now.
The writing appears to be on the wall from the hedge fund community: Big-name cannabis companies are off-limits until the industry matures and bottom lines improve.
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Sean Williams has no position in any of the stocks mentioned. The Motley Fool 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. | For investors lucky enough to have bought into the "Big Three" of the cannabis world -- Canopy Growth (NYSE: CGC), Aurora Cannabis (NYSE: ACB), and Cronos Group (NASDAQ: CRON) -- at the beginning of 2016, they'd be sitting on quadruple-digit gains as of today. The ability of the Big Three to expand internationally, forge partnerships, build their production portfolio, and gain brand recognition is a major reason these stocks have been so popular. According to data found on 13F aggregator WhaleWisdom.com, while institutional investors as a whole added to their positions in the Big Three, hedge funds, which are essentially more aggressively managed investment portfolios, couldn't get to the exit quick enough. | For investors lucky enough to have bought into the "Big Three" of the cannabis world -- Canopy Growth (NYSE: CGC), Aurora Cannabis (NYSE: ACB), and Cronos Group (NASDAQ: CRON) -- at the beginning of 2016, they'd be sitting on quadruple-digit gains as of today. Hedge funds headed for the exit on big-name pot stocks in Q2 Following the end of every quarter, money management firms with more than $100 million in assets under management have 45 days to file Form 13F with the Securities and Exchange Commission, which details their holdings at the end of the previous quarter. During the second quarter, hedge funds reduced their positions in: Aurora Cannabis by 67% Canopy Growth by 32% Cronos Group by 30% In aggregate, Aurora saw hedge fund ownership reduced by more than 10 million shares, with Canopy Growth and Cronos Group seeing a reduction of more than 1.1 million shares and nearly 1.2 million shares, respectively. | For investors lucky enough to have bought into the "Big Three" of the cannabis world -- Canopy Growth (NYSE: CGC), Aurora Cannabis (NYSE: ACB), and Cronos Group (NASDAQ: CRON) -- at the beginning of 2016, they'd be sitting on quadruple-digit gains as of today. Canopy's 3.14 billion Canadian dollars and Cronos Group's CA$2.32 billion gives each company ample financial flexibility to push into new markets, develop existing infrastructure, and make acquisitions. During the second quarter, hedge funds reduced their positions in: Aurora Cannabis by 67% Canopy Growth by 32% Cronos Group by 30% In aggregate, Aurora saw hedge fund ownership reduced by more than 10 million shares, with Canopy Growth and Cronos Group seeing a reduction of more than 1.1 million shares and nearly 1.2 million shares, respectively. | For investors lucky enough to have bought into the "Big Three" of the cannabis world -- Canopy Growth (NYSE: CGC), Aurora Cannabis (NYSE: ACB), and Cronos Group (NASDAQ: CRON) -- at the beginning of 2016, they'd be sitting on quadruple-digit gains as of today. Both Canopy Growth and Cronos Group have secured large equity investments, making them the respective No. During the second quarter, hedge funds reduced their positions in: Aurora Cannabis by 67% Canopy Growth by 32% Cronos Group by 30% In aggregate, Aurora saw hedge fund ownership reduced by more than 10 million shares, with Canopy Growth and Cronos Group seeing a reduction of more than 1.1 million shares and nearly 1.2 million shares, respectively. |
38185.0 | 2019-08-29 00:00:00 UTC | 3 Growth Stocks to Buy and Hold for the Next 50 Years | ACB | https://www.nasdaq.com/articles/3-growth-stocks-to-buy-and-hold-for-the-next-50-years-2019-08-29 | nan | nan | Long-term investing has been shown to outperform short-term trading, but that doesn't mean that every stock deserves a spot in set-it-and-forget-it portfolios. Many of today's winners won't have what it takes to thrive for decades, so it's critical to due your homework and focus on those companies best positioned for long-haul success. To help you find the best long-term stocks to buy, we asked three Motley Fool contributors to scour their universes. Read on to find out why they think American Tower (NYSE: AMT), Canopy Growth (NYSE: CGC), and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) are top stocks that long-term investors should stash away.
Riding the wave of global internet growth with...real estate?
Tyler Crowe (American Tower): Investing in growth stocks over a multidecade period is incredibly hard because so few businesses are able to maintain their competitive advantages for that long. Two things tend to remain constant over time, though: improving standards of living in emerging markets and real estate.
That combination of factors is what makes American Tower a compelling growth stock for the next half century. Don't let the name mislead you; the owner and operator of cellular towers isn't a pure play on the U.S. Rather, it has a diverse portfolio of towers and structures for telecommunications equipment across 19 countries on four continents. In fact, less than a quarter of the company's (technically, it's a real estate investment trust, or REIT) assets are in the U.S.
As mobile data speeds become faster, data transmission requires a more dense network of communication equipment. Therefore, American Tower benefits from more tenants renting space for their equipment on tower sites. This is providing ample room to grow in more mature markets such as the U.S. and Germany as they move from 4G to 5G as well as longer runways in emerging markets such as Nigeria and India as they move from 3G to 4G to 5G. According to management, smartphone data usage will grow 31% annually worldwide through at least 2023.
For American Tower investors, this has translated into stellar growth. Over the past decade, it has grown its free cash flow by more than 15% annually. The company is also making a large push into emerging markets in India, Latin America, and Africa, where it can get in on the ground floor of exponential data usage growth over the next several decades.
Whether cellular towers will remain the go-to method for communication equipment for the next half century remains to be seen, but it seems like a reasonable bet today, and it makes American Tower a very compelling growth stock for such a long time horizon.
IMAGE SOURCE: GETTY IMAGES.
A top pot stock for the long haul
Todd Campbell (Canopy Growth): It could be a great time to add Canopy Growth, Canada's largest cannabis company, to long-haul portfolios. Why? Because shares in Canopy Growth -- the biggest pot stock by revenue, market cap, and cash on the balance sheet -- have tumbled to levels that could make buying it savvy given global legalization trends and estimates that the global marijuana market could be worth $200 billion in 10 years, according to Stifel, an investment research firm.
Canopy Growth reported its latest quarterly results on Aug. 14, and this update was particularly important because it's the first one since Canopy's board forced marijuana pioneer Bruce Linton out of its C-suite. Fortunately, Canopy Growth's financials show it's still a dominant player. Net revenue was 90.5 million Canadian dollars, up 249% year over year, and its recreational cannabis revenue was CA$50.4 million. That keeps it neck and neck with top competitor Aurora Cannabis (NYSE: ACB), which reported preliminary quarterly net sales of CA$100 million to CA$107 million on Aug. 6.
Under Linton, Canopy Growth announced in January it's investing up to $150 million to create a hemp industrial park in New York targeting the U.S. cannabidiol (CBD) market. He followed that up with an innovative agreement in April to exchange $300 million for an option to acquire Acreage Holdings (OTC: ACRGF) upon legalization of marijuana in the U.S. at the federal level. If Canopy Growth exercises its option, Acreage Holdings investors will collect 0.58 shares in Canopy Growth for each share of Acreage Holdings they own.
Linton’s aggressive investments and a policy of rewarding employees with significant, profit-zapping stock options could be why he lost his job. But he's positioned Canopy nicely to capitalize on this multibillion-dollar market. Canopy's still on track to launch cannabidiol-based products in the U.S. later this year, and a rollout of marijuana consumer goods products such as edibles in Canada is anticipated in December. Given that those represent huge market opportunities, buying Canopy Growth shares for long-term portfolios while they’re on sale could be smart.
The tech giant that can't be stopped
Travis Hoium (Alphabet): There aren't a lot of companies I would want to own for the next 50 years given the disruption taking place in the economy today. Manufacturing is under pressure, energy is changing, and retail is being turned on its head. However, one company that has an upper hand in almost every business it enters is Alphabet, the search giant that now does everything from email to cloud hosting.
You can see the rapid growth of Alphabet's business over the past decade and the $35 billion of net income that it earned over the past year. What that doesn't show is how much power the tech giant has to expand its business and fend off upstarts that might be its competition.
GOOG Revenue (TTM) data by YCharts.
Alphabet has used its dominant position in search to enter email, maps, mobile and PC operating systems, voice recognition software, and many other products. The slow creep of products that Google makes that ingrain it more and more in people's lives also comes with data that makes search and other technology better. It's a feedback loop that gets bigger and bigger every year.
I don't think there's any end in sight to technology and software becoming more and more entrenched in our lives. Alphabet will continue to play an outsized role in that transition, and it's proven it has the ability to turn its technology into massive profits. That's the kind of business I want to own for the next 50 years.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Todd Campbell owns shares of Alphabet (C shares). His clients may have positions in the companies mentioned. Travis Hoium has no position in any of the stocks mentioned. Tyler Crowe owns shares of American Tower. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and American Tower. 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 keeps it neck and neck with top competitor Aurora Cannabis (NYSE: ACB), which reported preliminary quarterly net sales of CA$100 million to CA$107 million on Aug. 6. Tyler Crowe (American Tower): Investing in growth stocks over a multidecade period is incredibly hard because so few businesses are able to maintain their competitive advantages for that long. The company is also making a large push into emerging markets in India, Latin America, and Africa, where it can get in on the ground floor of exponential data usage growth over the next several decades. | That keeps it neck and neck with top competitor Aurora Cannabis (NYSE: ACB), which reported preliminary quarterly net sales of CA$100 million to CA$107 million on Aug. 6. Read on to find out why they think American Tower (NYSE: AMT), Canopy Growth (NYSE: CGC), and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) are top stocks that long-term investors should stash away. If Canopy Growth exercises its option, Acreage Holdings investors will collect 0.58 shares in Canopy Growth for each share of Acreage Holdings they own. | That keeps it neck and neck with top competitor Aurora Cannabis (NYSE: ACB), which reported preliminary quarterly net sales of CA$100 million to CA$107 million on Aug. 6. Read on to find out why they think American Tower (NYSE: AMT), Canopy Growth (NYSE: CGC), and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) are top stocks that long-term investors should stash away. A top pot stock for the long haul Todd Campbell (Canopy Growth): It could be a great time to add Canopy Growth, Canada's largest cannabis company, to long-haul portfolios. | That keeps it neck and neck with top competitor Aurora Cannabis (NYSE: ACB), which reported preliminary quarterly net sales of CA$100 million to CA$107 million on Aug. 6. Read on to find out why they think American Tower (NYSE: AMT), Canopy Growth (NYSE: CGC), and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) are top stocks that long-term investors should stash away. The slow creep of products that Google makes that ingrain it more and more in people's lives also comes with data that makes search and other technology better. |
38186.0 | 2019-08-29 00:00:00 UTC | 7 Marijuana Stocks With Critical Levels to Watch | ACB | https://www.nasdaq.com/articles/7-marijuana-stocks-with-critical-levels-to-watch-2019-08-29 | nan | nan | [Editor’s note: This story will be updated each week with new stocks and analysis. Please check back often for Mark’s latest take on marijuana stocks.]
At this time last year, marijuana stocks were soaring. There was tremendous euphoria and great expectations ahead of legalization in Canada. Hindsight is 20/20, and looking back now we can see that the rally that occurred was a bubble … and that bubble has burst.
Technical analysis has a bad reputation, and unfortunately it is well deserved. Most of the technical analysis of marijuana stocks that I see is not very good. Some is downright terrible. Some analysts are even proponents of bizarre techniques like Gann Theory and Elliot Waves. In my opinion these methods are better suited for a Twilight Zone episode than making money in real markets.
In financial markets, there are certain price levels that are more important than others. You can see this by looking at almost any chart. If you understand technical analysis and use it correctly, you can identify these important levels.
Knowing where these levels are will help you make money. For example, suppose you want to buy a stock if it gets down to $15 a share and sell it if it gets to $25. If there is support at $16, the stock could fall to $16 and then rally to $25. You would have missed out on a significant profit for want of one dollar because you didn’t know where the support was.
As marijuana stocks head lower, it is important to know where the support and resistance levels are. The dynamics for most of these marijuana stocks still seem bearish.
Technical Levels in Marijuana Stocks: Hexo (HEXO)
Hexo (NYSE:) manufactures and distributes medical marijuana.
HEXO stock seems to be breaking support at the $4 level. This level was resistance from May through August of last year. If it continues to trend lower it may not find support until it approaches the levels around $3.10. This is where the bottom was in December.
