Aurora Cannabis (ACB)
We are watching Aurora Cannabis as a possible earnings play. ACB is on track to be the largest cultivator of high THC cannabis in the world. However, ACB recent diversified into CBD hemp and is giving investors the ability to play both CBD and THC news.
ACB recently bought ICC labs, the largest CBD grower in South America and also purchased a hemp grower and processor in Europe. In Europe and Uruguay, Aurora will now have over 8,000 acres of hemp capable of producing 50,000 kg of pure CBD extract. With a Mkt Cap of $11.3 billion, ACB trades at 100x its cash flow in 2020, but is now a more diversified and financially secure company.
With the current stock price at $5.69, we see a good time to enter when the stock reaches the buy target, the green line, at $6. We are hoping that ACB has positive news and numbers in the earnings call driving the stock to target 1, the red line, at $7.35. We’ve seen ACB trade at $9 and we see a potential for it again to reach that point, so we see a target 2, the yellow line at $9.
Neptune Wellness (NEPT)
While the cannabis market is seen to be volatile, the best way to try and escape that risk is by finding a company with supply/service agreements already in place. Neptune Wellness Solutions (NEPT) has contracts with top cannabis producers like Tilray (TLRY) and The Green Organic Dutchman (TGODF).
By the end of September, NEPT’s Quebec subsidiary will receive an amended operating license which will allow the company to bring new equipment online and begin expanding its extraction capacity. Neptune also expects the recent acquisition of SugarLead to start contributing financially after FY 2020 Q2 (9/30). Its expected that SugarLeaf’s US extraction facility will reach an annual operating capacity of 1.5B kg of hemp biomass.
With the current stock price at $3.97, we see that this stock has great potential. If the stock drops to $3.75, that would be a great entry point, the green line.