Shares of cannabis giant Aurora Cannabis (TSX:ACB)(NYSE:ACB) have taken investors on a whirlwind journey. Aurora stock rose from $0.72 a share in July 2012 to a record high of $164.5 in October 2018. This means it generated monumental returns of 22,750% in six years. So, $500 invested in Aurora stock back in July 2012 would have ballooned to a staggering $113,500 by October 2018.
Now, Aurora stock is trading at $14, which is 92% below its record high. However, early Aurora Cannabis investors would have still returned close to 2,000%, despite the massive pullback.
Aurora Cannabis, like most other pot stocks, has been grappling with structural issues, including mounting losses, high inventory levels, lower-than-expected demand, and rising competition.
Aurora, in fact, has raised capital several times in the last few years to keep operations running. This diluted investor wealth significantly, driving its stock price to multi-year lows in early 2020. Aurora even had to resort to a reverse stock split to continue trading on the NYSE.
Aurora Cannabis reports solid Q3 results
Aurora stock reported better-than-expected fiscal third-quarter results with revenue of $78.4 million, above analyst estimates of $66.7 million. Sales were up 18% on a sequential basis, and the stock gained close to 200% in the following week.
Aurora’s consumer cannabis sales were up 24% sequentially at $41.5 million, while medical cannabis sales were up 6% at $27 million. International sales rose a stellar 125% to $4 million.
Another interesting aspect of the pot giant’s Q3 results were its narrowing losses. It used $154.5 million of cash in Q3, down from $273 million in the previous quarter. However, it also added $22 million in debt in Q3 taking its total debt to a hefty $246 million.
Aurora continues to focus on optimizing costs and reducing cash burn in its race to reach a positive EBITDA in early fiscal 2021. In Q3, its EBITDA loss was $45.9 million down from $80.3 million in Q2.
While Aurora Cannabis looks like it is staging a recovery, there are other marijuana companies that can be considered right now.
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A medical marijuana giant
Shares of GW Pharmaceuticals (NASDAQ:GWPH) are trading at US$126.17 and have gained over 20% in 2020. The stock went public back in January 2012 and has returned over 1,000% since then.
GW Pharma is the largest holding in the Horizons Marijuana Life Sciences ETF and is a top stock for marijuana investors. GWPH has the only cannabis-based drug that’s approved by the FDA. The drug, Epidiolex, is an effective treatment for patients with Dravet syndrome and Lennox-Gastaut syndrome.
Analysts expect GWPH to increase sales by 67.4% to US$521 million in 2020 and 55% to US$807.7 million in 2021. While adjusted earnings are forecast at -US$2.35 in 2020, it might drastically improve to US$2.19 in 2021.
This means GWPH stock is trading at a price-to-2021-earnings multiple of 57.5. It’s valued at US$4.05 billion and might be the first medical marijuana company to touch US$1 billion in sales in 2022.
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 Aditya Raghunath has no position in any of the stocks mentioned.