Top Canadian Cannabis Stocks to Monitor in March 2024
This week, the spotlight shines on Canadian cannabis stocks, marking an intriguing phase for investors and market watchers. Companies like Canopy Growth, Aurora Cannabis, and Tilray have become household names. They navigate the complex landscape of legal cannabis markets. Recent shifts in regulatory frameworks and market dynamics play a crucial role. These companies are on the brink of their quarterly earnings reports. This period could reveal significant insights into their operational efficiencies and market demand.
Globally, the cannabis industry is on a bullish trajectory. Analysts project the market could reach $90.4 billion by 2026, expanding at a CAGR of 28%. This growth is fueled by increasing legalization, medical cannabis research, and consumer acceptance. In the U.S., federal reform discussions have reignited, sparking optimism. Although no concrete changes have occurred, any positive movement could unlock vast opportunities for Canadian firms. As earnings approach, utilizing technical analysis and proper risk management becomes paramount. Investors are advised to scrutinize charts, trends, and financials. This strategy helps in making informed decisions amidst the sector’s volatility.
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March 2024 Watchlist: Leading Canadian Cannabis Stocks
- Canopy Growth Corporation (NASDAQ: CGC)
- Village Farms International, Inc. (NASDAQ: VFF)
- Cronos Group Inc. (NASDAQ: CRON)
Canopy Growth Corporation
With its headquarters located in Smiths Falls, Canada, Canopy Growth Corporation is a leading light in the international cannabis sector. Since its founding in 2013, it has become one of the biggest cannabis businesses globally. Canopy Growth is a company that produces, sells, and distributes cannabis products for both recreational and medical purposes. Their product line comprises topicals, softgel capsules, infused drinks, dried flowers, and oil.
Since my last update in April 2023, Canopy Growth has increased its retail locations across Canada under various labels, including Tokyo Smoke and Tweed. They are widely distributed in states with progressive cannabis laws, such as British Columbia, Alberta, and Ontario. Through collaborations and acquisitions, the company’s foreign endeavors are expanding into the United States, especially in places where cannabis is legal. It could be necessary to update specific store counts and states with the highest presence for the current year.
Financial Highlights
One of the biggest names in the Canadian cannabis market, Canopy Growth Corporation, has recently produced some outstanding outcomes. The company’s organic revenue growth, which has increased for three quarters straight, is evidence of its solid operational performance and well-thought-out business plan. With net revenue of $70 million in the second quarter of the fiscal year 2024 (Q2 FY2024), the business reached a noteworthy milestone. This exceptional result shows Canopy Growth’s positive market trend and significantly improved over the previous fiscal year. The company’s consolidated gross margin experienced a significant upturn, rising from a negative 1% in the same quarter of FY2023 to 34% in Q2 FY2024. The effective implementation of business transformation efforts that started at the beginning of FY2023 is responsible for this turnaround.
Canopy Growth Corporation has achieved notable progress in cost containment and asset optimization, showcasing its financial stability. In just the second quarter of FY2024, the company cut costs by an additional $54 million, saving $226 million since the start of FY2023. The company’s concentrated efforts to increase efficiency and streamline operations include these savings. In keeping with this promise, management has established a more stringent cost-cutting goal, expecting savings of between $270 million and $300 million by the end of FY2024.
Debt Reduction For Canopy
Since April 2023, the Company’s sale of its Hershey Drive location has brought in about $155 million in gross profits, demonstrating the wisdom of that asset management choice. An important part of the company’s plan to maximize its asset base is this transaction. With the successful reduction of $364 million in total debt to $681 million in Q2 FY2024, Canopy Growth’s debt has now dropped to approximately $1 billion since the beginning of FY2023 (nearly $1 billion). This significant debt decrease demonstrates the company’s dedication to preserving a solid balance sheet and increasing shareholder value.
CGC Stock Performance
CGC stock closed at $3.44 on February 21st down 21.84% in the past month of trading. Currently, the stock has a 52-week price range of $3.30-$24.10, down 32.68% year to date.
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Village Farms International, Inc.
Renowned agricultural enterprise Village Farms International, Inc. is becoming a major force in the cannabis and CBD sectors in North America. Since its founding in 1989, the company has thrived in the greenhouse vegetable industry before branching out into the cannabis industry with Pure Sunfarms. This tactical change capitalizes on their knowledge of agriculture to produce affordable, premium cannabis. They manufacture a range of cannabis products and are involved in both the medical and recreational cannabis industries.
The main location for Village Farms’ cannabis business is Canada, where Pure Sunfarms has made a significant foothold. Although they don’t run conventional retail locations, a large number of government and private shops in Canada distribute their items. The company has a strong presence and wide range of products across multiple provinces, with notable sales in British Columbia, Alberta, and Ontario. Following the federal legalization of hemp, Village Farms is investigating potential for hemp-derived CBD in the US cannabis industry. However, its direct retail presence in the US market is contingent upon legislative reforms.
