Due to the delay of recreational marijuana legislation being passed an amazing buying opportunity has emerged!
The Canadian Cannabis index has fallen about 30% since January 24 when it broke the 1000 level barrier. At this time their market cap had reached 31 billion dollars and US investors were buying shares of nearly every company the index had in its holdings.
The political gridlock in the Canadian parliament has delayed the sale of cannabis causing a devaluation of holdings. The companies that are poised to take the most market share are now nearly half the cost, and there is no sign of change in their underlying economic reality.
Canopy Growth Corp. (TWMJF): While unable to make sales, CGC has been spending large sums of money to acquire capital assets. Between 2016 and 2017 the company tripled its assets as well as increased its efforts in Research and Development by about 13 percent. They have also made efforts to expand their operations by nearly 500,000 sq. ft.
Aphria (APHQF): Gross Profit has tripled with this firm as they are ramping up production, and they have doubled their R/D budget. This is indicative of obvious growth in the medical arena, which is why I am excited to hear Aphria has now filed thirteen patents since August of 2017. I would estimate that this company is undervalued because there is implied value of proprietary technology that can be shown on the balance sheet once it is implemented in their production.
Aurora Cannabis Inc. (ACBFF): Sales revenue has increased dramatically from 1.4 million to 18.07 million over the last fiscal year. It’s no surprise that their net capital has also increased. It’s property and plant equipment has increased four times since last year alone and it has now generated a total of 322 million dollars with an increase of 1,654.02% since their last report.