Saturday , 19 October 2019


Cannabis Central: Not All “Pot” Stocks Are Penny Stocks: These 16 Trade Above $5/share

While it is true that most (57%) of the universe of 135 medical & recreational marijuana/cannabis “pot’ stocks are penny stocks (i.e. trading for less than $1/share) 43% of them do trade in excess of $1/share of which 10 trade at $5 to $10/share and 6 trade in excess of $10/share. Below is a breakdown of the those 16 stocks with pertinent data on each and links to their web sites.

Written/compiled by Lorimer Wilson (www.munKNEE.com)

Of the 6 highest priced (i.e. $10+) stocks 5 trade on the Toronto Stock Exchange (TSE) and 1 on the Canadian Securities Exchange (CSE). Beta depicts the level of systematic and unsystematic risk based on prior performance. They are as follows:

(All dollar figures below are Canadian as of July 19/19 unless otherwise noted)

1.  Canopy Growth Inc. (TSE:WEED; NYSE:CGCMarket Cap: $18.5B www.canopygrowth.com Beta: 4.1

  • Business Description: The company grows, produces and sells medical marijuana supported by over half million square feet of indoor and greenhouse marijuana production selling its products under the brand names Tweed, Bedrocan, and Mettrum.
  • Latest News: The company announced on July 3rd that it had terminated its co-founder and co-CEO, Bruce Linton, as a result of the company’s recently very disappointing year-end results.  Canopy’s other co-CEO, Mark Zekulin, assumed sole possession as leading executive until the transition period is completed and a replacement is found. Related Article

2. Charlotte’s Web Holdings, Inc. (TSE:CWEBMarket Cap: $1.9B www.charlottesweb.com Beta: 2.9

  • Business Description: The company is a vertically-integrated cannabis company that is headquartered in Boulder, CO with an initial focus on hemp-based, cannabidiol wellness products.
  • Latest News: Charlotte’s Web recently launched a line of pet products, including functionally-focused chews with synergistic ingredients to target specific health functions, including: Calming, Hips & Joints and Cognition. On May 28 the Canadian Securities Exchange (CSE) issued a delisting notice for Charlotte’s Web Holdings confirming the senior Canadian exchange TSX as its new listing. Related Article

3. Cronos Group Inc. (TSE:CRON; Nasdaq: CRONMarket Cap: $6.7B www.thecronosgroup.com Beta: 4.1

  • Business Description: The company cultivates and sells medicinal and recreational cannabis through its medicinal brand, Peace Brands, and its two recreational brands, COVE and Spinach. Although it primarily operates in Canada, Cronos exports medical cannabis to Poland and Germany. In addition, it has entered joint ventures in Israel, Colombia and Australia to drive further cultivation and growth. In March, 2019, Cronos closed a C$2.4B strategic investment from Altria Group. This investment will help the company expand its product development and commercialization capabilities.
  • Latest News: Despite the company posting improved revenue and net loss for the fiscal first quarter on July 3rd, CRON stock has tumbled as its results fell short of analysts’ forecast. Related Article

4. Horizons Marijuana Life Sciences ETF (TSE:HMMJMarket Cap: $831.7M www.HorizonsETFs.com  Beta: 3.2

  • Business Description: This ETF provides exposure to companies with significant business activities in, or significant exposure to, companies involved in the marijuana industry in the U.S. where local state law regulates and permits such activities, as well as in companies involved in the Canadian legal marijuana industry. The vast majority of the constituents currently trade on the Canadian Securities Exchange and NEO.
  • Latest News: The HMJR portfolio added more than 20 names to it this quarter mostly from Australia, Israel and, of course, the United States to get exposure to the early entrants into new markets. Related Article

5. Acreage Holdings Inc. (CSE:ACRG.UMarket Cap: $654.5M www.acreageholdings.com Beta: 2.4

  • Business Description: The company is a vertically integrated, multi-state operator deriving its revenues from its retail dispensary business where cannabis and cannabis-infused products are sold to consumers.
  • Latest News: Canopy Growth Inc. has entered into an agreement to acquire Acreage Holdings once cannabis becomes legal in the U.S., contingent on the U.S. federal government legalizing cannabis by 2026, in a deal worth US$3.4 billion. The Companies believe that the Arrangement will deliver significant benefits that will help accelerate the growth of Acreage across the United States powered by the expertise of the world’s leading cannabis company. In turn, upon the Acquisition, Canopy Growth shareholders will benefit from a national turnkey platform in the United States. Related Article

