Not so long ago, almost everyone had a bad case of weed mania – including me. But then we all obtained a hard dose of reality.
Canada is not that big. Cannabis was still federal illegal in America, which limited commercial prospects. Amateurs really like their dealerships. And so on.
As a result, the past few years have been tough. Even after having fallen from 2020, certain shares are down 90% compared to the summits of all time.
But the depression of cannabis has had its advantages. Companies with bad fundamental have been erased from the card, while the greatest players have been forced to cut their operations.
For this reason, some observers believe that survivors of the cannabis accident have a brilliant future. But is it correct?
Below, I will highlight the three main cannabis companies in Canada to see if they have long-term growth potential.
Let’s start!
Tilray (Nasdaq: Tlry)
In the media, cannabis users are described as young and unwanted slackers. But this stereotype erases a completely different side of this plant.
Every day, medical cannabis helps to relieve the suffering of millions of people. It is the vertical that Tilray Operation, because they produce flowers, oils and other products that attack everything, from anxiety to chronic discomfort.
In May 2021, Tilray also merged with aphria. In doing so, they had access to a greater variety of medical cannabis products. Even if we are waiting for additional states and countries to be fully legalized, many allow medical use. Thus, as the popularity of cannabis as a treatment continues to increase, the same goes for profits.
Now let’s talk about the course of Tlry’s action. It may be 90% reduction on its 2018 peak, but leave the past in the past. In the past year, TLRY increased from 52 weeks from 4.41 to 13.26, its last closure.
But with a little retracement earlier in the year, Tlry can be set again. Keep an eye on it.
Canopy growth (Nasdaq: CGC)
As recreational cannabis companies, canopy growth is giant. With a market capitalization of more than 8.59 billion USD, they are easily the most important in Canada.
A quick glance at their product range tells the story. They appeal to several demographic data – tweed products to CBD products as part of the Martha Stewart label, no other company is as diverse as CGC.
But institutional investors are no less care. For them, the fundamentals of the company are much more important. And in recent years, these figures have not impressed them. While the CGC has worked to lose excess assets and stocks, it is always weighed down Depreciation charges And insane figures in cash.
But on the right side, their sales have improved. In the second quarter of 2021, CGC reserved a profit of 390 million CADs, a large part on the force of the increase in income. But I don’t want you to be too excited – this stock is still massively overvalued.
At present, CGC is negotiating an allegiance 12 times future income. It is far from its rivals Tilray and Aurora, which are assessed respectively seven and five times future income.
A day will come when CGC is an excellent purchase. But that’s not that day – wait for them to fall into the figures with one figure. Then we can discuss.
Aurora Cannabis (Nasdaq: ACB)
By market capitalization, Dawn is just behind canopy growth because it is currently evaluated at 1.68 billion USD. But like his rival, Aurora suffered recently.
Unfortunately, many of their misfortunes come from uncomposed errors. For example, to collect funds, ACB has repeatedly issued additional stocks to sell. For this reason, they have diluted original shareholders of more than ten times since 2018.
Second, sales are not so hot. During the last quarter of ACB, sales fell 21% in annual shift. On the recreational side of their business, the income in Yoy was divided by two.
These are dark numbers. And when you look at the ACB stock graphic, the result was carnage. At the last market market, ACB was worth 6.69 – almost two thirds lower than its 52 weeks of 18.98.
Aurora’s options are not great in advance. Aurora currently hopes that reopening savings after the hideout will stimulate sales. Likewise, they would be delighted if Biden legalized cannabis in the United States. But neither solves the internal ACB problems currently.
Is there anywhere where to go but up?
Now anything can happen. After witnessing the blows that cannabis stocks have taken the last three years, it is tempting to think that a resurgence is possible.
But you should not ignore the fundamentals – even if the companies involved are market leaders. The companies mentioned above have indeed restructured, but it is not clear if they have a realistic assessment of the market.
At one point, yes – I believe that America will legalize federal cannabis. And when they do, you will be able to take advantage – if you have invested in quality cannabis actions. But at this stage, many high -level brands are not yet entitled to the ship.
Some are on the right track and can get there. Others can vacillate, however – so keep watching and investing with care.
