Top Canadian Cannabis Stocks 2024: Ultimate Investment Guide

Canadian Cannabis Stocks to Keep an Eye On in 2024

This week is shaping up to be an intriguing one for Canadian marijuana stocks, with several names catching the eyes of investors. As the industry forges ahead, these companies are emerging as ones to watch, thanks to their potential for growth and the dynamic nature of the market. Investors and traders seek solid earnings reports, strategic alliances, and opportunities to break into new markets. Given Canada’s established cannabis landscape, these firms offer insights into the sector’s continuous evolution, serving as a barometer for wider industry trends.

On another note, the U.S. cannabis industry stands at the brink of substantial growth, buoyed by shifting legislation and a growing acceptance among the public. This shift has ignited interest in the burgeoning potential for cannabis enterprises operating within the U.S. or looking to make their mark there. Leveraging technical analysis and stringent risk management is crucial for those eyeing these opportunities. Technical analysis aids in pinpointing price trends and spotting potential reversals, while effective risk management is key to safeguarding investments against the sector’s volatility and unpredictability. Together, these strategies are indispensable for those navigating the complex waters of the cannabis market, ensuring a more informed and cautious investment approach.

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Canadian Cannabis Stocks Forecast: Watchlist for 2024

1. Canopy Growth Corporation (NASDAQ: CGC)
2. Aurora Cannabis Inc. (NASDAQ: ACB)
3. Cronos Group Inc. (NASDAQ: CRON)

Canopy Growth Corporation

Canopy Growth Corporation is an influential company in the global cannabis industry, with its headquarters in Smiths Falls, Canada. Since its establishment in 2013, it has grown to become one of the largest cannabis companies in the world. Canopy Growth manufactures, markets, and supplies cannabis products for both recreational and therapeutic uses. It sells oil, soft gel capsules, infused beverages, dried flowers, and topicals.

Canopy Growth has expanded the number of retail shops it operates under various brands, such as Tokyo Smoke and Tweed, throughout Canada since my last report in April 2023. In states like British Columbia, Alberta, and Ontario that have progressive cannabis legislation, they are widely available. The company’s international activities are growing throughout the United States through partnerships and acquisitions, particularly in states where cannabis use is permitted. There’s a chance some store counts and the states with the greatest presence for the current year need to be updated.

Financial Highlights

In Q3 FY2024, Canopy Growth achieved significant strides, reporting consolidated gross margins of 36%, a notable rise from the previous year. Particularly in Canada, cannabis gross margins jumped to 28%, showing a stark improvement from the -11% in Q3 FY2023. This financial uplift is attributed to reduced inventory charges, lower operating costs, and the strategic use of cost-effective inputs. Despite the divestiture of its national retail business impacting revenue comparisons, the company still managed a 6% year-over-year net revenue growth when excluding this factor. However, consolidated net revenue saw a 7% decrease year-over-year, totaling $79 million. Yet, the Rest-of-World segment witnessed an 81% revenue surge, propelled by strong growth in Australia, Europe’s rebound fueled by new product launches and sales strategies, and recovering markets that had previously faced declines.

Storz & Bickel® also reported a remarkable 54% sequential net revenue increase in Q3 FY2024, largely due to the successful launch of the VENTY portable vaporizer and record-breaking Black Friday sales. This product mix shift towards higher-margin items significantly contributed to gross margin improvements. On the operational front, Canopy Growth significantly reduced its free cash flow losses to $(34)MM, achieving a 57% improvement over the previous year. The company’s financial health is strengthening with a solid cash and short-term investments balance of $186MM and a $69MM reduction in debt during the quarter. The management team remains confident in reaching positive Adjusted EBITDA across all business units by the end of FY2024. CEO David Klein and CFO Judy Hong emphasized the company’s renewed focus on cannabis, operational efficiencies, and the promising outlook with the Canopy USA strategy, aiming to position Canopy Growth as a leader in the rapidly expanding U.S. cannabis market.

