Category: Cannabis sativa

Cannabis 2.0 Is Coming: Watch ACB Stock

In case you didn’t get the memo, what’s popularly known as “Cannabis 2.0” is coming to Canada on Oct. 17 as the nation finally legalizes cannabis-infused beverages, edibles, vapes, and similar products. Owners of Aurora Cannabis (NYSE:ACB) stock could potentially be sitting on a green-hued gold mine if the pot-stock sector explodes to the upside in the wake of this historic event.

ACB - Aurora Cannabis Inc. 1 month stock chart

Aurora has been granted a processing license from Health Canada (the nation’s regulatory agency) for a facility known as Aurora Air. This particular facility will produce edible products including chocolates and gummies, which are expected to go public in Canada as soon as December of this year.

I consider that to be a very forward-thinking move on Aurora’s part, as edibles don’t carry the stigma that vaping products do. The fact that Health Canada granted the Aurora Air license, moreover, is a sign that the nation’s regulators accept and embrace edibles as a publicly purveyed commodity; you can love ’em or hate ’em, but edibles are here to stay.

Canopy Growth: A Lot Of Pain To Digest

The management team at Canopy Growth revealed some really positive developments, but also some very painful ones incurred by the business.

In its latest quarter, the company posted a record harvest that indicates strong sales moving forward. However, pricing, declining cash balances, and continued negative cash flows are all concerns that investors need to keep in mind.

Pain just keeps building up for the players in the cannabis space. In its latest filing, for instance, the management team at Canopy Growth Corp. (CGC) revealed that, despite posting strong sales and volume growth in the first quarter of its 2020 fiscal year, it’s still unable to generate a profit.

Add to this continued declines in its cash on hand, poor recreational cannabis pricing, and the prospect of some industry oversupply issues, and investors are right to be concerned. Even though, in the long run, Canopy will likely dominate the space as one of the few major players in the market, in the short run it looks like shareholders could be in for a world of hurt if current trends continue.

 Management did say that during the quarter they happened to harvest 40,960kg of the plant, up 323% from the 9,685kg harvested one year earlier. The amount actually harvested during the quarter was well above the 34,000kg worth previously forecasted, and over 70% of what was produced fits the company’s definition of “high THC” strains. This should translate into far higher sales in the next quarter or two, meaning that this prior quarter may have been more of a bump in the road on Canopy’s road to growth.

CGC – Canopy Growth Corporation

Canopy Growth Q1 2020 Earnings Preview

Canopy Growth (OTC:CGC) is scheduled to announce Q1 earnings results on Wednesday, August 14th, after market close.

The consensus EPS Estimate is -$0.31 (+22.5% Y/Y) and the consensus Revenue Estimate is $84.62M (+226.7% Y/Y).

Over the last 1 year, cgc has beaten EPS estimates 0% of the time and has beaten revenue estimates 75% of the time.

Over the last 3 months, EPS estimates have seen 0 upward revisions and 3 downward. Revenue estimates have seen 1 upward revision and 5 downward.

Heineken Has Another Awesome Year

Heineken And Cannabis Go Well Together

Lagunitas, a subsidiary of Heineken, brought a new cannabis-infused beverage on the market.The product is selling well, and demand is increasing rapidly.The successful launch will not bring in a lot of money (yet).

On June 26, 2018, Lagunitas, a subsidiary of Heineken (OTCQX:HEINY), announced that it will launch an IPA-inspired sparkling water which contains hops and is infused with THC and/or CBD. Both of the ingredients

HEXO (HEXO) Dips

HEXO (HEXO) closed at $4.91 in the latest trading session, marking a -1.8% move from the prior day. This change lagged the S&P 500’s daily loss of 0.62%. Meanwhile, the Dow lost 0.25%, and the Nasdaq, a tech-heavy index, lost 0.74%.

Prior to today’s trading, shares of the cannabis producer had lost 14.24% over the past month. This has lagged the Medical sector’s loss of 1.47% and the S&P 500’s gain of 2.8% in that time.

HEXO Corp

Potential Revenues Make It A Buy Opportunity

HEXO Corp. is a cannabis company with a very interesting exclusive agreement with the SQDC.

HEXO has a strategy that includes a wide range of cannabis-related products.

The merger with Newstrike Brands positions HEXO as an industry leader.

It is quite undervalued based on the fact that its revenues could reach more than $200 million in the next twelve months.

HEXO Corp. (TSE: HEXO, NYSE: HEXO) is a cannabis company that is growing revenues at a nice clip. The most distinguishable feature of this company is the exclusive distribution and supply agreements it has with Quebec, the largest agreement of the industry. Although HEXO currently serves only four provinces (pre-merger), it reaches 87 percent of the Canadian people.

Besides pure cannabis products, the company expects to develop cannabis-infused beverages, foods, and cosmetics in collaboration with larger companies, such as the partnership with Molson Coors Canada, named Truss Beverages. The Newstrike Brands’ merger will expose HEXO to four new provinces and expand production by 50%. With an enterprise value of $2.43 billion and 12-month-forward revenues in excess of $200 million, HEXO is a bit undervalued.

