It’s been a hectic week for marijuana stocks so far, with a lot of news dropping on a variety of fronts. But none has been more impactful than the rumors that The Coca-Cola Co (NYSE:KO) is looking to enter the marijuana industry and could choose Aurora Cannabis Inc (OTCMKTS:ACBFF, TSE:ACB) as its vessel. Needless to say, the potential Coca-Cola partnership proved to be a massive boon to the Aurora stock forecast.
Reports have come in that Coca-Cola is in talks with Aurora to produce non-alcoholic, cannabis-infused beverages. As a result, Aurora Cannabis stock climbed swiftly, surging 10% when the reports came in, while KO stock hasn’t seen much movement since the talks were announced. (Source: “Coke, Aurora Cannabis in talks to make marijuana-infused drinks: BNN Bloomberg,” CNBC, September 17, 2018.)
Should the partnership come to fruition, the two would likely develop health-focused beverages that will ease inflammation, pain, and cramping, the report stated.
“Along with many others in the beverage industry, we are closely watching the growth of non-psychoactive CBD [cannabidiol] as an ingredient in functional wellness beverages around the world,” The Coca-Cola Co said in a statement. “No decisions have been made at this time.”
Aurora also declined to give specifics about a potential deal, but did say that it, “has expressed specific interest in the infused beverage space, and we intend to enter that market.” (Source: Ibid.)
This marks the first time a non-alcoholic beverage company has looked into the marijuana sector.
Considering how positive investments have been received by the alcohol industry, the soft-beverage sector now looking to enter the marijuana market is only going to drive marijuana stock prices even higher.
After all, the $3.8-billion investment by Constellation Brands, Inc. (NYSE:STZ) into Canopy Growth Corp (NYSE:CGC) was enough to turn the entire industry around and push dozens of percentage points of growth across multiple stocks.
Should Coca-Cola be planning to invest, expect to see a major surge in marijuana prices as more concrete details filter out.
But the potential Coca-Cola deal is not the only positive news to have come out of Aurora Cannabis stock lately.
While likely to be the most momentous, several other positive moves by the company have brightened the Aurora Cannabis stock forecast considerably.
Hemp Leadership in Europe
One of the more recent boons to the Aurora Cannabis stock forecast came by way of the company’s deal with Agropro UAB, Europe’s largest producer, processor, and supplier of organic hemp and hemp products.
The Agropro acquisition provides Aurora with access to 1,600 hectares of land to grow a potential 1,000,000 kilograms of hemp, while Agropro is also looking into expanding into Lithuania, Latvia, Estonia, and Poland, potentially adding another 3,000 hectares. (Source: “Aurora Cannabis Acquires Europe’s Largest Organic Hemp Company,” Cision, September 12, 2018.)
The deal will open up Agropro to exploiting the CBD components of its hemp.
Aurora is planning to use that formerly discarded hemp biomass containing CBD to create a number of wellness products.
Chart courtesy of StockCharts.com
The deal not only adds yet another acquisition to Aurora’s growing list of buys this year, but it also helps the company increase its CBD production capacity while simultaneously spurring global growth, two areas I often prize when choosing which marijuana stocks to invest in.
Add this to Aurora’s recent CA$290.0-million acquisition of ICC Labs Inc. (OTCMKTS:ICCLF, CVE:ICC)—giving it a foothold in the South American markets—and you have a number of strong moves coming out of Aurora lately that have helped turn investors bullish on the Aurora Cannabis stock forecast.
The ICC labs acquisition, not incidentally, will also see Aurora increase its presence in the budding CBD market.
U.S. Listing in October
The next major event on the horizon for Aurora is the prospect of a U.S. listing.
Aurora CCO Cam Battley recently gave an interview with the Midas Letter claiming that a U.S. listing was on the way in October. (Source: “VIDEO: Aurora Cannabis Inc (TSE:ACB) US Uplisting and Leadership in Europe,” Midas Letter, September 17, 2018.)
Considering how well other marijuana stocks have performed on the Nasdaq and NYSE, this is likely to spur further growth should it come to fruition. Getting on a major U.S. listing will designate the company as a vetted stock to U.S. investors.
This has been the case with all the marijuana stocks on U.S. listings, often seeing increased investor activity as a result.
Aurora has long been seeking a spot on the NYSE or Nasdaq, and the completion of that goal will go a long way toward boosting the Aurora Cannabis stock forecast.
Aurora Stock Dilution
All these acquisitions—many of them accomplished via the issuance of more shares—has some concerned of stock dilution at Aurora.
While this is a genuine concern for shareholders, ultimately it’s one you need not worry over if you believe in the validity of these acquisitions.
If these are smart, savvy acquisitions at or below market value, then the boost in share price is likely to offset the issuance of new shares.
If you believe, on the other hand, that these buys are overpriced or wrongheaded, then that’s where the Aurora stock dilution will begin to cause trouble.
In either case, it doesn’t make much of a difference to those looking at the Aurora stock forecast in the end; if you believe these acquisitions to be poor decisions, you’re likely not investing in Aurora in the first place.
If you’re a long-term holder and are concerned about stock dilution, then again you have to ask yourself if you believe that these are strong moves being made. If you come to the conclusion that they are in fact bad buyouts, then you may want to reconsider your position in Aurora.
No marijuana company has been as aggressive as Aurora Cannabis in 2018.
Bent on becoming the largest producer of pot in the world, Aurora has been gobbling up companies left and right.
While I’m not sure so many acquisitions so fast was necessary, ultimately I do think that they will benefit the company in the long run.
As such, I’m quite bullish on the Aurora Cannabis stock forecast.
And if it can nab a Coca-Cola partnership, that outlook is only going to get brighter.