OrganiGram Holdings Inc: This $7.39 Pot Stock is Entering a New Era

OrganiGram Holdings Inc Is it This Pot Stock's Time
iStock.com/Анатолий Тушенцов

More Upside Ahead?

If American investors wanted to purchase shares of OrganiGram Holdings Inc (NASDAQ:OGI) a month ago, they would have to buy them over the counter. This is because, at that time, OrganiGram was only listed on the TSX Ventures Exchange in Canada.

And that’s basically the norm these days. Thanks to the more 420-friendly environment north of the border—Canada legalized recreational marijuana on October 17, 2018—many cannabis companies, including some that operate entirely within the U.S., have chosen to list their shares on Canadian stock exchanges.

Since OrganiGram Holdings is a licensed pot producer in Moncton, New Brunswick, Canada, it made sense for its stock to be listed on a Canadian exchange.

But then, on May 17, OrganiGram announced that it had been approved to list its shares on the Nasdaq Global Select Market. Since May 21, 2019, OGI stock has been trading on the Nasdaq. (Source: “Organigram Announces May 21st as Inaugural Date of Trading on the Nasdaq Global Select Market,” OrganiGram Holdings Inc, May 17, 2019.)

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Meanwhile, the company’s shares continue to be listed on the TSX Ventures Exchange, so for Canadian investors, things are just as convenient as before.

While there’s nothing wrong with just trading over the counter in America, being listed on the Nasdaq has quite a few benefits for OrganiGram stock.

For instance, some investors prefer to purchase stocks listed on major exchanges because of the increased liquidity and tighter spreads compared to stocks that trade over the counter.

Moreover, trading on a more reputable exchange like the Nasdaq could also bring this pot company more attention from Wall Street and the financial media.

Of course, having a Nasdaq ticker is no guarantee of future success. But if you take a look at what the company has been doing, you’ll see that OrganiGram stock does have what it takes to justify its Nasdaq listing.

OrganiGram Holdings Inc Is a Solid Pot Stock

The key here is growth. As I mentioned earlier, Canada legalized recreational marijuana in late 2018, so the market is still quite new. Meanwhile, pot companies are looking forward to what they call the “second wave” of legalization in Canada, which includes cannabis edibles and drinks, later this year.

OrganiGram managed to churn out some very impressive financial numbers since the Canadian legalization last October.

In the first quarter of the company’s fiscal-year 2019, which ended November 30, 2018 and includes sales from recreational cannabis for the first time, it generated net sales of CA$12.4 million. That represented a whopping 419% increase year-over-year and a 287% increase sequentially. (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.)

That growth momentum has been continuing.

In the second quarter of OrganiGram’s fiscal-year 2019, which ended February 28, 2019, the company earned CA$26.9 million in net revenue, marking a staggering 693% increase from the CA$3.4 million generated in the year-ago period. (Source: “Organigram Reports Second Quarter Fiscal 2019 Results Record Net Revenue of $26.9 Million,” OrganiGram Holdings Inc, April 15, 2019.)

Also, that figure more than doubled the CA$12.4 million earned in the prior fiscal quarter.

Note that, during the second fiscal quarter, the company signed a letter of intent with the Société québécoise du cannabis, a provincial Crown corporation in Quebec that is responsible for the trade of recreational cannabis within the province.

According to its latest investor presentation, OrganiGram is one of the only four Canadian licensed producers with distribution arrangements in all 10 provinces in Canada. (Source: “Investor Presentation,” OrganiGram Holdings Inc, last accessed June 10, 2019.)

Mind you, the company is not standing still. Right now, OrganiGram Holdings has licensed production capacity of around 47,000 kilograms (103,617 pounds) per year. By the end of 2019, its annual production capacity is expected to reach 113,000 kilograms (249,122 pounds).

At the same time, OrganiGram is in a position to capitalize on the upcoming cannabis edibles market. The company currently has 56,000 square feet within its existing Moncton facility being refurbished for additional extraction capacity, edibles and derivatives production, and office space.

OrganiGram Holdings Inc (NASDAQ:OGI) Stock Chart

Chart courtesy of StockCharts.com

Analyst Take

2019 has been a great year for the marijuana industry so far. Year-to-date, the North American Marijuana Index has climbed nearly 20%.

As it turns out, OrganiGram Holdings happens to be one of the biggest gainers in the index. Trading at $7.39 per share, OGI stock has more than doubled since the beginning of this year.

To investors who follow this cannabis producer, a soaring stock price shouldn’t really come as a surprise. Sentiment has generally been bullish toward the industry, and the company has been running solid operations and has managed to capitalize on the booming marijuana market in Canada.

And now more investors get to know about the company’s fast-growing business thanks to its Nasdaq listing. Combined with OrganiGram Holdings Inc’s expanding production capacity and its edibles and derivative products potential, we could see OGI stock enter a new era of higher prices.