Summary

• Recreational cannabis sales hit a new record of C$ 232 million in July, up 116 per cent from a year ago.
• Aurora Cannabis published its fourth fiscal quarter results on Tuesday, posting a five per cent QoQ decrease in total revenue.
• Canopy Growth recently partnered with chef Martha Stewart to launch a new line of CBD product, inspired by her famous recipes.

Pot stocks of Aurora Cannabis (TSX:ACB) and Canopy Growth (TSX:WEED) have been popular among Canadian investors. While Aurora Cannabis made news this week with its latest fiscal quarter results, Canopy Growth signed an amended agreement with American company Acreage Holdings. Both these stocks are currently trending on the Toronto Stock Exchange (TSX).

A new Statistics Canada study reported that retail sales of adult-use cannabis hit a new height C$ 232 million in July, breaking the record from a month ago. While retail sales show record performances in recent months, the S&P/TSX Cannabis Index reports a 47.3 per cent year-to-date decline and over 16 per cent month-to-date decline. Market experts have expressed mixed feelings about Canada’s marijuana industry since the onset of the pandemic, and Health Canada has also implied that the Canadian market for recreational cannabis may be flattening.

While a lot of factors are at play when it comes to stock movements, such as the pandemic-led market crash this year, stocks of some cannabis producers remain in demand. Let’s take a close look at Aurora Cannabis and Canopy Growth to understand their latest performance on the stock market.

Aurora Cannabis (TSX:ACB)
Current Share Price – C$ 6.9

Canadian pot manufacturer Aurora Cannabis released its fiscal fourth quarter results on Tuesday, September 22. It created much noise among investors and witnessing heavy trading activities. In the last ten days, Aurora Cannabis recorded an average trading volume of 2.8 million.

Aurora Cannabis posted net revenue of C$ 72.1 million in its fourth quarter ending 30 June 2020, a five per cent quarter-over-quarter (QoQ) decrease. Its cannabis net revenue of C$ 67.5 million saw a three per cent QoQ drop and its medical cannabis net revenue was down four per cent QoQ amounting to C$ 32.2 million.

Aurora Cannabis’ fourth quarter also recorded several balance sheet adjustments in Q4 2020, including fixed asset impairment charges of C$ 86.5 million, over C$ 135 million in inventory impairment and C$ 1.6 billion in a non-cash goodwill write-down. The company is also liable to pay a one-time fee of US$ 30 million to mixed martial arts company Ultimate Fighting Championship (UFC) in Q1 2021 for the termination of their deal.

Its adjusted EBITDA in Q4 2020 was C$ 34.6 million, a decrease from C$ 50.4 million in Q3 2020. The company believes that would achieve a positive adjusted EBITDA in the second quarter of 2021.

(Data Source: Aurora Cannabis / Image Credit: Kalkine Group)

Miguel Martin, Aurora Cannabis’ newly-appointed CEO, said in an official statement on Tuesday that the company has lost its top position in the Canadian consumer market. Following the end of its fourth fiscal quarter in June, Aurora Cannabis raised gross proceeds worth US$ 36.6 million from its at-the-market (ATM) equity program.

Since the release of its Q4 2020 results on September 22, Aurora Cannabis has witnessed a decline of about 18 per cent in its stock price. Its scrips also recorded a year-to-date (YTD) decrease of 79 per cent and a drop of about 43 per cent in the last six months.

This stock has yielded 1816 per cent returns since its debut on the TSX in 2014. During the cannabis market surge of 2018 — also known as the ‘Green Rush’ — Aurora Cannabis’ stock had hit a record high of C$ 164.52.

Canopy Growth Corporation (TSX:WEED)
Current Share Price – C$ 19.43

Stocks of pot company Canopy Growth Corporation are currently outperforming their health care sector peers on the TSX. Its scrips hit a low of C$ 14.14 when the market tanked amid the pandemic in March. But over the last six months, Canopy Growth shares rebounded by about 34 per cent in value, even briefly touching its pre-pandemic levels in May. Canopy Growth stocks have a 10-day average trading volume of 1.3 million.

Canopy Growth Corporation recorded a net revenue of C$ 110.4 million in the first quarter of fiscal 2021 (ending 30 June 2020), up 22 per cent year-over year (YoY). Its net revenue from recreational cannabis was C$ 44.3 million, down 11 per cent YoY. Its medical marijuana net revenue saw a substantial increase of 54 per cent, amounting to C$ 34.1 million in the latest quarter. Canopy Growth also recorded a net loss of C$ 128.3 in the latest quarter.

Canopy Growth recently completed an amendment agreement with US-based Acreage Holdings (ACRGF:US), which allows a smoother acquisition process of Acreage should the United States federally legalize cannabis in the country. Canopy Growth also recently partnered with chef Martha Stewart to launch a new line of CBD supplements. These new products, named ‘Martha Stewart CBD’, will include softgel, gummies and oil inspired by Stewart’s famous recipes.

Headquartered in Canada’s Smiths Falls, Canopy Growth currently has a market capital of C$ 7.2 billion. With such a large market cap, Canopy Growth holds a special place in the Canadian cannabis market. Its business is spread across the US, Canada and Germany. Its price-to-book ratio (P/B) is 1.45 and debt-to-earnings ratio (P/CF) is 0.13.