Aurora Cannabis Stock in 2019
There are few companies as intriguing in the marijuana market as Aurora Cannabis Inc (OTCMKTS:ACBFF, TSE:ACB). A stock that I began following over two years ago, Aurora Cannabis stock in 2019 is going to be one of the most interesting shares available on the market.
With the NYSE:ACB listing being made available to the public, the future of the company looks bright—even as prices drop across the marijuana industry in the near term.
Aurora Cannabis stock in 2019 is likely going to see rapid growth in the long term—especially as the company will likely be available at a discount, considering the likelihood of a correction between then and now.
Aurora Cannabis stock, for instance, took a 15% drop in the hours leading up to its listing on the New York Stock Exchange (NYSE). This plunge was by no means unique to Aurora Cannabis, instead hitting across the industry, which means that a prolonged correction may not be far behind.
This is likely in reaction to the explosive growth the industry experienced in August following the Constellation Brands, Inc. (NYSE:STZ) investment in Canopy Growth Corp (NYSE:CGC). This correction could dampen expectations for the end of 2018, making 2019 that much more important.
That brings us back around to Aurora Cannabis stock in 2019: Is ACB stock worth keeping an eye on?
I would say yes, primarily because the company has a lot going for it in 2019.
Aurora has signed multiple supply agreements across Canada, which are going to continuously pay off as the marijuana industry gets into full swing.
With those supply agreements in place, Aurora Cannabis stock in 2019 has the ability to generate a steady substantial income and high sales as a foundation upon which it can build with further Canadian expansion.
The company has the inventory to keep up with that expanded demand as well.
The Aurora Cannabis production capacity has grown in leaps and bound since 2017, with its huge buy of MedReleaf Corp making it one of the largest marijuana producers on the planet. And those expansions have spanned several continents, which we’ll dive into below.
Chart courtesy of StockCharts.com
On top of those acquisitions, rumors have been circulating that The Coca-Cola Co (NYSE:KO) and Aurora are looking to close a deal.
“The Company does confirm that it engages in exploratory discussions with industry participants from time to time,” said Aurora in a press release. (Source: “Pot stock Aurora says there’s no agreement with Coca-Cola, but the shares are rising anyway,” CNBC, September 18, 2018.)
“At this time the Company confirms there is no agreement, understanding or arrangement with respect to any partnership with a beverage company.”
While the statement is a long way from anything concrete, if the two companies are able to strike a deal, expect a large rush of gains to come Aurora’s way.
Aurora Cannabis stock in 2019 will also benefit from Australis Capital ORD (CNSX:AUSA), Aurora’s spin-off investment arm, which is currently focused on the U.S. cannabis market and cannabis real estate.
“Recent changes in U.S. federal positioning with respect to cannabis have positively impacted the perception of risk to invest in U.S. cannabis assets,” said Australis. (Source: “Aurora Cannabis Provides Update on Australis Capital Public Listing,” Australis Capital, September 14, 2018.)
“This has further incentivized capital market participants to seek opportunities to fund U.S. based operations.”
Aurora also registered strong numbers on its most recent quarterly report, with revenue climbing 223% compared to the same quarter last year, hitting $19.1 million.
The gross margin on medical cannabis also jumped quite high, hitting 74%, versus 58% the same period last year. The increase came about due to a higher average selling price per gram of dried cannabis, alongside a higher proportion of cannabis oil sales.
Coupled with the higher profit margins was a decrease in cash cost of sales and cash cost to produce, dropping by 11% compared to 2017. (Source: “Aurora Cannabis Inc. Announces Results for the Fourth Quarter And 2018 Fiscal Year,” Cision, September 24, 2018.)
And then, of course, you have the NYSE listing hitting at what may be the perfect time for Aurora Cannabis stock; it is now cheaper due to the industry-wide pullback and has all these factors going in its favor.
“Our NYSE listing represents another important milestone that reflects our commitment to all stakeholders as we continue advancing domestic and international growth initiatives, which includes expanding our base of global institutional and retail investors,” said Aurora Cannabis Inc CEO Terry Booth. (Source: “Aurora Cannabis Inc. Announces Results for the Fourth Quarter And 2018 Fiscal Year,” Cision, October 18, 2018.)
Aurora Acquisitions: Global Expansion
As mentioned above, Aurora has been very busy this year buying up companies.
Two of the company’s biggest recent acquisitions were UAB Agropro and ICC Labs Inc (OTCMKTS:ICCLF, CVE:ICC).
Agropro, Europe’s largest producer, processor, and supplier of organic hemp and hemp products, was added to the Aurora fold earlier this year. Aurora gained access to 1,600 hectares of land to potentially grow 1,000,000 kilograms of hemp with the Agropro purchase.
Furthermore, Agropro is looking to expand internationally into Lithuania, Latvia, Estonia, and Poland, which could add another 3,000 hectares of agricultural land. (Source: “Aurora Cannabis Acquires Europe’s Largest Organic Hemp Company,” Cision, September 12, 2018.)
This comes on top of the global expansion that started in 2018 with the acquisition of ICC Labs Inc. With this purchase, Aurora was able to enter the South American market. Gaining entry into the European market via Agropro further cemented the Aurora Acquisitions as global expansions, angling the company to take advantage of the global pot trade for years to come.
While the near term may end up being a little bleak for Aurora Cannabis stock, the future is bright. If a correction hits and lasts for the remainder of 2018, I expect Aurora Cannabis stock in 2019 to be all the higher as a result.
With Aurora’s savvy acquisitions and massive production capacity, I expect it to remain a major player in the industry for years to come.