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Aurora Cannabis Inc.: Buy the Dip?

Marijuana investors have been scrambling as pot stocks take a step back. The hype of the green rush attracted a lot of short-term thinkers, and once the good news stopped coming in, they dumped the stock to the curb and collected their profits.

Although marijuana stocks are cheaper than they were earlier in the year, it’s still nearly impossible to really determine the value to be had by purchasing shares of pot stocks at current levels. There’s a considerable amount of negative momentum right now, so contrarian investors should keep patient and wait for the opportune time to pick up shares.

With plummeting speculative stocks, it’s always a good idea to dollar cost average by buying shares in small increments on the way down. You can prevent a lot of pain by gradually increasing your stake in a company, and I’d strongly recommend doing so for volatile stocks that are difficult to value.

Which pot stock should you be watching like a closely for an opportunity to buy the dip?

Aurora Cannabis Inc. (TSXV:ACB) has been my favourite marijuana stock for quite some time. The management team is focused on operational efficiency and constructing its ambitious Aurora Sky facility, which is expected to be 800,000 square feet and could launch the stock of Aurora into orbit.

The company recently reported its third-quarter results, which saw substantial year-over-year increases across the board. Revenue surged to $5.2 million which was substantially higher than the $0.2 million during the same period last year. That’s a 2,500% increase! The strong revenue growth was attributed to an increase in the number of patients as well as higher revenue per patient.

Grams of marijuana sold also skyrocketed 2,049% to 653,008 — up from 30,380 during the same period last year. That’s a lot of weed, and more growth is expected once the next phase of the Aurora Sky project is completed.

I’ve said this many times in my previous pieces on marijuana stocks, and I’ll say it again: the company that can build the largest, most efficient marijuana operation will be the biggest winner of the green rush. The Aurora Sky project makes use of innovative technologies to improve both bud quality and plant yields. Approximately 100,000 kilograms of dried marijuana will be produced when Aurora Sky is operational, and the production costs are expected to be absurdly low.

I believe Aurora’s disciplined management team and its state-of-the-art facility will make it very difficult for its competitors to compete, and that’s why I’d pick up shares of Aurora if you’re thinking about buying pot stocks on weakness.

Stay smart. Stay hungry. Stay Foolish.

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Fool contributor Joey Frenette has no position in any stocks mentioned.

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