Shares in three well-known cannabis stocks are all down over the past three months. But that trend is unlikely to last. Much of the current malaise in marijuana investing has to do with the market becoming impatient with the pace of legalization for medical- and adult-use cannabis, and not necessarily anything to do with…
fundamental issues at these companies.
These three cannabis companies, OrganiGram Holdings (NASDAQ:OGI), Village Farms International (NASDAQ:VFF), and Green Thumb International (OTC:GTBIF) are all coming off strong third-quarter reports and are likely en route to record yearly revenue.
Instead of waiting until everyone else jumps back into cannabis stocks, it may be wise to buy in on these companies now while their share prices are still at a discount.
OrganiGram Holdings is cutting costs, gaining market share
OrganiGram Holdings stock is down nearly 10% over the past three months, but it’s up more than 7% in November, and I believe now is still a good time to buy the stock before it climbs higher for several reasons.
The Canadian company is growing its revenue market share. By September 2021, OrganiGram held a 7.7% share of the Canadian market, up from 3.9% in January.
According to its third-quarter report, it had gross revenue, sales before accounting for excise taxes, of 29.1 million Canadian dollars through in the quarter — up 31% year-over-year (YOY) and an improvement of 51% sequentially.
The company is seeing cost savings, which it credited to automation and better plant yields. In the quarter, it reported a loss of CA$4 million, compared to a loss of CA$89 million in the year-ago quarter. It also posted a gross margin of CA$2.1 million, compared to a loss of CA$50.2 million in the same period in 2020.
OrganiGram is in a much better position to grow now that it has paid down its long-term debt, paying off its CA$58.5 million balance with a syndicate of lenders. That will mean, the company said, an annual interest savings of CA$2.7 million.
Village Farms International becoming profitable
Village Farms International is down 6% over the past three months. Looking at the company’s third-quarter numbers, there’s plenty of room for share growth. A big key for the Canadian cannabis company has been the success of its subsidiary, Pure Sunfarms, which the company said has the top-selling dried flower in Ontario, Alberta, and British Columbia and has had 12 consecutive quarters of positive adjusted EBITDA.
Village Farms just reported third-quarter numbers Tuesday, and they helped push the stock up. The company reported total sales of $72.4 million for the quarter, ending Sept. 30, up 68% YOY and 3% sequentially. More importantly, the company had a profitable quarter with $0.7 million in net income, up from $0.5 million in the same period in 2020 and an increase from the $4.4 million loss it reported in the second quarter. It also had $6.7 million in positive adjusted EBITDA, up 49% YOY and 338% sequentially.
What I like about Village Farms is it is…
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