The Canadian cannabis stocks on our list, major cultivators with market caps over $500M, have seen substantial shareholder losses from 2019 highs
SmallCapPower | October 2, 2019: Canadian licensed producers remained under pressure during the month of September. As a benchmark, the Horizons Marijuana Life Sciences Index (TSX:HMMJ) is down 15.8% for the month and down 49.6% from its 2019 high of $23.65 on March 19, 2019. Most Canadian cultivators are now trading ~50% lower than their 2019 highs. Selling pressure in the space could be the result of several factors, including a lack of sector catalysts and poor second-quarter results. Ontario and Quebec have also been slow in rolling out retail stores, likely pushing back profitability for many large-cap cultivators further into 2021. Additionally, investors are unclear about how the rollout of edibles plays out, with the vaping epidemic causing investors to lose confidence in the sector as well. Today we have found four Canadian cannabis stocks, cultivators with market caps over $500M, that have sold off more than the HMMJ.
*Share prices at September 30, 2019, data obtained from S&P Capital IQ
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Cronos Group Inc. (TSX:CRON) – $11.97
Cannabis
Cronos is a globally-diversified and vertically-integrated cannabis company that currently has operations in five continents. The Company has two wholly-owned Canadian licensed producers: 1) Peace Naturals Project Inc., a global health and wellness platform; and 2) Original BC Ltd., a recreational adult-use Canadian licensed producer that is located in Okanagan Valley, BC. Cronos’ business strategy is to focus on building an international iconic brand portfolio in addition to developing its intellectual property. On August 8, 2019, the Company released its Q2/19 financial results, which showed net revenue of $10.2M, an increase of 58% QoQ from $6.5M in Q1/19. This was driven mainly by increased sales of CBD oil. Cronos Group is expected to report Q3/19 results on November 15, 2019. Analysts are estimating EPS of ($0.03) on revenue of ~$15.0M.
- Market Cap: $4,023.7M
- 2019 High (March 5, 2019): $31.77
- Return from 2019 High: -62.3%
- YTD-Return: -15.0%
- 90-Day Average Trading Volume: 693,800
Organigram Holdings Inc. (TSX:OGI) – $4.55
Cannabis
Organigram is a licensed producer of cannabis and cannabis-derived products in Canada for the recreational and medical market. The Company has a strong brand portfolio that includes The Edison Cannabis Company, Ankr Organics, Trailer Park Buds and Trailblazer. Organigram’s main facility is located in Moncton, New Brunswick. On July 26, 2019, the Company entered into an advance payment and purchase agreement with 703454 N.B. Inc., through which Organigram will pre-fund hemp purchases to receive access to, at most, 60,000 kg of dried hemp flower that is expected to be harvested in Calendar 2019 for extraction into CBD isolate. The Company reported its Q3/19 financial results on July 15, 2019, which showed net revenue of $24.8M through sales of about 5,130-kilogram equivalents. This is down 7.8% when compared to its Q3/18 revenue of $26.9M. Organigram is expected to report Q4/19 results on November 29, 2019. Analysts are expecting EPS of $0.01 on revenue of ~$31.5M for the quarter.
- Market Cap: $710.6M
- 2019 High (May 17, 2019): $10.72
- Return from 2019 High: -57.6%
- YTD-Return: -3.9%
- 90-Day Average Trading Volume: 739,170
Canopy Growth Corporation (TSX:WEED) – $30.35
Cannabis
Canopy Growth is the largest cannabis company listed by market cap on the TSX and NYSE. Currently, the Company has the largest licensed production platform in Canada, with over 600,000 sq. ft of production space. On August 15, 2019, the Company announced Q1/20 financial results: net revenue fell 4% to $90.5M (was $94.1M in Q4/19). This follows an announcement from July 3, 2019, when Canopy announced that CEO Bruce Linton would be stepping down and a replacement would be found by majority investor Constellation Brands (NYSE:STZ). Canopy is expected to report Q2/20 results on November 15, 2019. Analysts are expecting EPS of ($0.39) on revenue of ~$121.2M for the quarter.
- Market Cap: $10,557.7M
- 2019 High (April 29, 2019): $69.90
- Return from 2019 High: -56.6%
- YTD-Return: -17.5%
- 90-Day Average Trading Volume: 1,856,090
Aurora Cannabis Inc. (TSX:ACB) – $5.82
Cannabis
Aurora Cannabis is a vertically-integrated and horizontally-diversified cannabis company that is located in Edmonton, Alberta. Currently, the Company has a funded capacity that exceeds 625,000kg per year. Aurora Cannabis has sales operations in 25 countries across five continents. The Company has 15 global production facilities with 3 EU GMP certified, 40 clinical studies running or completed and over 77,000 medical patients served. On September 11, 2019, Aurora reported Q4/19 results, highlighted by total revenue of $98.9M, with $94.6M of cannabis net revenue. Total revenue missed management guidance of between $100M – $107M, but net cannabis revenue met guidance of between $90M and $95M. Aurora is expected to report Q1/20 results around November 15, 2019. Analysts are expecting EPS of ($0.05) on revenue of ~$104.5M for the quarter.
- Market Cap: $5,987.4M
- 2019 High (March 18, 2019): $13.26
- Return from 2019 High: -56.1%
- YTD-Return: -14.3%
- 90-Day Average Trading Volume: 4,397,930
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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