Why This Little-Known Cannabis Stock Could Double in 2024

This cannabis stock has already doubled this year since 52-week lows and could easily rise that much once more.

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

Image source: Getty Images

There are many cannabis stocks out there, but some deserve attention more than others. One of those cannabis stocks is Organigram Holdings (TSX:OGI). Organigram has become one of the leading companies in the Canadian cannabis industry. Organigram operates within the legal cannabis market, producing both medical and recreational cannabis products.

And yet, there is one key metric that the company holds above others, and that’s profitability. Yet shares have remained quite low. However, this could change quite soon for investors.

About Organigram stock

First let’s discuss a bit about Organigram stock in general. Organigram offers a variety of cannabis products, including dried flower, oils, and pre-rolled joints, catering to both medical patients and recreational consumers. Organigram also has a strong focus on research and development, continually innovating to create new products and improve existing ones. 

In addition to its operations in Canada, Organigram has been expanding its presence internationally, exploring opportunities in markets where cannabis is legal for medical or recreational use. This expansion has continued even as the company continues to be profitable.

Big backing

One of the biggest benefits for Organigram stock over others is its partnership with British American Tobacco (BAT). This tobacco company has a growing partnership with the cannabis stock, focusing on research and development of non-combustible cannabis products. 

BAT initially invested in Organigram and established a Product Development Collaboration (PDC) to leverage expertise from both companies for innovative cannabis product development. From there, BAT invested an additional $124.6 million to strengthen the partnership. This increased BAT’s ownership stake in Organigram to 45%.

Speculative buy

Now that earnings have come out, analysts are becoming interested in Organigram stock once more. The recent quarter fell in line with estimates, with operating margins remaining stable. The company also reported a loss of US$20.1 million in the second quarter of the year, leading to a slight drop in share price.

Yet, while its earnings were in line or lower than estimates, analysts still believe there is a strong future for the stock. some of these reasons include the company’s strong position in the Canadian cannabis market. Furthermore, it’s known for producing high-quality cannabis products. Its focus on quality control and innovation has helped it build a strong brand reputation among consumers, which could translate into long-term success and market share.

Yet, it’s not just the quality and Canadian market that shareholders should only consider, but also expansion. This is what comes with partnering with a large company like BAT. As more countries legalize cannabis, including the United States potentially, then BAT has a foothold to introduce its products.

Bottom line

The legal cannabis industry is still in its early stages of development, with significant growth potential ahead. Investing in a leading company like Organigram allows investors to capitalize on the growth opportunities in this emerging industry. Organigram stock, meanwhile, has shares at just around $2.70 as of writing. And with a potential upside to reach consensus price targets of $3.77, that alone is a 40% share increase. Yet, should the United States see more movement in legalizing cannabis, which has already begun, it’s clear that the share price could easily double this year alone.

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 Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Organigram. The Motley Fool has a disclosure policy.

More on Cannabis Stocks

A close up image of Canadian $20 Dollar bills
Tech Stocks

3 No-Brainer Stocks to Buy With $20 Right Now

These three stocks are easy buys for those who don't have all that much to spend, and want long-term growth…

Read more »

Pot stocks are a riskier investment
Cannabis Stocks

Slow Burn: Is Aurora Cannabis Finally a Good Buy in June?

One of the benefits of choosing from some of the most beaten-down market segments like cannabis is that even a…

Read more »

Caution, careful
Cannabis Stocks

I Wouldn’t Touch This TSX Stock With a 60-Foot Pole

I wouldn't touch Canopy Growth Corp (TSX:WEED) stock with a 60-foot pole.

Read more »

Bad apple with good apples
Cannabis Stocks

1 TSX Stock I Wouldn’t Touch With a 420-Foot Pole

Down 87% from all-time highs, Cronos Group stock is a still a high-risk investment for long-term shareholders in 2024.

Read more »

A cannabis plant grows.
Cannabis Stocks

Canopy Growth: Buy, Sell, or Hold?

Canopy Growth (TSX:WEED) stock should make a killing on U.S. expansion, but investors will need to be very patient.

Read more »

Marijuana plant and cannabis oil bottles isolated
Energy Stocks

3 Canadian Value Stocks to Buy Right Now

Undervalued Canadian stocks such as Secure Energy should be part of your shopping list in May 2024.

Read more »

edit Cannabis leaves of a plant on a dark background
Cannabis Stocks

Here’s Why it’s Not Too Late to Buy Cronos Group Stock

The optimism about U.S. federal marijuana legalization and its anticipation are potent bullish triggers for the Canadian cannabis industry.

Read more »

Cannabis grows at a commercial farm.
Cannabis Stocks

Canopy Growth Stock Is on a Tear: Is it a Good Buy Now? 

Canopy Growth (TSX:WEED) stock surged by 80% from news out of the U.S., but is enough there without the news…

Read more »