Top Canadian Cannabis Stocks to Monitor in Q1 2024
This week, investors are turning their eyes to marijuana stocks and the Canadian cannabis sector, a rapidly growing area in the global market. As the industry evolves, Canadian stocks are emerging as key players to watch. The global cannabis market, already worth billions, is projected to expand significantly. This growth is spurred by the increasing legalization and acceptance of cannabis for both medical and recreational use. For those looking to invest, the potential for high returns from top Canadian cannabis stocks is an exciting prospect.
When diving into the Canadian cannabis market, it’s essential to utilize technical analysis and sound risk management. Technical analysis, which examines market data like price and volume, is vital for predicting future market trends. This approach can guide investors in making more informed decisions. Equally important is risk management. The cannabis market can be unpredictable, so strategies like setting stop-loss orders, diversifying investments, and only using expendable capital are key to safeguarding against volatility. Overall, with these tools, investors can navigate the cannabis sector more confidently, balancing the potential for high returns with prudent investment practices.
Leading Canadian Cannabis Stocks for Your Q1 2024 Watchlist
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. In general, 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
Cronos Group Inc. recorded a net revenue of $24.8 million for the third quarter of 2023. Comparing this period in 2022 to this one, there was a $4.4 million rise. Increased sales of cannabis flower and extracts in Canada’s adult-use market were a major factor in the surge. Nevertheless, obstacles faced this encouraging trend. Notable problems included decreasing flower sales in Israel and higher excise tax payments in Canada. Geopolitical upheaval and competitive pricing pressure were the causes of these problems. Furthermore, exchange rate swings involving the New Israeli Shekel, Canadian dollar, and US dollar had a detrimental effect on the financial outcomes.
The Cronos Group saw an increase in gross profit from Q3 2022 to Q3 2023 of $0.8 million to $4.0 million. Lower biomass costs and more sales in the Canadian market were the main causes of this increase. Nevertheless, a write-down of inventory and decreased sales in Israel offset the profit. The $0.7 million write-down was brought on by the closing of the “Cronos Fermentation” facility in Winnipeg, Manitoba. A 19% gross margin would have resulted from this write-down. Moreover, adjusted EBITDA increased by $3.3 million from the prior year to $(15.2) million. The primary cause of this improvement was a decrease in general and administrative costs.
Guidance and Outlook
Cronos Group restates its objective to reduce operating costs by $20 to $25 million by 2023. In 2024, a further $10–$15 million in savings are anticipated. It is anticipated that sales, marketing, administration, and research and development will contribute to these reductions. In the last 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 forecast is predicated on stable interest rates and minimal effects from the conflict between Israel and Hamas. The business is keeping a careful eye on events in Israel. Its effect on the staff, operations, and finances of the corporation is still unknown. These predictions could change depending on a number of variables.
CRON Stock Performance
On January 10th, CRON stock closed at $2.04, down 2.86 in the last month with a 52-week price range of $1.64-$2.64.
Sundial Growers Inc.
Located in Calgary, Alberta, Canada, Sundial Growers Inc. is a well-known participant in the cannabis market. Sundial was founded in 2006 with the primary goal of cultivating and distributing cannabis for adult consumption. Pre-rolls, vapes, and dried flower are among their product offerings. They are renowned for their dedication to producing high-quality, reliable, and safe products.
In Canada, Sundial runs a sizable number of retail locations, primarily in Ontario, British Columbia, and Alberta. Their cannabis products are marketed heavily in these areas. At the time of my most recent update in April 2023, Sundial had not entered any foreign markets, including the US. It seems that their growth plan is concentrated on growing and merging their Canadian businesses. Sundial is a well-known brand in Canada’s cannabis industry thanks to their emphasis on quality and client satisfaction.
Third Quarter 2023 Financial Highlights
Sundial Growers Inc. (SNDL) reported significant operational and financial results for the third quarter of 2023. Their operating activities yielded net cash of $27.5 million. Compared to $8.6 million in the third quarter of 2022, this is a substantial increase. Their free cash flow turned a profit, coming in at $16.5 million as opposed to $67.1 million in the same time the previous year.
As of September 30, 2023, SNDL had $202.0 million in unrestricted cash. From June 30, 2023, this amount was $185.5 million; this is an 8.9% consecutive growth. Operational efficiencies and efficient cash creation are credited with this rise. Notably, working capital management was one area where these advancements were most noticeable.
In the third quarter of 2023, the company’s net revenue was $237.6 million. Comparing this to $230.5 million in the third quarter of 2022, there has been a 3.1% growth. Revenue from their retail liquor business remained steady at $151.8 million. Net sales for the retail cannabis business increased by 14.1% to $75.5 million. The cannabis operations business saw a notable increase in net revenue of 77.4%, amounting to $21.0 million.
