HEXO Stock History
The marijuana industry is still less than five years old, with many of the premier pot stocks having been around for three or four years, coinciding with the Canadian push to legalize recreational marijuana.
Since then, we’ve seen a number of new and exciting stocks pop up and see massive gains, including one of my top marijuana penny stocks: HEXO Corp (NYSEAMERICAN:HEXO).
If you had invested $1,000 in HEXO stock when it first hit the market about two years ago, you would have seen gains of 264%. Not bad for a relatively short period of time. Better yet, I believe that HEXO stock’s best days are still ahead of it.
First, let’s go over how HEXO stock got to where it is.
Chart courtesy of StockCharts.com
The company first hit the market as Hydropothecary Corporation and later switched to the much more memorable HEXO Corp in 2018.
Since hitting the market, the Quebec-based company has stood out among its competitors.
There were three major factors that helped spur HEXO stock’s growth: getting a Big Alcohol partnership, netting a huge deal with Quebec, and the company generally being considered undervalued.
HEXO stock has long been punching well above its weight. Despite being a marijuana penny stock (it trades at about $5.00 at the time of writing), the company has some of the qualities that only heavy-hitters like Canopy Growth Corp (NYSE:CGC) and Cronos Group Inc (NASDAQ:CRON) possess.
The most important is the company’s partnership with Molson Coors Brewing Co (NYSE:TAP).
The alcohol producer and the cannabis company formed the partnership with the intention to tap into the cannabis-infused beverage market, likely to be a very lucrative subsector of the marijuana industry in the near future.
HEXO stock quickly became an industry heavyweight overnight with its Big Alcohol partnership; only Canopy Growth at that point had been able to nail down a similar deal.
HEXO then went on to score a huge deal in Quebec—Canada’s second-largest province—which will see HEXO provide 200,000 kilograms (~440,925 pounds) or more annually over the next five years to the province.
This deal helped propel HEXO stock to huge gains (and notoriety) as more and more analysts began paying attention to the company.
The company quickly became the darling of many analysts and began scoring win after win on the market.
And that brings us to the best and probably most important quality of HEXO stock: many (myself included) consider it to be undervalued. This is hugely important as many of its competitors often face charges of being overvalued.
In some cases, those allegations are warranted. In others, they’re myopic. But that HEXO stock is typically considered undervalued gives the company a huge advantage and it remains under the radar of the worst marijuana bears.
The company finished off its run with a New York Stock Exchange (NYSE) listing, a move that all the top players in the industry have now completed.
With a market value of $1.1 billion, HEXO has seen huge gains in the recent past, but I believe that more gains are still ahead in the company’s future.
HEXO Stock Forecast
While the company has been going strong over the past two years, the future looks very bright.
Consider that in the past couple of months alone, HEXO stock has seen huge gains.
Chart courtesy of StockCharts.com
HEXO has been expanding internationally, creating its first eurozone distribution center in Greece, hoping to tap into the huge potential in Europe.
The company also sold approximately 1,110,000 total gram equivalents in its most recent quarter versus 539,000 total gram equivalents sold for the entire fiscal year of 2018. Revenue in the quarter increased sixfold over the previous year. (Source: “HEXO Corp reports $6.7 million in gross revenue for the first quarter of new fiscal year,” Globe Newswire, December 13, 2019.)
These gaudy numbers are to be expected, to a certain degree; these are the first financial reports post-Canadian recreational legalization. Still, that shouldn’t detract too much from what is otherwise a fantastic quarter for HEXO stock.
HEXO Corp CEO and co-founder Sebastien St-Louis said in a statement:
HEXO’s first quarter financials highlight the remarkable pace of its adult-use cannabis sales and puts HEXO on-track to generate significant revenue this year. Today, we are a world-class organization as our team continues to focus on our strategy which includes partnering with Fortune 500 companies in various product categories and leverage their distribution platforms.
The overall effect is that HEXO is making all the moves that its larger competitors are making, which should have investors very excited.
As much as I love CGC stock, there’s little chance that the company can replicate its early-day growth of thousands of percentage points.
HEXO stock, on the other hand, never had such a rush. At its size, there’s still plenty of room for growth moving forward. And that is how I view HEXO stock: as a long-term growth stock.
My HEXO stock prediction has the company at least gaining 50% within the next 12 months, and more likely doubling in that time.
Of course, there are other factors that may slow HEXO’s growth (an industry-wide correction, for instance) but the company itself has all the fundamentals in place to see strong growth for years to come, making it my pick for one of the highest potential ceilings in the entire marijuana market.
HEXO stock is already off to a great start in 2019, up nearly 60% year-to-date.
One of my top marijuana penny stocks has long been behaving like an industry titan while selling for a bargain price.
Alongside its relatively small market cap, there’s a lot of room for growth in HEXO’s future, which makes it one of the more exciting marijuana stocks available right now.