Since the legalization of marijuana has been in full swing in countries such as Canada, cannabis companies have worked out the best operating methods which has caught the attention of traders as an upswing in forecasted as 2021 progresses.
There has been lots of potential seen in some Canadian cannabis companies right now and investors are beginning to take advantage of this prime buying opportunity.
Tilray (NASDAQ: TLRY)
After recently merging with Aphria, Tilray is now the biggest cannabis company globally. With larger facilities, the company has been able to expand their product offering with low cost cultivation and processing. The Motley Fool reported that “with E.U. GMP- certified production facility in Portugal and a strong distribution network in Germany, the company is well equipped to pursue its growth opportunities in the international market.”
Tilray also has the potential to expand into the US cannabis market with their two strong verticals, SweetWater and Manitoba Harvest. These two companies provide the opportunity for Tilray to “save around $100 million over the next 18 months”, and as the market continues to grow, Tilray stock is expected to perform well over the next two years.
Canopy Growth (TSX: WEED) (NYSE: CGC)
Canopy acquired AV Cannabis and Supreme Cannabis which is strengthening the company’s position in the cannabis market as their brand portfolio grows, distribution networks expand and more resources are allocated to research and development. The company also plans to acquire Acreage Holdings when marijuana is legal in the United States.
With the launch of their CBD-infused beverages in the US, Canopy’s has placed themselves in a favourable position in the market “with its cash and cash equivalents standing at $1.59 billion at the end of December.”
As the company’s stock price sees more growth, investors can expect to see worth-while returns from Canopy Growth.
HEXO (TSX: HEXO) (NYSE: HEXO)
HEXO has partnered with Molson Coors Canada to produce and distribute cannabis-infused drinks across Canada. The brand has a large stake in the cannabis beverage space, recently acquiring Zenabis Global but also plans to introduce edible products in the US. HEXO also acquired a production facility in Colorado to support their recent growth. These mergers have been incredibly beneficial for building company’s strength and “could also deliver around $20 million in savings over the next 12 months due to the synergy between the two companies.”
HEXO also forecasts to generate $500 million over the next 25 months, which has caught the attention of investors looking for bullish action over the next two years.
Aurora Cannabis (TSX: ACB) (NYSE: ACB)
Since February Aurora has lost 57.3% of its stock value but looks like it will be bouncing back by 2023. The company has grown their “medical cannabis sales in both domestic and international markets during the quarter. It also lowered its SG&A expenses by 42% on a year-over-year basis.”
The company has also taken cost-saving initiatives, hoping to save $60-$80 million within the next year. Aurora is estimated to have $525 in cash and forecasts “to raise around $300 million through new equity offerings” which will help them with their plans to expand into the US market.
High Tide (TSXV: HITI)
Operating retail outlets in Alberta, Ontario, Manitoba and Saskatchewan, High Tide is a stock to keep an eye on as one of the largest cannabis networks in Canada. This year company has been prioritizing opening more stores across Ontario and Calgary.
In March High Tide acquired Smoke Cartel for $8 million and The Motley Fool reported that the company “now operates the two largest e-commerce platforms for cannabis consumption in the world.”
As the company expands into the US, High Tide reported that their revenue for Q1 2021 increased 179% year over year to $38.3 million by the end of January. “Geographically, $34.2 million of these revenues were generated in Canada, $3.9 million in the United States and $200,000 internationally.”
Moving into Q2 2021, High Tide had $16.6 million cash, up from $7.5 million in Q4 2020 and “the company’s cash balance has since increased to $33.0 million.” This growth is forecasted to be sustained by the end of the year which will peak the attention of buyers over the coming months.
By Surina Nath