Navigating Q4 2023: Best Canadian Cannabis Stocks to Invest In
The cannabis industry in Canada continues to be a hub of financial opportunities, drawing in both seasoned investors and novices. The industry’s unrelenting expansion has been nothing short of extraordinary, driven by rising legality and soaring demand. Since cannabis was first legalized for recreational use in 2018, Canada’s cannabis market has advanced significantly. Its booming retail sector, elite cultivators, and well-established infrastructure all contribute to its continued success. Growing exports abroad have also helped the industry, establishing Canada as a major cannabis-producing hub.
The US market offers Canadian cannabis companies enormous development potential. These companies want to grow through partnerships and acquisitions to reach the south of the border. Benefits to Canadian operators are also anticipated from eliminating the 280E rule. There was a profit limit on this tax regime. Removing it might increase margins. Top Canadian cannabis stocks are well-positioned to profit from shifting regulations and rising demand as leaders in the global cannabis industry.
Growth In the Global Cannabis Industry
By 2027, the cannabis market is expected to grow to a value of $102 billion worldwide. From 2022 to 2027, this translates as a compound annual growth rate of 22%. The United States’ legalization of cannabis is the main motivator. Experts predict that the US market alone might grow to $40 billion.
Investors interested in Canadian marijuana stocks must use technical analysis and prudent risk management. With key indicators, trends, and price patterns in mind, technical analysis can assist traders in determining the best times to enter and exit the market. A well-considered risk management plan can also lessen possible drawbacks in this unstable industry. Examples of such strategies include diversifying the portfolio and establishing stop-loss orders. Making wise investment choices is essential to navigating the fascinating and dynamic environment of Canadian marijuana stocks in November 2023, as the cannabis sector is expected to grow further, and new markets may open up in the near future.
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Investor’s Guide to Canadian Cannabis: Q4 2023 Stock Picks
- Aurora Cannabis Inc. (NASDAQ: ACB)
- Canopy Growth Corporation (NASDAQ: CGC)
- Village Farms International, Inc. (NASDAQ: VFF)
Aurora Cannabis Inc.
Aurora Cannabis Inc. is a Canadian company that cultivates and ships medicinal marijuana to nations across the globe. The company bought Reliva, a startup that makes CBD in the US, to establish a foothold in the cannabis industry there. Three more cultivars of San Rafael ’71 are now available, courtesy of Aurora. The business sold marijuana to Israel for $8 million. Now that the company has shipped the first batch of cannabis to the French medical cannabis pilot program, its attention is being diverted to accounting balances. The corporation expanded its market dominance in Germany in May by opening its first production and manufacturing facility with EU-GMP accreditation. The company will release its second quarter fiscal 2024 results on November 9th after the market close.
Fiscal 2024 Fourth Quarter Highlights
- Achieves Quarterly Net Revenue1 of $75.1 Million; Strong YoY Growth Across All Business Units; Global Medical Cannabis +14%, Consumer Cannabis +5%, Plant Propagation +12%
- Delivers Third Sequential Quarter of Positive Adjusted EBITDA1, Supported by Bevo’s Record Quarterly Revenue
- Cash Used in Operating Activities Reduced by $15.5 Million YoY, Re-Affirms Target of Positive Free Cash Flow in Calendar Year 2024
ACB Stock Performance
ACB stock closed at $0.4752 on November 7th, down 16.22% in the last month of trading. Currently, the stock has a 52-week price range of $0.41-$1.62, down 48.49% year to date. According to analysts at CNN Business, ACB stock has a median price target of $0.61 per share. This would increase 29.30% from its last trading price of $0.4752.
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Canopy Growth Corporation
In Canada, Canopy Growth is a well-known company that produces cannabis and products produced from it. The company’s three primary export markets for commodities derived from hemp and cannabis are the United States, Canada, and Germany. In the US, alcoholic beverages infused with CBD will be sold by Canopy and Southern Glazers Wine & Spirits in 2021. In order to expand its product line in Canada, Canopy purchased Supreme Cannabis Company, Inc., an upscale cannabis company. Whisl is a state-of-the-art CBD vape pen that may support your optimistic attitude throughout the day. The company will release its second quarter fiscal 2024 results on November 9th after the market close.