The gross margin dropped to $48.6 million, a 3.4% fall, despite these gains. The primary cause of this decline was impairments in non-cash inventories. For the quarter, there was a $21.8 million net loss. Nonetheless, compared to the $98.8 million loss in the third quarter of 2022, this represented a 77.9% improvement. The asset impairments reported in 2022 were mostly responsible for the improvement.
For the quarter, adjusted EBITDA was $16.1 million. This is a little less than the $18.3 million that was disclosed during the 2022 third quarter. Furthermore, five credit assets are now held by SNDL in the SunStream portfolio. This comes after one credit exposure was monetized in the third quarter of 2023.
SNDL Stock Performance
SNDL stock closed at $1.51 on January 10th, up 2.37% in the past month of trading. In this case, the stock has a 52-week price range of $1.25-$2.48 and is down 29.44% year to date.
High Tide Inc.
High Tide Inc. is a well-known player in the retail cannabis industry, offering an engaging shopping experience for those interested in cannabis products. In general, the company has made a significant mark in the Canadian market, operating a vast network of over 100 retail stores.
The most substantial presence of High Tide can be seen in Alberta and Ontario, where the majority of its stores are located. Overall, this strategic positioning in these provinces allows the company to effectively reach a wide customer base, ensuring easy access to their products. Also, Known for its focus on customer experience, High Tide has established itself as a go-to destination for cannabis consumers seeking quality and variety.
Third Fiscal Quarter 2023 Financial Highlights
In the third fiscal quarter of 2023, High Tide Inc. reported a substantial increase in revenue and profitability. Revenue surged to $124.4 million, marking a 30% year-over-year growth and a 5% sequential rise from the previous quarter. This growth was bolstered by a remarkable improvement in free cash flow, reaching $4.1 million compared to a loss in the previous quarter. The company attributes this success to its discount club model’s traction and stringent cost-control measures. Gross profit also saw a significant rise to $34.6 million, a 34% increase from the same period last year, with a steady gross profit margin of 28%. Adjusted EBITDA experienced a dramatic increase to $10.2 million, including a one-time return from Manitoba’s SRF, showing a 140% year-over-year and 55% sequential growth. The company’s cost-saving measures led to a decrease in general and administrative expenses, marking a more efficient operation.
High Tide’s operational highlights included the expansion of its retail footprint with new Canna Cabana locations and the continued growth of its Cabana Club loyalty program, now boasting over 1.1 million members. The company’s focused approach to innovative product offerings and efficient technology implementations like the Fastendr kiosks has been effective. Despite a net loss of $3.6 million for the quarter, High Tide’s cash position improved significantly, with $25.7 million on hand. The CEO, Raj Grover, expressed confidence in the company’s innovative retail model and its potential expansion into the US market. High Tide is looking to leverage opportunities in the US, particularly in light of potential legislative changes, while continuing to grow and innovate in its current markets.
HITI Stock Performance
The shares of HITI finished at $1.72 on January 10th, up 5.52% in the last month of trading. In this case, the stock is trading in a 52-week price range of $1.0340 to $2.30, down 5.52% year to date.
[Read More] Best Ancillary Cannabis Stocks in 2024
Canada’s Top Rising Cannabis Stocks
Heading into the first quarter of 2024, there are a few Canadian cannabis stocks that are catching the eye of savvy investors. Companies like High Tide Inc. are showing promise with their strong retail strategy and customer-focused approach. They’ve been making waves with their financial performance, suggesting potential for further growth. Other big names to watch include Canopy Growth and Aurora Cannabis. Overall, they’ve got a wide range of products and a growing presence in international markets, which could mean good things for their future. Additionally, on a broader scale, the global cannabis industry looks set for some exciting growth. With new markets opening up in Europe and the United States, Canadian companies could find new expansion opportunities. The increasing popularity of CBD products is also opening doors to a wider range of consumers, signaling a promising future for the industry as a whole.
When it comes to investing in these stocks, it’s all about smart analysis and managing your risks wisely. Digging into the technical aspects, like looking at price trends and trading volumes, can give you some valuable insights. Tools like moving averages and the Relative Strength Index (RSI) can help you get a feel for where the market is at. It’s also important to set clear goals for your investments and know how much risk you’re comfortable with. Spreading your investments across different areas within the cannabis sector can help keep things balanced. And, of course, staying up to date with the latest industry news and regulatory shifts is key, as these factors can influence how these stocks perform. With the right approach and a bit of homework, navigating the cannabis market in early 2024 could be a fruitful endeavor.
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