Cannabis MarketInvestment Opportunities

Four Factors Possibly Indicate a Buy on Aurora Cannabis

By August 26, 2019 No Comments

As of now, the early stages of the cannabis industry in the U.S. and Canada has cannabis stock investors in a state of heavy anticipation for the future. Cannabis sales in the U.S. are expected to hit $15 billion in 2019 and sales have been projected by prominent Wall Street firm Stifel to multiply by 15 times over to $200 billion by 2029. An even bigger event is on the horizon for cannabis investors across the globe and it, “Cannabis 2.0”, will take place in Canada this year. Canada’s introduction of cannabis edibles, beverages, and vapes are expected to give consumers a wide range of new, legal choices as only dried cannabis flower, oil, and under-the-tongue sprays are available for purchase right now.

Brett Hundley, analyst at Seaport Global Securities, in a note stated: “Although regulatory development has been both disappointing and frustrating, there is no question that cannabis offers an attractive growth profile. In addition, the Canadian space is about to gain a fair amount of pricing power, in our view, as the 2.0 market opens up late this year.”

Along with cannabis market sales projections, Aurora Cannabis has four factors that can indicate an even higher position as a continued leader in the expanded cannabis markets to come.

1.) The company appointed billionaire Nelson Peltz as a strategic adviser back in March of this year. Peltz’s duties are to expand Aurora Cannabis’ global reach and to work with the company in order to create and establish strategic partnerships. It is expected that Peltz will be able to leverage his previous experience and established relationships with high value companies to develop a partnership in each individual cannabis market segment that Aurora is associated in. This means that Peltz could soon form an agreement for a line of cannabidiol (CBD) infused wellness beverages and many other products that the company already has experience with.

2.) Aurora Cannabis is the leading producer of cannabis with a fully funded capacity expected to hit 625,000 kg annually. Its successful position as a cannabis cultivation leader is attributed to the company’s unique glass roof Sky facility design. Sky cultivation facilities have less crop loss, high automation, and low labor requirements when compared to the amount of cannabis cultivated. The recipe of automation, less labor, Sky facility design overall, and reduced crop loss has resulted in a produced dried cannabis flower that has an extremely low cost per gram ratio. Two facilities that are yet to complete construction, Aurora Sun & Aurora Nordic II, have a combined annual production output of 270,000 kg. Management at the company believes that when these two new facilities complete their construction phase, the cost per gram ratio will drop below $1.00.

3.) The Bank of Montreal (BMO) gave Aurora Cannabis a credit facility increase of C$160 million to C$360 million. Tier 1 Canadian bank lenders, spearheaded by the Bank of Montreal, all agreed to increase the initial C$200 million credit facility.

4.) Lastly, and certainly not the least important factor, Aurora Cannabis won an offer in July of this year to supply 400 kg of medical cannabis to Italy over a period two years. The agreement isn’t the primary focus of the factor, its the Italian location that is the key. Italy is home to one of the strictest medical cannabis industries across the globe and makes use of Aurora’s EU GMP certified facilities.

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