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As the United States and Mexico inch closer towards legalizing recreational marijuana, cannabis retail players are set to benefit from this expanding industry. The vast product portfolio, including medical and recreational cannabis, also opens room for sellers to better market their products.
Despite the pandemic, the outlook for the entire industry looks promising. As more countries legalize marijuana, and pot manufacturers and retail players could merge to compound their resources and form larger brands.
However, many pot stocks are witnessing a dip in their current value. This could be an entry point for investors, eyeing high returns in future.
Looking at these prospects, let us explore three cannabis stocks that may prove to be a cheap investment option with promising returns:
Aurora Cannabis Inc (TSX: ACB, NASDAQ: ACB)
The Edmonton-based company’s stock declined about 40 per cent in the last three months. Its scrip closed at C$ 9.16 on Friday, May 21. The company has a market capitalization of C$ 1.8 billion.
Its net revenue from operations declined by 20.8 per cent year-on-year (YoY) to C$ 55.2 million in the quarter ended March 31, 2021. While revenues from its medical cannabis products rose about 17 per cent YoY, consumer cannabis revenues plummeted by about 53 per cent YoY.
Aurora has dual listing on the TSX and the NASDAQ. It transferred from NYSE and started trading on the NASDAQ from Tuesday, May 25. The stock was up 6.14 per cent as of 12:53PM EDT on the US-based exchange. This listing transition is a part of the cannabis retailer’s recently announced measures to improve its cost efficiency.
High Tide Inc (TSX:HITI)
The stock of the C$ 426-million company declined nearly 12 per cent in the last three months amid some volatile sessions when the stock jumped to touch C$ 13.95.
The scrip closed at C$9.25 on TSX on Friday.
The stock’s returns rose about 225 per cent in the last six months, starting from C$ 2.85 in November, 2020. However, it may still be undervalued looking at the prospects of the growing cannabis market, and High Tide’s large retail network.
After its recent listing on the exchanges, the company had 65 operating retail locations and C$ 148-million annualized revenue.
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Organigram Holdings Inc (TSX:OGI)
The Canada-based cannabis product maker’s stock has declined 26 per cent in the last three months, making it cheap investment option with promising returns.
Organigram Holdings has a market capitalization of C$981 million.
The company has a healthy product pipeline with about 31 stock-keeping units (SKUs) expected to be launched in 2021. Its net revenue declined 37 per cent year-on-year (YoY) in the quarter ended March 31, 2021, while its net loss widened by 872 per cent during the quarter. The loss come on the back of increased workforce, acquisitions and operation expansion.
The company expects a pickup in its operations in the following quarters on the back of better staffing as the COVID-19 situation improves, a wider product portfolio, and its recent acquisition of The Edibles and Infusions Corporation.
Please note: The above constitutes a preliminary view and any interest in stocks should be evaluated further from an investment point of view. The reference data in this article has been partly sourced from Refinitiv.
