Cannabis stocks have continued their volatile ride again in the last month.
That’s no surprise.
What is also not surprising are the numerous news items that further solidify the opinion that, if you are willing to accept this volatility and the inherent risks to participate in the cannabis boom, Canopy (TSX:WEED)(NYSE:CGC) is the cannabis stock to own.
Aphria (TSX:APHA)(NYSE:APHA)
Aphria stock is down 17% in the last month, as very disappointing third-quarter fiscal 2019 results as well as the expiry of Green Growth Brands’s bid to acquire the company, sent the stock into a tailspin.
Latest quarterly results showed a company that has had to tackle with a huge write-down of its Latin American acquisition, accelerating net losses, and lower-than-expected revenue growth, placing the expectations that are built into the stock into question.
This coupled with the removal of Green Growth’s bid have left Aphria in the dust.
Aurora Cannabis (TSX:ACB)(NYSE:ACB)
Aurora Cannabis stock has been pretty much flat in the last month, as the company continues to acquire cannabis companies in an attempt to increase its size and production capacity.
From a market share and production perspective, this is good.
But from a shareholder value perspective, the way that these acquisitions have been made is not good.
One of the biggest concerns with this stock is the shareholder dilution that has taken place.
Aurora Cannabis shares outstanding have more than doubled in the last year, effectively eating away at existing shareholders’ holdings, and it doesn’t look like this will be stopping any time soon.
The company recently filed a prospectus to enable it to raise up to $750 million through common shares, debt securities, subscription receipts, units, warrants, or any combination thereof during the 25-month period that the prospectus is effective.
Canopy
Finally, on to Canopy stock, which has rallied 16% in the last month and is fast approaching Oct. 2018 highs of $73.75.
Recent news out of Canopy was the announcement of its plan to acquire leading U.S. cannabis operator, Acreage Holdings.
This is a very proactive move that is Canopy’s attempt to keep its first-mover advantage and extend it to the U.S. Canopy made this unprecedented move to acquire “at such time as cannabis production and sale becomes federally legal in the United States.”
Final thoughts
Canopy and other cannabis companies will be reporting fourth-quarter fiscal 2019 results in June, and until then, we can expect these stocks to continue to trade on sentiment, news, and excitement (or nervousness) about the future of cannabis and cannabis stocks.
