Canada is set to legalize recreational marijuana use across the country in July 2018. As a result, weed stocks have been a hot topic. But are investment reporters just blowing smoke about which marijuana stocks to invest in? A lot of people have opinions about marijuana stocks in the USA and Canada as both countries march toward different levels of legalization.
Aurora Cannabis (OTCQX:ACBFF) has been riding this wave of public support and interest in weed stocks since the company reported its fiscal 2018 second-quarter results.
Aurora Cannabis’ quarterly update was a lot of great news for investors interested in marijuana stocks in Canada.
Aurora Cannabis reported revenue of $11.7 million, a figure that was more than triple the result from the prior year period. Aurora Cannabis’ stock also showed a 41.8% jump from the first quarter of fiscal 2018.
This jump in Aurora Cannabis weed stocks likely occurred for a few reasons, some more obvious than others:
For one, Aurora Cannabis had more patients. Perhaps more importantly, Aurora Cannabis’ average selling price per gram increased from CAN$8.22 in the first quarter to CAN$8.36 in the last quarter.
Aurora Cannabis saw a lot of sales in the Canadian market, but it also saw impressive growth in the German market. Aurora Cannabis’ subsidiary, Pedanios, showed growth in the German market that more than doubled from the previous sequential quarter–to $2.5 million.
Aurora Cannabis’ gross profit increased 57% year over year, landing at $6.5 million. The company’s current state as a weed stock is even more impressive when we consider its recent history. In the past year, Aurora Cannabis went from a net loss of $2.7 million, or $0.01 per share, to positive net income of $7.2 million, or $0.02 per share, in the second quarter of 2018.
Aurora Cannabis weed stocks may soar for reasons beyond monetary sales.
Aurora Cannabis’ second quarter results are impressive, but, the most important number of all is not found on the company’s balance sheet or income statement. In fact, the number that matters the most about Aurora Cannabis has nothing to do with the amount of money it generated. Aurora Cannabis is set to produce 240,000 kilograms (roughly 529,109 pounds) of cannabis on an annual basis with its currently owned facilities.
This is not the only factor that impacts Aurora Cannabis’ output. Once Aurora Cannabis acquires CanniMed Therapeutics (NASDAQOTH: CMMDF), the company’s production capacity will increase. CanniMed is estimated to bring another 7,000 kilograms (approximately 15,432 pounds) per year of immediate capacity and 19,000 kilograms (approximately 41,887 pounds) annually of funded capacity to Aurora Cannabis.
There are other promising factors to influence the future of Aurora Cannabis and marijuana stocks investments.
The company is attempting to obtain a cultivation license in Germany, which would allow it to construct a new facility in the country. Additionally, Aurora Cannabis’ Aurora Nordic joint venture is retrofitting a 100,000-square-foot greenhouse in Denmark intended to cultivate cannabis. Aurora Nordic is also breaking ground in other ways, including the construction of a new 1 million-square-foot production facility that would add 8,000 kilograms (approximately 17,636 pounds) of annual capacity.
For individuals looking for marijuana stocks to invest in, Aurora Cannabis is a good potential investment. Weed stocks, like all stocks, require investors to be tolerant of market fluctuations. However, for individuals who want greener pastures, marijuana stocks in Canada are a good place to start investigating investment options.
(To learn more about the future of marijuana stocks, read Marijuana Sales Beat Alcohol! Another Positive for Pot Stocks?)