The cannabis sector continues its slow march through summer. Watchers of RichTV Live know that the summer slump is a period in which stock prices fall and companies have comparatively little in the way of good news to report. On top of that, this summer, in particular, has seen numerous scandal rock the cannabis industry, eroding investor trust.
“This market is not for the faint of heart,” says Rich. “There’s a lot of volatility in cannabis. Right now everything is down, so anybody holding cannabis stocks is probably feeling the crunch.”
While Aurora Cannabis Inc. (TSX:ACB) (NYSE:ACB) has in no way been immune to the downturn affecting the rest of the sector, it remains one of the biggest and most exciting cannabis companies.
The company is expected to release its Q4 2019 revenue and production estimates sometime this week. These results should serve as a kind of Groundhog Day for Aurora Cannabis, and indeed the industry. If the company reports strong projections, its stock price is likely to grow, which might return some much-needed stability to pot stocks.
But if the estimates are fairly conservative, well, Aurora will have been spooked by its own shadow and we can all expect another few weeks of the summer slump.
Lucky for you, Rich is here to give us a little preview of the estimates by breaking down the company’s standing and recent news. Based on his research, he remains optimistic about Aurora.
“I think Aurora Cannabis is going to go up long-term,” says Rich.
Aurora Cannabis Stuck in the Red
What’s so fascinating about Aurora Cannabis’s last month or two is that the company has watched its stock price decline steadily despite having some fairly good news to report.
On August 15, Aurora announced that it increased its credit facility from the Bank of Montreal by $160 million, giving it plenty more capital to work with in the immediate future. Despite this, ACB stock fell nearly four percent the morning of the announcement.
On August 19, the company completed its acquisition of Hempco Food and Fiber. This provides Aurora with access to something that every major cannabis company seems to be after: low-cost hemp material that can be used for CBD extraction. The CBD market is gigantic, and growing bigger, so surely this news would get investors excited.
And yet, ACB stock continued to fall. From a month-long high of $9.05 on the TSX, Aurora has dropped now to $7.57. This probably has something to do with the fact that, on August 13, investment bank Piper Jaffray gave Aurora Cannabis a “neutral” rating. To add insult to injury, of the five major cannabis companies Jaffray analyzed, Aurora was the only one not to get a “buy.”
So what should pot investors make of all this contradictory information? If the company seems well-positioned, but the stock price keeps falling, what’s the play? Rich says this is the time to buy.
“I think these prices are very good, I think these are very close to a bottom for Aurora,” says Rich. “If we invest at these prices, I expect at least 100 percent returns as the company grows its quarterly revenue and starts to become profitable.”
Aurora’s Long-Term Upside
Aurora Cannabis remains the company with the largest production capacity in the cannabis industry. Within the next few years, it will be able to annually produce 625,000 kgs of product. This incredibly high level of output has analysts reevaluating the company as a potential long-term “buy.”
“In my opinion, when the resurrection comes, we see Aurora go way higher than $10.00,” says Rich. “I see it up past $15.00, I see it passing $20.00.”
Make sure you keep watching RichTV Live to see Aurora’s revenue and production estimates for Q4. Do you have any thoughts about Aurora’s position and potential? Join the conversation in the comments below.
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