6. Village Farms Int’l Inc. (TSE: VFF; Nasdaq:VFFMarket Cap: $741.0M villagefarms.com Beta: 3.8

  • Business Description: Village Farms International Inc, along with its subsidiaries owns and operates agricultural greenhouse facilities. and, In the past couple of years, has made moves into the cannabis space by forming joint ventures with Emerald Health Therapeutics and Nature Crisp LLC to form Pure Sunfarms Corporation and Village Fields Hemp USA LLC.
  • Latest News: While it can produce 75,000 kilos of cannabis every year, Village Farms announced earlier this year that is going covert another greenhouse soon, thereby doubling the company’s output. Considering the escalating demand for cannabis in the adult recreational use space, the company should not have any difficulty in selling its product.. Related Article

The 6 companies above consist of:

  • Large Cap (i.e. +$10B): 1
  • Mid Cap ($2B-$10B): 1
  • Small Cap ($300M-$2B): 4

and have an average beta of 3.4

Of the 10 stocks that trade between $5/share and $9.99/share 4 are listed on the TSE; 3 on the TSXV; and 3 on the CSE. Again, beta depicts the level of systematic and unsystematic risk based on prior performance. They are as follows:  

All dollar figures below are Canadian as of July 19/19

1. Aurora Cannabis Inc. (TSE:ACB; NYSE:ACBMarket Cap: $9.98B www.auroramj.com Beta: 1.6

  • Business Description:  Aurora is engaged in the production and distribution of medical cannabis and is one of the largest and fastest-growing cannabis companies in the world, with a funded production capacity of over 500,000 kilograms per year.
  • Latest News: After enjoying a strong run for months, Aurora stock declined, and since February, ACB stock has only gained 6% as many investors are of the opinion that, due to rising competition, it might be difficult for the company to maintain its dominant market share. Related Article

2. Aphria Inc. (TSE:APHA; NYSE:APHAMarket Cap: $2.2B www.aphria.com Beta: 2.7

  • Business Description: Aphria Inc. and its subsidiaries produce and sell medical marijuana and its derivatives through retail sales and wholesale channels. Its products include capsules, oral solutions vaporizers.
  • Latest News: Aphria is still repairing the damage from a controversial acquisition of Latin American assets. Concerns were raised about the value paid out for the purchase against the actual worth of the assets in question. The accusations suggested that management had a vested interest in the assets and were lining their own pockets by over-paying for them. The controversy caused its stock price to decline over 75% in the 3 months following the event and led to the departure of APHA’s founder and then-CEO, Vic Neufeld. Aphria’s recent move away from dried cannabis sales and into vapes and concentrates should increase its margins and help move its stock higher though it will take some time to do so. Related Article

3. Curaleaf Holdings Inc. (CSE:CURAMarket Cap: $4.2B curaleaf.com Beta: -139.0

  • Business Description: The company is headquartered in Wakefield, Massachusetts, and cultivates and sells medicinal and recreational cannabis in 15 U.S. states under the brands Curaleaf, Curaleaf Hemp, and UKU Craft Cannabis.
  • Latest News: The company has made two key acquisitions in Arizona that has cost the company a total of $25 million, namely Glendale Greenhouse, which will bring a cannabis processing and cultivation facility under Curaleaf’s control and a retail outlet at an attractive location, and Phytotherapeutics Management Services LLC and, by virtue of this deal, Curaleaf Holdings will get the license for a new store. Once it is completed, Curaleaf will have 8 retail locations in the state of Arizona. Related Article 

4. OrganiGram Holdings Inc. (TSXV:OGIMarket Cap: $1.3B www.organigram.ca Beta: 9.7

  • Business Description: The company is a Canadian licensed producer of cannabis products focusing on producing exceptional, indoor-grown cannabis for patients and adult recreational consumers, as well as developing global business partnerships.
  • Latest News: On Monday announced that it has developed a proprietary nano-emulsification technology for the production of recreational cannabis edibles and cannabis-infused beverages. According to the update, Organigram is planning, in early 2020, to launch a variety of dried powder formulation beverage products in Canada in addition to its previously announced plans to launch a range of premium cannabinoid-infused chocolates. Related Article

