Today we have weeded out some Canadian cannabis stocks that were hardest hit during a rough October for equities
SmallCapPower | November 2, 2018: The month of October was like a bad Halloween movie for the equities market, as the major indices saw their yearly returns ‘slashed’. The S&P/TSX Composite Index, Dow Jones, and the NASDAQ dropped 6.7%, 5.1%, and 9.2%, respectively. Cannabis equities were hit especially hard, with the HMMJ falling 24.4%, driven by concerns of high valuations and supply shortages, compounded by macro affects influencing the broader market. Today, we have identified four Canadian cannabis stocks that dropped the most in the month of October. These stocks may offer a value play for investors looking to capitalize on a rebound in the cannabis sector. Note: All metrics reflect closing prices as at October 31, 2018.
The Green Organic Dutchman Holdings Ltd. (TSX:TGOD) – $3.10
Green Organic Dutchman Holdings is a Canada-based cannabis producer with operations in Ontario and Quebec. TGOD aims to be the lowest cost producer in Canada by accessing the lowest power rates in Ontario and Quebec. The combined production capacity of the two facilities totaling 970,000 sq. ft. is expected to be 116,000 kg of cannabis flower. On October 18, 2018, the Company announced that Aurora Cannabis (TSX:ACB) had elected to dispose ownership of an aggregate of 5,783,000 shares of TGOD, dropping Aurora’s total TGOD holding from 16.9% to 13.2%.
- Market Cap: $816.7 Million
- 1-Month Total Return: -57.0%
- EBITDA (Last Quarter): -8.9 Million
- Average Daily Volume (1-Month Average): 3,910,000
Beleave Inc. (CSE:BE) – $0.95
Beleave is a Canada-based biotech company with a focus on the production of medical marijuana. The Company is working towards the development of patents through research with Canadian institutions, as well as the research and development of cannabis-based therapies, such as smoke-harm reduction products, portable and stationary vaporizers and accessories. Beleave Inc’s purpose-built facility is located near Hamilton, Ontario. The Company is planning to expand the facility to 80,000 sq. ft. throughout 2018, with a total expected production capacity of 32,000 kg/year.
- Market Cap: $56.3 Million
- 1-Month Total Return: -33.1%
- EBITDA (Last Quarter): -17.5 Million
- Average Daily Volume (1-Month Average): 173,000
The Supreme Cannabis Company Inc. (TSXV:FIRE) – $1.56
Supreme Cannabis is a Canada-based licensed producer of medical marijuana. The Company’s primary asset is 7ACRES, which currently operates a 40,000 sq. ft. facility that produces 13,330 kg per year. The Company is also developing a 342,000 sq. ft. facility at 7ACRES that anticipates 50,000 kg of annual production. On September 26, 2018, the Company announced a supply agreement with Tilray Inc. (NASDAQ:TLRY) to provide dried cannabis in a deal estimated to be worth $12 million.
- Market Cap: $435.2 Million
- 1-Month Total Return: -30.0%
- EBITDA (Last Quarter): -0.25 Million
- Average Daily Volume (1-Month Average): 206,000
Aldershot Resources Ltd. (TSXV:ALZ) – $0.14
Aldershot Resources announced it had filed to change its name on October 23, and will become Solo Growth Corp. The vision of Solo Growth is to become a premier retailer for adult-use cannabis. The Company plans to open 60 retail locations across Alberta and Ontario and already has approval for 18 development permits in Alberta and 32 permits in Ontario.
- Market Cap: $76.7 Million
- 1-Month Total Return: -51.7%
- EBITDA (Last Quarter): -13.5 Million
- Average Daily Volume (1-Month Average): 320,000
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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