This Canadian Marijuana Company Is Fortifying Its Base
We’re only nine days into the new year and one Canadian marijuana company has already made the most of it. With renewed vigor, Aurora Cannabis Inc (TSE: ACB), (OTCMKTS: ACBFF) is on top of the marijuana industry in the new year with at least four major news announcements that make Aurora stock a great pick for 2018. And yet, one famous short seller believes otherwise.
Before I get to any of the good news that bolster our Aurora stock forecast 2018, let’s begin with some bad news.
A Plot Twist in the Aurora-CanniMed Saga?
If you’ve followed Aurora stock long enough, you must already know of the ongoing Aurora-Cannimed fight. Aurora has been all over the news after making a hostile takeover attempt of CanniMed Therapeutics Inc (TSE: CMED), (OTCMKTS: CMDFF).
In case, you haven’t been following the whole drama, here’s a trailer for you:
Aurora made a hostile bid to acquire CanniMed but Cannimed’s management doesn’t want to sell the company. Instead, they wish to take over another smaller marijuana company, Newstrike Resources Ltd (CVE: HIP), (OTCMKTS: NWKRF). Aurora is against the CanniMed-Newstrike merger and has already begun buying CanniMed’s shares in the open market.
Aurora is incentivizing CanniMed shareholders to give up their stock in return for a proportional ownership stake in Aurora Cannabis.
It seemed likely that Aurora would ultimately succeed in acquiring CanniMed. That’s until the famous Citron Research short-seller hit Aurora with his extremely bearish commentary.
The notorious Andrew Left of Citron Research, who’s known for shorting the stocks he’s bearish on and running their prices into the ground with his negative commentary, is out with a new short bet. This time, he’s shorting Aurora stock.
Left says Aurora stock price could retrace by 50%. He has set a price target of $6.50 for a stock that was trading at $14.00 at the time of writing. Take note that the stock has actually gone up in the period since Left posted his bearish commentary on Twitter.
That’s probably because investors raised eyebrows at the peculiar timing of his tweet. Aurora investors can’t help but notice that Left’s bearish pitch comes at a time when CanniMed stockholders are deciding the company’s ultimate fate. As is obvious from the replies to his tweet, investors smell something fishy.
So, with a famous short-seller shorting ACB stock, who in their right mind would want to bet against him? Many would not want to risk their money in an investment that’s predicted to tank by 50% in the coming days.
If that’s your feeling right now, then shrug it off. Because from where I see it, ACB stock could actually rise in the coming days, forcing Citron to bite the dust. I’ve solid ground on which I base my Aurora stock forecast 2018.
Let me take you back to the prologue where I mentioned the four major developments around Aurora stock.
Below is a brief rehash of each. I’ve saved the best one for the end.
- Aurora set a new monthly record of sales in the most recently reported month of November. About $3.1 million worth of cannabis was sold in November alone. That’s nearly as much as CanniMed has been making in a quarter.
- Aurora just bought a 17% stake, which may eventually be converted into a 51% majority stake, in an organic marijuana grower in Quebec—The Green Organic Dutchman—which is building a massive 820,000-square-feet facility in the province. This further strengthens its foothold in the eastern region of Canada ahead of Canada’s full legalization of marijuana.
- Aurora just secured the Canadian marijuana industry’s biggest bought deal, raising $200.0 million with debt that is convertible to equity. The proceeds will help it step up its expansion plans ahead of the legalization day.
- And finally, Aurora Cannabis is set to become the largest producer of marijuana in Europe later this year. The company entered a joint venture with a Denmark-based grower to create “Aurora Nordic Cannabis”—its European marijuana subsidiary that will eventually have an annual production capacity of 120,000 kilograms of weed.
All of these major announcements have been made in the eight days since the new year began. There’s no better way to put it; Aurora is firing on all cylinders!
So while I may not question the short seller’s motives, I do question his analytical judgment of Aurora stock.
Aurora Stock Forecast 2018: Why ACB Stock May Double in 2018
Let me remind you that Aurora Cannabis is the second largest marijuana company in Canada, both in terms of its sales and market value. The only marijuana grower it trails in worth is Canopy Growth Corp (TSE: WEED), (OTCMKTS: TWMJF).
But in my book, Aurora has one unique moat that puts it ahead of Canopy Growth and virtually all other marijuana companies in Canada.
Aurora Cannabis is quietly setting up its bases across the Canadian map ahead of Canada’s legalization day. Mind you, Canada, where medicinal marijuana is already legal, is set to legalize recreational marijuana by summer of this year.
To reach out to a bigger target market, Aurora is strategically positioning itself across the country. The Vancouver-based company has its biggest base in the west of Canada, in the province of Alberta, where it’s currently building an additional production facility—”Aurora Sky.” The 800,000-square-feet capacity will be the largest greenhouse facility in the country.
Pan over to the east and Aurora has two existing facilities in Montreal, Quebec—the “Aurora Vie” and the “Lachute facility.” Plus, count in the additional production capacity from The Green Organic Dutchman acquisition that I discussed above.
On top of all these, if Aurora succeeds in acquiring the Saskatchewan-based CanniMed, then Aurora would be producing additional weed right in Ontario’s backyard to compete with Ontario-centered Canopy Growth.
All in all, Aurora Cannabis is the only marijuana company that has its footprints running across Canada.
It’s obvious now why the market has been rewarding this stock. Here’s how Aurora stock’s performance in the past one year stacks up against the three other biggest marijuana players: Canopy Growth, Aphria Inc. (TSE: APH), (OTCMKTS: APHQF), and MedReleaf Corp. (TSE: LEAF), (OTCMKTS: MEDFF). As you can see, we have a clear winner in blue.
Chart courtesy of TradingView.com
Analysts like us, or Citron’s Left, may give you a good running start in your investments, but it’s always best to do your own research before initiating a position in marijuana stocks. At the same time, ensure that you’ve duly diversified your portfolio because, at the end of the day, you don’t want to be hanging by a thread.
That said, Aurora stock is one marijuana stock you should be watching right now. Aurora is undergoing massive expansion within Canada and abroad. It’s setting up itself well ahead of the full legalization day. So, ACB stock may turn out to be the wildcard in your stack that could win you the big wager.
There’s no reason why I wouldn’t be bullish in my Aurora stock forecast 2018. So keep an eye out because I’m foreseeing Aurora Cannabis stock doubling soon than later.