This action illustrates an important dynamic that occurs in markets. When a stock gets to important support and it is oversold, it tends to rebound, or rally. When stocks gets to important support and they not oversold, they tend to consolidate before breaking the level and going lower.
Oversold refers to momentum. It is where the stock is today versus where is was X many days ago. When this number reaches an extreme to the downside, it is considered oversold.
When HEXO reached support at $4 the end of July, it was oversold. It subsequently rallied by over 20%. Now the support is being tested again but this time it is not oversold. The level seems to be breaking.
Canopy Growth (CGC)
Canopy Growth (NYSE:) continues its death spiral. Just since Aug. 13, it has fallen by 26% and is still in a clear downtrend. I thought that there may have been more support at the $25.50 level, but it ended up being minor. CGC stock only traded there for three days before resuming its downtrend. It is the most oversold that it has been all year, however, so maybe we will see a small bounce.
If so, there will probably be some resistance around $25.50. This is because prior support levels tend to become resistance levels. This happens because the people who bought CGC stock in January at $25.50 were looking at a profit all year.
Now that the stock has broken this level and is lower, these investors are now looking at a loss. They regret not selling it for a profit and tell themselves that if the stock gets back to $25.50, they will sell it to get out at breakeven.
This supply of the stock is what creates the resistance.
Cronos Group (CRON)
Cronos Group (NASDAQ:) grows and sells marijuana.
CRON stock continues to trend lower since breaking support around the $14 level in early August. There may be some minor support around the $10 level because it where the lows were last December. It is also an important psychological level. People like to buy stocks at $10.
Why was there support around the $14 level? It is because it was a resistance level during last September and December.
When the stock hit $14 and then went lower, those who sold it were happy. The short-sellers are making money and the long sellers think the made the right decision in deciding to sell.
Then when the stock rallied up through the level the long sellers believe their decision to sell was a mistake. They tell themselves that if the stock comes back to the level, they will buy it back.
The short-sellers are now losing money. They tell themselves that if the stock drops back to the level they will cover their positions and get out breakeven. This demand for the stock at the level is what creates support.
Aurora Cannabis (ACB)
Aurora Cannabis (NYSE:) is a Canadian based company that grows and sells medical cannabis.
ACB stock rallied early this month when it provided an update for Q4 that was perceived by some to be positive. The stock then failed at resistance around the $7 level, and has been trending lower since then. If it keeps trending lower, there may be support around the $5 level. This is because this is where the lows were in December and January.
Many investors are concerned about the large amount of Goodwill that Aurora calculates as part of its valuation.
Goodwill is essentially a company’s reputation. If a company has $100 of assets and it is bought for $110, the extra $10 would be consider part of the Goodwill valuation.
Roughly 50% of the valuation of Aurora is Goodwill. The company has made a tremendous amount of acquisitions over the past year. If they overpaid for some of these acquisitions, the amount of the overpayment is now considered part of the Goodwill value. Some analysts believe that this is the case.
Trulieve Cannabis (TCNNF)
Trulieve Cannabis (OTCMKTS:) engages in the provision of medical cannabis products.
The head-and-shoulders pattern that we have been following in Trulieve has played out in a textbook fashion. It has reached its target price.
Like most things in technical analysis, this pattern is widely misunderstood. First of all, it is a reversal pattern. That means that it needs to come after a significant trend. There is no such thing as an head-and-shoulders continuation pattern.
The left shoulder formed here after the stock nearly doubled in just a few months. This is clearly a trend.
Second, most volume has to occur in the left should or head. This is the so-called smart money getting out and selling to those who were late to the party. By the time it gets to the left shoulder, the buy interest diminishes and the stock drops.
The way to calculate a target price in a head-and-shoulders pattern is to take the distance from the head to the neckline, and then subtract it from the neckline. That would make the target here to be around $8 which is where it is currently trading.
The recent large volume could mean we are seeing a capitulation, or fire sale of the stock. When this is over it could rally.
Tilray (TLRY)
Tilray (NASDAQ:) cultivates and sells medical marijuana.
Last July, Tilray was a media darling because it was the first cannabis company to list on the Nasdaq. TLRY hit the market around $22 in late July. By September, it had traded at over $300 a share.
Since then, the stock has dropped all the way back down to current levels around $27. Maybe there will be some support around $22 because it was the low last year.
This company was backed by a private equity fund called Privateer Holdings Inc. Privateer owns 75 million shares of TLRY. This is 77% of the company. An agreement was just signed that the “provide for the orderly release of the 75 million TLRY shares held by Privateer.”
In other words, they will be selling 75 million shares. Considering that TLRY trades about 300,000 share on a typical day, this will not be an easy task. This overhang will keep pressure on the stock.
Scotts Miracle-Gro. (SMG)
Scotts Miracle-Gro. (NASDAQ:) manufactures systems and accessories for hydroponic gardening.
As expected, SMG stock ran into resistance around the $110. There was resistance at this level because it was the top in January of last year.
It has also broken the uptrend that began in the beginning of the year. This means that the forces of demand are no longer in control of the market. The forces of supply have equalized with them and may be about to take over and drive the stock lower.
If you are bearish on the long-term prospects of SMG, this would be a logical place to sell it.
Right now nine firms follow this company and the average target price is $111. This is a situation where knowing about the resistance is could benefit a seller. They may be tempted to sell it at this average target price of $111. However, it may make sense to put the sell order at $110, because it may not get to $111.
As of this writing, Mark Putrino did not hold a position in any of the aforementioned securities.
The post 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 (ACB) Aurora Cannabis (NYSE:) is a Canadian based company that grows and sells medical cannabis. ACB stock rallied early this month when it provided an update for Q4 that was perceived by some to be positive. In my opinion these methods are better suited for a Twilight Zone episode than making money in real markets. | Aurora Cannabis (ACB) Aurora Cannabis (NYSE:) is a Canadian based company that grows and sells medical cannabis. ACB stock rallied early this month when it provided an update for Q4 that was perceived by some to be positive. Technical Levels in Marijuana Stocks: Hexo (HEXO) Hexo (NYSE:) manufactures and distributes medical marijuana. | Aurora Cannabis (ACB) Aurora Cannabis (NYSE:) is a Canadian based company that grows and sells medical cannabis. ACB stock rallied early this month when it provided an update for Q4 that was perceived by some to be positive. As marijuana stocks head lower, it is important to know where the support and resistance levels are. | Aurora Cannabis (ACB) Aurora Cannabis (NYSE:) is a Canadian based company that grows and sells medical cannabis. ACB stock rallied early this month when it provided an update for Q4 that was perceived by some to be positive. As marijuana stocks head lower, it is important to know where the support and resistance levels are. |
38187.0 | 2019-08-28 00:00:00 UTC | Aurora Cannabis Stock Looks Overvalued Here | ACB | https://www.nasdaq.com/articles/aurora-cannabis-stock-looks-overvalued-here-2019-08-28 | nan | nan | Aurora Cannabis (NYSE:) a Canadian cannabis stock that has yet to make a profit, is likely overvalued. Its market value is $5.6 billion U.S., or $7.5 billion CAD.
Source: Shutterstock
ACB’s sales for the June quarter will be between $100 million CAD and $107 million CAD, according on Aug. 6 from Aurora. That should put annual run rate revenues between $400 million CAD and $428 million CAD.
This means ACB stock is trading between 19 times and 20 times that run rate.
That may not seem expensive, especially compared with other overvalued Canadian cannabis stocks. For example, Cronos Group (NASDAQ:) just reported $10 million CAD in quarterly sales. But CRON has a market value of $4.9 billion CAD. That puts its price-to-sales ratio at 122x on a run-rate basis. Also, Canopy Growth (NYSE:) trades at a higher multiple than ACB at 31 times run-rate sales.
But Aurora Cannabis stock is not in very good financial shape. It is losing money, burning cash and may need to continually raise capital to stay alive.
Aurora Racking Up Heavy Losses
ACB reported net income losses of on net revenues of C$65 million CAD for the three months ended March 31. That means that losses represented 243% of revenue. Aurora Cannabis stock will report its June quarter earnings in September. So far it has not provided guidance on if its losses are expected to fall.
The company has been burning cash at a rate of about $323 million CAD between its cash flow for operations and investing activities for the first nine months of its 2019 fiscal year. That implies a minimum of $431 million CAD per year needs to be financed, even though sales are rising.
So far it has been able to finance its burn rate. In March Aurora Cannabis stock reported it had $534 million CAD in unrestricted cash and securities. That implies its cash burn could last a year or so.
Recently ACB by $160 million CAD. Aurora likely had to finance cash burn losses during the last six months, and its cash liquidity was running low. We won’t know much for sure until September.
Investors’ Appetite for Continual Losses Might Be Waning
In the past six months, since March 19, Aurora Cannabis stock has fallen from $9.96 to $5.57 — a drop of 44%. Meanwhile ACB stock has reported higher sales and higher sales forecasts.
So investors are not buying the press. The continuing losses and cash burn may be getting to them. And frankly, that is what is happening in the whole Canadian cannabis stocks arena.
What to Do?
I suppose you could wait until tearnings to see how well the company is doing. But ACB has already pre-announced its expected sales range. Investors so far think that 20x times sales may be too high, even though relative to other Canadian cannabis stocks it seems “cheap.” Frankly they want to see profits or at least a major reduction in the cash burn rates.
Pay attention in September to what Aurora Cannabis says when it expects to get cash flow profitable, if at all. Even if ACB stock doesn’t forecast this, see if it expects to reach breakeven sales anytime soon. At least then investors can look for light at the end of the cash burn tunnel.
As of this writing, Mark Hake, CFA does not hold a position in any of the aforementioned securities.
The post 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 ACB’s sales for the June quarter will be between $100 million CAD and $107 million CAD, according on Aug. 6 from Aurora. This means ACB stock is trading between 19 times and 20 times that run rate. Also, Canopy Growth (NYSE:) trades at a higher multiple than ACB at 31 times run-rate sales. | Aurora Racking Up Heavy Losses ACB reported net income losses of on net revenues of C$65 million CAD for the three months ended March 31. Meanwhile ACB stock has reported higher sales and higher sales forecasts. Source: Shutterstock ACB’s sales for the June quarter will be between $100 million CAD and $107 million CAD, according on Aug. 6 from Aurora. | Source: Shutterstock ACB’s sales for the June quarter will be between $100 million CAD and $107 million CAD, according on Aug. 6 from Aurora. This means ACB stock is trading between 19 times and 20 times that run rate. Also, Canopy Growth (NYSE:) trades at a higher multiple than ACB at 31 times run-rate sales. | Source: Shutterstock ACB’s sales for the June quarter will be between $100 million CAD and $107 million CAD, according on Aug. 6 from Aurora. This means ACB stock is trading between 19 times and 20 times that run rate. Also, Canopy Growth (NYSE:) trades at a higher multiple than ACB at 31 times run-rate sales. |
38188.0 | 2019-08-28 00:00:00 UTC | 5 Stocks to Buy for $20 or Less | ACB | https://www.nasdaq.com/articles/5-stocks-to-buy-for-%2420-or-less-2019-08-28 | nan | nan | A good rule of thumb in the stock market is to not buy stocks just because they are cheap or low-priced … Cheap stocks (stocks that trade at discounted valuation multiples) are often inexpensive for a reason. The same is true for low-price stocks, or stocks that trade in the under-$10 and under-$20 ranges.
As such, when dealing with super-cheap stocks or super low-price stocks, investors should exercise caution. These stocks are at these levels for a reason, and it’s not usually a good reason.
Having said that, this group of beaten up stocks does offer significant upside potential. These stocks are priced for death. Thus, if anything good happens, these stocks will rise by a lot, and quickly. But you need something good to happen first, and something good only materializes for a handful of these sub-$10 and sub-$20 stocks.
With that in mind, I’ve put together a list of high-quality stocks in the under $20 bucket that are supported by healthy fundamentals, and have a realistic opportunity to rally in a big way from their current prices. Which stocks made the list? Let’s take a deeper look.
Luckin Cofffe (LK)
Source: Shutterstock
Stock Price: $19.48
The first stock on this list is freshly public Luckin Coffee (NYSE:), the hyper-growth China retail coffee chain which many dub the Starbucks (NASDAQ:) of China.
