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#1 17-09-2019 11:13:39

Admin & Trader
From: Paris - France
Registered: 21-12-2009
Posts: 3050

Marijuana stocks: 3 beaten shares that could win big in medium term

Marijuana stocks: 3 beaten shares that could win big in the medium term

Investments in the Cannabis industry will likely generate great profits for investors in the long term. Between last year and the end of the next decade, legal annual sales could increase from $11 billion to $190 billion worldwide.

On the other hand, in the short term, the sector has been hit hard by a few scandals.

But rather than considering this bad situation as an alarm signal, perhaps it is better to approach the current situation as a good opportunity to profit from "weed".

Below, we take a look at 3 stocks in the marijuana sector that have been hit especially hard in recent weeks, but which could prove to be excellent investments, especially in a context where they are acquired by other groups:

Aphria, whose market capitalisation has recently sunk to $1.5 billion, despite the fact that the company expects a peak annual production of 255,000 kilos when fully operational and that it is present in nearly 11 countries, including Canada.

The biggest problem for Aphria is acquisitions. At the end of last year, Quintessent Capital Management released a scathing report alleging that Aphria had paid grossly too much for the purchase of some of its assets.

Although an independent committee reviewed these allegations and found them to be untrue, Aphria eventually recorded a write-down of $49 million CAD on its assets in its accounts in the following quarter, and its CEO quit after the committee identified conflicts of interest regarding this agreement.

In addition, Aphria's purchase of Nuuvera last year was questioned after it was disclosed just one day before the closing that a handful of Aphria's executives held Nuuvera shares.

Flowr Corp.
Another major producer whose shares appear cheap right now is Flowr Corp.

Penalised by a proposed IPO on the Nasdaq that never happened, the company ended last week with a market capitalization of only $268 million.

However, Flowr can bring a lot in terms of production to a potential buyer. First, there is the production of at least 49,000 kilos of the company's products on its British Columbia campus. The campus focuses specifically on high quality and ultra-premium dried cannabis flowers. There is simply not much supply or competition in the high-end space, which means that Flowr should benefit from excellent margins

CannTrust Holdings
While this is undoubtedly a risky gamble, CannTrust Holdings, a struggling marijuana producer, could also be attractive to a large producer with access to capital.

CannTrust had a nasty fall in recent weeks. In mid-summer, the company announced that it was growing unlicensed cannabis at its Niagara facility. It was then learned that some senior managers were aware of this deception, but that they allowed it to continue, resulting in the dismissal of boss Pete Aceto. Deficiencies were also discovered in its much smaller production plant. Currently, sales are suspended until the regulator, Health Canada, imposes its fines.

"Anything worth having is worth going for - all the way." - J.R. Ewing



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