This Pot Stock Deserves a Look
If you’ve been following the cannabis industry, you’ll likely have seen the name Aurora Cannabis Inc (NYSE:ACB) in the headlines.
The Edmonton, Alberta, Canada-based company is one of the few pot stocks that trades on the New York Stock Exchange, thus gaining a lot of mainstream attention. Back in its home country, ACB stock is listed on the Toronto Stock Exchange.
Now, being a well-known pot stock also means Aurora Cannabis stock is constantly being put under the microscope.
For instance, when the company reported strong year-over-year sales growth in its latest earnings report, market participants quickly noticed that there was a decline quarter-over-quarter. (Source: “Aurora Cannabis Announces First Quarter 2020 Results & Corporate Action Plan,” Aurora Cannabis Inc, November 14, 2019.)
Yet, there seems to be one aspect of the company’s business that constantly gets overlooked. And that aspect could turn into a major catalyst for ACB stock.
I’m talking about international expansion.
ACB Is Becoming a Global Cannabis Company
You see, when people talk about pot stocks, they are usually referring to companies that operate in the U.S. and Canada. Indeed, that’s where most of the action has been.
With Canada legalizing recreational pot in 2018 and the evolving regulatory environment in the U.S., there are certainly plenty of opportunities for pot companies in these two countries.
However, the global cannabis market is much bigger.
To give you an idea, the Canadian medical and recreational marijuana market opportunity is estimated to be $12.0 billion. The global cannabis opportunity, on the other hand, is projected to be around $200.0 billion. (Source: “Investor Presentation,” Aurora Cannabis Inc, December 12, 2019.)
Aurora Cannabis started its business with its first facility in Mountain View County, Alberta. Since then, the company has grown its network of subsidiaries and partnerships, expanding its presence internationally through the process.
Today, Aurora Cannabis has operations in 25 countries across five continents, making it well positioned to deliver a wide range of cannabis and hemp products to markets worldwide.
For instance, Aurora’s wholly-owned medical cannabis distributor Aurora Deutschland provides the company with a first-mover advantage in Germany.
Note that Germany is a country with broad health insurance coverage for medical cannabis, thus allowing pot companies to achieve substantially higher margins. Right now, Aurora Cannabis has a leading share of the German medical marijuana market. (Source: Ibid.)
Meanwhile, in Denmark, Aurora has teamed up with tomato producer Alfred Pederson & Son to create Aurora Nordic, which has a 100,000-square-foot facility for producing pot.
Note that Aurora Cannabis is the first Canadian licensed producer to ship medical cannabis to Denmark.
The company has made big investments in hemp as well. Last year, Aurora acquired Europe’s largest producer, processor, and supplier of certified organic hemp—Agropro UAB—and its sister company Borela UAB. (Source: “Aurora Cannabis Acquires Europe’s Largest Organic Hemp Company,” Aurora Cannabis Inc, September 12, 2018.)
More recently, Aurora announced that its product “High CBD Oil Drops” has been approved for use under Ireland’s Medical Cannabis Access Programme. (Source: “Aurora Receives First Approval for Medicinal Cannabis Product in Ireland,” Aurora Cannabis Inc, December 2, 2019.)
Aurora Cannabis Inc (NYSE:ACB) Stock Chart
Chart courtesy of StockCharts.com
However you look at it, Aurora Cannabis Inc is well positioned to capitalize on the worldwide cannabis opportunity.
Of course, like all pot stocks, Aurora Cannabis stock could see some volatility going forward. But once the company’s international expansion starts to bear fruit, ACB stock could become a lot more attractive.