The core growth narrative here is very favorable. Luckin is the fastest growing and second-largest retail coffee operator in China and is on track to soon become the largest player in the space. At the same time, the China economy is rapidly urbanizing and expanding, and the coffee market in that economy is surging higher, rising by over 30% last year. That makes Luckin the hyper-growth leader in a rapidly expanding market, a combination which ultimately implies tremendous long-term growth potential.
The numbers underlying LK stock are equally favorable. Luckin Coffee has a market cap of about $4 billion. Starbucks has a $100 billion market cap. To be sure, Luckin Coffee will never be as big as Starbucks. But, if the company does become a leader in what projects to be a China retail coffee market, then today’s $4 billion market cap looks like a steal.
Starbucks has about 40% market share in the U.S. Luckin can maybe do a 20% share in China. A 20% share in a $25 billion market implies $5 billion in revenue potential. On 10% operating margins and after a 20% tax rate, that equates to $400 million in net profits. A market average 16 multiple on that implies a potential future valuation target of over $6 billion. That’s way bigger than $4 billion.
Aurora Cannabis (ACB)
Stock Price: $5.57
In the under $10 category, one of the more attractive stocks to buy is undervalued Canadian cannabis producer Aurora (NYSE:).
No matter which way you slice it, Aurora is one of the more undervalued pot stocks in the market. It’s cheaper than most peers on a trailing sales basis, forward sales basis, volume basis, and on pretty much every other important operating metric.
That relative cheapness in ACB stock comes despite Aurora having many strengths. Aurora is the second-largest player in the Canadian cannabis market behind Canopy Growth (NYSE:), is one of the fastest growers in the market, is behind some of the top-selling products across Canada and has one of the largest production capacities.
Why, then, is ACB stock cheap relative to peers? Balance sheet. Cronos (NASDAQ:) and Canopy are loaded up with billion-dollar investments from consumer staples giants, which simultaneously shore up their balance sheets and give those companies ample firepower to grow rapidly.
Aurora has no such investment. But if the stock stays this cheap for long, it’s only a matter of time before they get a big investment. Also, the company is tapping into the debt markets to raise sufficient capital to compete, meaning that in the big picture, this valuation disconnect has no reason to exist. If it gets wiped out — as it should — ACB stock could fly higher.
Vipshop (VIPS)
Source: Shutterstock
Stock Price: $7.90
Another hidden gem in the under $10 category is Chinese e-retailer Vipshop (NASDAQ:).
Although China’s economy is slowing, it is still growing at a robust mid single digit rate. At the same time, the digital economy remains red hot, with this year. Vipshop is at the heart of this robust e-retail sales growth narrative.
Further, Vipshop is a discount retailer, and if the U.S. retail landscape has shown us anything, it is that off-price retail is a winning strategy. See the stocks of Ross Stores (NASDAQ:), TJX (NYSE:), Walmart (NYSE:) and Five Below (NASDAQ:), versus the stocks of Nordstorm (NYSE:) and Macy’s (NYSE:).
Thus, Vipshop finds itself at the convergence of two favorable trends. On one end, you have robust growth through expansion of China’s e-commerce landscape. On the other end, you have sustained popularity through an off-price retailing strategy.
Net-net, that means Vipshop projects as a sustained big grower for the foreseeable future. That sustained big growth should shoot VIPS stock materially higher from today’s sub-$10 price.
American Eagle Outfitters (AEO)
Source:
Stock Price: $16.19
A bunch of mall retailers trade in the under $20 range. But, only one retail stock is really worth buying at these levels and that stock is American Eagle Outfitters (NYSE:).
Put simply, American Eagle is a winning retailer. They are succeeding where others are not. American Eagle has transformed into the king of the denim category, and denim has made a strong comeback over the past several years.
At the same time, American Eagle’s Aerie brand has been one of the hottest stories in retail because the brand has aligned itself with body positivity tailwinds. Because of these favorable dynamics, American Eagle demand has remained resilient in the face of broader mall retail demand turbulence, which has allowed American Eagle to report far better than peer numbers over the past several quarters.
The numbers speak for themselves here. American Eagle has rattled off 17 consecutive quarters of comparable sales growth, and 6 consecutive quarters of 5%plus comparable sales growth, including a 6% comp last quarter.
In the overlapping period, peer mall retailers Nordstorm, J.C. Penney (NYSE:), Gap (NYSE:), Express (NYSE:) and many others pretty much all reported negative comps. The norm was also big gross margin compression. American Eagle’s gross margins only fell back 30 basis points.
Broadly, American Eagle Outfitters is significantly outperforming its retail peers. This is nothing new. This has been the trend for a long time. It also projects to remain the trend for the foreseeable future. Consequently, if you’re gonna buy a mall retail stock in the under $20 category, AEO should be your first choice.
Ford (F)
Source:
Stock Price: $8.76
The last stock on this list is another stock in the sub-$10 category which has compelling upside in a medium to long term window.
We all know Ford (NYSE:), the U.S. automotive giant that makes great pick-up trucks and a variety of other good cars. Naturally, that sounds like a stable business, since auto demand is fairly stable, and Ford has been a relevant player in that space for what seems like forever.
But the narrative supporting Ford stock has weakened over the past several years, mostly because the auto space is shrinking thanks to ride-sharing, and because Ford is losing share thanks to the emergence of electric vehicles.
These headwinds are very real. But they are also overstated. Sure, some urban residents will choose to forego car ownership as a result of increased ride-sharing prevalence. But most won’t because no matter how good ride-sharing gets, it won’t ever parallel the convenience of car ownership.
Further, electric vehicles are ramping, but Ford isn’t just sitting on its hands while consumption pivots. They are pivoting into the EV space, too, and the company should be able to command respectable EV share at scale.
Overall, then, the fears dominating the Ford narrative at present are overstated. Ultimately, they will pass, and when they do, Ford stock will rally from today’s depressed levels.
As of this writing, Luke Lango was long LK, ACB, CGC, TJX, WMT, FIVE and JWN.
The post 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 (ACB) Stock Price: $5.57 In the under $10 category, one of the more attractive stocks to buy is undervalued Canadian cannabis producer Aurora (NYSE:). That relative cheapness in ACB stock comes despite Aurora having many strengths. Why, then, is ACB stock cheap relative to peers? | Aurora Cannabis (ACB) Stock Price: $5.57 In the under $10 category, one of the more attractive stocks to buy is undervalued Canadian cannabis producer Aurora (NYSE:). That relative cheapness in ACB stock comes despite Aurora having many strengths. Why, then, is ACB stock cheap relative to peers? | Aurora Cannabis (ACB) Stock Price: $5.57 In the under $10 category, one of the more attractive stocks to buy is undervalued Canadian cannabis producer Aurora (NYSE:). That relative cheapness in ACB stock comes despite Aurora having many strengths. Why, then, is ACB stock cheap relative to peers? | Aurora Cannabis (ACB) Stock Price: $5.57 In the under $10 category, one of the more attractive stocks to buy is undervalued Canadian cannabis producer Aurora (NYSE:). That relative cheapness in ACB stock comes despite Aurora having many strengths. Why, then, is ACB stock cheap relative to peers? |
38189.0 | 2019-08-28 00:00:00 UTC | Canadian Marijuana Sales Hit a New High in June, but This Doesn't Tell the Full Story | ACB | https://www.nasdaq.com/articles/canadian-marijuana-sales-hit-a-new-high-in-june-but-this-doesnt-tell-the-full-story-2019 | nan | nan | Chances are high -- pardon the pun -- that marijuana will be one of the greatest growth stories of our generation. With worldwide legal weed sales more than tripling between 2014 and 2018 to $10.9 billion, the research team of Arcview Market Research and BDS Analytics foresees sales climbing to more than $40 billion by 2024. Looking out even further, some of the most aggressive Wall Street estimates portend that global sales could hit $200 billion annually in about a decade's time.
While the United States should be the top-selling marijuana market in the world, it's Canada that tends to garner a lot of attention from investors. That's because last year Canada became the first industrialized country in the world -- and only the second overall behind Uruguay -- to legalize recreational cannabis. Canada is, therefore, something of a legalization guinea pig for the rest of the industrialized world to watch and potentially follow.
Chief among the statistics that investors watch closest are Canada's monthly cannabis sales.
Image source: Getty Images.
Canada's marijuana sales in June hit a record high
Last week, Statistics Canada released its monthly data on retail sales for June, with the country logging its highest marijuana sales figures to date. Below you'll find the progression of cannabis store sales since October 2018, as announced by Statistics Canada (all data is reported in Canadian dollars, with U.S. dollar equivalency in parenthesis):
October 2018: CA$53.68 million ($40.26 million)
November 2018: CA$53.73 million ($40.3 million)
December 2018: CA$57.34 million ($43.01 million)
January 2019: CA$54.88 million ($41.16 million)
February 2019: CA$51.66 million ($38.75 million)
March 2019: CA$60.94 million ($45.71 million)
April 2019: CA$74.58 million ($55.94 million)
May 2019: CA$85.81 million ($64.36 million)
June 2019: CA$91.13 million ($68.35 million)
Added up, licensed cannabis store revenue has tallied CA$583.75 million ($437.84 million) in the 8.5-month period since adult-use sales began in our neighbor to the north on Oct. 17. This should put Canada on track for perhaps CA$900 million (about $675 million) -- if not a tad bit higher -- in sales for its first full year.
Image source: Getty Images.
Supply issues are going to take a while to sort out
However, the roughly 6% sequential monthly sales growth in cannabis store sales in June doesn't tell the full story of the supply challenges Canada is currently contending with.
To begin with, Health Canada began the year with a monstrous backlog of cultivation, processing, and sales license applications for review. It often takes the regulatory agency many months, if not more than a year, to give the green light to a cultivation application, meaning it can take well over a year for a grow farm to become licensed to grow and sell cannabis. Some of the biggest growers in the world have been stymied by this licensing process, including Aphria (NYSE: APHA), which has been waiting for cultivation license approval for its Aphria Diamond facility for more than a year. Aphria Diamond will comprise 140,000 kilos of the company's 255,000 kilos of peak annual production.
If there is good news, it's that Health Canada has made changes to the application process to whittle away at its backlog. Growers now need to have their grow farms constructed and ready for inspection prior to submitting their cultivation license application. This should help remove underfunded growers from the equation and expedite the review process, but it's going to take Health Canada many quarters to work through its backlog.
In addition to supply issues created by licensing backlogs, Canada has been dealing with compliant packaging shortages. Health Canada laid out a laundry list of requirements that compliant packaging would need to follow in order to make it into licensed cannabis stores, and there simply hasn't been enough in the early going.
Making matters worse, despite some cannabis stocks having a substantive international presence, overseas sales have been virtually nonexistent because of these early stage supply and packaging issues. International sales are unlikely to pick up until demand in the Canadian market is being met, and that's probably not going to happen for many more quarters.
Image source: Getty Images.
Investor expectations for pot stocks were always too high
All of these early stage problems for the Canadian cannabis market circle back to the reality that next-big-thing investments need time to mature.
Over the past quarter of a century, we've seen incredible rallies regarding blockchain, 3D printing, genomics, and business-to-business e-commerce, to name a few hot trends. However, each and every one of these rallies eventually came to a crashing halt. This isn't to say that companies within these industries weren't eventually fantastic long-term buys. But it does demonstrate that investors have a history of unrealistic expectations when it comes to next-big-thing industries -- and cannabis is no different. I don't doubt that cannabis sales can ramp up substantially over the long run, but with no precedence to a legal industrialized country, there will be bumps in the road.
Because of their premiums, the most popular pot stocks are likely to be the most exposed to wild swings lower in valuation. That means shareholders of Aurora Cannabis (NYSE: ACB), Canopy Growth (NYSE: CGC), and Cronos Group (NASDAQ: CRON), which are three of the 11 most-held stocks on online investing app Robinhood, should be taming their near-term expectations.
In recent months, profit projections for all three companies have plunged. Aurora Cannabis, once expected to generate a modest profit of CA$0.10 per share (that's 10 Canadian cents) in fiscal 2020, is now forecast for a loss of CA$0.08 per share. Three months ago, Canopy Growth was forecast for CA$0.38 in full-year profit for fiscal 2021. Now Wall Street projects a loss of CA$0.73 per share. As for Cronos Group, its consensus estimate for 2020 has shrunk to a CA$0.01-per-share loss.
