Mid-August 2023’s Must-Watch Penny Stocks in Canada
As Canada’s cannabis sector grows, knowledgeable investors look for chances in marijuana penny stocks in 2023. These lower-priced stocks have the potential for quick gains, making them tempting to day traders and swing traders looking for quick profits. However, approaching this market with prudence and a strong plan that includes good risk management and technical analysis to understand the peculiar characteristics of penny stocks is critical.
Identifying ideal penny stocks in the ever-changing Canadian cannabis sector requires extensive study and analysis. Day trading, a transaction that buys and sells inside a single trading day, can be appealing due to the possibility of profiting from intraday price swings. Swing trading, on the other hand, entails holding positions for multiple days to capitalize on price movements. In addition, both strategies can be rewarding when applied to the correct penny stocks, but they necessitate a thorough understanding of market patterns and company fundamentals.
Risk management is essential in the face of the attraction of fast rewards. Penny stocks can be volatile and vulnerable to unexpected price movements, emphasizing the significance of establishing straightforward entry and exit points. Incorporating technical analysis into decision-making processes assists traders in identifying trends, patterns, and probable price levels, increasing the precision of their trades. As the Canadian cannabis sector navigates new rules, economic developments, and consumer trends in 2023, traders must stay informed, practice caution, and apply clever methods to trade penny stocks’ promising but rugged terrain.
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Canadian Cannabis Market: Hot Penny Stocks to Monitor in August 2023
- High Tide Inc. (NASDAQ: HITI)
- Organigram Holdings Inc. (NASDAQ: OGI)
- Cronos Group Inc. (NASDAQ: CRON)
High Tide Inc.
High Tide Inc. is a cannabis dispensary that manufactures and sells cannabis-based goods. In general, High Tide’s portfolio comprises a reputable international manufacturer and distributor of cutting-edge smoking accessories and a well-known Canadian cannabis brand. The corporation’s primary purpose was to dominate the internet accessory supply market. High Tide is now available in 127 stores across Canada. Blessed CBD’s primary market is the United Kingdom, and High Tide purchased the company in October 2021. With the opening of its 66th retail cannabis store, the company improved its market share and surpassed all competitors to become Alberta’s industry leader. This was High Tide’s largest acquisition to date, according to the company.
Second Fiscal Quarter 2023 – Financial Highlights:
- Revenue increased to $118.1 million in the second fiscal quarter of 2023 compared to $81.0 million during the same period in 2022, representing an increase of 46% year-over-year and was consistent with the previous quarter. Note that the second fiscal quarter of 2023 had three fewer days and is a seasonally slower quarter when compared to the first fiscal quarter of 2023
- Gross profit increased to $31.6 million in the second fiscal quarter of 2023 compared to $22.7 million during the same period in 2022, representing an increase of 39% year-over-year and was down 2% sequentially as there were 3% fewer days.
- The gross profit margin in the three months ended April 30, 2023, was 27%, consistent with the previous three quarters. The Company notes that gross margins earned in its bricks-and-mortar stores ticked higher sequentially.
- Adjusted EBITDA increased to $6.6 million in the second fiscal quarter of 2023 compared to $2.4 million during the same period in 2022, representing increases of 174% year-over-year and 20% sequentially3
Other Highlights
- Continued cost-saving measures implemented by the Company resulted in a decrease in general and administrative expenses as a percentage of revenue to 5% in the second fiscal quarter of 2023, an improvement from 7% in the second fiscal quarter of 2022 and 6% sequentially.
- Cabanalytics data sales were $6.4 million in the second fiscal quarter of 2023 compared to $5.1 million for the same quarter last year. Sequentially, Cabanalytics data sales decreased by 3%
- For locations operational throughout the second fiscal quarter of 2023 and 2022, same-store sales increased by 30% year-over-year. Sequentially, same-store sales increased by 1%.
- Loss from operations improved to ($2.6) million in the second fiscal quarter of 2023, compared to ($7.6) million during the same period in 2022 and ($3.9) million sequentially, representing a reduction in losses of 65% and 33% respectively.
- Net loss improved to ($1.6) million in the second fiscal quarter of 2023, compared to ($8.3) million during the same period in 2022 and ($3.9) million sequentially, representing reductions in net losses of 81% and 59%, respectively.
- The Company generated fully diluted earnings per share of ($0.02) in the second fiscal quarter of 2023, compared to ($0.14) during the same period in 2022 and ($0.05) sequentially, representing improvements of 86% and 60%, respectively.
- Free cash flow was ($2.0) million in the second fiscal quarter of 2023 compared to ($0.8) million in the first fiscal quarter of 2023. Importantly, this includes a meaningful reduction of 6.8 million dollars in accounts payable and accrued liabilities during the second fiscal quarter. Free cash flow also represented a 66% improvement versus ($5.8) million in the second fiscal quarter of 2024
- Cash on hand as of April 30, 2023, totaled $22.5 million.
HITI Stock Performance
The shares of HITI finished at $1.24 on August 16th, down 4.62% in the last three months of trading. The stock is trading in a 52-week price range of $1.0340 to $2.23, down 16.22% from the previous year. According to Tip Ranks analysts, HITI stock has an average price target of $4.20 per share. In this example, the upside would be 236% over the current market price of $1.24.