Financial Highlights
- All business segments of the Company delivered sequential revenue growth in Q1 FY2024 compared to Q4 FY2023.
- We achieved a cost reduction of $47 million in Q1 FY2024, bringing total cost reductions to $172 million since the beginning of FY2023.
- Consistent supply and strong demand for high-quality flower elevated the Tweed brand to the #8 rank within the total flower segment of the Canadian adult-use cannabis market in Q1 FY20241, moving up 19 places year-over-year.
- Canadian cannabis business continued its transformation to simplified, asset-light model in Q1 FY2024, building on the divestiture of national retail operations, closure of eight cultivation facilities to focus on two purpose-built cultivation sites and outsourcing of vape, beverage and edible production to independent, third-party Contract Manufacturing Organizations (“CMO”).
- The Company continues to focus on simplifying its businesses and reducing cash burn; currently reviewing strategic options for BioSteel Sports Nutrition Inc. (“BioSteel”), including a potential sale of the business, in order to remove the cash burden to Canopy Growth as quickly as possible.
- Entities that are expected to be acquired by Canopy USA, LLC (“CUSA”) continue to demonstrate momentum and Canopy Growth continues to work with regulators to advance its novel structure.
CGC Stock Performance
CGC stock closed at $0.5874 on November 7th, down 16.66% in the past month of trading. Currently, the stock has a 52-week price range of $0.3460-$4.77, down 74.57% year to date. According to analysts at CNN Business, CGC stock has a 12-month median price target of $0.52 per share. This estimate would be an 11.86% decrease from its last trading price of $0.5874.
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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 treble its output if it gets a cannabis cultivation authorization and a Delta 2 greenhouse. Village Farms updated its website, www.villagefarms.com, and logo last year.
Second Quarter Financial Highlights
(All comparable periods are for the second quarter of 2022 unless otherwise stated)
Consolidated
- Consolidated sales decreased (7%) year-over-year to $77.2 million from $82.9 million;
- Operating loss before tax improved to ($42 thousand) compared with an operating loss before tax of ($43.8 million);
- Consolidated net loss improved to ($1.4 million), or ($0.01) per share, compared with ($36.6 million), or ($0.41) per share; and,
- Consolidated adjusted EBITDA (a non-GAAP measure) improved to $4.5 million from negative ($10.3 million).
- Canadian Cannabis (Pure Sunfarms and Rose LifeScience)
- Net sales decreased (6%) to $28.1 million (C$37.7 million) from $29.8 million (C$38.0 million) (a decrease of (1%) in Canadian dollars);
- Retail branded sales increased 24% (in Canadian dollars);
- International (export) sales increased 217% (in Canadian dollars);
- Gross margin was 38%;
- Net income was $1.2 million (C$1.7 million) compared with net income of $1.8 million (C$2.3 million); and,
- Adjusted EBITDA increased 78% to $4.8 million (C$6.7 million) from $2.7 million (C$3.4 million) (an increase of 97% on a constant currency basis).
VFF Stock Performance
VFF stock closed at $0.7750 on November 7th, down 1.91% in the last month of trading. Currently, the stock has a 52-week price range of $0.5550-$2.42 and is down 42.16% year to date. According to analysts at CNN Business, VFF stock has a 12-month median price target of $2.50 per share. In this case, this would represent an upside of 143.47%.
Q4 2023 Canadian Cannabis Stock Prospects
Investors in the Canadian cannabis industry have an exciting journey ahead of them starting in November 2023. These stocks are a compelling option for investors looking to gain a presence in this dynamic market because they combine growth potential, innovation, and opportunity. To traverse the ups and downs of the industry, traders of all experience levels must practice cautious risk management and remain watchful using technical analysis. The cannabis sector is always changing due to legalization and international expansion, so keeping a close eye on these top Canadian cannabis stocks this week can help you fully capitalize on this thriving market. Make wise decisions and allow November to stand out in your investing career.
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