Even though Aurora Cannabis, Canopy Growth, and Cronos Group have all made intriguing acquisitions, pushed into foreign markets, and look to have the tools to succeed over the long run, supply and packaging issues have impacted all three pretty noticeably in the near term, and these headwinds aren't going to disappear overnight. Temper your expectations with cannabis stocks, and you won't be disappointed.
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 – 10 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. | That means shareholders of Aurora Cannabis (NYSE: ACB), Canopy Growth (NYSE: CGC), and Cronos Group (NASDAQ: CRON), which are three of the 11 most-held stocks on online investing app Robinhood, should be taming their near-term expectations. Making matters worse, despite some cannabis stocks having a substantive international presence, overseas sales have been virtually nonexistent because of these early stage supply and packaging issues. Investor expectations for pot stocks were always too high All of these early stage problems for the Canadian cannabis market circle back to the reality that next-big-thing investments need time to mature. | That means shareholders of Aurora Cannabis (NYSE: ACB), Canopy Growth (NYSE: CGC), and Cronos Group (NASDAQ: CRON), which are three of the 11 most-held stocks on online investing app Robinhood, should be taming their near-term expectations. Canada's marijuana sales in June hit a record high Last week, Statistics Canada released its monthly data on retail sales for June, with the country logging its highest marijuana sales figures to date. Below you'll find the progression of cannabis store sales since October 2018, as announced by Statistics Canada (all data is reported in Canadian dollars, with U.S. dollar equivalency in parenthesis): October 2018: CA$53.68 million ($40.26 million) November 2018: CA$53.73 million ($40.3 million) December 2018: CA$57.34 million ($43.01 million) January 2019: CA$54.88 million ($41.16 million) February 2019: CA$51.66 million ($38.75 million) March 2019: CA$60.94 million ($45.71 million) April 2019: CA$74.58 million ($55.94 million) May 2019: CA$85.81 million ($64.36 million) June 2019: CA$91.13 million ($68.35 million) Added up, licensed cannabis store revenue has tallied CA$583.75 million ($437.84 million) in the 8.5-month period since adult-use sales began in our neighbor to the north on Oct. 17. | That means shareholders of Aurora Cannabis (NYSE: ACB), Canopy Growth (NYSE: CGC), and Cronos Group (NASDAQ: CRON), which are three of the 11 most-held stocks on online investing app Robinhood, should be taming their near-term expectations. Canada's marijuana sales in June hit a record high Last week, Statistics Canada released its monthly data on retail sales for June, with the country logging its highest marijuana sales figures to date. Below you'll find the progression of cannabis store sales since October 2018, as announced by Statistics Canada (all data is reported in Canadian dollars, with U.S. dollar equivalency in parenthesis): October 2018: CA$53.68 million ($40.26 million) November 2018: CA$53.73 million ($40.3 million) December 2018: CA$57.34 million ($43.01 million) January 2019: CA$54.88 million ($41.16 million) February 2019: CA$51.66 million ($38.75 million) March 2019: CA$60.94 million ($45.71 million) April 2019: CA$74.58 million ($55.94 million) May 2019: CA$85.81 million ($64.36 million) June 2019: CA$91.13 million ($68.35 million) Added up, licensed cannabis store revenue has tallied CA$583.75 million ($437.84 million) in the 8.5-month period since adult-use sales began in our neighbor to the north on Oct. 17. | That means shareholders of Aurora Cannabis (NYSE: ACB), Canopy Growth (NYSE: CGC), and Cronos Group (NASDAQ: CRON), which are three of the 11 most-held stocks on online investing app Robinhood, should be taming their near-term expectations. That's because last year Canada became the first industrialized country in the world -- and only the second overall behind Uruguay -- to legalize recreational cannabis. To begin with, Health Canada began the year with a monstrous backlog of cultivation, processing, and sales license applications for review. |
38190.0 | 2019-08-28 00:00:00 UTC | Despite Pot Stock’s Challenges, Investors are Eyeing Canopy Growth Stock | ACB | https://www.nasdaq.com/articles/despite-pot-stocks-challenges-investors-are-eyeing-canopy-growth-stock-2019-08-28 | nan | nan | Nervous cannabis investors have been watching Canopy Growth Corp (NYSE:) closely since the company’s founder and co-CEO was pushed out in July. Shares of CGC stock widened their 2019 loss to 12.7% on Tuesday after Corona beer brewer Constellation Brands Inc (NYSE:STZ) — which spent more than $4 billion on a majority stake in the Canadian cannabis producer — announced a record $54.8 million quarterly loss on that investment. And CGC told investors earlier this month that it will need another three to five years to become profitable.
Source: Shutterstock
Given the poor performance of CGC (especially since April), the gloomy profitability projections, and the challenges that cannabis stocks in general have faced, is this the time to invest in Canopy Growth stock? Or does CGC have further to fall before it bottoms out?
A Trying Year for Canopy Growth Investors
Investors who jumped on Canopy Growth stock in the lead-up to recreational marijuana legalization in Canada have had a rough ride since last fall.
Between ramp-up issues, distribution challenges and consumer demand that was much weaker than expected, recreational marijuana sales in Canada have been tepid since legalization. That has hit most cannabis stocks and CGC was no exception. Pot-stock exchange-traded fund ETFMG Alternative Harvest ETF (NYSEArca:) is down almost 59% since Canada’s abolition. Canopy Growth stock is the fourth-largest holding, at 6.99%, of the fund’s 38 marijuana equities portfolio.
In its Q4 2019 earnings, CGC reported a $323.4 million CAN ($243.1 million) loss. In its most recent quarterly earnings, Canopy Growth saw significant revenue growth but still posted a . Its CFO said it could be three to five years before the company is profitable.
That Q4 performance saw Constellation Brands apparently exert its influence to .
All of this drama and underperformance was murder on Canopy Growth stock. After recovering from the immediate post-legalization disappointment, CGC hit $52.03 in April but it has been all downhill since then.
Bottom Line for CGC
The past year has proved that investors need to have a tolerance for risk when it comes to cannabis stocks. And they also need to have patience. The legalization of recreational marijuana in Canada didn’t lead to the stampede to corner pot shops that some had expected and there have been challenges in ramping up production and distribution across the industry. As a result, companies like Canopy Growth that saw explosive growth in their stock last fall have seen those record prices quickly cool.
Since hitting an all-time high of $56.89 on October 15 — two days before recreational pot became legal in Canada — CGC stock has now lost nearly 56% of its value.
However, CGC stock investors should have seen the worst of things by now. Expenditures on production ramp-up that boosted operating costs should begin to ease up. The slow-to-start Canadian recreational marijuana market has begun to pick up, and in December cannabis edibles and beverages . The legal marijuana market is growing in the U.S. (it hit $11.9 billion in 2018) and globally is projected to be worth $66.3 billion by 2023.
Canopy Growth is the largest cannabis producer, at least by market cap (even after this year’s CGC stock slump), although Canada’s Aurora Cannabis (NYSE:) has an edge in total production capacity. CGC has the strong backing of Constellation with its proven track record of marketing alcoholic beverages like Corona. When the company picks its new CEO, that should bring strong leadership. And Canopy Growth still has $1.82 billion CAN in cash.
It’s difficult to say whether CGC has hit its absolute bottom yet, but analysts remain bullish on the company’s prospects. Of 23 analysts polled by CNN Business, only one recommends selling, while Canopy Growth stock.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
The post 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. | Nervous cannabis investors have been watching Canopy Growth Corp (NYSE:) closely since the company’s founder and co-CEO was pushed out in July. Between ramp-up issues, distribution challenges and consumer demand that was much weaker than expected, recreational marijuana sales in Canada have been tepid since legalization. The legalization of recreational marijuana in Canada didn’t lead to the stampede to corner pot shops that some had expected and there have been challenges in ramping up production and distribution across the industry. | Shares of CGC stock widened their 2019 loss to 12.7% on Tuesday after Corona beer brewer Constellation Brands Inc (NYSE:STZ) — which spent more than $4 billion on a majority stake in the Canadian cannabis producer — announced a record $54.8 million quarterly loss on that investment. A Trying Year for Canopy Growth Investors Investors who jumped on Canopy Growth stock in the lead-up to recreational marijuana legalization in Canada have had a rough ride since last fall. Since hitting an all-time high of $56.89 on October 15 — two days before recreational pot became legal in Canada — CGC stock has now lost nearly 56% of its value. | Source: Shutterstock Given the poor performance of CGC (especially since April), the gloomy profitability projections, and the challenges that cannabis stocks in general have faced, is this the time to invest in Canopy Growth stock? A Trying Year for Canopy Growth Investors Investors who jumped on Canopy Growth stock in the lead-up to recreational marijuana legalization in Canada have had a rough ride since last fall. Canopy Growth is the largest cannabis producer, at least by market cap (even after this year’s CGC stock slump), although Canada’s Aurora Cannabis (NYSE:) has an edge in total production capacity. | A Trying Year for Canopy Growth Investors Investors who jumped on Canopy Growth stock in the lead-up to recreational marijuana legalization in Canada have had a rough ride since last fall. That has hit most cannabis stocks and CGC was no exception. Canopy Growth stock is the fourth-largest holding, at 6.99%, of the fund’s 38 marijuana equities portfolio. |
38191.0 | 2019-08-27 00:00:00 UTC | Two Pieces of Good News Do Little for Aurora Cannabis Stock | ACB | https://www.nasdaq.com/articles/two-pieces-of-good-news-do-little-for-aurora-cannabis-stock-2019-08-27 | nan | nan | The selling pressure continues on Aurora Cannabis (NYSE:) stock. Aurora Cannabis, at Friday’s close of $5.64, has fallen 44% from March highs. ACB stock now trades at a seven-month low, with most of its 2019 gains wiped out.
What’s interesting — and, for ACB shareholders, frustrating — is that Aurora Cannabis seems to have had a good month. The company delivered upbeat preliminary results for its June quarter, and appears to have improved its balance sheet.
So far, those two pieces of good news have done little to move investors to do anything but sell. That response from the market admittedly suggests ACB stock might be an interesting contrarian play from a long-term perspective. But it also implies that sentiment toward cannabis is such that ACB stock — and the entire pot sector — may have further to fall in the meantime.
ACB Stock Gains (Briefly) on Preliminary Q4 Earnings
It’s difficult to see from Aurora Cannabis as anything but good news. Aurora estimates revenue will come in at C$100-$107 million, a 57%-64% increase over third quarter levels. Net cannabis sales are guided to C$90-$95 million, suggesting solid organic growth. Production is aimed at the high end of a previous 25,000-30,000 kg range.
In terms of profitability, the news might be a bit more mixed. Aurora wrote that “the company continues to track toward positive adjusted EBITDA, and in particular adjusted EBITDA from cannabis operations.” That’s not the same, however, as saying the company will be profitable, even on an EBITDA basis.
Still, this looks like a solid report. That’s particularly true in the context of disappointing results from industry leader Canopy Growth (NYSE:). Canopy, and the sector, badly needed a strong earnings report. Instead, its sales fell quarter-over-quarter. In the wake of the report, Bloomberg cited one analyst who estimated that to Aurora.
Meanwhile, Aurora seems set to join Aphria (NYSE:) as cannabis producers heading toward profitability. As a result, the preliminary release boosted ACB stock, which rose 10.3% after the preliminary earnings were announced. The gains were erased over the next six sessions.
An Upsized Credit Facility
The following week, perhaps with some help from the strong report, Aurora Cannabis . The company added C$160 million in availability to what had been a C$200 million facility.
This, too, looks like good news. As I detailed last month, Aurora Cannabis . The declines in Aurora Cannabis stock mean that debt almost certainly will be paid in cash, not shares.
The problem was that even with C$390 million in cash on the balance sheet, Aurora Cannabis was unlikely to be able to repay that bond. A steadily increasing amount of that cash was to be held for payments on the existing credit facility. Free cash flow almost certainly will remain negative through early next year.
As such, investors fretted that the company would issue more stock to raise the necessary cash. That would be a problem for a company .
The larger credit facility seems to solve that problem. Aurora can tap the incremental borrowing capacity to repay the convertibles in March. It can then drive free cash flow to repay the facility, which matures in August 2021 — or extend that maturity to fund external acquisitions or internal investments.
