Thanksgiving Week Watchlist: Top Canadian Cannabis Stocks

Holiday Highs: Canadian Cannabis Stocks to Watch During Thanksgiving Week

Beyond Canada’s borders, the global cannabis industry is also experiencing remarkable growth. Countries like the United States are increasingly pursuing cannabis legalization, creating new investment prospects and driving the momentum further. Short-term trading in the cannabis sector has become an attractive option for investors looking to capitalize on market fluctuations and evolving regulations. As the industry matures and consolidates, savvy traders watch for catalysts that influence stock prices. With the global cannabis market projected to expand significantly in the coming years, top Canadian cannabis stocks remain at the forefront, poised to benefit from this unprecedented growth and offering an intriguing avenue for investors seeking to ride the wave of the cannabis industry’s evolution.

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Canadian Cannabis Stocks to Keep an Eye on This Thanksgiving Week

1. Tilray Brands, Inc. (NASDAQ: TLRY)
2. Cronos Group Inc. (NASDAQ: CRON)
3. Village Farms International, Inc. (NASDAQ: VFF)

Tilray, Inc.

Tilray is a prominent player in the global cannabis industry, specializing in the cultivation, production, and distribution of high-quality medical and recreational cannabis products. Headquartered in Nanaimo, British Columbia, Canada, Tilray has established itself as a leading cannabis company with a strong international presence.

With numerous retail locations across North America, Tilray operates retail stores under various brand names, such as High Park and Manitoba Harvest. In the United States, they have a significant presence with stores in states like California, Colorado, and Washington. These strategic locations allow Tilray to tap into the lucrative U.S. cannabis market, catering to the evolving needs and preferences of cannabis consumers while maintaining a strong foothold in the Canadian market. As a global cannabis innovator, Tilray continues to expand its portfolio and explore new opportunities in the ever-growing cannabis sector.

Financial Highlights – First Quarter Fiscal Year 2024

In the first quarter, Tilray reported impressive financial results, with net revenue surging by 15% to reach $177 million, up from the previous year’s $153 million. However, it’s worth noting that gross profit stood at $44 million, while adjusted gross profit was slightly higher at $49 million, resulting in a gross margin of 25%. This gross margin was notably lower than the prior year’s 32%, mainly due to various factors, including changes in product mix and the absence of certain revenue streams.

In the cannabis segment, net revenue saw a substantial 20% increase, rising to $70 million, compared to $59 million in the same quarter of the prior year. Despite this impressive growth, the cannabis gross margin dipped significantly, falling from 51% in the prior year to 28%, largely due to the absence of certain revenue sources and strategic inventory adjustments. On a more positive note, the beverage alcohol segment performed well, with a 17% increase in net revenue to $24 million. The gross margin in this sector improved to 53%, up from 47% in the prior year, benefiting from changes in product mix and the acquisition of Montauk.

Tilray’s distribution segment also witnessed growth, with net revenue rising by 14% to $69 million, and a notable improvement in gross margin, reaching 11% compared to 9% in the prior year. Overall, while Tilray reported a narrowed net loss of $56 million compared to the prior year’s $66 million, it remains focused on achieving its integration and cost-saving goals. With a strong liquidity position of approximately $466 million, including cash and marketable securities, and improving operating cash flow, Tilray is well-positioned for continued success in the cannabis industry.

TLRY Stock Performance

On November 20^th, the shares of TLRY closed at $1.815, up 8.04% in the past five days of trading. The 52-week price range for the stock is $1.50-$5.12 and is down 32.53% year to date. According to CNN Business experts, TLRY stock has a 12-month consensus price objective of $2.50 per share. This represents a 38.12 percent increase over the last trading price of $1.815.

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Cronos Group Inc.

Five continents are served by the international cannabis wholesaler Cronos Group Inc. The cannabis-related efforts of Cronos have received overwhelming positive feedback from Canadian customers. Additionally, Cronos disclosed that it paid $110.4 million to purchase a 10.5 percent share in PharmaCann. Sales of marijuana will occur as a result of the US government legalizing it. PharmaCann’s six manufacturing facilities and twenty-three dispensaries would be covered under the collaboration. The business debuted a new line of cannabis candies with two flavors earlier this year. These particular recipes appear to be popular among adults, per a poll. In June, the business and Geocann collaborated to employ VESIsorb delivery technology for quicker absorption.

Third Quarter 2023

In the third quarter of 2023, Cronos Group reported a gross profit of $4.0 million, which marked an increase of $0.8 million compared to the same period in 2022. This boost in gross profit was mainly attributed to higher sales of cannabis flower and extracts in the Canadian adult-use market, as well as reduced costs related to biomass. However, it’s important to note that this increase was partially offset by reduced cannabis flower sales in Israel and an inventory write-down incurred due to the decision to wind down operations at the Winnipeg, Manitoba facility known as “Cronos Fermentation.” Excluding the impact of the inventory write-down, the gross margin would have been approximately 19%.

In terms of adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), the company reported a figure of $(15.2) million for Q3 2023, showing an improvement of $3.3 million compared to Q3 2022. This year-over-year improvement was primarily driven by a decrease in general and administrative expenses, which is part of the broader organizational efforts to reduce costs.

Guidance and Outlook

Regarding their financial outlook, Cronos anticipates a net decrease in cash of less than $5 to $10 million in the last three months of fiscal year 2023. However, they maintain their expectation that the net change in cash will turn positive in 2024.

CRON Stock Performance

On November 20^th, CRON stock closed at $2.09, 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 $2.41 per share. This projection represents a 15.56 increase from the stock’s most recent trading price of $2.09.

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Village Farms International, Inc.

North American bell peppers, tomatoes, and cucumbers grown in greenhouses are produced, marketed, and distributed by Village Farms International, Inc. and its subsidiaries. The company also manages cannabis and CBD-related businesses in the US and Canada. Pure Sunfarms, a completely owned subsidiary of Village Farms, is one of the biggest cannabis firms in North America. Pure Sunfarms can triple its output if it gets cannabis cultivation authorization and a Delta 2 greenhouse. Village Farms updated its website, www.villagefarms.com, and logo last year.

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.

VFF Stock Performance

VFF stock closed at $0.82 on November 20^th, up 25.96% in the last week of trading. In this case, the stock has a 52-week price range of $0.5550-$2.37 and is down 38.81% 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 132.75%.

Top Canadian Cannabis Stocks for the Current Climate

Moreover, practicing proper risk management is paramount when trading Canadian marijuana stocks. Due to stock volatility, use stop-loss orders, diversify, and invest wisely. Be aware of regulatory and geopolitical impacts.

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