Cannabis Guide - 5 Profitable Pot Stocks Across The Globe

Cannabis finds many applications in the medical field, where it helps in the formulation of drugs to ease out the pain of multiple sclerosis, enhance the effectiveness of treatment for hepatitis C with minimalistic side-effects, treat Parkinson’s disease and soothes tremors, etc.

Five important Cannabis stocks around the globe are, MGC Pharmaceuticals Ltd (ASX:MXC), CANN Group Limited (ASX:CAN), Constellation Brands, Inc. (NYSE:STZ), Altria Group (NYSE:MO) and Scotts Miracle-Gro Company (NYSE:SMG). Let’s now see how recent developments have impacted the performance of these companies.

MGC Pharmaceuticals Ltd (ASX:MXC)

An EU-based Biopharma company, MGC Pharmaceuticals Ltd (ASX:MXC) recently announced signing of a new agreement with ONIX Empreendimentos e Participações for distribution of its pharmaceutical products in Brazil. Brazilian and Latin American medical cannabis markets have been estimated to reach a valuation of around US$8.5 billion by the year 2028.

H1 FY19 Financial Performance: Revenue from ordinary activities increased by 864% to $286,224 in the half year period as compared to the previous corresponding period. MXC reported a total profit of $611,016 in H1 FY19 as compared to the previous corresponding period.

H1FY19 P&L Statement (Source: Company Reports)

As per the earlier announcement, MXC received the 1^st shipment of CannEpil^TM in the UK.

On the stock information front, at the time of writing (on June 21, 2019, AEST 4:00 PM), the stock of MGC Pharmaceuticals was trading at $0.054, up 3.846% with the market capitalisation of ~A$63.07 Mn. Today, it reached day’s high at $0.055 and touched day’s low at $0.053, with a daily volume of 1,212,830,419. Its 52 weeks high price stands at $0.081 and 52 weeks low price at $0.032, with an average volume of 4,610,549 (yearly). Its absolute returns for the past one year, six months, and three months are -14.75%, 40.54%, and 44.44%, respectively.

Cann Group Limited (ASX:CAN)

Cann Group Limited (ASX:CAN) recently provided notice under 708A(5)(e) of the Corporations Act 2001 (Cth) that on June 13, 2019, CANN issued 100,000 fully paid ordinary shares at the value of $0.37 per share, as a result of holders exercising their underwriting options with an issue date of 13, 2019. The company has followed all the requisite regulatory compliances under the Act. In another update, the company announced that it has delivered first commercially grown Australian medicinal cannabis resin to the Victorian Government. These resins are extracted from dry cannabis flowers produced at the company’s Southern Facility in Melbourne.

March’19 Quarter Key Highlights: Cann entered into a non-binding Heads of Agreement to purchase a site located in the Mildura region, in North West Victoria. The company intends to construct highly advanced state-of-the-art greenhouse facility for the large scale production of cannabis (medicinal) to service domestic and global markets.

H1FY19 Financial Performance: Research and development credits received was reported at $92,495 in H1 FY19 from $44,102 in H1 FY18. Total comprehensive loss attributable to members of the group was reported at $4,898,171 in H1 FY19 from $1,462,561 in H1 FY18.

H1FY19 P&L Statement (Source: Company Reports)

On the stock information front, at the time of writing (on June 21, 2019, AEST 4 PM) the stock of Cann Group was trading at $1.915, down 0.26% with the market capitalisation of ~$268.62 million. Today, it reached day’s high at $1.942 and touched day’s low at $1.855, with a daily volume of 299,178. Its 52 weeks high price stands at $3.600 and 52 weeks low price at $1.525, with an average volume of 374,858 (yearly). Its absolute returns for the past one year, six months and three months are -35.14%, 4.35%, and -4.48%, respectively.

Constellation Brands, Inc. (NYSE:STZ)

A leading alcoholic beverage company, Constellation Brands, Inc. (NYSE:STZ) with operations in the US, Mexico, New Zealand, Italy, and Canada. It ranks third in the US with its iconic, high-end brands such as the Pacifico, Corona and Modelo brand families. The company recently announced that it has entered into an agreement with a leading diversified cannabis company, Canopy Growth Corporation in order to modify certain warrants and other rights. It has ownership in the leading Canadian cannabis producer, Canopy Growth (NYSE:CGC). Even though CGC is yet to become profitable, STZ’s profit margin for February ‘19 quarter stood at 67.4%.

FY19 Financial Performance: Net sales and operating income increased by 7% to US$8,116 million and 6% to US$2,412 million, respectively. On a reported basis, EPS increased by 53% to $17.57 and on a comparable basis, EPS increased by 7% to $9.28. The reported basis EPS includes $1.97 billion unrealized net gain from an increase in the fair value of Canopy investments. The company generated operating cash flow and free cash flow of more than US$2.2 billion and US$1.4 billion, respectively in FY19. The Board of Directors declared a quarterly cash dividend of $0.75 per share for Class A and $0.68 per share for Class B common stock.

