Q4 Cannabis Capital: Canadian Stocks at the Forefront
The Canadian cannabis investing market is filled with opportunities as October 2023 continues. Canadian cannabis stocks remain a top choice for investors, offering opportunities for those hoping to profit from the booming sector. The more extensive background of the cannabis industry is even more fascinating because recent events in the United States impact the entire market. Federal cannabis legalization has been moving forward in the United States, which has broad ramifications for the North American cannabis business.
Although Canadian cannabis equities have been resilient, the changing legal environment in the United States is increasing their growth potential. In general, Canadian businesses stand to benefit significantly from the momentum toward federal cannabis legalization in the United States, which could usher in a new era of international cooperation and investment. In addition, investors must take a balanced approach that incorporates fundamental analysis, technical analysis, and effective risk management to navigate these volatile waters. October 2023 presents an exciting juncture for cannabis investors to explore the full potential of this developing sector by carefully choosing the best Canadian cannabis companies, keeping up with the newest U.S. legal changes, and employing knowledgeable investment tactics.
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Best Canadian Cannabis Stocks for Q4
- Tilray Brands, Inc. (NASDAQ: TLRY)
- Village Farms International, Inc. (NASDAQ: VFF)
- SNDL Inc. (NASDAQ: SNDL)
Tilray, Inc.
Tilray, Inc. is a cannabis consumer packaged goods (CPG) company with operations across the U.S., Australia, Europe, and South America. The company has become one of the most successful cannabis corporations worldwide due to its dominance in the Canadian market. Tilray has expanded its presence in the nation. Tilray was the first company to cultivate and sell medical marijuana in Germany. According to the company, CBD-infused foods and beverages are trendy in the U.S. and Canadian markets.
Financial Highlights – 2023 Fiscal Fourth Quarter
- Record Q4 Net Revenue of $184 Million, Representing 20% Growth Year over Year, $627 Million of Net Revenue for FY2023; On a Constant Currency Basis, FY2023 Net Revenue Grew 6% to $668 Million
- $8 Million of Net Cash from Operating Activities Generated for FY2023 Achieved Nearly $200 Million Improvement in Adjusted Free Cash Flow Compared to FY2022
- Increased Tilray’s #1 Cannabis Market Share Position in Canada to 13% with HEXO Acquisition and Substantially Grew Medical Cannabis Market Position Across Europe
Fiscal Year 2024 Guidance
For its fiscal year ended May 31, 2024, the Company expects to achieve adjusted EBITDA targets of $68 million to $78 million, representing 11% to 27% growth compared to fiscal year 2023. In addition, the Company expects to generate positive adjusted free cash flow.
TLRY Stock Performance
On October 11, the shares of TLRY closed at $2.05, down 38.07% in the past month of trading. The 52-week price range for the stock is $1.50-$5.12 and is down 23.79% 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 21.65 percent increase over the last trading price of $2.05.
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Village Farms International, Inc.
Village Farms International, Inc. and its subsidiaries grow, sell, and distribute greenhouse-grown cucumbers, bell peppers, and tomatoes throughout North America. The company also operates CBD and cannabis-related businesses in the U.S. and Canada. Pure Sunfarms, a wholly owned subsidiary of Village Farms, is one of the most significant cannabis businesses in North America. In addition, Pure Sunfarms can double its output with a Delta 2 greenhouse and a cannabis-producing license. Village Farms updated its website and logo at www.villagefarms.com last year.
Second Quarter Financial Highlights
(Unless otherwise stated, all comparable periods are for the second quarter of 2022.)
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 by 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 $0.78 on October 11, down 26.42% in the last month of trading. In this case, The stock has a 52-week price range of $0.5550-$2.42 and is down 41.79% 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 21.65%.
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Sundial Growers Inc.
In Canada, SNDL Inc. produces, distributes, and retails cannabis-related goods. The corporation’s two main business divisions are retail operations and cannabis-related activities. It has, distributes, and sells marijuana to adult markets and sells it privately for recreational purposes through corporately owned and licensed retail marijuana businesses. Additionally, the business manufactures and markets inhalable goods like flower, pre-rolls, and vapes. Its brands include Top Leaf, Sundial Cannabis, Palmetto, and Grasslands.
Second Quarter 2023 Financial And Operational Highlights
In the second quarter of 2023, SNDL (Sundial Growers Inc.) reported robust financial results, with net revenue reaching $244.5 million, a 9.3% increase compared to the same period in 2022. This achievement marked an all-time high for the company, highlighting SNDL’s successful implementation of strategic initiatives and operational improvements. Additionally, SNDL reported a record gross margin of $51.9 million in Q2 2023, reflecting a remarkable 21% year-over-year increase. This boost in gross margin was attributed to cost-saving measures, supply chain efficiencies, improved pricing strategies, economies of scale, and product mix optimization.
While the company showed impressive revenue and gross margin growth, SNDL reported a net loss of $33.2 million for the second quarter of 2023. This loss was primarily driven by one-time events, including integration costs related to the Valens Company and realized losses from equity investments. However, SNDL also reported adjusted EBITDA of $2.2 million for the same period, a significant improvement compared to the $25.9 million loss in Q2 2022, indicating positive financial performance within the company’s operating segments and synergies from vertical integration strategies. SNDL’s enhanced operational efficiency was further underscored by a 51% reduction in cash used for operating activities compared to the same quarter in the previous year. As of June 30, 2023, SNDL boasted a solid financial position with $754 million in unrestricted cash, marketable securities, investments, and zero outstanding debt, resulting in a net book value per share of $4.86.
SNDL Stock Performance
SNDL stock closed at $1.60 on October 11, down 26.61% in the past month of trading. The stock has a 52-week price range of $1.25-$3.36 and is down 23.44% year to date. According to analysts at CNN Business, SNDL stock has a 12-month consensus price target of $3.22 per share. This would represent an increase of 101.37% from its last trading price of $1.60.
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Canadian Cannabis Stocks for Your Portfolio
As 2023 comes to a close, the Canadian cannabis sector is still a vibrant and interesting area for investors. This is an ideal time to consider investing in the Great White North due to the possible synergy between Canadian cannabis enterprises and the changing landscape in the United States. Overall, the continuing campaign in the U.S. to legalize cannabis on a federal level represents a substantial change in the industry’s landscape and offers profitable opportunities for Canadian businesses. Additionally, to make the most of this attractive landscape, it’s crucial to do an in-depth study and use a well-rounded investment approach, fusing fundamental analysis with technical insights and attentive risk management. With the top Canadian cannabis stocks for Q4 2023, you can confidently navigate this quickly evolving business and capitalize on North America’s top Canadian marijuana stocks.
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