The Canadian cannabis sector is crowded but there is still potential for large-cap and deep-pocketed Canadian cannabis stocks. The industry has faced serious challenges in the past year and the coronavirus pandemic just worsened prospects for some of the operators.
When Canada legalized pot most of the operators embarked on an expansion and acquisitions and some of the assets they acquired have yet to give returns leaving most of the companies grappling with cash problems. Some of the companies have even abandoned expansion plans as a result and some shuttered operations of some facilities. However, despite these challenges, there are some Canadian cannabis stocks still holding promise.
Aurora stock jumps on promising Q3 2020 results
One Canadian cannabis stock that is shining this week is Aurora Cannabis (NYSE:ACB) which is up 42%. The trigger for the stock was its latest Q3 2020 results which were much improved with a quarter over quarter increase of net revenue of 35%. Most of the growth in revenue came from its international medical cannabis operations which grew 125%. The company reported net sales of CA$75.5 million and a net loss of CA$137 million or CA$1.37 per share. The loss was however not as bad as the CA$1.3 billion loss it posted in the previous quarter.
The good results were due to a 34% increase in quarter over quarter sales in cannabis to around 12,729kg. The company reported a 24% increase in recreational cannabis sales with most of these gains due to the launch of the company’s cheap pot brand, Daily Special, and the new products such as edibles and vapes.
Canopy Growth Among Canadian cannabis stocks rejuvenated
Another Canadian cannabis stock that could also be rejuvenated is Canopy Growth Corp (NYSE:CGC). The company has been plagued with problems in the recent past but with the backing of Constellation Brands (NYSE:STZ) the operator seems like it will shake off its problems. Recently the beer maker exercised warrants to acquire Canopy’s shares taking its stake in the cannabis company to 38.6%.
The Ontario based company has continued to see a series of departures in recent months with the latest departure being that of Dave Bigioni the chief marketing officer and that of Andre Fernandez the chief operating officer. Jordan Sinclair the VP of communication for the company indicated that the two executives left on mutual agreement and the company has commenced a search for their replacement.
Aphria stock rides on Aurora’s promising results to jump 11.3%
Aphria (NYSE:APHA) is another Canadian cannabis stock that fits among the big players in the industry. In the past quarters, the company has been posting promising results and it is among the few operators to post a profit. The company ended last week on a high with its shares jumping 11.3%.
The trigger for the surge seems to have come from Aurora posting better than expected quarterly results. On its side, Aphria posted net revenue of CA$144.4 million in its recent quarter which was a 19.8% sequential quarter growth.