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Aurora Cannabis Inc.

Aurora Cannabis Inc. is a Canadian corporation with its headquarters in Edmonton, Alberta. Its focus is on growing and selling cannabis for both recreational and medical purposes. With operations and sales spanning 25 countries, the company has built a solid international footprint. Aurora is renowned for its superior cannabis products and cutting-edge growing methods.

Aurora Cannabis has achieved great success on the international scene, especially in Latin American and European nations. Because of federal cannabis laws, its presence in the United States is more indirect. Aurora, meanwhile, has concentrated on strategic alliances and acquisitions to enter the American market before modifications to federal legislation. Key priority areas for such strategic initiatives are states with medical cannabis programs and possibilities for recreational legalization.

Fiscal 2024 Third Quarter Highlights

Aurora Cannabis Inc. reported a 5% rise in consolidated net sales to $64.4 million in the third quarter of 2024 from $61.1 million in the same period the previous year. Despite a drop in net revenue from consumer cannabis, this growth is due to the expansion of their global medical cannabis business and higher revenue in plant propagation. With adjusted gross profit before fair value adjustments increasing by 15.7% to $32.4 million, the adjusted gross margin before fair value adjustments increased to 50% from 46% in the previous year. Due to the introduction of new cultivars, the medical cannabis market proved especially robust, accounting for 86% of the adjusted gross profit and 70% of the consolidated net income. Increased sales in Europe and Australia supported this.

Operationally, Aurora’s net revenue from consumer cannabis dropped from $14.6 million to $11.6 million in the previous year. This was due to the company strategically allocating products to markets with greater profit margins, which increased the segment’s adjusted gross margin from 20% to 26%. The Bevo brand’s plant propagation division reported a rise in revenue to $7.3 million, with improved adjusted gross margins as a result of changes in the sales mix and seasonal business trends. Additionally, the company’s net loss decreased to $25.2 million from $62.4 million as a result of higher gross profit and lower operating costs. Significantly, Aurora recorded its fifth consecutive quarter of positive adjusted EBITDA, totaling $4.3 million, up from $3.0 million in the prior year, signaling a robust path towards achieving positive free cash flow within the calendar year.

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Cronos Group Inc.

Cronos Group Inc. is a well-known cannabis company that operates globally. This Canadian company works in the cannabis sector. Its main goals are to manufacture and market products associated with cannabis, which 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.

In April 2023, there were several states in the United States where Cronos Group had a retail presence. Because they have a lot of stores, they are well-represented in places where cannabis is legal. The company has placed itself strategically in cannabis-heavy markets in the United States. This covers both the medical and recreational markets. Cronos Group’s expansion into these states is a testament to its commitment to accessibility. Their goal is to establish connections with a wide range of clients effectively.

Fourth Quarter 2023

In Q4 2023, net revenue increased to $23.9 million, up by $1.9 million from the previous year. This rise is primarily attributed to enhanced cannabis flower sales in Canada, along with growing markets in Germany and Australia. However, sales were tempered by challenges in Israel due to the conflict involving Israel and Hamas, alongside competitive pricing pressures. These factors, coupled with a weakened Canadian dollar and the New Israeli Shekel, impacted the financials. Despite these hurdles, gross profit also improved by $0.7 million to $1.9 million, thanks to strong sales in the mentioned regions, albeit offset by the operational wind-down in Winnipeg and the conflict’s effects on the Israeli market.

Canadian Cannabis Stocks Shaping the Future in 2024

As this week approaches, the spotlight on top Canadian cannabis stocks has never been brighter. These companies continue to pave the way in a competitive landscape through their innovative approaches and strategic expansions. Investors have been closely monitoring their performance, seeking out the ones with the strongest growth prospects and operational efficiencies. Furthermore, the anticipation surrounding upcoming earnings reports and potential market expansions has fueled discussions. This underlines the dynamic nature of the Canadian cannabis sector. Indeed, these stocks are indicators of individual company success and reflect broader industry health and trends.

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