Why Has ACB Stock Declined?
And yet ACB stock has continued to fall. One reason is sentiment toward the sector. As The Motley Fool noted this week, 10 pot stocks have in just four months. That includes other well-known names such as Cronos Group (NASDAQ:) and Tilray (NASDAQ:). Almost every cannabis stock has taken a hit as of late.
There are company-specific factors at play as well. Oversupply in Canada and ensuing pricing pressure . In that context, huge revenue and production growth might not be considered good news from some investors. It’s a short-term positive but a long-term negative. Aurora is contributing to a market heading for a crash, or something close.
Meanwhile, Aurora’s balance sheet and dilution questions aren’t exactly fixed by the larger facility. The company closed the third quarter with C$390 million in cash. It has to repay C$230 million in March. It has already drawn C$144 million on its revolver. Free cash flow is likely to be negative in Q4, adding to that pressure.
So Aurora’s larger facility simply kicks the proverbial can down the road by about 17 months. Meanwhile, another convertible offering matures in 2024.
Per the , that US$345 million (C$459 million) bond can be repaid at maturity in shares, not cash. Starting in 2022, Aurora Cannabis can redeem the bonds if the trading price (for the NYSE listing) of Aurora Cannabis stock averages $9.40 for 20 trading days.
If that doesn’t happen, however, Aurora would have to issue another US$345 million in stock in 2024. With investors already concerned with the share count balloon to over 1 billion, the lower ACB stock price means more dilution could be on the way.
Aurora Cannabis Stock a Falling Knife
The catch for Aurora Cannabis right now is that even good news can be spun as bad news. The trading in Aurora Cannabis stock suggests that’s exactly what is happening.
That said, the declines do present an opportunity for cannabis bulls who see those concerns as somewhat overwrought. While debt and dilution are a concern, the credit facility move does give Aurora Cannabis more time. And the willingness of banks to lend against Aurora’s assets is, in some way, a vote of confidence.
Few, if any, companies have . Rivals like Canopy and Cronos don’t seem to be performing quite as well. For cannabis optimists, ACB stock might look very tempting. But the question at this point might be just how many of those optimists are left.
As of this writing, Vince Martin has no positions in any securities mentioned.
The post 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. | That response from the market admittedly suggests ACB stock might be an interesting contrarian play from a long-term perspective. ACB Stock Gains (Briefly) on Preliminary Q4 Earnings It’s difficult to see from Aurora Cannabis as anything but good news. With investors already concerned with the share count balloon to over 1 billion, the lower ACB stock price means more dilution could be on the way. | ACB stock now trades at a seven-month low, with most of its 2019 gains wiped out. What’s interesting — and, for ACB shareholders, frustrating — is that Aurora Cannabis seems to have had a good month. That response from the market admittedly suggests ACB stock might be an interesting contrarian play from a long-term perspective. | ACB Stock Gains (Briefly) on Preliminary Q4 Earnings It’s difficult to see from Aurora Cannabis as anything but good news. ACB stock now trades at a seven-month low, with most of its 2019 gains wiped out. What’s interesting — and, for ACB shareholders, frustrating — is that Aurora Cannabis seems to have had a good month. | ACB stock now trades at a seven-month low, with most of its 2019 gains wiped out. What’s interesting — and, for ACB shareholders, frustrating — is that Aurora Cannabis seems to have had a good month. That response from the market admittedly suggests ACB stock might be an interesting contrarian play from a long-term perspective. |
38192.0 | 2019-08-27 00:00:00 UTC | Why Aurora’s Latest CBD Play is a Big Deal | ACB | https://www.nasdaq.com/articles/why-auroras-latest-cbd-play-is-a-big-deal-2019-08-27 | nan | nan | Despite being the most popular cannabis company in the world, particularly among millennials, Aurora Cannabis (NYSE: ACB) has yet to live up to its perceived potential, even given the nascent nature of the industry. There are many reasons for that, but perhaps the most important is Aurora's share dilution problem. While relying on dilutive forms of financing was a necessary evil for most pot companies in their early stages, Aurora did so at a dizzying pace, which is likely dragging down its stock price. Further, unlike many of it peers, Aurora has yet to land a big name partner. Such a partnership would allow the firm to have access to the cash it needs to fund its expensive growth projects. Despite these headwinds, Aurora is arguably one of the better investment options in the cannabis industry, and the company recently made an important move that improved its prospects.
Image source: Getty Images
Aurora completes the acquisition of Hempco
Aurora's growth strategy has focused on two main aspects. First, the marijuana company has spent a small fortune on efforts to increase its peak production capacity. These efforts have been rewarded since Aurora is second to none in the industry in this category. Second, the pot firm has been busy making acquisitions, and one of them is of particular interest to our current discussion. Back in April, Aurora announced it had made a move to acquire the remaining shares of Hempco Food and Fiber Inc; the transaction was valued at $48 million. Hempco is a Vancouver-based cannabis company that focuses on hemp-based nutritional products. With solid footprints in Canada, and a vast distribution network abroad, Hempco is a leader in its market.
So what?
CBD extracted from hemp is well-known for its health benefits, and since it lacks the psychoactive component found in marijuana, it is much better received both among consumers and governmental authorities. The passage of the Farm Bill at the end of last year -- which made hemp derived products legal at the federal level -- is evidence enough of this. All these factors have made Hemp-based CBD one of the hottest segments in the cannabis industry. Many companies are already profiting from this market, most notably Colorado-based Charlotte's Web Holdings (OTC: CWBHF), the current leader in the crowded US CBD market. With the acquisition of Hempco, Aurora will be well-positioned to improve its standing in this sector. The Edmonton-based firm will gain access to Hempco's 56,000 square foot facility, which can process up to 2.9 million kilograms of hemp per year. Aurora plans on using Hempco and several other subsidiaries it owns to create an even stronger presence in the CBD market. That isn't a bad strategy at all. After all, CBD-based products offer higher margins than those of the recreational segment.
Now what?
Of course, whether Aurora benefits from this opportunity depends in part on the company's ability to properly execute its plans. However, this move is a reminder that Aurora is playing the long game. The marijuana firm has sacrificed short-term profits perhaps more than any of its competitors for the sake of building a strong foundation for the future. Only time will tell whether this strategy will pay off, but Aurora looks at least a bit more attractive given its acquisition of Hempco.
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 – 10 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
Joel South has no position in any of the stocks mentioned. 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. | Despite being the most popular cannabis company in the world, particularly among millennials, Aurora Cannabis (NYSE: ACB) has yet to live up to its perceived potential, even given the nascent nature of the industry. While relying on dilutive forms of financing was a necessary evil for most pot companies in their early stages, Aurora did so at a dizzying pace, which is likely dragging down its stock price. Back in April, Aurora announced it had made a move to acquire the remaining shares of Hempco Food and Fiber Inc; the transaction was valued at $48 million. | Despite being the most popular cannabis company in the world, particularly among millennials, Aurora Cannabis (NYSE: ACB) has yet to live up to its perceived potential, even given the nascent nature of the industry. Despite these headwinds, Aurora is arguably one of the better investment options in the cannabis industry, and the company recently made an important move that improved its prospects. Image source: Getty Images Aurora completes the acquisition of Hempco Aurora's growth strategy has focused on two main aspects. | Despite being the most popular cannabis company in the world, particularly among millennials, Aurora Cannabis (NYSE: ACB) has yet to live up to its perceived potential, even given the nascent nature of the industry. Despite these headwinds, Aurora is arguably one of the better investment options in the cannabis industry, and the company recently made an important move that improved its prospects. Image source: Getty Images Aurora completes the acquisition of Hempco Aurora's growth strategy has focused on two main aspects. | Despite being the most popular cannabis company in the world, particularly among millennials, Aurora Cannabis (NYSE: ACB) has yet to live up to its perceived potential, even given the nascent nature of the industry. Despite these headwinds, Aurora is arguably one of the better investment options in the cannabis industry, and the company recently made an important move that improved its prospects. All these factors have made Hemp-based CBD one of the hottest segments in the cannabis industry. |
38193.0 | 2019-08-27 00:00:00 UTC | 3 Reasons It Probably Is Time to Get in on ACB Stock | ACB | https://www.nasdaq.com/articles/3-reasons-it-probably-is-time-to-get-in-on-acb-stock-2019-08-27 | nan | nan | Since March, Aurora Cannabis (NYSE:) has been on a steady decline, going from $10 to $5.65. But of course, ACB stock is not an outlier. The cannabis sector has been in a bearish trend, as seen with Canopy Growth (NYSE:), Cronos Group (NASDAQ:) and Tilray (NASDAQ:).
Source: ElRoi / Shutterstock.com
There are a variety of factors for this. First of all, while the legalization of marijuana in Canada has been a strong catalyst, the expectations were too exuberant. So a fall-off was a much-needed adjustment.
But there are other nagging issues. For example, the Canadian market continues to have supply chain problems as well as adverse impacts from black market activities.
OK then, so what now? Well, timing a trade in the cannabis sector is difficult. This is why it’s a good idea to average into positions. I also think it’s advisable to focus on high-quality companies. And for the most part, ACB stock is a solid choice right now.
Here’s a look at three reasons:
Growth Story
While there are legitimate issues with the cannabis market right now, the long-term prospects still look promising. For example, a research report from the that there are about 180 million people who consume cannabis.
But this is likely to grow, especially as more and more countries pursue legalization. Another key is that cannabis has been shown to have strong therapeutic qualities.
Now there are many forecasts of the market. But they all point to strong growth. Just look at a recent Research and BDS Analytics, which pegs the compound annual growth rate at 26.7% between 2017 to 2022.
The Cannabidiol (CBD) opportunity also looks promising (this is the compound of hemp that does not produce a high). In the US, the Farm bill took this off the illegal substance list, and this should spur growth. BDS Analytics forecasts that the spending will hit , for a compound annual growth rate of 49%.
Strong Platform
Long-term success in the cannabis industry will likely be due to scale. This will help a company rise above the noise in the market but also deal with inevitable shifts in supply-and-demand.
As for Aurora Cannabis, it is building the right kind of platform that should be a winner. The company is already a major producer in the Canadian market and is also making inroads in other countries, such as Italy. Keep in mind that it has been at the forefront of automation of facilities, which will lead to overall lower costs.
Aurora Cannabis is also investing heavily in its medical business. Note that the pipeline has 40 in-process and completed clinical trials and case studies. In the meantime, the patient base has continued to increase, hitting 77,136 in the latest quarter.
And yes, Aurora Cannabis has been focused on the CBD opportunity. To this end, the company has struck a variety of acquisitions, including HempCo, ICC Labs, Agropro and Borela.
Nelson Peltz and ACB Stock
Unlike CGC and CRON, Aurora Cannabis does not have a major strategic investor. But this could change soon. The reason? In March, the company retained Nelson Peltz as a strategic advisor.
He is one of the world’s top activist investors, with positions in a myriad of consumers companies like Procter & Gamble (NYSE:), Mondelez (NASDAQ:), and Wendy’s (NASDAQ:). Given his extensive network, he should be able to find the right partner.
But of course, Peltz should also help with other matters, such as advice on marketing and strategy. All in all, his involvement is a major validation of ACB stock.
Tom Taulli is the author of the book, . Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.
The post 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. | Nelson Peltz and ACB Stock Unlike CGC and CRON, Aurora Cannabis does not have a major strategic investor. But of course, ACB stock is not an outlier. And for the most part, ACB stock is a solid choice right now. | But of course, ACB stock is not an outlier. And for the most part, ACB stock is a solid choice right now. Nelson Peltz and ACB Stock Unlike CGC and CRON, Aurora Cannabis does not have a major strategic investor. | Nelson Peltz and ACB Stock Unlike CGC and CRON, Aurora Cannabis does not have a major strategic investor. But of course, ACB stock is not an outlier. And for the most part, ACB stock is a solid choice right now. | Nelson Peltz and ACB Stock Unlike CGC and CRON, Aurora Cannabis does not have a major strategic investor. But of course, ACB stock is not an outlier. And for the most part, ACB stock is a solid choice right now. |
38194.0 | 2019-08-26 00:00:00 UTC | 5 Top Stock Trades for Tuesday: NFLX, AMGN, ACB, BMY | ACB | https://www.nasdaq.com/articles/5-top-stock-trades-for-tuesday%3A-nflx-amgn-acb-bmy-2019-08-26 | nan | nan | It looked like it was going to be a rough day for investors, but Monday’s action proved otherwise. While Friday was a painful day for bulls and with futures pointing to more losses on Sunday night, all it took were some positive trade-related headlines to turn things around. After Monday’s rally, let’s look at a few top stock trades.
