Today we present the biggest Canada-listed cannabis stock gainers and decliners year to date with market caps greater than $1 Billion
SmallCapPower | June 28, 2019: What a year it has been for cannabis stocks so far. We’ve seen lots of activity in the cannabis industry, driven by competition, growth, and bullish speculation. This mainly includes the emergence of extraction companies and the expansion of large LPs into the U.S. and Europe.
Expectations remain high for the cannabis industry as Canadian LPs continue to expand and push the envelope in hopes of dominating the global cannabis market. Today we have identified six Canada-listed cannabis stocks with market caps over $1B that exceeded expectations and saw the largest year-to-date returns, in addition to the pot stocks that disappointed and realized the lowest year-to-date returns.
YTD Returns as of December 31, 2018 – June 26, 2019
Share prices as of close Wednesday, June 26, 2019
Organigram Holdings Inc. (TSXV:OGI) – $8.15
- YTD Return: 68.8%
Headquartered in Moncton, New Brunswick, Organigram Holdings is a licensed producer of cannabis and cannabis-derived products in Canada. The Company produces high quality, premium products for medical and recreational consumers. Organigram has a strong brand portfolio, including The Edison Cannabis Company, Ankr Organics, Trailer Park Buds, and Trailblazer.
Organigram has been one of the best performing licensed cultivators to-date. Organigram has the capabilities of producing at a rate of ∼155 grams of cannabis per square foot, 46% better than the average, which is ∼106 grams. This efficiency is also demonstrated by the Company’s impressive margins, as they’ve posted gross margins, net of fair value adjustment to biological assets, above 30% in their last two quarters.
Curaleaf Holdings Inc. (CSE:CURA) – $9.50
- YTD Return: 47.1%
Curaleaf is a vertically-integrated, U.S.-based cannabis company that cultivates, processes, markets, and/or dispenses a variety of cannabis products, including vape oils, flower, pre-rolls, topical lotions, mints and edibles. The Company is currently active in 12 different states, operating 45 dispensaries, 12 cultivation sites, and 11 processing sites throughout the U.S.
Curaleaf had a flurry of acquisitions that took place during the first quarter of 2019.
- In February 2019, Curaleaf signed a definitive agreement to acquire Eureka Investment Partners LLC, with the transaction valued at $30.5M. Based in California, Eureka operates a cultivation facility in the Salinas Valley and is developing three dispensaries across the state.
- Curaleaf signed a definitive agreement to acquire Acres Cannabis for $70M, the operator of Nevada’s largest cultivation facility. This acquisition was announced in March 2019.
- In May 2019, CURA signed a definitive agreement to acquire the state-regulated cannabis business of Cura Partners Inc, owners of the Select brand, for $1.27B.
Its stock price reacted strongly to the release of Curaleaf’s Q4/18 earnings, increasing ∼42% from March 20 to March 22.
HEXO Corporation (TSX:HEXO) – $6.62
- YTD Return: 44.2%
Headquartered in Gatineau, Quebec, HEXO is a consumer-packaged goods cannabis company that manufactures and distributes products in the Canadian market. HEXO specializes in medical cannabis and aims to become the highest-quality producer and distributor of medical cannabis products throughout Europe.
HEXO realized rapid growth in its share price from January to May 2019 then cooled off after that. Some of this can be contributed to the gross margin pressure HEXO has been facing. Over the past three quarters, the Company’s gross margins net of fair value adjustment to biological assets decreased from 37.3% to 24.2% to 13.6%. Despite this, investors were quite pleased in March when HEXO announced that it had entered into a definitive arrangement agreement under which HEXO will acquire all of common shares of Newstrike Brands Ltd, a producer and retailer of medical marijuana in Canada, in an all-stock transaction valued at approximately $263M.
Acreage Holdings (CSE:ACRG.U) – US$16.98
- YTD Return: -11.9%
Acreage Holdings, founded in New York, New York, is an investment firm that specializes in the cannabis industry. The Company’s portfolio has diverse holdings in the cannabis industry; cultivating, processing, and dispensing operations. Acreage is the largest vertically-integrated owner of cannabis licenses and assets in the U.S. Acreage holds licenses in 19 states to operate or hold management service agreements with license holders to assist in the operation of cannabis facilities.
A significant event that took place during the past six months for Acreage was Canopy Growth’s acquisition of the Company. Acreage Holdings announced a deal to sell itself to Canopy for $27.45 per share, representing a 10% premium to its RTO price in November. This deal gave all future upside to Canopy without a significant premium, resulting in many investors selling their shares of Acreage.
Aphria Inc. (TSX:APHA) – $9.12
- YTD Return: -16.6%
Aphria produces and sells medical and adult-use cannabis-derived extracts in Canada. The Company has a 1,100,000 sq. ft Leamington greenhouse facility yielding 100,000 kg annually and currently has supply agreements with all Provinces and the Yukon. Back in January, Aphria announced that it had completed construction of Aphria Double Diamond, an additional 1.4M sq. ft greenhouse with an annual yield of 120,000 kg in Leamington, Ontario. Aphria is still waiting on Health Canada approval for the site. APHA has its footprint all around the world, with operations in Germany, Italy, Malta, South America, Lesotho and Australia.
Investors perked up when Aphria announced on April 18 that it had secured a cultivation license in Germany for domestic cultivation of medical cannabis from the German Federal Institute for Drugs and Medical Devises.
Trulieve Cannabis Corporation (CSE:TRUL) – $13.66
- YTD Return: -24.5%
Trulieve is the first medical cannabis company in the state of Florida. The Company cultivates and produces products in-house and distributes its products to Trulieve-branded stores in Florida, as well as directly to patients via home delivery. The Company operates a 507,000 sq. ft. facility, yielding 19,500 kg annually. Additionally, Trulieve has expansion plans to add another 127,500 sq. ft., which the Company estimates will increase production by 10,215 kg.
Despite being a bottom three performer on our list, Trulieve has still had a decent year thus far. The Company was the first medical marijuana licensee to complete a sale of smokable flower following approval from Florida legislature. Trulieve has established seven new dispensaries in Florida since (bringing the total to 29 throughout the state, with 231,000 medical patients), and it received Minorities for Medical Marijuana’s inaugural 2018 Diversity and Inclusion Champion of the Year Award in the State of Florida. The Company has also increased its U.S. footprint into Connecticut following the acquisition of The Healing Corner, a Connecticut-based dispensary.
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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