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Organigram Holdings Inc.
OrganiGram Holdings Inc. is well-known for its cannabis-derived and extracted products. The organization is well-known for cultivating high-quality marijuana for recreational and medicinal purposes. Organigram is expanding its most essential foreign contacts to strengthen its position in the global cannabis industry. The wholesale cannabis distribution industry of the corporation is rapidly expanding. SHRED’ems Gummies are now available as a premium addition to Organigram’s SHRED product line. The Edison JOLTS are also the first palatable and potent THC edible extracts in the country.
HIGHLIGHTS
- Recreational net revenue was $92.5 million for the nine months ended May 31, 2023, an increase of $8.0 million over the same prior-year period.
- Increased sequential net revenue from Canadian recreational business by 7% vs. Q2, driven by continued success in hash and rebound in flower
- Organigram regained the #3 position in May and held it through June with a 6.7% national market share1
- Held the #1 position in milled flower, the #1 position in concentrates, and moved into the #2 position in gummies nationally in May 1
- International sales for the first nine months of fiscal 2023 of $18.4 million exceeded the $9.5 million realized for the same prior-year period by 94%
- Completed first U.S. investment in Phylos Bioscience Inc. (“Phylos”) to commercialize THCV and transition a portion of production capacity to more cost-effective and consistent seed-based production over time
- Completed investment in Green Tank Technologies Corp. (“Greentank”) for initial exclusive access to new vapour heating technology
- Product Development Collaboration with BAT moving rapidly toward product commercialization.
- SHRED brand is one of the largest cannabis brands in the Canadian market approaching $190 million in retail sales in the last 12 months
- Successfully launched 28 SKUs in the quarter for a total of 127 in the market.
- Completed ramp-up of SHRED X Rip Strip production and distribution to meet strong consumer demand
- Announced supply agreement with Sanity Group GmbH (“Sanity Group”) to supply medical cannabis to the promising German market
- A strong balance sheet with $75 million in cash and negligible debt
OGI Stock Performance
OGI stock closed at $1.42 on August 16th, down 27.42% in the past three months of trading. The stock has a 52-week price range of $1.29-$5.08, down 70.17% in the last year. According to analysts at CNN Business, OGI stock has a 12-month median price target of $4.20 per share. In this case, this would represent an upside of 238.71% from its last trading price of $1.42.
Cronos Group Inc.
Cronos Group Inc. is a global cannabis distributor with operations on five continents. In general, Cronos’ cannabis ventures have received nothing but praise from Canadian consumers. The company also revealed that it spent $110.4 million to acquire a 10.5 percent stake in PharmaCann. The legalization of marijuana by the US government will impact sales, among other things. The partnership would encompass PharmaCann’s six manufacturing facilities and its 23 dispensaries. Earlier this year, the company released a new line of cannabis sweets in two flavors. Adult customers enjoy these specific foods, according to a poll. In June, the company teamed with Geocann to use the VESIsorb delivery technology for faster absorption.
Overall, the company reported net revenue of $20.1 million in the first quarter of 2023, a $4.9 million decrease from the same period in the previous year. The decline was mostly due to lower cannabis flower sales in the Rest of the World (“ROW”) segment and a decrease in revenue in the US segment. The depreciation of the Canadian and Israeli currencies against the US dollar affected the ROW segment’s net revenue as well. Higher cannabis extract sales in Canada offset some of these findings. Gross profit was $2.4 million in Q1 2023, a $4.5 million decrease from Q1 2022.
The total net revenue for the fiscal year 2023 is expected to be between $100 and $110 million. In addition, the Company is on track to meet the high end of the previously projected $10 to $20 million in operating expense savings for 2023, primarily from savings in sales and marketing, general and administrative, and R&D.
CRON Stock Performance
On August 16th, CRON stock closed at $1.80, with a 52-week price range of $1.64-$3.616. According to CNN Business analysts, CRON stock has a 12-month consensus forecast price target of $2.51 per share. In this case, this projection represents a 38.89 increase from the stock’s most recent trading price of $1.80.
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Canadian Cannabis Penny Stocks for Traders to Watch
In conclusion, the mid-August 2023 landscape of Canadian cannabis penny stocks presents a dynamic and potentially lucrative trading arena. With the industry’s ongoing growth and evolution, these penny-level stocks offer traders a chance to capitalize on short-term gains. Whether engaged in day trading or swing trading, investors must approach this market with a well-defined strategy that encompasses thorough research, risk management, and the utilization of technical analysis.
However, it’s crucial to acknowledge the inherent risks associated with penny stocks. Overall, their volatility demands disciplined decision-making and a keen eye for market trends. As Canada’s cannabis stocks continue to respond to regulatory changes and consumer preferences, staying informed and adaptable will be paramount for traders seeking success within this niche. Also, by carefully considering the stock options presented in this watchlist and staying attuned to market dynamics, traders can position themselves advantageously to seize opportunities in the ever-evolving Canadian cannabis landscape.
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