5. Harvest Health & Recreation Inc. (CSE:HARVMarket Cap: $2.2B www.harvestinc.com Beta: 2.0

  • Business Description: The company, headquartered in Tempe, Arizona, is a multi-state and vertically-integrated cannabis operator which will have, subject to completion of announced acquisitions, the largest footprint in the U.S., with rights to more than 210 facilities, of which approximately 140 are retail locations, and more than 1,580 employees across 17 states.
  • Latest News: On July 8th the company announced the acquisition of Arizona medicinal cannabis dispensary, Leaf Life, which is the 13th dispensary in Arizona, solidifying Harvest as the top operator in the state and expands its industry-leading national footprint of retail and wholesale licenses across the U.S. Related Article

6. HEXO Corp. (TSE:HEXO; NYSE:HEXOMarket Cap: $1.6B www.hexo.com Beta: 4.0

  • Business Description: A consumer packaged goods cannabis company that serves the recreational market under the HEXO brand, while continuing to serve its medical cannabis clients through the well-known Hydropothecary brand. The company currently operates with 2.4 million sq. ft. of facilities in Ontario and Quebec and offers dried cannabis; Elixir, a cannabis oil sublingual mist product line; and Decarb, an activated fine-milled cannabis powder product.
  • Latest News:  On July 11th, the company announced earlier that it will transfer the listing of its common shares from the NYSE American exchange (usually comprised of smaller capped companies or newer businesses) to the NYSE effective July 16 to give its stock an added boost of legitimacy. Related Article

7. Pharmacielo Ltd. (TSXV:PCLOMarket Cap: $632.5M www.pharmacielo.com Beta: 20.5

  • Business Description: PharmaCielo Ltd is a pharma company, headquartered in Canada, with a focus on ethical and sustainable processing and supplying of all natural, medicinal-grade cannabis oil extracts and related products to large channel distributors.
  • Latest News: As of June 21st the company began trading on the OTC Markets under the symbol “PHCEF”.

8. TerrAscend Corp. (CSE:TERMarket Cap: $272.4M www.terrascend.com Beta: 0.18

  • Business Description: The Canadian company  currently provides cannabis products for patients suffering from chronic pain and debilitating illnesses in Canada and in several U.S. states where cannabis has been legalized for therapeutic or adult use and will soon be selling its products in Europe.
  • Latest News: On July 8th TerrAscend received an amendment to its licence from Health Canada allowing for the sale of cannabis oils from its facility in Mississauga, Ontario, with sales set to begin immediately through its medical marketplace, Solace Health.

9. The Flowr Corporation (TSXV:FLWRMarket Cap: $526.3M www.flowr.ca Beta: 0.63

  • Business Description: The company, through its subsidiaries, holds a cannabis production and sales license granted by Health Canada. With a head office in Toronto and a production facility in Kelowna, BC, Flowr builds and operates large-scale, GMP-designed cultivation facilities utilizing its own growing systems.
  • Latest News: On June 26th, the company announced the development of a Clean Stock Protocol, which is a propriety process to certify that Flowr’s clones are free of pests and pathogens.  The use of the Clean Stock Protocol is in addition to industry standard Certificates of Authenticity that attest to THC and CBD content.

10. Neptune Wellness Solutions Inc. (TSE:NEPTMarket Cap: $470.0M www.neptunecorp.com Beta: 1.5

  • Business Description: Leveraging its scientific and technological expertise, Neptune focuses on the development of value-added and differentiated products for the Canadian and global cannabis markets. Its head office is located in Laval, Quebec.
  • Latest News: On July 8th, the company announced the appointment of Michael Cammarata as its Chief Executive Officer and Member of the Board of Directors, effective immediately, replacing Jim Hamilton who will remain as an advisor to the Board.

The 10 companies above consist of:

  • Large Cap (i.e. +$10B): 0
  • Mid Cap ($2B-$10B): 4
  • Small Cap ($300M-$2B): 5
  • Micro Cap ($50M-$300): 1

and have an average beta of 4.7 (excluding the -139.0 outlier).

Combining the two groups above, in summary:

  • 9 stocks trade on the TSE,
  • 3 trade on the TSXV,
  • 4 trade on the CSE,
  • 1 stock is a large cap,
  • 5 are mid-caps,
  • 9 are small-cap,
  • 1 is a micro-cap in size
  • their average beta is 4.2

Incidentally, the beta of the above group of stocks is double that of the 8 stocks highlighted in my previous article entitled ‘These 8 “Pot” Stocks Trade On Both Major U.S. & Cdn. Exchanges – Check Them Out’.

There you have it. The next time someone dismisses “pot” stocks as only being penny stocks let them know the facts: 10 stocks, representing 12% of the universe of 135 such stocks trading on North American stock exchanges, actually trade in excess of $5 Canadian with 6 of those trading above $10 Canadian.