Top Marijuana Penny Stocks: HEXO vs. OGRMF, Which Is Better?

Top Marijuana Penny Stocks: HEXO vs. OGRMF, Which Is Better?
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Top Marijuana Penny Stocks

We’ve seen a huge amount of gains in the marijuana market so far, but the growth is far from over. Several big names now hold firm spots atop the industry, but another batch of top marijuana penny stocks are aiming to replicate their growth in the months and years to come.

That brings us to two of my top marijuana penny stocks: HEXO stock and OGRMF stock. Which one is the superior marijuana penny stock?

Forced to choose just one, I would take Hexo Corp (NYSE:HEXO) over OrganiGram Holdings Inc (OTCMKTS:OGRMF, CVE:OGI), but I believe that both are top marijuana penny stocks, and for different reasons.

To put it succinctly, Hexo is the better pick because it has already achieved so much and the share price has yet to catch up to its actual value. Being undervalued in the marijuana industry is rare, but many analysts will point to HEXO stock as one of the few shares worthy of that designation.

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On the flip side, OGRMF stock has more potential to see rapid growth in a shorter period of time precisely because there is so much left for the company to achieve.

Both of these top marijuana penny stocks will likely see 50% growth (at least) by 2020, but in my mind, HEXO stock is the safer pick of the two, while OGRMF stock is more of a risk-reward gamble—although, even putting it like that seems unfair to OrganiGram. The company is very strong and I believe the risk is relatively minimal.

The stock chart below showcases the recent performance of both HEXO stock (black line) and OGRMF stock (blue line).

Chart courtesy of StockCharts.com

To understand why I’m so bullish on both of these top marijuana penny stocks, see below.

HEXO Stock

As I mentioned earlier, “undervalued” is rarely spoken in reference to the marijuana industry. But when it is uttered, it’s usually in the same sentence as Hexo Corp.

I like to say that Hexo has the portfolio of a marijuana titan at a marijuana penny stock price.

First, consider all the major victories the company has won on the business side of things.

Partnership with a powerful company? Check.

Molson Coors Brewing Co (NYSE:TAP) and Hexo teamed up 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.

Only a few companies have been able to score these massive types of deals, and all of them are bigger than Hexo, putting it in good company.

Strong presence in the Canadian marijuana market? Check.

Hexo scored a huge deal in Quebec—Canada’s second-largest province—which will see Hexo provide 200,000 kilograms (about 440,925 pounds) or more annually over the next five years to the province.

Listing on a major U.S. exchange? Check.

Hexo scored a New York Stock Exchange (NYSE) listing earlier in 2019.

And then you have the very promising financials.

The company sold approximately 1.1 million 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.)

On top of that, net revenue increased by over 500% year-over-year.

While losses also increased substantially in the most recent quarterly report, the money is being spent wisely, as demonstrated by the massive growth in sales.

All of this speaks to a company that is among the top performers in the marijuana industry, even as it remains at a marijuana penny stock price.

And I’m not alone in thinking that HEXO stock is undervalued.

Beacon Securities Limited, an investment firm out of Toronto, came out in support of HEXO stock, with an analyst writing that the stock is trading well below its value. (Source: “HEXO is trading at a huge discount to its US peers, Beacon says,” Cantech Letter, March 25, 2019.)

And it only keeps growing.

Hexo recently expanded its Canadian footprint via Up Cannabis Inc., a wholly owned subsidiary of Newstrike Brands Ltd (OTCMKTS:NWKRF, CVE:HIP). Up Cannabis entered into a supply agreement with New Brunswick.

With so much going for it, it should be plain to see why I’m so bullish on HEXO stock.

OGRMF Stock

The funny thing about these two top marijuana penny stocks is the contrast: all the things that make Hexo so valuable, OrganiGram has almost none of them. Paradoxically, that’s why I’m so hot on OGRMF stock.

Allow me to explain.

While Hexo has already made a ton of progress and now is waiting for share prices to catch up, OGRMF stock still has a lot of room left for growth.

The company has no big partnership, no major U.S. listing, and has made few bold moves like huge acquisitions—and that’s exactly why OGRMF stock is exciting.

There is simply so much room left to grow, especially for the eighth-biggest marijuana producer by market cap (Hexo is sixth).

This top marijuana penny stock could see its value explode in short order if any of the above-mentioned events took place.

Equally enticing is the possibility of an acquisition. The company is the right size for a major buy and would see its value skyrocket as a result in the immediate aftermath.

That makes OGRMF stock a very good pick for those looking to make quick gains.

It’s worth noting that while OGRMF stock has already jumped by 1,000% over the past few years, that’s still relatively small in comparison to its competitors. Canopy Growth Corp (NYSE:CGC), for instance, gained 2,000% in the same time.

What this means is that OGRMF stock still has plenty of room to grow, even if it has already made impressive gains.

One thing that HEXO stock and OGRMF stock do share in common, though, is great numbers.

OrganiGram’s net sales for the last quarter hit CA$12.4 million, up from CA$2.4 million in the same prior-year period and CA$3.2 million in Q4 2018. That represents a 419% and 287% jump, respectively. (Source: “OrganiGram Reports Record Net Revenue of $12.4 Million Up 287% Sequentially Quarter-over-Quarter; Adjusted Gross Margin of 71%,” OrganiGram Holdings Inc, January 28, 2019.)

Net income similarly grew, hitting CA$29.5 million (CA$0.195 per diluted share). This is a stark contrast to its net loss of CA$1.2 million ($0.012 per diluted share) last year.

OrganiGram has posted some of the most impressive numbers to date, sending stocks soaring and helping the company along to a very strong opening to 2019.

While Canopy Growth and other pot companies struggled to curtail their spending, OrganiGram kept everything in a healthy sweet spot that made investors salivate when it released its report.

And here’s the kicker: the first quarter of 2019 covered the three-month period ended November 30, 2018. So the fantastic numbers are from only one month of legal recreational marijuana in Canada. In fact, OrganiGram wrote in its report that it fully expects Q2 2019 to have at least double the net revenue of the first quarter, a bold and impressive claim. (Source: Ibid.)

The overall sentiment, then, is that OrganiGram is just getting started when it comes to growth. As a result, I believe that OGRMF stock has one of the best upsides in the marijuana industry, full stop.

Analyst Take

When it comes to these two top marijuana penny stocks, there’s so much to like on both sides.

As seen in the stock chart, they are pretty much mirroring each other to start 2019. Both have seen very impressive growth to start the year and both are among my top marijuana penny stocks.

The best part about these top marijuana penny stocks is that they actually complement each other very well. Hexo is a more solid, safer, long-term, buy-and-hold pick. That’s more in keeping with my personal investment preferences, and as such, I tend to prefer HEXO stock.

But OGRMF stock has so much potential locked away within it that it could explode any day now via a big partnership, acquisition, or listing on a major U.S. exchange.

So really, investors would be wise to take a look at both companies as they represent the top marijuana penny stocks around.