The Motley Fool

Value Investors: 1 Cheap Cannabis Stock to Own

Image source: Getty Images

Organigram Holdings (TSX:OGI)(NASDAQ:OGI) is a leading Canadian licensed producer of high-quality cannabis and cannabis-derived products in Canada. The company is focused on producing high-quality, indoor-grown cannabis primarily for adult recreational consumers in Canada and the medical market as well as developing international business partnerships to extend the company’s global footprint.

High-quality products and brands

The company has been working on establishing strong brands for use in the adult-use recreational market place and is seeking to create a portfolio of diverse brands and products. The company’s adult-use recreational brands strategy reflects Organigram’s views about current and potential consumers, the industry, future product development, and opportunities for growth.

Huge recreational cannabis opportunity

The company developed an initial portfolio of adult-use recreational brands to specifically meet the evolving needs of Canada’s recreational use market. The suite of brands created by the Company for Canada’s adult-use market include Edison Cannabis, Trail Blazer, and SHRED. Each brand is unique to a specific customer demographic with a product offering designed to meet the needs of the target audience, including as to strength and price point.

Medical cannabis

The company received a medical cannabis certification and now offers organically grown medical cannabis under the certification body. The company offers a broad offering of medical cannabis products, including cannabis flowers, cannabis oils, and vaporizers to suit a variety of preferences.

New product development

The company plans to bring a variety of cannabis-based products to market. Such products are at various stages of development, including edible products, vape pens, chocolate, and dissolvable powdered beverages. These products require 60-day advance new product notifications to be submitted to Health Canada before they can be sold.

Efficient operations

The company has assembled a capable management team with significant experience in the management and growth of successful enterprises. Coupled with operational experience, the company is a cost-competitive producer of cannabis, owing to various operational cost-saving attributes such as competitive power costs and competitive labour costs.

Further, the company has a facility that maximizes real property square footage through the use of tiered grow rooms.

Other cost-saving attributes include competitive real property costs, the adoption of various efficiencies and access to various government assistance programs. Substantially all of the company’s revenue is derived from the sale of cannabis, cannabis product, and cannabis plant material produced, which is cultivated and processed by the company.

Capital markets risk

An economic downturn of global capital markets would make the raising of capital by equity or debt financing is difficult. The company is dependent upon the capital markets to raise additional financing in the future, while it establishes a user base.

As such, the company is subject to liquidity risks in meeting development and future operating cost requirements in instances where cash positions are unable to be maintained or appropriate financing is unavailable. These factors could impact the company’s ability to raise equity or obtain loans and other credit facilities in the future and on favourable terms.

Despite risks, Organigram has huge potential due to the company’s broad offering of medical cannabis products.

If you enjoyed this article, click the link below for top market insight delivered directly to your inbox!

The 10 Best Stocks to Buy This Month

Renowned Canadian investor Iain Butler just named 10 stocks for Canadians to buy TODAY. So if you’re tired of reading about other people getting rich in the stock market, this might be a good day for you.
Because Motley Fool Canada is offering a full 65% off the list price of their top stock-picking service, plus a complete membership fee back guarantee on what you pay for the service. Simply click here to discover how you can take advantage of this.

Click Here to Learn More Today!

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 Nikhil Kumar has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends OrganiGram Holdings. The Motley Fool recommends OrganiGram Holdings.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.