Top Stock Trades for Tomorrow #1: Netflix
Netflix (NASDAQ:) continues to struggle, locked in a tough downtrend that’s pressured the stock to new recent lows for 2019.
A name that would normally rally from lower interest rates, NFLX stock continues to struggle as its quarterly results haven’t been impressive enough and as streaming competition increases.
We near $340 and subsequent pullback since. Still below downtrend resistance (blue line), investors need to see NFLX hurdle this level, as well as the 20-day moving average. Over the latter and a run to the 50-day could be in the cards.
Should it lose the $288 mark, a decline to $270 could be in the cards.
Top Stock Trades for Tomorrow #2: Amgen
Amgen (NASDAQ:) caught a 2.5% boost on Monday after it was announced that it will buy Otezla from Celgene (NASDAQ:) for $13.4 billion. The former gets a solid asset while the latter gets a good price and likely takes a step toward FTC approval to be acquired by Bristol-Myers Squibb (NYSE:).
AMGN has a nice-looking bull pennant forming over the past few weeks. Shares continue to bump up against $205 resistance, while uptrend support (purple lines) keep squeezing shares higher.
A break over resistance could send AMGN higher, with the first target being the $210.41 highs. Above that, and a test of channel resistance (blue line) is technically possible.
Top Stock Trades for Tomorrow #3: Bristol-Myers Squibb
Speaking of Bristol-Myers, it too has been trading well. After bottoming near $42.50 about a month ago, shares have been in a steady climb higher.
While BMY was rejected from channel resistance on Monday, investors are hoping support can buoy the name. Above the 200-day moving average, and the stock still looks good on the long side. Below and a test of the 20-day moving average, as well as channel support, is on the table.
Top Stock Trades for Tomorrow #4: Aurora Cannabis
Pot stocks remain pressured, and Aurora Cannabis (NYSE:) is lodged in a brutal downtrend. Once $7 gave way, the stock has really struggled to come up for air.
While ACB made new 2019 lows on Monday, shares did reverse higher and turn positive. That’s a good sign for bulls, although it doesn’t mean the stock has found a bottom.
Bulls’ first assignment is to get the stock back above $6. If they can, over current downtrend resistance is the next task. That will put the 50-day moving average on the table, in that event.
On the downside, watch Monday’s lows. Should they give way, it could usher in a flush down to $5.50 and $5, respectively. Look for channel support to continue buoying the name.
Top Stock Trades for Tomorrow #5: Foot Locker
It was a tough day in the markets on Friday, but Foot Locker (NYSE:) was under extra pressure after reporting earnings.
Shares are putting together a nice reversal rally on Monday. If it can maintain some of that momentum, it has a chance to retest downtrend resistance (blue line). Above resistance and the 10-week moving average, and a test of $42.50 is possible.
Below Monday’s open and Friday’s close though puts this week’s low on the table. If it doesn’t hold FL up, a test of $30 is possible.
Bret Kenwell is the manager and author of and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long CELG.
The post 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. | While ACB made new 2019 lows on Monday, shares did reverse higher and turn positive. While Friday was a painful day for bulls and with futures pointing to more losses on Sunday night, all it took were some positive trade-related headlines to turn things around. A name that would normally rally from lower interest rates, NFLX stock continues to struggle as its quarterly results haven’t been impressive enough and as streaming competition increases. | While ACB made new 2019 lows on Monday, shares did reverse higher and turn positive. Top Stock Trades for Tomorrow #1: Netflix Netflix (NASDAQ:) continues to struggle, locked in a tough downtrend that’s pressured the stock to new recent lows for 2019. Top Stock Trades for Tomorrow #2: Amgen Amgen (NASDAQ:) caught a 2.5% boost on Monday after it was announced that it will buy Otezla from Celgene (NASDAQ:) for $13.4 billion. | While ACB made new 2019 lows on Monday, shares did reverse higher and turn positive. Top Stock Trades for Tomorrow #1: Netflix Netflix (NASDAQ:) continues to struggle, locked in a tough downtrend that’s pressured the stock to new recent lows for 2019. Top Stock Trades for Tomorrow #2: Amgen Amgen (NASDAQ:) caught a 2.5% boost on Monday after it was announced that it will buy Otezla from Celgene (NASDAQ:) for $13.4 billion. | While ACB made new 2019 lows on Monday, shares did reverse higher and turn positive. After Monday’s rally, let’s look at a few top stock trades. Still below downtrend resistance (blue line), investors need to see NFLX hurdle this level, as well as the 20-day moving average. |
38195.0 | 2019-08-26 00:00:00 UTC | October 4th Options Now Available For Aurora Cannabis (ACB) | ACB | https://www.nasdaq.com/articles/october-4th-options-now-available-for-aurora-cannabis-acb-2019-08-26 | nan | nan | Investors in Aurora Cannabis Inc (Symbol: ACB) saw new options become available today, for the October 4th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the ACB options chain for the new October 4th contracts and identified one put and one call contract of particular interest.
The put contract at the $5.00 strike price has a current bid of 30 cents. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $5.00, but will also collect the premium, putting the cost basis of the shares at $4.70 (before broker commissions). To an investor already interested in purchasing shares of ACB, that could represent an attractive alternative to paying $5.57/share today.
Because the $5.00 strike represents an approximate 10% 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 72%. 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 6.00% return on the cash commitment, or 56.15% 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 $5.00 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $6.50 strike price has a current bid of 15 cents. If an investor was to purchase shares of ACB stock at the current price level of $5.57/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $6.50. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 19.39% if the stock gets called away at the October 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 $6.50 strike highlighted in red:
Considering the fact that the $6.50 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 70%. 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 2.69% boost of extra return to the investor, or 25.20% annualized, which we refer to as the YieldBoost.
The implied volatility in the put contract example is 89%, while the implied volatility in the call contract example is 74%.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 250 trading day closing values as well as today's price of $5.57) to be 73%. 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 $6.50 strike highlighted in red: Considering the fact that the $6.50 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 become available today, for the October 4th expiration. | Below is a chart showing ACB's trailing twelve month trading history, with the $6.50 strike highlighted in red: Considering the fact that the $6.50 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 become available today, for the October 4th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the ACB options chain for the new October 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 $6.50 strike highlighted in red: Considering the fact that the $6.50 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 become available today, for the October 4th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the ACB options chain for the new October 4th 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 October 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 $6.50 strike highlighted in red: Considering the fact that the $6.50 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 become available today, for the October 4th expiration. |
38196.0 | 2019-08-26 00:00:00 UTC | These 10 Pot Stocks Have Lost Nearly $21 Billion in Aggregate Value in 4 Months | ACB | https://www.nasdaq.com/articles/these-10-pot-stocks-have-lost-nearly-%2421-billion-in-aggregate-value-in-4-months-2019-08-26 | nan | nan | For years, cannabis stocks have been showing investors the green. Early investors in some of the most popular pot stocks are likely sitting on triple-digit or quadruple-digit gains today, with more than a dozen cannabis stocks gaining at least 70% during the first quarter.
However, the green rush has come to a crashing halt since April began. Few cannabis stocks are near their 2019 highs, with most registering double-digit losses during the month of July.
Image source: Getty Images.
Marijuana stocks have clobbered investors over the past four months
Yet, what might be truly surprising is just how much market value has evaporated from the industry's best-known stocks since this downtrend began in April. As of April 25, there were 14 pot stocks with a $1 billion valuation or larger -- 10 of which surpassed $1.8 billion. As of the market close on Aug. 19, here's how much market value has been erased from each of the 10 biggest marijuana stocks as of April (listed in descending order by market cap lost):
Canopy Growth (NYSE: CGC): $7.39 billion
Aurora Cannabis (NYSE: ACB): $3.36 billion
Tilray (NASDAQ: TLRY): $2.04 billion
Curaleaf Holdings: $1.77 billion
Acreage Holdings: $1.74 billion
Cronos Group: $1.54 billion
Harvest Health & Recreation (OTC: HRVSF): $1.27 billion
Cresco Labs: $0.83 billion
Aphria (NYSE: APHA): $0.38 billion
GW Pharmaceuticals: $0.35 billion
Collectively, that's $20.67 billion in market cap that's been erased in roughly four months' time. To put this into context, the aggregate value of the 10 biggest pot stocks on April 25 was $55.1 billion. Today, that's been cut to $34.4 billion.
Image source: Getty Images.
Four reasons pot stocks have been a money pit since April
What's interesting about the decline in pot stock valuations is that there isn't one problem that can be singled out or blamed for the drop. Rather, it's a confluence of four factors that have collectively weighed on the industry.
1. Supply problems in Canada
Arguably the most front-and-center issue for Canadian cannabis stocks has been persistent supply concerns throughout the country. Regulatory agency Health Canada had more than 800 licensing applications to review at the beginning of the year and is taking months, to possibly more than a year, to approve growing, processing, distribution, or sale licenses. When combined with compliant packaging shortages, it's led to cannabis not reaching dispensary shelves.
On the bright side, Health Canada has implemented changes to its application review process that should (pardon the pun) weed out underfunded companies and expedite licensing approvals for larger pot stocks. Even so, it's going to take a couple of quarters for Health Canada to work through its existing licensing backlog, which likely means an ongoing supply shortage for dried flower, as well as derivatives, when they launch by mid-December.
Image source: Getty Images.
2. Subpar operating results
With Canada legalizing recreational marijuana, and 11 U.S. states having passed adult-use consumption laws, another problem is that earnings actually matter now. And frankly, cannabis stock operating results have been dreadful.
For instance, the largest marijuana stock in the world, Canopy Growth, reported its fiscal first-quarter operating results two weeks ago, and virtually nothing in its report could be spun as a positive. Canopy recorded a sequential quarterly revenue decline and anemic gross margin of 15%, saw its goodwill increase by 387 million Canadian dollars to CA$1.93 billion, and has seen its share-based compensation soar. To put the icing on the cake, Canopy Growth's visionary co-CEO was fired in early July, and there's really no telling when the company will be profitable on an operating basis.
There's also Tilray, which has been in free fall since reporting its second-quarter operating results. Despite topping Wall Street's consensus sales estimate, Tilray's loss was, once again, wider than expected, with the company recording a subpar gross margin of 23%. Tilray has had to purchase wholesale dried flower to meet supply agreements, which continues to be a drag on its margins.
Image source: Getty Images.
3. Share-based dilution
A third factor that's been responsible for shrinking marijuana stock market caps is ongoing share-based dilution. Since U.S. pot stocks have virtually no access to non-dilutive forms of financing, and Canadian marijuana stocks only gained this access about a year ago, most capital raises have involved issuing stock. The problem is that issuing stock often dilutes the value of existing shareholders, and it signals the very real possibility that additional capital raises may be on the horizon.
Take Aurora Cannabis as a good example. Aurora has been busy acquiring companies left and right for the past three years, and is currently on track to be Canada's leading producer by peak production. But in the process, the company has ballooned its outstanding share count by 1 billion shares in roughly five years. Even though Aurora continues to add value by purchasing new pieces to its global puzzle, investors remain leery of the company issuing stock to finance these deals. With each share issuance, it becomes that much harder for Aurora Cannabis to generate a meaningful per-share profit, and that's been reflected in its shrinking market cap.
And don't think this is purely a Canada problem. Harvest Health & Recreation has agreed to acquire privately held Verano Holdings for $850 million, and has made a number of smaller deals. But with virtually no financing options beyond share issuances, Harvest Health has been using its stock as currency to make these deals happen. This ongoing dilution has more than halved Harvest Health's market cap since April 25.
Image source: Getty Images.
4. A lack of investor trust
Lastly, investors have clear trust issue with marijuana stocks.
