Aurora Cannabis Inc. (TSX:ACB) (NYSE:ACB) is showing signs of life today after months in the red. As pot stock watchers know, where ACB goes, so goes the industry.
It’s one of the few buoyancy stocks—along with Canopy Growth (TSX:WEED) (NYSE:CGC), Tilray Inc. (NASDAQ:TLRY), and a few others—that can have a profound impact on the Canadian Marijuana Index all on its own.
So today, Rich profiles Aurora Cannabis, its recent moves, and how the cannabis industry is reacting.
Aurora Cannabis’s Plans for Legalization 2.0
In its most recent press release, Aurora discussed its cannabis consumables roll-out strategy.
Most notably, the company will make its new products available in all 10 Canadian provinces. The initial shipments are currently awaiting approval from provincial regulators. In addition, for medical patients, consumable products are being made available for order countrywide.
ACB CEO Terry Booth said:
“We are ready and have launched a diversified portfolio of new product formats and are excited for Canadians to have access to high-quality, safe alternative cannabis products such as edibles, vape pens and other derivatives. We have prudently deployed capital and we believe that we’re ready with the appropriate combination of technology, scale and consumer insights to have the right products on store shelves in a timely fashion.”
As Rich has previously pointed out, investors will have to wait until Q2 or Q3 before the profits from Legalization 2.0 can begin affecting corporate margins. Still, Aurora Cannabis has always been about long-term potential.
Aurora Selling Greenhouse
News broke on January 6 that Aurora Cannabis is selling a 15,000-square-foot propagation area in Ontario. It’s seeking $17 million for this.
In an email to the Financial Post, ACB spokeswoman Michelle Lefler explained that the greenhouse would have required “retrofit and significant capital investment in order to meet Aurora’s production standards.”
According to MKM Partners analyst Bill Kirk, the listing signals major write-downs ahead, as much as $2 billion worth. Aurora Cannabis’s market value is currently $2.8 billion, and the company has $3.9 billion of goodwill and intangibles on its balance sheet.
“We believe more divestitures are likely, as Aurora has a major cash problem, and this listing only covers about two weeks of cash burn,” Kirk explained.
Can Aurora Still Double (or More) in 2020?
In 2019, Aurora lost 60% of its value. While some analysts think it’s in for a similarly bad—or worse—2020, Rich remains optimistic.
“I believe that Aurora Cannabis goes back to $10.00 in 2020,” says Rich. “If it does, anyone who’s buying right now is going to be greatly rewarded.”
ACB shares hit $10.00 in March of last year. From its current price of $1.68, a return to $10.00 would represent an upside of nearly 500%. While that might be too good to be true, even a small portion of that upside would be a phenomenal benefit to investors.
In the past, Rich has referred to Aurora as a “very safe bet” for investors. Whether 2020 turns out to be the company’s big year remains to be seen, but either way, RichTV Live will keep you up-to-date on this important pot stock.
Let Rich know what your plans are for ACB!
Featured image: Canva