Pick This Top Growth Stock as Canadian Marijuana Sales Jumps 68%

OrganiGram stock, not the industry giants, is TSX’s top growth stock in 2021. With a booming cannabis market, expect superior returns from this high flyer.

| More on:
Cannabis stocks have fallen.

Canada’s red-hot housing market is cooling down, although the focus is likely to shift to a booming market. Statistics Canada reported that cannabis sales rose 68% in May 2021. On August 20, 2021, a flash report said retail sales of legal adult-use cannabis in Canada increased to almost $318.7 million in June.

Overall, recreational cannabis sales in Canada posted a 58.5% year-over-year increase. If you were to bet on a top growth stock in the space, I don’t think Canopy Growth, Aurora Cannabis, Hexo, or Tilray are the choices. All these industry giants are underperformers in 2021.

OrganiGram Holdings (TSX:OGI)(NASDAQ:OGI) is the surprise package. Investors in this $985.95 million producer and seller of cannabis and cannabis-derived products enjoy a 95.27% year-to-date gain. Also, the current share price of $3.33 is 100% higher than a year ago. Had you invested $10,000 on August 27, 2020, your investment is worth double today.

Significant growth in eight years

OrganiGram started as a medical cannabis producer in Atlantic Canada back in 2013. Today, the Moncton-based company focuses on high-quality, indoor-grown cannabis for patients and adult recreational consumers in Canada. It also develops international business partnerships as part of its global footprint expansion plan.

Cultivation facilities

You can find OrganiGram’s primary indoor cultivation and production facility in Moncton, New Brunswick (14 acres). This said facility has an edibles and derivative facility in it and can also do in-house extraction capacity. The company acquired Winnipeg-based Edibles and Infusions Corporation in April 2021 to expand its manufacturing and production footprint.

OrganiGram’s edge is Organigrow, an in-house proprietary information technology system. The database tracks all grow cycles by harvest period, strain, room, environmental conditions, and other factors. It helps the company understand and refine the optimal methods to grow cannabis plants.

Management is particular about the continuous improvement and refinement of cultivation and post-harvesting practices. The goal is to achieve a competitive advantage in the cannabis space.

Multi-year partnership

During the COVID year, OrganiGram and Canndoc signed a multi-year agreement (7.5 years). The Canadian firm will supply dried flowers to one of Israel’s largest and most established medical cannabis producers and InterCure Ltd.’s subsidiary.

OrganiGram guarantees to deliver 3,000 kg of high-quality, indoor-grown dried flower product to Canndoc by year-end 2021. The partnership is an opportunity to launch branded medical products with Canndoc. More importantly, it paves the way to penetrate markets in Europe.

Solid investor

If Canopy Growth has a strategic partner in Constellation Brands, British American Tobacco has a significant stake in this Moncton-based company. The global tobacco giant owns 19.9% of OrganiGram, its vehicle into the lucrative CBD market. British American chose Organigram because of its proven track record of consumer-led innovation and developing high-quality adult-use recreational and medical cannabis products.

High flyer

In Q3 fiscal 2021 (quarter ended May 31, 2021), OrganiGram’s gross revenue soared 31% versus Q3 fiscal 2020. The net loss reduced significantly (93%) to $4 million. The stellar revenue growth explains why the weed stock is a high flyer.

According to OrganiGram’s chief strategic officer Paolo De Luca, the ongoing investment in genetics and cultivation program will lead to more genetics and derivative product launches in the near term. The potential upside could be as high as 67% in the next 12 months based on analysts’ forecasts.

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. The Motley Fool owns shares of and recommends Constellation Brands and OrganiGram Holdings. The Motley Fool recommends British American Tobacco and HEXO Corp.

More on Cannabis Stocks

A cannabis plant grows.
Cannabis Stocks

TLRY Stock: Here’s What’s Coming in 2023

Tilray Inc. (TSX:TLRY) is geared up for big growth this decade and looks like one of the top cannabis stocks…

Read more »

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

Canopy Growth Stock: Here’s What’s Coming in 2023

Canopy Growth stock has made a lot of new moves in the last few months, but where is the company…

Read more »

A cannabis plant grows.
Cannabis Stocks

Better Cannabis Buy: Canopy Growth Stock or Tilray?

Only two TSX weed stocks can deliver substantial returns in the highly anticipated growth of the global cannabis market.

Read more »

Medicinal research is conducted on cannabis.
Cannabis Stocks

Is Tilray Stock a Buy in January 2023?

Tilray stock has lost 50% of its value in the last 12 months, in line with its peers.

Read more »

Pot stocks are a riskier investment
Cannabis Stocks

Are Cannabis Stocks Still a Thing in 2023?

The whole question of whether cannabis stocks are still relevant in 2023 is an interesting one. Here's my take on…

Read more »

A cannabis plant grows.
Cannabis Stocks

Why Canopy Growth Stock Fell 72% Last Year

Canopy Growth stock is a beaten-up cannabis giant that is trading at a discount compared to historical multiples. But is…

Read more »

Cannabis grows at a commercial farm.
Cannabis Stocks

Is SNDL Stock a Buy in January 2023?

SNDL is among the worst-performing cannabis stocks in the last three years. But is SNDL stock a buy right now?

Read more »

a person watches a downward arrow crash through the floor
Cannabis Stocks

Why Tilray Stock Fell Almost 60% in 2022

Tilray is a Canadian cannabis stock that is down 93% from all-time highs. Let's see if TLRY stock is a…

Read more »