As you may recall, Aphria was clobbered in December after a short-seller report emerged claiming that the company had grossly overpaid for its Latin American assets. Even though an independent committee didn't find this to be true, Aphria wound up taking a CA$50 million writedown on the value of its Latin American assets just months later. Further, a few Aphria executives, including longtime CEO Vic Neufeld, wound up stepping down after conflicts of interest came to light concerning this Latin American acquisition.
There's also the ongoing CannTrust (NYSE: CTST) scandal, which has really taken the wind out of the sails of pot stocks. CannTrust grew cannabis in five unlicensed rooms for a period of six months (October 2018 to March 2019), and it would appear that executives knew about this deception, yet didn't stop it. CannTrust is currently waiting on a ruling from Health Canada, but there's clear concern that it may not be the only bad apple of the bunch.
All of these factors point to the need for cannabis stocks to mature before they have any real shot of creating long-term value for investors.
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Sean Williams owns shares of CannTrust Holdings Inc. The Motley Fool recommends CannTrust Holdings 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. | As of the market close on Aug. 19, here's how much market value has been erased from each of the 10 biggest marijuana stocks as of April (listed in descending order by market cap lost): Canopy Growth (NYSE: CGC): $7.39 billion Aurora Cannabis (NYSE: ACB): $3.36 billion Tilray (NASDAQ: TLRY): $2.04 billion Curaleaf Holdings: $1.77 billion Acreage Holdings: $1.74 billion Cronos Group: $1.54 billion Harvest Health & Recreation (OTC: HRVSF): $1.27 billion Cresco Labs: $0.83 billion Aphria (NYSE: APHA): $0.38 billion GW Pharmaceuticals: $0.35 billion Collectively, that's $20.67 billion in market cap that's been erased in roughly four months' time. On the bright side, Health Canada has implemented changes to its application review process that should (pardon the pun) weed out underfunded companies and expedite licensing approvals for larger pot stocks. Even so, it's going to take a couple of quarters for Health Canada to work through its existing licensing backlog, which likely means an ongoing supply shortage for dried flower, as well as derivatives, when they launch by mid-December. | As of the market close on Aug. 19, here's how much market value has been erased from each of the 10 biggest marijuana stocks as of April (listed in descending order by market cap lost): Canopy Growth (NYSE: CGC): $7.39 billion Aurora Cannabis (NYSE: ACB): $3.36 billion Tilray (NASDAQ: TLRY): $2.04 billion Curaleaf Holdings: $1.77 billion Acreage Holdings: $1.74 billion Cronos Group: $1.54 billion Harvest Health & Recreation (OTC: HRVSF): $1.27 billion Cresco Labs: $0.83 billion Aphria (NYSE: APHA): $0.38 billion GW Pharmaceuticals: $0.35 billion Collectively, that's $20.67 billion in market cap that's been erased in roughly four months' time. Share-based dilution A third factor that's been responsible for shrinking marijuana stock market caps is ongoing share-based dilution. Since U.S. pot stocks have virtually no access to non-dilutive forms of financing, and Canadian marijuana stocks only gained this access about a year ago, most capital raises have involved issuing stock. | As of the market close on Aug. 19, here's how much market value has been erased from each of the 10 biggest marijuana stocks as of April (listed in descending order by market cap lost): Canopy Growth (NYSE: CGC): $7.39 billion Aurora Cannabis (NYSE: ACB): $3.36 billion Tilray (NASDAQ: TLRY): $2.04 billion Curaleaf Holdings: $1.77 billion Acreage Holdings: $1.74 billion Cronos Group: $1.54 billion Harvest Health & Recreation (OTC: HRVSF): $1.27 billion Cresco Labs: $0.83 billion Aphria (NYSE: APHA): $0.38 billion GW Pharmaceuticals: $0.35 billion Collectively, that's $20.67 billion in market cap that's been erased in roughly four months' time. Marijuana stocks have clobbered investors over the past four months Yet, what might be truly surprising is just how much market value has evaporated from the industry's best-known stocks since this downtrend began in April. Since U.S. pot stocks have virtually no access to non-dilutive forms of financing, and Canadian marijuana stocks only gained this access about a year ago, most capital raises have involved issuing stock. | As of the market close on Aug. 19, here's how much market value has been erased from each of the 10 biggest marijuana stocks as of April (listed in descending order by market cap lost): Canopy Growth (NYSE: CGC): $7.39 billion Aurora Cannabis (NYSE: ACB): $3.36 billion Tilray (NASDAQ: TLRY): $2.04 billion Curaleaf Holdings: $1.77 billion Acreage Holdings: $1.74 billion Cronos Group: $1.54 billion Harvest Health & Recreation (OTC: HRVSF): $1.27 billion Cresco Labs: $0.83 billion Aphria (NYSE: APHA): $0.38 billion GW Pharmaceuticals: $0.35 billion Collectively, that's $20.67 billion in market cap that's been erased in roughly four months' time. For years, cannabis stocks have been showing investors the green. Supply problems in Canada Arguably the most front-and-center issue for Canadian cannabis stocks has been persistent supply concerns throughout the country. |
38197.0 | 2019-08-26 00:00:00 UTC | Should Investors Buy Aurora Cannabis Stock At Current Levels? | ACB | https://www.nasdaq.com/articles/should-investors-buy-aurora-cannabis-stock-at-current-levels-2019-08-26 | nan | nan | Since mid-March, many cannabis stocks, including Canada’s Aurora Cannabis (NYSE:), have fallen from grace. Earlier in July, ACB stock was downgraded to neutral from its previous buy rating. Analysts are expressing concerns over its spending levels and its potential need for funding in the coming quarters. The ACB stock price is now hovering around $5.80, close to January’s lows in the $5 range.
Source: Shutterstock
There is a wide range of issues affecting the cannabis industry. It is likely that the rich valuations in this commodity-based consumer market may take a further hit in the coming months. At present, Aurora Cannabis is , which gives the company certain economies of scale.
Understandably investors are wondering what may be next for ACB stock given the recent in the price. Let’s now look at the company’s fundamentals as well as the stock price.
Medical Cannabis Is Important for ACB Stock
More than 260 million adults worldwide consume cannabis at least once per year. Collectively they spend $344 billion annually, firm New Frontier Data.
Aurora Cannabis, which aims to capture an important part of this growth, has three key target markets:
Canadian medical
So far in 2019, Aurora Cannabis has achieved more recreational marijuana sales than medical cannabis revenue. However, the two segments are very close, split almost 50-50. In general, of these three areas, Canadian is the most important one for the industry. Similarly, in the United States, only 20% of sales come from the medical side. ACB stock is unique in its strength in the medical market.
ACB’s latest earnings report from May showed a 37% revenue increase in the Canadian consumer section. Canadian medical revenue was up 8% and international medical revenue was up 40%.
Many analysts highlight the importance of the for ACB stock. The medical marijuana market operates with a higher margin than its retail recreational counterpart.
Several analysts have also praised ACB’s continued , including diversified geographies into Europe and medical sales with higher margins. The company has operations in over two dozen countries.
However, it will probably be several quarters before investments in medical marijuana as well as in global markets pay off and turn into further profits.
Headwinds That May Affect ACB Stock
Aurora’s results disappointed analysts. Despite the 367% year-over-year revenue growth, ACB missed analyst estimates by a wide margin. On Aug. 6, ACB stock issued a press release with a corporate outlook. Many investors were quite concerned that the producer did not touch upon profits, earnings or cash flow in its trading update.
Like many other cannabis producers — such as Canopy Growth (NYSE:) or Tilray (NASDAQ:) — ACB is not able to convert the exponential revenue growth into real profits. Aurora Cannabis said it lost $160.1 million CAD ($121.8 million), or 16 cents per share.
In its fiscal first quarter of 2020, Aurora will have to pay a $230 million CAD convertible debt, which is currently out the money. In other words, Aurora Cannabis will likely pay this debt in cash unless the ACB share price rallies in a few months.
InvestorPlace readers may remember that Tesla (NASDAQ:) also had a similar convertible bond payment earlier in March. That payment has triggered a host of for the auto maker. Thus, unless Aurora Cannabis tightens up its financials, investors may not be too forgiving.
Recent industry developments in Canada have also put many investors on alert: Health Canada, the national regulator north of the border, has — due to — revoked both the producer and the dealer licenses of Canada-based cannabis producer Agrima Botanicals, which has been under creditor protection for several months.
Again in July, cannabis sales of another Canadian company, CannTrust Holdings (NYSE:), got put on hold by Health Canada for unlicensed growing. In other words, for the first time since the legalization of pot in Canada, the issues of clarity, compliance and transparency have hit the headlines in a matter of few weeks.
Could these developments regarding non-compliance come to haunt other shares, such as ACB stock?
Aurora Cannabis Stock’s Technical Charts Are Weak
Since listing on the New York Stock Exchange in October, ACB stock has rewarded investors richly. So far in 2019, Aurora Cannabis, the producer powerhouse, is up more than 8%.
Yet, investors in the cannabis sector are also aware of how volatile the price of Aurora Cannabis stock and its peers can be. After starting 2019 around $5, on March the stock saw an intra-day high of $10.32. However, marijuana stock investors haven’t been very bullish on the industry in recent months.
Since mid-March, there has been selling pressure on ACB stock. The mixed earnings results for fiscal have put further pressure on the price of Aurora Cannabis shares and other weed stocks. On May 31, it finished the month at $7.59. Following a choppy June and July, so far August has also been a tough month for ACB stock.
The downtrend is a that ACB’s all-time high of $12.52 in October 2018 may not be tested again any time soon. Many investors are now wondering if the bears may possibly push the shares below $5.50.
ACB stock’s short-term technical chart looks weak, pointing to the possibility for more downside around the corner. Expect nearer-term trading to be choppy at best, possibly until the next earnings announcement date in .
Later in the year, if you still believe in the bull case for Aurora Cannabis stock, you might consider waiting for a better time to get long, such as around $5.00.
Short Interest and ACB Stock
As part of short-term sentiment analysis, investors may also monitor the extent to which stocks are shorted. In other words, they follow the ratio of short positions that are open and yet to be covered. Two investors may look at the same data and have differing views. I tend to use the number as a contrarian indicator.
For example, if more than 20% of a stock’s float (available shares) are shorted, then even a small rise in its price could actually become a powerful short squeeze and propel the stock much higher.
At this point, 11% of are shorted. So while there are plenty of traders who have shorted ACB stock, not enough shares of Aurora Cannabis are being shorted to set the stage for a massive short-squeeze rally. On the contrary, the current level of short-selling in ACB stock may be enough to put further selling pressure on the shares.
Our readers may want to compare this number to the on other companies.
The Bottom Line on ACB Stock
Upcoming earnings reports from ACB as well as its peers will be important for the industry, as not everyone is convinced that Canadian recreational pot sales . If Canadian weed demand softens, ACB’s revenue would also be hit.
If there is any broader market weakness in Canadian stocks — say due to market worries over the U.S.-China trade war or because of a general weakness due to disappointing earnings — Aurora Cannabis share price may also be adversely affected further.
As of this writing, Tezcan Gecgil did not hold a position in any of the aforementioned securities.
The post 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. | Several analysts have also praised ACB’s continued , including diversified geographies into Europe and medical sales with higher margins. Earlier in July, ACB stock was downgraded to neutral from its previous buy rating. The ACB stock price is now hovering around $5.80, close to January’s lows in the $5 range. | Earlier in July, ACB stock was downgraded to neutral from its previous buy rating. The ACB stock price is now hovering around $5.80, close to January’s lows in the $5 range. Understandably investors are wondering what may be next for ACB stock given the recent in the price. | Medical Cannabis Is Important for ACB Stock More than 260 million adults worldwide consume cannabis at least once per year. Aurora Cannabis Stock’s Technical Charts Are Weak Since listing on the New York Stock Exchange in October, ACB stock has rewarded investors richly. Earlier in July, ACB stock was downgraded to neutral from its previous buy rating. | Medical Cannabis Is Important for ACB Stock More than 260 million adults worldwide consume cannabis at least once per year. Earlier in July, ACB stock was downgraded to neutral from its previous buy rating. The ACB stock price is now hovering around $5.80, close to January’s lows in the $5 range. |
38198.0 | 2019-08-25 00:00:00 UTC | Is Aurora Cannabis a Buy? | ACB | https://www.nasdaq.com/articles/is-aurora-cannabis-a-buy-2019-08-25 | nan | nan | There are as many reasons to be bullish on cannabis stocks as there are reasons to be bearish. With the full legalization of the Canadian market in October of last year, cannabis seems poised to go much more mainstream in the years ahead. The highest industry estimate from a mainstream Wall Street firm is Stifel's recent $200 billion estimate for global legal cannabis sales by 2030. That would be up roughly 13 times from the $15 billion estimated global sales for 2019!