Conclusion

With a production capacity of 150,000 kg and facilities with more than 3 million sf, HEXO seems poised to generate significant revenues and grab a relevant market share in Canada and Europe. It is the preferred supplier and distributor in Quebec, which will secure it hundreds of millions in revenues in the years to come. It is also venturing in new areas like cannabis-infused beverages and foods. The company has closed a merger with Newstrike Brands that is accretive in many ways and seems approved by the market.

The management expects revenues to be more than $400 million in the fiscal years ending July 31, 2020, and according to my estimations, it could reach $200-$244 million in the 12 months from February 1, 2019 to January 31, 2020. With a forward EV/Revenues in the 10x-12x range, the stock seems quite undervalued. Remember it has been valued this way for a while although it has increased a bit and could not expand in valuation as you could expect.

FDA to Host Public Hearing on Cannabis Friday

This Friday, May 31, the FDA will host a public hearing aimed at gathering scientific data and information about the safety, manufacturing, product quality, marketing, labeling and sale of cannabis-containing products and cannabis-derived compounds. The agency’s objective is to clarify a workable regulatory framework for the products since the cultivation and production of hemp was legalized in the 2018 Farm Bill.

A docket for public comment, FDA-2019-N-1482, will be available until July 2.

ETFs: MJSOILACTYOLO

Selected tickers: Tilray (NASDAQ:TLRY), Canopy Growth (NYSE:CGC), Aurora Cannabis (NYSE:ACB), Cronos Group (NASDAQ:CRON), New Age Beverages (NASDAQ:NBEV)

Curaleaf Holdings, Inc. ~ +5%

Acquiring “Select”, the Leading Cannabis Wholesale Brand in the U.S.

Curaleaf Holdings (OTCPK:CURLF) announces a deal to purchase the the cannabis business of Cura Partners (owners of the Select brand) in an all-stock deal valued at just under $1B. Brings together two of the most well-known, fastest growing cannabis brands on the East Coast and West Coast

Combines the largest retail operator and the highest revenue generating wholesaler in the U.S., achieving significant operational synergies. Accelerates growth, diversifies product range and expands customer reach and accessibility

Curaleaf Holdings Move to Acquire Cura Partners

Leading West Coast Cannabis Oil Manufacturer ~ All-Stock Deal Close to $1 Billion

“The combination of Curaleaf and Select is a perfect fit,” Curaleaf CEO Joe Lusardi said in a statement. “With our industry leading capacity, expansive retail distribution network and Select’s impressive sales and marketing capabilities, we intend to meaningfully accelerate our top line growth trajectory with the addition of the Select Oil product range.”

Massachusetts-based cannabis company Curaleaf Holdings announced Wednesday it agreed to purchase a leading West Coast cannabis oil manufacturer, Cura Partners, in an all-stock deal valued at about $950 million.

Curaleaf’s move to acquire Cura Partners, which owns Select, the leading cannabis brand in California, Nevada and Oregon, according to independent market analytics, marks the largest deal based on dollar value so far between U.S. cannabis operators. The companies also stressed it will combine Curaleaf’s East Coast footprint with a West Coast-focused Cura Partners to create the largest U.S. cannabis company by market cap and combined 2018 sales.

HEXO

The Best Pot Stock to Buy Right Now?

Even in a record-setting market, pot stocks have proven to be unusually powerful growth vehicles. The downside, though, is that most cannabis plays now sport sky-high valuations — many of which are frankly hard to justify from a fundamental perspective. 

However, HEXO (NYSEMKT:HEXO) is one name that stands out in this regard. Despite its share price more than doubling since the start of the year, the company remains undervalued in the industry such as Aurora CannabisCanopy Growth (NYSE:CGC), Cronos Group, and Tilray. In fact, Aphria is the only top-level cannabis producer with a lower estimated 2020 price-to-sales ratio than HEXO (3.2 vs. 5) right now.  

  • As previously mentioned, HEXO’s projected 2020 price-to-sales ratio of five is dramatically lower than most of the elite cannabis producers right now. Driving this point home, the average forward-looking price-to-sales ratio across the most highly valued top-level producers — consisting of Aphria, Aurora, Canopy, Cronos, and Tilray — stands at approximately 16. Viewed in this context, HEXO’s stock is an outright bargain. 
  • HEXO’s recent acquisition of Newstrike Brands catapulted the company to the middle of the pack in terms of peak production capacity. Prior to this deal, HEXO’s fully funded production capacity sat at around 108,000 kg/year. In the wake of this acquisition, the company now has a projected capacity of 150,000 kg/year, which puts it in the running to be the sixth largest producer in Canada
  • Lastly, HEXO and Molson Coors Brewing (NYSE:TAP) formed a joint venture last year called Truss to develop nonalcoholic cannabis-infused beverages. While the commercial opportunity surrounding the cannabis beverage market remains elusive for a number of reasons, HEXO and Molson are on track to hit the ground running once Health Canada green-lights this second wave of product categories later this year. Canopy Growth and Tilray both have designs on cannabis-infused beverages through their own partnerships, but Truss could very well be the first to market.