Hexo Corp (NYSE: HEXO) is one of Canada’s success stories with significant growth potential. A buyout of Newstrike Brands for $263 million underscores the company’s credentials as it seeks to become an industry leader in the multi-billion sector.
Hexo Corp Price Analysis
The stock has also taken off in the market on huge volume, in what is turning out to be an inflection year, after the underperformance of last year. A 100% plus spike in share price, since the start of the year, could as well signal the stock’s break out credentials.
With the stock currently trading in a steep uptrend, further gains could be on the offing given the underlying fundamentals that continue to fuel the upside action. For starters, the company is fresh from inking a multi-year extraction agreement with Valens that will see it supply a minimum of 30,000kg cannabis and hemp biomass.
A spike in Hexo share price also comes on the heels of an analyst at Bank of America initiated coverage of the stock with a ‘buy’ rating. A rally past the $7 a share resistance level has since opened the door for the stock to continue edging higher in continuation of the long-term bull trend.
Pullbacks have so far emerged as entry positions from where bulls have come back and continued to push the stock higher. Conversely, any pullback, back to the $7 support level could trigger further upside action, as has been the case for the better part of the year.
About Hexo Corp
Through its subsidiaries, Hexo Corp produces markets and sells cannabis and its derivatives in Canada. The company also offers dried cannabis under the Time of Day and H2 lines. The products are offered under the Hexo and Hydropothecary brand names.
Hexo Corp Buy Rating
Shares of Hexo have been on the move in recent weeks on Bank of America analyst, Christopher Carey, reiterating that the stock is a strong ‘buy’ in response to recent developments. According to the analyst, the stock is a top pick in the cannabis sector; thus the $10 price target.
According to the analyst, Hexo is an ideal pick in part because of its low valuation supported by an annualized revenue of $40 million. The company has also inked cannabis supply agreements with four provincial agreements that could be worth billions of dollars in revenue over the next few years.
Hexo moving with speed to take advantage of the growing demand for cannabis products is another development that justifies the buy rating according to the analyst. In addition to positioning itself for growth in Canada, the company has also set sights on international markets in pursuit of growth opportunities.
Cannabis Production Capacity Boost
The development of a 350,000 square foot facility in Greece underscores the company’s push for growth in the European market. Once the production facility is up and running, the company should be able to supply medical marijuana markets across the EU.
The acquisition of Newstrike Brands is poised to more than quadruple Hexo cannabis cultivation space to 2.3 million square foot. With the large cultivation space, the company should be able to ramp up cultivation and production capacity, to cater to the growing cannabis demand back at home and abroad
Hexo has already inked a deal that will see its supply Valens GroWorks, a minimum of 30,000 kg of cannabis and hemp biomass a year.
“HEXO is pleased to work with a quality organization like Valens. On the eve of edibles and concentrate legalization in Canada, this agreement will allow our company to bring an expanded offering to market, creating innovative products to deliver exceptional cannabis experiences to consumers,” said James McMillan, Vice-President of Strategic Business Development at HEXO Corp.
A balance sheet with CA$224 million in working capital leaves the company well financed to pursue growth initiatives, ideal for generating shareholder value. As it stands, Hexo remains well positioned to start producing positive cash flow as it continues to ramp up sales on improved cannabis production.
Hexo is an exciting fundamental investment as it continues to send shockwaves in the cannabis sector. The acquisition of Newstrike Brands has all but reinvigorated the company’s growth metrics given the synergies of expanded cannabis cultivation and production at stake.
The stock is a solid buy on pullbacks after the recent spike as it continues to outperform the overall market.
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Disclosure: We have no position in HEXO and have not been compensated for this article.
What Do Investors See In Medical Marijuana Stock (OTCMKTS:MJNA)?
Medical Marijuana Stock (OTCMKTS:MJNA) has emerged as one of many investor’s favorite pot stocks in the legal cannabis universe in 2020. The stock is already up about 10% in 2020, demonstrating how investors have warmed up to the stock early on in the New Year.
Following a disastrous 2019, cannabis investors lost money but have also learned that their best bets are stocks with strong fundamentals. They are looking for companies that have positioned themselves well in the cannabis industry and have what it takes to go for the opportunities. That is why MJNA stock is catching a lot of investor attention in 2020 because of how it has positioned itself in the cannabis market.
Robust revenue growth and strong financial position have also helped put MJNA on the radar of investors hunting for quality cannabis stocks. Revenue at MJNA more than doubled from $26.5 million in 2017 to $60 million in 2018. MJNA is also not in financial distress as may be the case with other cannabis companies out there. The company finished the third quarter, the most recent reported period, with $5.5 million in cash reserves.
Moreover, MJNA has recently taken steps to expand into new international markets and invest in companies that are leaders in their segments. These prudent actions are helping lift Medical Marijuana stock as more investors learn about them.
About Medical Marijuana stock
Is Tilray Inc (NASDAQ:TLRY) A Buy Or Sell?
For Tilray Inc (NASDAQ:TLRY) and the rest of cannabis stocks, 2019 was no doubt a bad year. But 2020 is shaping up to be a promising year for the stock. To start with, Tilray stock has already gained 8.35% year-to-date. If that says anything, it shows following the broad selloff in Tilray stock last year, we’ve got to a point where sellers are giving way to buyers in the stock.
There are several catalysts that should continue driving NASDAQ:TLRY as you’re about to see. First, below is a brief profile of the company we’re discussing.
Tilray is a Canada-headquartered global cannabis company. It is engaged in activities of cannabis cultivation and processing as well as marketing and distribution of cannabis products. Tilray already has several cannabis products brands to its portfolio. It operates across five continents through subsidiaries in Canada, Australia, Germany, and Portugal.
Following the broad collapse of cannabis stocks in 2019, investors are looking for cannabis stocks that can make a positive impact on their portfolios in 2020. Tilray stands out as an attractive cannabis stock pick in 2020. Here are some of the exciting things about the company.
Tilray CEO sees a bright future for the cannabis industry
On January 25, Tilray CEO Brendan Kennedy spoke on Bloomberg. In that interview, Kennedy framed a rosy outlook for the…
Is Cronos Stock (TSE:CRON)(NASDAQ:CRON) A Buy?
Cronos Stock (TSE:CRON)(NASDAQ:CRON) stock fell 9.22% on January 24, marking its steepest decline so far in 2020. The stock plunge followed an important disclosure that you would only expect from a company that is trying to be straight and transparent with investors. Here’s what happened.
On January 22, after market close, Cronos made a regulatory filing detailing changes in its executive team. In that SEC filing, Cronos revealed that David Hsu and William Hilson have stepped down as its chief operating officer and chief commercial officer, respectively. Unfortunately, some investors read bad news in the executive exits and sold their shares in Cronos.
But a careful reading of the filing doesn’t seem to raise any red flags. Therefore, the big stock plunged points to investors panicking to the degree of responding to a mosquito bite with a missile.
There is no doubt that 2019 was a difficult year for cannabis stocks and Cronos Stock is no exception. But before the uncalled for reaction to Cronos’s regulatory filing, we had been at a point where sellers were starting to give way to buyers in Cronos stock. The stock has gained about 8.0% in the past one month. It had gained more than 13% year-to-date before the January 24 big selloff.
About Cronos Stock
Cronos Stock is a Canada-based global cannabis company. Cronos operates through subsidiaries and…