And yet there are just as many reasons for caution on pot stocks. For one, it's still very early innings in the legal cannabis industry, and a whole host of things can go wrong. Even in Canada and legal U.S. states like California, the legacy black market is still thriving due to the higher prices on legal weed from high state taxes. That may be contributing to the oversupply in the Canadian market that has recently sent pot prices tumbling. Deepening this problem is the fact that pot companies are subject to some unique and bizarre accounting rules, which could mean that past profits may have to be written down if retail prices keep falling, in addition to current results.
Additionally, who knows when the U.S. will finally get its act together regarding national legalization? Until it does, companies have to navigate a patchwork of different state regulations, as well as the fact that U.S. companies can't ship cannabis across state lines. Many pot companies have thus made very expensive acquisitions in order to expand their reach in certain U.S. states, setting up the potential for future goodwill writedowns.
Nevertheless, if you're one of the brave ones looking to take advantage of the current skepticism in pot stocks, you might want to consider Aurora Cannabis (NYSE: ACB). Aurora is the market leader by production capacity and the most widely held stock on the investing app Robinhood, and there are a few good reasons why it sticks out among the big cannabis players.
Aurora Cannabis is set for growth. Image source: Getty Images.
The leading producer
Aurora has been the most successful cannabis company in growing its production capacity, with funded capacity set to reach 625,000 kg annually in the next couple years. In the company's most recent quarter, Aurora sold between 25,000 and 30,000 kg, or a little less than 20% of its full potential, so there should be massive growth in the next couple years as this capacity comes online.
But it's not just the amount of cannabis that Aurora can produce, it's how well the company executes. Aurora is a bit different from other cannabis companies in that it has its own custom, large-scale Sky facility design. Sky facilities are equipped with a glass roof and highly automated infrastructure, which allows for massive production with relatively lower labor requirements, and a highly controllable environment that limits crop loss. For instance, Aurora's older Mountain facility produces about 4,800 kg and requires about 125 people; however, the new Sky facility can produce 100,000 kg/year, or 20 times that of Mountain, but only requires 380 people, or three times Mountain's labor requirements.
Aurora is constructing two more Sky-model facilities, Aurora Sun and Aurora Nordic part two, which will be even bigger and support a combined 270,000 kg per year in production. The scale benefits from these massive facilities should send Aurora's costs below $1.00 per gram, according to management.
Best-in-class execution and being the lowest-cost producer could help Aurora outlast competitors as prices per gram come under pressure across the industry.
Validation by Peltz, Italy, and BMO
In an industry that is evolving and may be vulnerable to unscrupulous, self-dealing managers, it always helps when a company and its management team are validated by well-known third parties. In the case of Aurora, the company recently received validation from some big customers and industry players:
Italy: In mid-July, Aurora won a tender offer to supply Italy with medical cannabis. While the contract is only for 400 kg of cannabis over two years, the win is more about what it signifies. Italy is the most tightly regulated medical cannabis market in the world, and Aurora was the only company out of five competitors to win the contract. The cannabis will come from Aurora's Canadian EU GMP certified facilities, which will be used to supply the massive German market as well. The fact that Aurora seems to be winning these competitive contracts under rigorous regulatory scrutiny bodes well for future wins too.
Peltz on board: In March, Aurora named Nelson Peltz as a strategic advisor to the company. Peltz is an activist investor who is famous for bets on large branded consumer goods companies such as Procter & Gamble (NYSE: PG), Mondelez (NASDAQ: MDLZ), and Wendy's (NASDAQ: WEN). Aurora is the largest cannabis company that hasn't inked its own partnership with another big alcohol or cigarette company, but having Peltz on board could very well enable a similar transaction, and likely on advantageous terms. Either way, the fact that Peltz chose Aurora as his big cannabis pick is another validation for the company.
Bank of Montreal (NYSE: BMO): Finally, Aurora also got a thumbs-up from its lenders recently, with a consortium of Tier 1 Canadian banks, led by the Bank of Montreal, agreeing to upsize the company's current credit facility from 200 million Canadian dollars to CA$360 million. The increased facility is another vote of confidence in Aurora, especially in an industry going through a difficult month and increasing skepticism.
A good bet for the longer term
Of the leading cannabis companies, Aurora sticks out as the quality and scale leader at the moment. Though its stock is a bit higher priced than some others in the space, paying up for quality is usually a good trade-off in any industry, especially a difficult, evolving one such as the cannabis market. Those seeking to play the cannabis market would be smart to give Aurora a look.
Here's The Marijuana Stock You've Been Waiting For
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Billy Duberstein has no position in any of the stocks mentioned. His clients may own shares of the companies mentioned. The Motley Fool is short shares of Procter & Gamble. 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. | Nevertheless, if you're one of the brave ones looking to take advantage of the current skepticism in pot stocks, you might want to consider Aurora Cannabis (NYSE: ACB). Deepening this problem is the fact that pot companies are subject to some unique and bizarre accounting rules, which could mean that past profits may have to be written down if retail prices keep falling, in addition to current results. Aurora is the market leader by production capacity and the most widely held stock on the investing app Robinhood, and there are a few good reasons why it sticks out among the big cannabis players. | Nevertheless, if you're one of the brave ones looking to take advantage of the current skepticism in pot stocks, you might want to consider Aurora Cannabis (NYSE: ACB). The highest industry estimate from a mainstream Wall Street firm is Stifel's recent $200 billion estimate for global legal cannabis sales by 2030. For instance, Aurora's older Mountain facility produces about 4,800 kg and requires about 125 people; however, the new Sky facility can produce 100,000 kg/year, or 20 times that of Mountain, but only requires 380 people, or three times Mountain's labor requirements. | Nevertheless, if you're one of the brave ones looking to take advantage of the current skepticism in pot stocks, you might want to consider Aurora Cannabis (NYSE: ACB). The leading producer Aurora has been the most successful cannabis company in growing its production capacity, with funded capacity set to reach 625,000 kg annually in the next couple years. In the case of Aurora, the company recently received validation from some big customers and industry players: Italy: In mid-July, Aurora won a tender offer to supply Italy with medical cannabis. | Nevertheless, if you're one of the brave ones looking to take advantage of the current skepticism in pot stocks, you might want to consider Aurora Cannabis (NYSE: ACB). With the full legalization of the Canadian market in October of last year, cannabis seems poised to go much more mainstream in the years ahead. The leading producer Aurora has been the most successful cannabis company in growing its production capacity, with funded capacity set to reach 625,000 kg annually in the next couple years. |
38199.0 | 2019-08-23 00:00:00 UTC | Hexo Stock Continues to Feel the Effects of Cannabis Industry Issues | ACB | https://www.nasdaq.com/articles/hexo-stock-continues-to-feel-the-effects-of-cannabis-industry-issues-2019-08-23 | nan | nan | Hexo Corp (NYSE:) continues to feel the impact of its underwhelming Q3 earnings, a slower than expected recreational cannabis market in Canada, and concern over corporate leadership in the industry. Hexo stock is down 13% from Monday’s open, and is now trading right around the $4 mark.
Source: Shutterstock
This continues a slide that began after HEXO hit an all-time high of $8.28 in April, and worsened after another quarter of red ink and the departure of its co-founder from his executive role.
HEXO Underwhelmed in Q3
On June 12, HEXO and failed to impress investors. The company missed badly on revenue ($13 million CAD compared to the $14 million analysts were looking for) and the red ink was worse than expected, with a quarterly loss of $7.75 million — up from a loss of $1.97 million the previous year. The company announced plans to enter the U.S. CDB market through a joint venture with Molson Coors Brewing Co (NYSE:TAP), but that is fast becoming a crowded field and investors weren’t overly impressed. Hexo stock dropped over 8% on the results.
HEXO is expected to report Q4 earnings in September.
Investor Nervousness Around Cannabis Industry
Many investors piled onto Canadian cannabis stocks over the past year, looking for the legalization of recreational pot in Canada to result in a boom market. The reality has been a little harsh for some.
Slower than expected initial sales of recreational pot led to in the days after recreational marijuana use was legalized in Canada last October. There were no line-ups at Canadian cannabis retailers and product shortages were reported as a result of glitches in distribution and production. While the situation has improved, recreational pot still isn’t exactly flying off the shelves in Canada.
Adding to investor unease, 2019 has seen considerable drama among Canadian cannabis companies, and HEXO has not been immune.
In January, the CEO of Aphira (NYSE:) left the company amid allegations of improprieties regarding acquisitions in Latin America. On July 10 the CEO and co-founder of Canopy Growth (NYSE:) was forced out of his role, and didn’t leave without igniting controversy over his dismissal.
Just days later on July 18, HEXO’s co-founder of Chief Brand Officer, although he retained his seat on the board.
The most recent headlines were centered around CannTrust Holdings (NYSE:), which became the center of Health Canada and Ontario Securities Commission investigations over illegal cannabis cultivation at one of its facilities. The fallout there has included the firing of the CannTrust Holdings CEO and the forced resignation of the company’s co-founder and chairman.
The series of leadership shakeups and missteps has certainly not helped cannabis stocks in 2019, although the corporate transitions are expected to put many of these companies in stronger positions for the long term.
How Does Hexo Stock Performance Compare to Cannabis Cohorts?
Even after this week’s 13% drop and a decline in Hexo stock price of around 40% since it reported Q3 earnings in June, HEXO is performing reasonably well on the year compared to its fellow Canadian cannabis stocks. Year-to-date growth is 6.5% for HEXO, while Aurora Cannabis (NYSE:) is up 11% and Aphira has gained over 8%.
However the biggest of the Canadian cannabis producers Canopy Growth has lost 13% since the start of the year. CannTrust Holdings — the company that kicked off the latest round of concern about the industry — has dropped some 64% so far in 2019.
The question for HEXO investors is whether the company’s Q4 earnings are going to going to be as underwhelming as Q3’s were. If so, the Hexo stock price slump that started in April could well continue through the fall. And HEXO doesn’t have far to drop before it goes into the red for 2019…
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
The post 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. | Hexo Corp (NYSE:) continues to feel the impact of its underwhelming Q3 earnings, a slower than expected recreational cannabis market in Canada, and concern over corporate leadership in the industry. Source: Shutterstock This continues a slide that began after HEXO hit an all-time high of $8.28 in April, and worsened after another quarter of red ink and the departure of its co-founder from his executive role. The company announced plans to enter the U.S. CDB market through a joint venture with Molson Coors Brewing Co (NYSE:TAP), but that is fast becoming a crowded field and investors weren’t overly impressed. | Hexo Corp (NYSE:) continues to feel the impact of its underwhelming Q3 earnings, a slower than expected recreational cannabis market in Canada, and concern over corporate leadership in the industry. Investor Nervousness Around Cannabis Industry Many investors piled onto Canadian cannabis stocks over the past year, looking for the legalization of recreational pot in Canada to result in a boom market. On July 10 the CEO and co-founder of Canopy Growth (NYSE:) was forced out of his role, and didn’t leave without igniting controversy over his dismissal. | Hexo Corp (NYSE:) continues to feel the impact of its underwhelming Q3 earnings, a slower than expected recreational cannabis market in Canada, and concern over corporate leadership in the industry. Investor Nervousness Around Cannabis Industry Many investors piled onto Canadian cannabis stocks over the past year, looking for the legalization of recreational pot in Canada to result in a boom market. Even after this week’s 13% drop and a decline in Hexo stock price of around 40% since it reported Q3 earnings in June, HEXO is performing reasonably well on the year compared to its fellow Canadian cannabis stocks. | Hexo stock dropped over 8% on the results. Investor Nervousness Around Cannabis Industry Many investors piled onto Canadian cannabis stocks over the past year, looking for the legalization of recreational pot in Canada to result in a boom market. Even after this week’s 13% drop and a decline in Hexo stock price of around 40% since it reported Q3 earnings in June, HEXO is performing reasonably well on the year compared to its fellow Canadian cannabis stocks. |
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