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Summary
- The S&P/TSX Cannabis Index is down nearly 45 per cent YTD, though marijuana sales have made substantial headways this year.
- Aurora Cannabis (TSX:ACB) released its fiscal fourth quarter report on September 22, following which is saw a slump in its stock price.
- Aphria (TSX:APHA) is likely to announce its first quarter fiscal 2021 report on October 15.
- HEXO Corp (TSX:HEXO) appointed a new chief financial officer in September.
Senior cannabis stocks of Aphria Inc (TSX:APHA), Aurora Cannabis (TSX:ACB) and HEXO Corp (TSX:HEXO) have remained popular among investors through the topsy-turvy times of COVID-19. Even as the S&P/TSX Cannabis Index is nearly 45 per cent down this year, Canada’s cannabis industry has reported substantial headways in sales. Retail sales of adult-use marijuana hit a record high of C$ 232 million in July and in the same month, the pot market made up for C$ 9.6 billion in Canada’s GDP, according to Statistics Canada.
There are a lot of factors that come at play in terms of stock movements, ranging from the pandemic, economic factors, fluctuation in demand and prices, operational disruption, etc. Let’s take a closer look at the stocks of Aurora Cannabis, Aphria and HEXO which continue to draw attention among investors.
Aurora Cannabis (TSX:ACB)
Current Share Price – C$ 6.12
Aurora Cannabis is one of the top cannabis producers in Canada, focusing on the production and sale of medical and adult-use marijuana. Its stocks grew over 1600 per cent since 2014, skyrocketing to a record level of C$ 164.52 during the ‘Green Rush of 2018’.
But year 2020 has not been so kind on Aurora Cannabis so far. Its shares are down nearly 82 per cent year-to-date (YTD) and 54 per cent in the last six months.
The Edmonton-based company released its fiscal fourth quarter report on September 22, which was closely followed by a slump in its stock price.
Aurora Cannabis recorded a five per cent quarter-over-quarter (QoQ) fall in its net revenue of C$ 72.1 million in the fiscal fourth quarter ending 30 June 2020. Its cannabis net revenue of C$ 67.5 million was down three per cent QoQ and its medical cannabis net revenue, at C$ 32.2 million, was down four per cent QoQ in Q4 2020.
In the latest quarter, Aurora Cannabis bore fixed asset impairment charges of C$ 86.5 million, inventory impairment worth C$ 135 million and a non-cash goodwill write-down amounting to C$ 1.6 billion. The company also reported a charge of US$ 30 million which it will have to pay Ultimate Fighting Championship (UFC) in Q1 2021 for pulling the plug on their contract.
Aphria Inc (TSX:APHA)
Current Share Price: C$ 6.79
Ontario-based pot company Aphria Inc got its license manufacture cannabis in Canada in 2014. It also expanded its medicinal cannabis business to Germany in 2019.
While most companies struggled to rake up a revenue in the midst of the coronavirus pandemic, Aphria recorded a revenue growth for the fifth consecutive quarter. Its net revenue was up 18 per cent YoY at C$ 152 million in its fourth quarter fiscal ending 31 May 2020. Its adjusted EBITDA of C$ 8.6 million saw an increase of 49 per cent QoQ in Q4 FY20.
Aphria Inc also incurred a net loss of C$ 98 million in its latest quarter, as compared to a net income of C$ 15.8 million in Q4 FY19. Its cash and cash equivalents stood at C$ 497 million at the end of May 2020.
The company is expected to announce its first quarter fiscal 2021 report on October 15.
Stocks of Aphria Inc tumbled to C$ 3.03 (March 17) amid the pandemic-led market crash back in March, but has rebounded in the last seven months. Its scrips climbed about 60 per cent in six months’ times and nearly 16 per cent in the last three months.
Aphria has a current market capitalization of C$ 1.9 billion. Its shares have been trading mostly flat this year. In the last ten days, it saw an average trading volume of 1.9 million. Its price-to-book (P/B) ratio is 1.07, its price-to-cash flow (P/CF) ratio stands at 2,681.6 and its debt-to-earnings (D/E) ratio is 0.23, as per the TSX data.
HEXO Corp (TSX:HEXO)
Stock Price: C$0.93
The COVID-19 pandemic saw HEXO Corp sell off its Niagara unit at a loss of US$ 2.8 million in May, lay off workers and reduced production substantially. Its shares recorded a decline of 55 per cent YTD and three per cent in the last six months.
However, since dropping to a low of C$ 0.52 (March 19) amid the March market crash, HEXO shares rebounded nearly 79 per cent in seven months’ time. Its scrips recorded a 10-day average trading volume of 1.2 million.
The Ottawa-based company joined the trend of ‘Cannabis 2.0’ in Canada to launch its line of vape pens and other ingestible pot products earlier this year. In September, HEXO also appointed a new chief financial officer, former Rx Drug Mart CFO Trent MacDonald.
HEXO Corp posted a whopping 94 per cent YoY surge in its total revenue from sales, amounting to C$ 30.9 million, in its third fiscal quarter ending 30 April 2020. Its gross margin of C$ 5.7 million was up a 40 per cent QoQ and its adjusted EBITDA sequentially down to C$ 4.3 million in Q3 2020. The company’s operating expenses stood at C$ 26.8 million in the latest quarter.
