The overall market has rallied well off last week’s lows and cannabis stocks have been trending higher with the market.
We are favorable on the recent move higher and will keep an eye on how this trend continues. Over the last week, we have seen several Canadian marijuana producer release quarterly financial numbers and the market has responded favorably to these numbers.
Today, we have highlighted 3 of the most important recent company developments and investors should be keeping an eye on these opportunities.
Canopy Growth: Trades Higher on Earnings
Yesterday, Canopy Growth (WEED.TO) (TWMJF) released third quarter financial results and the shares traded higher after this announcement. We are favorable on the improving revenue numbers, the expanding production capacity, the stronger balance sheet, and the funded growth initiatives.
Canopy Growth is levered to several of the most attractive legal cannabis markets (Canada, Australia, and Germany) and recently received a major investment from Constellation Brands (STZ). The company has been laser focused on execution and has the largest market share in Canada.
Investors looking for a quality long-term cannabis investment should have their eyes on Canopy Growth. The marijuana producer has been leading the global cannabis movement and is well positioned to capitalize on this burgeoning opportunity. The company is recording strong revenue growth and this is a trend we expect to become more prominent in future quarters.
Aurora Cannabis: Closes a Major Investment
Aurora Cannabis (ACB.TO) (ACBFF) edged higher after closing the strategic investment in Liquor Stores (LIQ.TO) and we are favorable on this move. Liquor Stores intends to use the net proceeds to establish and launch a leading brand of cannabis retail outlets, whereby it will convert some number of Liquor Stores’ existing retail locations into cannabis retail stores and establish new cannabis retail stores.
Liquor Stores issued 6.9 million common shares at $15 each for gross proceeds of $103.5 million. As a result of the Initial Investment, Aurora owns approx. 19.9% of the shares (on a non-diluted basis). Aurora also subscribed for 2.3 million subscription receipts at $15 each which will increase its ownership to approximately 25% (on a non-diluted basis).
Aurora Cannabis has been laser focused on execution and the marijuana producer has made several strategic investments and acquisitions. We are favorable on Aurora’s proven track record of success when it comes to initiatives like this and will monitor how the company executes on this opportunity.
CannTrust: A Stock to Watch
CannTrust Holdings Inc. (TRST.CN) (CNTTF) has been focused on increasing production capacity before Canada’s recreational marijuana market opens and we are favorable on the Canadian cannabis producer.
Yesterday, CannTrust closed the previously announced $15 million mortgage financing on its Niagara Greenhouse Facility. The mortgage is being used to fund the balance of the 180,000 square foot Phase 2 expansion at the Niagara Facility. $10 million was funded on closing and the remaining $5 million will be funded upon completion of the Phase 2 construction (expected in the middle of 2018).
CannTrust is one of the most underappreciated Canadian cannabis producers and we are bullish on the company’s long-term outlook. The marijuana producer has been an execution story and has a significant registered patient base. CannTrust is focused on increasing production capacity and we are favorable on the company’s funded growth initiatives. This is a stock investors need to keep an eye on.