1 Cannabis Stock Is All You Need to Get Wealthy

You shouldn’t be frustrated with how the cannabis industry is behaving in the present. Things are beginning to settle down. If you want to get wealthy, pick Aurora Cannabis Inc. (TSX:ACB)(NYSE:ACB).

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

Image source: Getty Images

Marijuana stocks are high-risk, high-reward investments. The industry is rapidly growing but highly volatile. You can make millions, however, without investing in multiple companies. Taking positions in several promising cannabis companies is not always the best strategy. Sometimes, all you need is one marijuana stock to get wealthy.

Aurora Cannabis (TSX:ACB)(NYSE:ACB) should be your only exposure in the cannabis space. The company has yet to show strong fundamentals or profits, for that matter. But this cannabis company has what it takes to deliver your desired riches. Its future success could be the way to wealth for you.

The winning edge

Aurora Cannabis knows that the total opportunity in the global, medical, and recreational marijuana markets combined is around $200 billion. The company is also aiming to disrupt other markets that include cannabis-infused beverages, edibles, and other derivatives.

This new market segment could potentially amount to $500 billion in yearly sales. If Aurora could capture at least 25% of the total global opportunity, shareholders can expect tremendous rewards.

Is the target ambitious? After the legalization of recreational marijuana, Aurora was able to garner a 30% share in the Ontario market, which is the largest province in Canada. The company could claim a higher market share down the road.

The bigger objective is capturing a significant market share in the international markets. Production capacity and distribution channels are the key components to secure the win on the global stage. Aurora has the winning edge in this aspect.

By the end of June 2020, Aurora’s run-rate production would be 625,000 kilos, which are industry-leading thus far in 2019. The company also has the biggest international presence of any marijuana stock. Its distribution network in 24 countries is expected to grow some more.

Latest quarterly earnings

Aurora’s fiscal 2019 fourth-quarter results reported a few days ago elicited mixed reactions. The company was able to book $98.9 million in net revenue, which is 52% better than the preceding quarter. It’s also 415% higher on a year-over-year basis.

The reported quarterly net loss of $2.3 million is a vast improvement from the $160.2 million posted in the previous quarter but $77.6 million worse compared with the net profit in Q4 2018.

With the gross margin improving to 58% in Q4 as against the 55% in Q3, the company’s production costs per gram are declining. On the whole, the latest quarterly results are not damning to discourage you from investing.

The feeling of shock in some quarters is understandable because of the very high expectations. But most of the challenges the company is facing are beyond its control.

Industry bellwether

Despite missing the beat on consensus estimates, Aurora is approaching the corner of profitability. The ups and downs are general characteristics of the industry that’s slowly finding its way. You can sit tight and watch Aurora capitalize on multiple growth opportunities.

The industry’s bellwether stock will not disappoint. Keep in mind that investing in Aurora is a long game. Your future riches won’t come in a flash, but they will come. You might regret not buying the only marijuana stock that could make you wealthy.

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 Christopher Liew has no position in any of the stocks mentioned.

More on Investing

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

Business man on stock market financial trade indicator background.
Tech Stocks

1 Growth Stock Down 50 Percent to Buy Right Now

There are plenty of growth stocks in the market worth considering, but Shopify (TSX:SHOP) looks like one of the best…

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

edit Sale sign, value, discount
Stocks for Beginners

These 3 Growth Stocks Are on Sale and Set to Surge

Some growth stocks are on sale right now that offer massive long-term potential for investors. Here's a trio to consider…

Read more »

Cannabis grows at a commercial farm.
Cannabis Stocks

Why Canopy Growth Stock Could Double in 2024

Canopy Growth (TSX:WEED) stock saw its share more than double in the last two weeks. So, can it do it…

Read more »

Young woman sat at laptop by a window
Dividend Stocks

3 Dividend Stocks Everyone Should Own for the Long Haul

For investors looking for top-tier dividend stocks to buy and hold for the long term, here are three of my…

Read more »