4 Canadian Marijuana Stocks Set for M&A Growth?

Today we’ve sifted through and found four Canadian marijuana stocks with large cash positions that could be used for inorganic growth

SmallCapPower | September 13, 2019: A strong cash position is a sign of financial strength and liquidity. This cash can be deployed to fuel M&A activity, which can drive inorganic growth and consolidate an industry. Today we have identified the Top 4 Canadian marijuana stocks in terms of cash on hand.

*Share prices as at September 11, 2019, data obtained from S&P Capital IQ

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Canopy Growth Corporation (TSX:WEED) – $36.12

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. Additionally, Canopy Growth has secured the necessary agreement to export medicinal cannabis to Australia, Brazil, and Germany. On August 15, 2019, the Company announced Q1/19 financial results: net revenue fell 4% to $90.5M (was $94.1M in Q4/18). 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 Growth generated $10.5M in international revenue during its last-reported quarter, primarily from its acquisition of German-based C3 Cannabinoid Compound Company, which sells full spectrum cannabidiol-based medicines in Germany.

  • Market Cap: $12,564.9M
  • 90-Day Return: -35.9%
  • YTD-Return: -3.2%
  • 90-Day Average Trading Volume: 82,348,000
  • Last Quarter Cash Position: $3,176.7M

Cronos Group Inc. (TSX:CRON) – $15.21

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.

  • Market Cap: $5,112.9M
  • 90-Day Return: -27.6%
  • YTD-Return: 4.5%
  • 90-Day Average Trading Volume: 14,400,000
  • Last Quarter Cash Position: $2,324.2M

Aphria Inc. (TSX:APHA) – $9.09

Aphria produces and sells medical and recreational cannabis-derived extracts in Canada. The Company currently has a 1.1M sq.ft Leamington greenhouse facility that yields 100,000 kg per year. On August 1, Aphria Inc reported its results for the fourth quarter and fiscal year ended May 31, 2019. These results featured net revenue of $128.6M in the fourth quarter, an increase of 75% QoQ. Notably, the Company more than doubled its kilograms sold from the previous quarter, selling 5,574 kg of cannabis relative to 2,637 kg in the previous quarter. On May 21, 2019, the Company announced that its German subsidiary, Aphria Deutschland GmbH, had received a fifth lot for the cultivation of medical cannabis in Germany.

  • Market Cap: $2,290.2M
  • 90-Day Return: -3.5%
  • YTD-Return: 12.0%
  • 90-Day Average Trading Volume: 16,625,000
  • Last Quarter Cash Position: $571.0M

Aurora Cannabis Inc. (TSX:ACB) – $8.51

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 August 18, 2019, Aurora announced the completion of its acquisition of Hempco Food and Fiber Inc. for ~$63.4M. This provides the Company with access to low-cost, high-volume, raw hemp material for the extraction of CBD and other cannabinoids.

  • Market Cap: $8,683.4M
  • 90-Day Return: -23.7%
  • YTD-Return: 14.0%
  • 90-Day Average Trading Volume: 33,765,000
  • Last Quarter Cash Position: $535.2M

Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.

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