Third Quarter Financial Highlights
The third quarter ended September 30, 2023, saw Village Farms International, Inc. post a great result that demonstrated the effectiveness of its diverse business model. The company realized positive consolidated net income, adjusted EBITDA, and cash flow. It is a leader in the fresh produce industry and the cannabis sectors in both Canada and the United States. In October, Canadian cannabis operations achieved considerable growth and operational excellence, regaining the second position in the national market share. Additionally, U.S. Cannabis had positive adjusted EBITDA and net income, demonstrating strong performance in this market. With a notable year-over-year improvement, the fresh produce division maintained its upward trend and improved the company’s overall financial health.
Village Farms’ experience in controlled environmental agriculture is a strategic advantage that drives profitability and positive cash flow across all business areas, as highlighted by President and CEO Michael DeGiglio. The company’s creative initiatives and emphasis on quality, which are well-received by customers, have strengthened its leadership position in the Canadian cannabis market. The company’s dedication to expansion and market share is demonstrated by the rebranding of CBDistillery and the introduction of new wellness-focused products in the United States. Technological advances and the development of virus-resistant strains have helped the fresh produce segment return to profitability, and the future looks promising. The company’s successes in finance and operations highlight Village Farms’ dominant positions in the fresh produce and cannabis industries.
VFF Stock Performance
VFF stock closed at $0.81 on February 21st , down 6.90% in the last month of trading. Currently, the stock has a 52-week price range of $0.5550-$1.17 and is up 6.44% year to date.
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Cronos Group Inc.
A well-known cannabis company worldwide is Cronos Group Inc. This Canadian company works in the cannabis sector. Their main goals are to manufacture and market products associated with cannabis. This covers cannabis for both medical and recreational usage. The Cronos Group’s novel strategy has had a big effect on the industry. The business is well-known throughout the world, but especially in North America.
The Cronos Group operated retail locations in a number of states in the US as of April 2023. In areas where cannabis is legal, they are well-represented because to their large number of storefronts. The business has deliberately positioned itself in US markets with a high concentration of cannabis users. This includes marketplaces for both medical and recreational use. The growth of Cronos Group into these states demonstrates its dedication to accessibility. To effectively build relationships with a variety of clients is their aim.
Third Quarter 2023
For the third quarter of 2023, Cronos Group Inc. reported net revenue of $24.8 million. The difference between this time in 2022 and the current one is $4.4 million. One of the main causes of the increase was the expansion of the cannabis flower and extracts adult-use market in Canada. However, there were issues with this growing pattern. Two notable difficulties were Canada’s higher excise tax payments and Israel’s decreased flower sales. These issues were brought on by competitive pricing pressure and geopolitical unrest. Changes in the US dollar, Canadian dollar, and New Israeli shekel exchange rates had a negative impact on the financial results as well.
From Q3 2022 to Q3 2023, the Cronos Group’s gross profit increased by $0.8 million to $4.0 million. This expansion’s primary drivers were lower biomass costs and higher sales in the Canadian market. However, the profit was offset by a write-down of stocks and a decline in sales in Israel. The shutting of the “Cronos Fermentation” factory in Winnipeg, Manitoba, resulted in a $0.7 million write-down. This write-down would have produced a 19% gross margin. Moreover, adjusted EBITDA was $(15.2) million, up $3.3 million from the previous year. The reduction in general and administrative expenses was the main factor contributing to this improvement.
Guidance and Outlook
The Cronos Group reaffirms its objective to reduce operating costs by $20–$25 million by 2023. Savings of an additional $10–$15 million are anticipated by 2024. It is anticipated that these reductions will affect research and development, administration, marketing, and sales. In the fourth quarter of 2023, the company expects a net cash change reduction of less than $5 to $10 million. But in 2024, they anticipate a net cash change that is positive. This prediction is based on stable interest rates and minimal effects from the Israeli-Hamas conflict. The business is keeping a careful eye on events in Israel. How it will impact the company’s operations, personnel, and finances is still unknown.
CRON Stock Performance
CRON stock closed at $2.19 on February 21st , up 7.88% in the last month of trading. In this case, the stock has a 52-week price range of $1.64-$2.64 and is up 4.78% year to date.
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Canada’s Cannabis Stocks to Watch in March
As March approaches, investors are closely monitoring top Canadian cannabis stocks for potential growth opportunities. The global cannabis industry is on a significant upturn, with projections indicating a market value of $73.6 billion by 2027, according to Grand View Research. In addition, this growth is fueled by increasing legalization and acceptance worldwide. In the U.S., federal reform efforts continue, albeit slowly, which could open doors for Canadian companies looking to expand southward. With earnings season around the corner, these companies are under the microscope. Their performance could signal how well they are navigating regulatory landscapes and capitalizing on market expansions.
Investors should employ technical analysis and proper risk management when considering these stocks. Key indicators, such as moving averages and RSI, can provide insights into market trends and potential entry or exit points. Diversification within the sector can also mitigate risk, spreading exposure across different companies and market segments. As the industry evolves, staying informed on legislative changes and market dynamics is crucial. Overall, balancing optimism with caution could be the strategy that navigates investors through the volatile yet promising cannabis market as we head into March and beyond.
MAPH Enterprises, LLC | (305) 414-0128 | 1501 Venera Ave, Coral Gables, FL 33146 | new@marijuanastocks.com
