The Canadian cannabis stocks we’ve discovered have strong adjusted operating income
SmallCapPower | June 10, 2019: It is beneficial to look at a Company’s adjusted operating income to help determine the profitability of the Company. This measure helps show the amount of profit the company can generate from operations. The higher the adjusted operating income, the more likely the company is, or will be, profitable. Today we have identified four Canadian cannabis stocks that have displayed high adjusted operating income.
*Share prices as at close June 6, 2019, data obtained from S&P Capital IQ
Organigram (TSXV:OGI) – $9.65
Organigram has a production and R&D facility based in Moncton, NB, which consists of two buildings on 14 acres of land. The Company utilizes 480,000 sq. ft of production space at full build out. Currently, Organigram has distribution agreements in all 10 provinces. On May 20, 2019, the Company made a $15 million investment commitment for a high-speed, fully-automated production line that is predicted to produce four million kilograms of chocolate cannabis edibles per year. This investment is for the October 2019 legalization of edibles. On May 29, 2019, the Company announced that it shipped 130,000 units of CBD oil for the Canadian market. On June 7, 2019, Organigram announced it secured a partnership with PAX as brand partner. Organigram will be one of the four Canadian launch partners for PAX Era, which is a premium oil vaporizer developed by PAX Labs, Inc.
- Market Cap: $1,485.4 Million
- YTD Return: 99.4%
- 90- Day Average Daily Volume (1,000): 1,500
- Revenue: $26.9 Million
- Adjusted Operating Income: $6.3 Million
*adjusted for fair value of biological assets
MediPharm Labs (TSXV:LABS) – $5.27
MediPharm is a specialized, research-driven extraction company that has operations that focus on a downstream extraction methodology, distillation, and cannabinoid isolation and purification. On May 28, 2019, the Company announced a $60 Million bought deal financing agreement led by Scotiabank at $5.55/share. On May 14, 2019, the Company entered into a multi-year tolling arrangement with Cronos Group. Under the terms of the agreement, MediPharm Labs will supply Cronos with about $30 million of high-quality, private label cannabis concentrate over 18 months and, depending on renewal and purchase options, has the potential to increase up to $60 million over 24 months. The Company announced Q1/19 financial results, highlighted by revenue of $22 million and adjusted EBITDA of $4.3 million on May 10, 2019.
- Market Cap: $612.5 Million
- YTD Return: 202.9%
- 90- Day Average Daily Volume (1,000): 1,426
- Revenue: $22.0 Million
- Adjusted Operating Income: -$0.2 Million
Sunniva Inc. (CSE:SNN) – $3.45
Sunniva is a vertically-integrated cannabis company that supplies products and services to Canada and California. The California cultivation facility is a cGMP designed glasshouse situated on a 20-acre piece of land with a 30-year lease agreement. Construction is in process and production is expected to begin late Q3/19, with 325,000 sq. ft that will have 50,000 kg/year of flower capacity. The Company has a fully-licensed facility for volatile and non-volatile operations that has a production capacity of 180 kg/month of distillate and 15 kg/month of live resin extraction. The Company is also planning on launching a premium brand, which is expected to offer high-quality distillate, concentrates, pre-rolls, edibles and beverage product lines. On May 30, 2019, the Company announced Q1/19 financial results, highlighted by revenue of $14.2 million, which is up 175% from Q1 2018. The Company also announced its acquisition of two Licenced cannabis companies to grow its packaging and distribution capabilities in California. This will add 6,662 sq. ft of property in Coachella, CA.
- Market Cap: $134.2 Million
- YTD Return: 4.5%
- 90- Day Average Daily Volume (1,000): 135
- Revenue: $14.2 Million
- Adjusted Operating Income: -$3.1 Million
National Access Cannabis Corp. (TSXV:META) – $0.64
National Access Cannabis operates retail locations to sell and distribute cannabis and cannabis-related products. The Company also assists patients by providing medical cannabis by its national network of physicians and health professionals. On April 16, 2019, the Company announced Q2/19 financial results highlighted by revenue of $15.9 million and adjusted EBITDA of $1.8 million. Currently, at the end of Q2/19, the Company has 23 retail cannabis stores open and is predicting to have 40 stores open and operating by the end of the 2019 calendar year.
- Market Cap: $119.9 Million
- YTD Return: 20.8%
- 90- Day Average Daily Volume (1,000): 745
- Revenue: $16.2 Million
- Adjusted Operating Income: -$4.5 Million
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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