HEXO and TLRY: What you should know before buying these TSX pot stocks

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HEXO and TLRY: What you should know before buying these TSX pot stocks

HEXO and TLRY: What you should know before buying these TSX pot stocks
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Highlights

  • Hexo (TSX: HEXO) and Tilray (TSX: TLRY) took a step forward to execute their strategic plan on Tuesday, April 12.
  • Both companies are working together on cost-saving synergies and production efficiencies.
  • Tilray’s international cannabis segment recorded a notable surge of 4000 per cent YoY in the latest quarter.

Hexo Corp (TSX: HEXO) and Tilray Inc (TSX: TLRY) took a step forward to execute their strategic plan, ‘The Path Forward’, on Tuesday, April 12, by signing a definitive agreement. The definitive agreement will solidify the strategic deal proposed on March 3.

Upon closure, Hexo is set to benefit from the recapitalized balance sheet and improved financial flexibility to accelerate into positive cash flows within the next 12 months, the company said.

The agreement includes a transaction to amend and restate the outstanding senior secured notes worth US$ 193 million issued by Hexo originally to HT Investment MA LLC, under which all the notes will be assigned to Tilray.

Both companies are working together on cost-saving synergies and production efficiencies for which they will form a commercial agreement upon the closing of the transaction.

Let us talk about two TSX pot stocks with such developments in the Canadian pot space.

Hexo Corp (TSX: HEXO)

Hexo Corp noted a 61 per cent year-over-year (YoY) rise in its total net revenues of C$ 52.8 million in Q2 FY2022 compared to Q2 FY2021.

Its adjusted gross margin grew from 25 per cent to 36 per cent Q2 FY2022 on a quarter-over-quarter (QoQ) basis.

HEXO stock plummeted by about 90 per cent in the last one year.

Also read: Canada Budget 2022 earmarks $12.5B more for climate: 2 TSX clean stocks

Tilray Inc (TSX: TLRY)

Tilray reported a growth of 23 per cent YoY in its net revenue to US$ 152 million in Q3 FY2022.

The company said that its international cannabis segment recorded a notable surge of 4000 per cent YoY in the latest quarter.

TLRY stock plunged by over 70 per cent since June 9, 2021.

 Tilray (TSX: TLRY)’s Q3 2022 results

Bottomline

This definitive agreement between Hexo and Tilray could be a significant deal leading the cannabis industry towards cost efficiencies.

However, investors should note all the developments these companies may attain in the future and consider the market dynamics while investing in cannabis stocks.

Also read: GPV and VMC: 2 TSXV EV stocks to see as Canada invests in Honda plant

Please note, the above content constitutes a very preliminary observation based on the industry, and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.

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