As per the FY2020 guidance, STZ expects to have reported basis EPS and comparable basis EPS to be in the range of $8.47 to $8.77 and $8.50 to $8.80, respectively, including impact of the wine and spirits divestiture, but excluding gain/loss on the wine and spirits transaction, share repurchase and Canopy growth equity earnings.

On the stock information front

At the time of writing (on June 21, 2019) the stock of Constellation Brands was trading at US$185.74, up 0.77%, with a market capitalisation of ~US$35.60 billion. Its current PE multiple is at 10.57x, with EPS of 17.57 USD. Its annual dividend yield has been noted at 1.63%. Today, it reached day’s high at US$188.09 and touched day’s low at US$185.47, with a daily volume of 1,017,458. Its 52 weeks high price stands at US$234.26 and 52 weeks low price at US$150.37. Its 90 days average volume has been noted at 1,963,747. STZ has posted a one year return of around -20.38%, with a share price of US$231.5 on June 20, 2018.

Altria Group Inc. (NYSE:MO)

Altria Group Inc. (NYSE:MO) has diversified positions across tobacco, alcohol and cannabis. It employs around 8,300 employees, with more than 97% being American residents. Its network comprises more than 200,000 retailers across all the 50 states. The company recently announced an update, wherein Schlesinger Law firm filed a class-action lawsuit against JUUL E-cigarette manufacturer and Altria Group, Inc., on behalf of a Sarasota County teenager (age 15) and her parents to redress the nicotine addiction epidemic among youth. The lawsuit claims that the companies are violating federal racketeering laws by intentionally exploiting adolescents while falsely denying their association for the same.

In another update, Altria Group kept its FY19 guidance unchanged, where the company expects its adjusted diluted earnings per share (EPS) to be between $4.15 to $4.27, which is an increase of 4% to 7% as compared to the adjusted diluted earnings per share (EPS) base of $3.99 in the year 2018. The guidance excludes the below-mentioned charges in 2019:

• US$0.04 of tax expense resulting from the Tax Cuts and Jobs Act related to a tax basis adjustment to Altria’s AB InBev investment;
• US$0.04 for acquisition-related costs associated with the Cronos Group Inc. and JUUL transactions;
• US$0.04 for the cost reduction program announced in December’18.

Financial Year 2018 Key Metrics (Source: Company Reports)

On the stock information front

At the time of writing (on June 21, 2019) the stock of Constellation Brands was trading at US$50.26, up 0.72%, with a market capitalisation of ~US$94.03 billion. Its current PE multiple is at 15.32x, with EPS of 3.28 USD. Its annual dividend yield has been noted at 6.41%. Today, it reached day’s high at US$50.41 and touched day’s low at US$49.90, with a daily volume of 9,091,073. Its 52 weeks high price stands at US$66.04 and 52 weeks low price at US$42.20. Its 90 days average volume has been noted at 8,987,073. MO has posted a one year return of -12.07%, with share price of US$56.75 on June 20, 2018.

Scotts Miracle-Gro Company (NYSE:SMG)

A branded consumer lawn and garden products and household pesticides producer company, Scotts Miracle-Gro Company (NYSE:SMG) recently announced its extension of the partnership with Major League Baseball. This would be the 4th season that Scotts Miracle-Gro is an official partner of the Major League Baseball (MLB) Play Ball Initiative. In another update, SMG sold a 30% ownership stake in TruGreen for around US$234 million, and the proceeds collected will be focused on reducing the company’s debt. The company expects its debt-to-EBITDA ratio to fall below 4 times by the end of FY19.

March’19 Quarter Financial Performance: The company’s net sales increased by 17% to US$1,189.9 million as compared to the previous corresponding period. The income from continuing operations increased by 160% to $396.9 million as compared to the previous corresponding period.

March’19 Quarter Financial Metrics (Source: Company Reports)

On the stock information front

At the time of writing (on June 21, 2019) the stock of Scotts Miracle-Gro was trading at US$98.26, down 0.22%, with a market capitalisation of ~US$5.45 billion. Its current PE multiple is at 21.98x, with EPS of 4.47 USD. Its annual dividend yield has been noted at 2.23%. Today, it reached day’s high at US$99.47 and touched day’s low at US$97.06, with a daily volume of 501,596. Its 52 weeks high price stands at US$98.93 and 52 weeks low price at US$57.96. Its 90 days average volume has been noted at 437,434. SMG has posted a one-year return of 23.50%, with a share price of US$79.74 on June 20, 2018.

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