Is Aurora Cannabis Inc. (TSX:ACB) Now the Top Canadian Pot Stock to Own?

Aurora Cannabis Inc. (TSX:ACB)(NYSE:ACB) stock was unsung in the sector heading into March. That has all changed with a new hire, and with good reason.

| More on:
edit Cannabis leaves of a plant on a dark background

Image source: Getty Images

Aurora Cannabis (TSX:ACB)(NYSE:ACB) stock fell 1.92% on March 21. Shares have climbed 88.5% in 2019 so far. However, the stock is only up 26% from the prior year. Aurora stock reached an all-time high of $16.24 in the days before recreational cannabis was legalized. Like most of its peers, it was hit with major turbulence in the final third of 2018.

Back in March I’d discussed whether Aurora was an undervalued play in the cannabis sector. Compared to its competitors, Aurora’s gains had been modest to start the year. Despite this, there was a lot to like about a company that had positioned itself to be a monster producer going forward.

In February, the company released its fiscal 2019 second-quarter results. Aurora exceeded analyst estimates and reported $62 million in revenue for Q2 2019, which represented a 430% increase from the prior year. Kilograms produced rose 550% and kilograms sold increased 502%. Aurora expects revenue to experience significant growth as it aggressively ramps up its production.

Aurora announced that sales and operations had expanded to 23 countries at the end of Q2 2019. CEO Terry Booth has said that keeping up with overseas demand will be Aurora’s biggest challenge going forward; this is a great problem to have.

Aurora stock received its biggest boost when it announced that billionaire investor Nelson Peltz would be brought on as a strategic advisor. Peltz has experience with the fast food giant Wendys Co., having served as its non-executive chairman. He also served as director at Kraft Heinz Company. Aurora hopes that his experience with these large companies will help lure partners in large consumer packaged goods.

As of this writing, Aurora stock had an RSI of 69, putting it just outside of overbought territory. However, Aurora’s year-over-year performance has been a lot more muted than its competitors. A big splash or two will bring more legitimacy to Aurora, which has still suffered from skepticism because of its aggressive expansion to start out. If it can pair its elite production capacity with top-flight partners, it will be worthwhile to readjust its growth expectations.

Back in January, I’d recommended Aurora as one of my top stocks for a future-oriented TFSA. The company looks like it will be a mainstay in the international cannabis industry. Shareholders will be able to enjoy the ride, but they should temper their expectations rather than expect the kind of growth we have seen for cannabis stocks since the liberals announced plans to legalize.

Crowning Aurora as the top pot stock may be a stretch, but it looks like it still has a lot of room to run if we take other stocks in the sector as an example. After this hire, Aurora is now well positioned to strike up major strategic partnerships before the year ends. The stock has a great chance to blow past its all-time highs before 2019 concludes.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan owns shares of Aurora Cannabis.

More on Cannabis Stocks

Pot stocks are a riskier investment
Cannabis Stocks

Steer Clear: This Stock Spells Trouble

A newly listed cannabis stock is outperforming in 2024 but investors should stay clear to avoid trouble and losses.

Read more »

Cannabis stocks have fallen.
Cannabis Stocks

2 Best Marijuana Stocks to Buy This Month

Marijuana stocks in the U.S. such as Green Thumb and Curaleaf can help you deliver outsized gains to investors in…

Read more »

A cannabis plant grows.
Cannabis Stocks

Can Aurora Cannabis Stock Recover in 2024?

Aurora Cannabis stock is down 99% from all-time highs but remains a high-risk bet, despite its cheap valuation.

Read more »

A person holds a small glass jar of marijuana.
Cannabis Stocks

The Best Cannabis Stock to Buy Right Now

This cannabis stock has jumped 30% in the last few months, with even more growth on the way – all…

Read more »

Cannabis grows at a commercial farm.
Cannabis Stocks

Down 99% From All-Time Highs, Is Canopy Growth Stock a Good Buy Right Now?

Canopy Growth stock is a high-risk investment due to its negative profit margins and challenging liquidity position.

Read more »

Marijuana plant and cannabis oil bottles isolated
Stocks for Beginners

Aurora Cannabis’ Reverse Stock Split: Is the Stock a Buy Today?

Cannabis stock Aurora (TSX:ACB) is consolidating shares once again, but what does this mean for investors?

Read more »

Medicinal research is conducted on cannabis.
Cannabis Stocks

Where Will Cannabis Stocks Be in 10 Years?

Cannabis stocks could see a huge shift upwards should marijuana be rescheduled in the U.S., but you can still buy…

Read more »

Cannabis grows at a commercial farm.
Cannabis Stocks

Forget Canopy Growth: 1 Cannabis Stock With Far Less Risk

Cannabis stocks like Canopy Growth (TSX:WEED) haven't done well for quite some time, yet this one deserves a major boost!

Read more »