Leading Canadian Cannabis Stocks for 2024 Investors
The Canadian cannabis industry and top Canadian marijuana stocks are poised for significant growth as we approach 2024. With Canada being one of the first major economies to legalize cannabis for both medical and recreational use, the sector has seen substantial development. This pioneering step has paved the way for a burgeoning market. Companies in this space are experiencing rapid expansion. Investors are keenly watching Canadian cannabis stocks. These stocks are seen as promising investment opportunities.
For those interested in short-term trading, the Canadian cannabis market offers dynamic possibilities. Utilizing technical indicators is crucial in this volatile market. These indicators help traders find the best entry and exit points. They analyze market trends and predict future movements. Short-term traders rely on these tools to maximize their returns. As the industry grows, staying informed and agile is key to success in trading these stocks.
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Canadian Cannabis Stocks to Watch as 2024 Approaches
- Tilray Brands, Inc. (NASDAQ: TLRY)
- Cronos Group Inc. (NASDAQ: CRON)
- Village Farms International, Inc. (NASDAQ: VFF)
Tilray, Inc.
Tilray is a major player in the international cannabis market, with a focus on the production, distribution, and cultivation of premium cannabis products for both medical and recreational use. With its main office located in Nanaimo, British Columbia, Canada, Tilray has made a name for itself as a top cannabis business with a significant global footprint.
Tilray is a retail company that has a large number of shops throughout North America. Its brands include High Park and Manitoba Harvest. With locations in areas including California, Colorado, and Washington, they have a sizable following in the US. Tilray can meet the changing requirements and tastes of cannabis consumers while retaining a strong presence in the Canadian market thanks to these advantageous locations, which also give them access to the lucrative U.S. cannabis market. Tilray is a worldwide cannabis pioneer that is growing its business and looking for new ventures in the rapidly developing cannabis industry.
Financial Highlights – First Quarter Fiscal Year 2024
Tilray posted strong first-quarter financial results, with net revenue rising 15% to $177 million from $153 million in the same period last year. It is noteworthy, therefore, that the adjusted gross profit was $49 million, marginally higher than the actual profit of $44 million, translating into a gross margin of 25%. Due to a number of circumstances, including changes in the product mix and the absence of some income streams, this gross margin was noticeably lower than the 32% of the previous year.
Net sales in the cannabis business increased significantly by 20% to $70 million from $59 million in the same period last year. Despite this remarkable rise, the cannabis gross margin declined sharply, from 51% to 28% in the previous year. This was mostly because certain revenue streams were not there and deliberate inventory adjustments were not made. Positively, the beverage alcohol segment did well, increasing its net revenue to $24 million by 17%. Due to modifications in the product mix and the purchase of Montauk, the gross margin in this industry increased to 53% from 47% the previous year.
The distribution division of Tilray also saw growth, with net revenue increasing by 14% to $69 million and a noteworthy improvement in gross margin, which increased to 11% from 9% the previous year. Although Tilray’s net loss for the year was reduced to $56 million from $66 million the year before, the company is still committed to meeting its cost-cutting and integration objectives. Tilray is well-positioned for longer success in the cannabis sector with a robust liquidity position of over $466 million, including cash and marketable securities, and increasing operating cash flow.
TLRY Stock Performance
On December 11th, the shares of TLRY closed at $1.84, up 10.18% in the past month of trading. The 52-week price range for the stock is $1.50-$3.72 and is down 31.60% year to date. According to CNN Business experts, TLRY stock has a 12-month consensus price objective of $2.60 per share. This represents a 41.30 percent increase over the last trading price of $1.84.
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Cronos Group Inc.
Cronos Group Inc. is a globally recognized cannabis company. Based in Canada, it operates in the cannabis industry. They focus on producing and selling cannabis products. This includes both recreational and medicinal cannabis. Cronos Group has made a significant impact in the market with its innovative approach. The company has established a strong presence in various regions, including North America.
As of my last update in April 2023, Cronos Group’s retail footprint extends across several U.S. states. They have numerous stores, with a notable presence in states where cannabis is legal. The company’s strategic locations are in states with high demand for cannabis. This includes both recreational and medicinal markets. Cronos Group’s expansion in these states reflects its commitment to accessibility. They aim to reach a wide range of consumers effectively.
Third Quarter 2023
In the third quarter of 2023, Cronos Group Inc. reported a net revenue of $24.8 million. This marked an increase of $4.4 million from the same period in 2022. The growth was largely driven by higher sales of cannabis flower and extracts in the Canadian adult-use market. However, this positive trend faced challenges. Increased excise tax payments in Canada and decreased flower sales in Israel were notable issues. These issues were due to competitive pricing pressure and geopolitical unrest. Additionally, currency fluctuations between the Canadian dollar, New Israeli Shekel, and U.S. dollar negatively impacted the financial results.
Cronos Group’s gross profit in Q3 2023 was $4.0 million, up by $0.8 million from Q3 2022. This increase was primarily attributed to higher sales in the Canadian market and reduced biomass costs. However, the profit was offset by lower sales in Israel and an inventory write-down. The write-down, amounting to $0.7 million, was due to the closure of the Winnipeg, Manitoba facility, “Cronos Fermentation.” Without this write-down, the gross margin would have been around 19%. Additionally, adjusted EBITDA improved to $(15.2) million, a $3.3 million enhancement from the previous year. This improvement was mainly due to reduced general and administrative expenses.
