OrganiGram Stock: What $1,000 in OGRMF Stock Would Have Gained After 3 Years

OrganiGram Stock: What $1,000 in OGRMF Stock Would Have Gained After 3 Years
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OGRMF Stock

I’ve made no secret that one of my favorite marijuana penny stocks, OrganiGram Holdings Inc (OTCMKTS:OGRMF, CVE:OGI), still has a ton of room left to grow. OrganiGram stock easily has the potential to gain 100% by year’s end.

With that in mind, here’s a look back at what you could have made had you invested $1,000 in OGRMF stock three years ago.

Chart courtesy of StockCharts.com

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The chart above shows it all (I’ve included Canopy Growth Corp (NYSE:CGC) for comparison).

OrganiGram stock would have netted investors returns of more than 1,000% over the past three years. The lucky (or clever) investors who put in $1,000 a few years ago would have gained over $10,000 by today.

Some of you may rightly point out that the CGC stock gain doubled that of OGRMF stock, but that’s what makes OrganiGram so exciting today.

It’s not too late to see massive gains from OGRMF shares, and the disparity in growth between OrganiGram and Canopy Growth shows why.

While both stocks grew roughly in tandem for the first few years, they split significantly in 2018. The reason being that Canopy Growth began to score a lot of wins that empowered it in the eyes of investors.

The biggest of these moves was a deal between Canopy Growth and Constellation Brands, Inc. (NYSE:STZ), wherein the alcohol giant partnered with the marijuana giant through a massive investment. You can clearly make out where the OrganiGram and Canopy Growth stock prices diverge: in October 2017, right after this deal.

And then the wins kept pouring in for Canopy Growth: listing on the New York Stock Exchange (NYSE), inking supply deals, building capacity, etc.

OrganiGram stock has neither listed on a major exchange nor netted a major partnership with Big Alcohol or Big Tobacco.

Now, you might be thinking that a marijuana penny stock with a valuation under $1.0 billion would not be able to attract these kinds of deals, but you’d be wrong.

Hexo Corp (NYSEAMERICAN:HEXO), my other top marijuana penny stock, has a higher valuation at $1.2 billion, compared to OrganiGram’s $778.6 million. Both companies are trading around $6.00 a share.

But Hexo was able to nab both a Big Alcohol partnership and, more recently, a listing on the NYSE.

On top of that, HEXO stock has benefited from some of the strongest supply deals in the game.

So while I believe that HEXO is the safer pick, OGRMF stock has more short-term potential precisely because it hasn’t been able to lock down any of these big gains yet.

After all, OrganiGram is one of the few companies in the legal cannabis industry (alongside Hexo) that is widely considered to be undervalued.

In this position, any number of scenarios could take place that would boost OrganiGram stock.

If OrganiGram scores a major deal with an outside company, expect to see its share prices soar. I believe that such a move could see 50% gains within a week or two. And unless the deal was truly onerous, I imagine that OGRMF shares could climb by 100% by 2020.

Another scenario that could see it grow just as quickly would be an acquisition.

Considering its low price, strong fundamentals (like deals across the vast majority of Canada), and enviable production capacity, OrganiGram stands as one of the best and most desirable acquisition targets for larger pot companies looking to make waves.

I suspect that (again, barring a bad deal) OGRMF stock would shoot up within a short period, possibly doubling in value in the month or so leading up to the final papers being signed.

Finally, while an NYSE or Nasdaq listing doesn’t quite hold the sway it once had, it would still help boost OrganiGram stock’s profile, grant it access to more avenues of capital, and make it appear more legitimate in the eyes of investors.

While unlikely to spark the same stock price increase as the previous two scenarios, it would still go a long way toward increasing the value of OGRMF shares.

And if you want further proof that OrganiGram is the real deal, you need look no further than its last quarterly report.

OrganiGram Q1 2019 Financial Report

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 up from CA$3.2 million in Q4 2018. That represents 419% and 287% jumps, 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.

This was all helped along by recreational marijuana becoming legal in Canada. Now companies will begin seeing huge surges in revenue, an influx of capital, and very healthy earnings reports for the next few quarters.

OrganiGram’s earnings report was among the most impressive, sending shares soaring when it soon after it was released.

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.)

That makes sense, though. After all, it will be the first quarter that falls fully within Canadian marijuana legalization.

That means that, while Q1 2019 impressed, there’s a very good chance that it will be outdone by Q2.

These numbers are among the best in the business and clearly show that OrganiGram is a marijuana penny stock with some real teeth.

Analyst Take

When it comes to top pot stocks, there’s no shortage of competitive choices. But when it comes to the stocks that have the biggest potential to see huge gains fast, I believe that OrganiGram stock has the highest ceiling.

Due to its relatively smaller stature, OrganiGram is in the very desirable position of being big enough to command attention but not too big to be considered bloated or over-the-hill, gains-wise.

OGRMF stock has so many paths toward higher gains that it is, in my mind, the best marijuana stock for investors who don’t mind a little risk if the potential rewards are great. As far as potential goes, few, if any, stocks can rival OrganiGram.