TSX Best Marijuana Bets in 2016: Canopy Growth Corp, Aphria Inc, and Organigram Holdings
Aphria Inc. (CVE:APH), Canopy Growth Corp (CVE:CGC) (OTCMKTS:TWMJF) (FRA:11L1), and Organigram Holdings Inc (CVE:OGI) – Canada’s top 3 publicly traded marijuana stocks on the S &P/TSX Venture Composite Index(INDEXTSI:JX), each of whom finished the year up significantly from where they closed out 2014, are likely to continue to perform well in 2016. That is mostly thanks to the Liberal Party of Canada’s commitment to the full decriminalization of the precious herb, expected to manifest itself in concrete steps toward that end this year.
Aphria Inc. closed out the year at $1.28 per share, up almost 20 percent over its 2014 closing price of $1.05. The company saw its licensed saleable output increased to 2,000 kilograms per year by Health Canada, and the company crossed the ‘break-even’ threshold in revenues, implying the company may become a profitable entity in 2016. The company raised $11.5 million at $1.30 per unit composed of a share and half warrant, the full warrant to purchase a common share priced at $1.75 for three years. That put 8.8 million shares into the float in December, which will likely see the price capped at $1.30 for the foreseeable future.
The company did announce the signing of a bunch of wholesale contracts to other producers to purchase ‘up to’ 550 kilos of bud with a gross margin between 35 and 40 percent for total value of $1.9 million if delivery accepted for the whole amount.
[four_fifth_last padding=”0 0 0 20px”]Listen to an interview with Aphria CEO Vic Neufeld:
Organigram Holdings had a busy and prosperous year as well, finishing the year at $0.94 per share, up 44 percent from the 2014 close of $0.65, making it the second best performer among Canadian ganja growers.
Highlights of Organigram’s year included the squeaking out net income of $56,926 in the last quarter of the year, and a QonQ bump of 70 percent in Q1 2016 revenue to over $1,000,000.
Organigram also added 6 growing rooms bringing its annual production capacity to over 3,100 kilograms, which will be brought up to 7,500 kg per year when its phase 6 and 7 ramp-up adds an additional 12 growing rooms. Organigram reported an all-in cash cost per gram of $1.91 and a gross margin of 63 per cent.
Organigram secured a total of $6.4 million in financing during the year consisting of a combination of equity and debt.
[four_fifth_last padding=”0 0 0 20px”]Listen to an interview with Organigram CEO Denis Arsenault:
Another top performer for the year among TSX Venture-listed marijuana producers is once again Canopy Growth Corp, the first, the biggest, and the most diversified of Canadian publicly-traded marijuana producers. Canopy saw its shares appreciate by more than 42 percent to close the year at $2.97 per share, up $0.89 over 2014’s close of $2.08.
Canopy’s accomplishments in 2015 included closing a $14.4 million bought deal short form prospectus financing that included no warrants, making it the most non-dilutive capital raise in the marijuana space across the board. The deal closed in November, and the fact that shares are trading so much higher so soon after the closing bodes well for shareholders.
Canopy is the result of a merger between Tweed Marijuana and Bedrocan. Between the two brands, the company is best positioned to capture market share in Canada in the event of an end to prohibition of marijuana for recreational purposes.
[four_fifth_last padding=”0 0 0 20px”]Listen to an interview with Canopy Growth CEO Bruce Linton:
Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.
Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.
Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.