Guidance and Outlook
Looking ahead, Cronos Group reiterates its goal to save $20 to $25 million in operating expenses in 2023. Further savings of $10 to $15 million are planned for 2024. These savings are expected to come from sales, marketing, administration, and research and development. The company anticipates a net cash change decline of less than $5 to $10 million in the last quarter of 2023. However, they expect a positive net cash change in 2024. This outlook assumes consistent interest rates and limited impacts from the Israel-Hamas conflict. The company is closely monitoring the situation in Israel. Its impact on the company’s personnel, business, and financials remains uncertain. These forward-looking statements are subject to change based on various factors.
CRON Stock Performance
On December 11th, CRON stock closed at $2.02, with a 52-week price range of $1.64-$3.04. According to CNN Business analysts, CRON stock has a 12-month consensus forecast price target of $2.41 per share. This projection represents a 19.27 increase from the stock’s most recent trading price of $2.02.
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Village Farms International, Inc.
Village Farms International, Inc. is a leading player in the agricultural sector. The company specializes in greenhouse-grown produce and cannabis. Based in Canada, it operates in North America and internationally. Village Farms is known for its high-quality products and innovative farming techniques. The company’s expertise in sustainable greenhouse cultivation sets it apart. It has a strong focus on producing fresh vegetables and premium cannabis products.
As of my last update in April 2023, Village Farms has expanded its retail presence significantly. The company’s products are available in numerous stores across various U.S. states. They have a strong presence in states with favorable agricultural climates and cannabis regulations. Their retail footprint reflects their commitment to accessibility and quality. Village Farms continues to grow its market share. This is achieved through strategic expansions and partnerships. The company’s focus is on regions with high demand for fresh produce and cannabis products.
Third Quarter Financial Highlights
In the third quarter of 2023, Village Farms reported notable financial and operational highlights across its various segments. Consolidated sales decreased slightly by 2% year-over-year to $69.5 million. However, the company showed significant improvements in its operating loss, which reduced to ($2.9 million) from ($12.3 million) in the same period of the previous year. The consolidated net loss also improved, reaching ($1.3 million), compared to ($8.7 million) in the prior year.
In the Canadian Cannabis segment, which includes Pure Sunfarms and Rose LifeScience, net sales decreased by 5% to $28.8 million (C$38.7 million). Despite this decrease, Village Farms saw an improvement in gross margin, which increased to 35% compared to 27%. Net income in this segment increased to $2.9 million (C$3.8 million), and adjusted EBITDA reached $4.6 million (C$6.2 million).
In the U.S. Cannabis segment, under Balanced Health Botanicals, net sales remained relatively steady at $5.0 million, with a gross margin of 64%. Net income improved to $79,000 from a net loss of ($0.3 million), and adjusted EBITDA increased to $0.2 million.
Village Farms Fresh, the Produce segment, reported sales of $35.7 million. Notably, the net loss improved significantly to ($1.0 million), and adjusted EBITDA showed improvement at $0.8 million.
The company also highlighted its strategic growth and operational achievements, including maintaining market share leadership in the Canadian Cannabis market, launching successful brands, and expanding its product offerings to meet evolving consumer preferences. Village Farms received recognition as the Best Canadian Cannabis Company at the 2023 Benzinga Cannabis Awards in September.
Overall, Village Farms demonstrated improved financial performance and a strong presence in the cannabis and produce markets during the third quarter of 2023, reflecting its commitment to growth and innovation.
VFF Stock Performance
VFF stock closed at $0.82 on December 11th, up 16.13% in the last month of trading. Currently, the stock has a 52-week price range of $0.5550-$1.77 and is down 42.84% year to date. According to analysts at CNN Business, VFF stock has a 12-month median price target of $1.88 per share. In this case, this would represent an upside of 144.24%.
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Canadian Cannabis Stocks with High Growth Potential
As we look towards 2024, Canadian cannabis stocks continue to present intriguing opportunities for investors. Companies like Cronos Group Inc. and Village Farms International, Inc. are noteworthy examples, showcasing growth and resilience in a dynamic market. These companies, along with others in the sector, are benefiting from an expanding global market for cannabis products. Their innovative approaches and strategic expansions in key regions make them stocks to watch. The potential for further legalization and regulatory changes across the globe could also play a crucial role in shaping the industry’s future. Investors should keep an eye on these developments, as they could significantly impact the market landscape and stock performances.
For those engaging in short-term trading of Canadian cannabis stocks, proper risk management is vital. The cannabis market’s volatility requires traders to be cautious and informed. Utilizing stop-loss orders and setting clear profit targets can help mitigate risks. It’s essential to stay updated on market trends and company-specific news that can influence stock prices. Diversification of investments and continuous monitoring of the financial health of these companies can also help manage risk. As with any investment, balancing potential rewards with the risks involved is key to successful trading in this evolving market.
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