There’s no sweeping under the carpet the fact that it’s been a rough ride for cannabis stocks over the past six-plus months. Stockhouse investors and
Bullboard users know only too well that there’s no sense trying to make a silk purse out of a sow’s ear. But retail and institutional investors also know that a down market offers that most enticing of opportunities – bargains.
That being said, an undervalued stock doesn’t necessarily translate into a share price that will automatically increase in value just because all of the available metrics indicate it should – investor confidence must remain high and the company’s revenue streams have to stay consistent to ensure the below-market-value stock stabilizes and hopefully starts rising against the ‘bear tide’.
One play that many analysts consider is a
cannabis ETF – exchange-traded funds that invest in cannabis companies and can give investors much more diversification and a bit more safety. However, generally, cannabis investors should be aware that the risk of investing in cannabis stocks, especially at this juncture of the industry's growth, is still relatively high. And regardless of how many different types of stocks are held in an ETF, it can't entirely protect your portfolio if things go bad.
Among one of few cannabis stocks that has bucked the downward market trend is
Organigram Holdings Inc.(V.OGI, OGI, Forum). Don't be fooled by claims of profitability from any of the major Canadian cannabis growers and cultivators. The only grower that's managed to
deliver a real quarterly operating profit to date is New Brunswick-based OrganiGram.
During the fiscal third quarter, OGI reported $24.75 million Canadian in net sales, representing a
784 percent year-on-year increase. Not including fair-value adjustments, OrganiGram’s cost of sales totaled $12.47 million, with operating expenses rising to $11.11 million. This works out to real operating income of $1.17 million, without the frills. It may not be much, but considering the massive losses being reported by the likes of Canopy Growth, this is truly impressive.
Another pot stock that's pushed aside industrywide weakness and delivered a no-frills operating profit is cannabis and hemp extraction-services provider
Valens GroWorks Corp. (
C.VGW,
OTCQB: VGWCF,
Forum) – one of the global leaders in cannabis extraction capacity as well as extraction methodologies.
Valens, which only began its extracting operations roughly a year ago, managed to produce $16.46 million in revenue in its fiscal third quarter. This compares to cost of goods sold of $3.65 million and $7.28 million in operating expenses, which was a tripling from the prior-year period. Even so, this works out to $5.52 million in real operating income during the most recent quarter – results that are well above the industry norm.
As with any stock investment, cannabis investing should always be thoroughly researched and carried out with due diligence.
New to investing in Cannabis? Check out Stockhouse tips on How to Invest in Cannabis Stocks and some of our Top Cannabis Stocks.
For more of the latest info on Cannabis, check out the Cannabis Trending News hub on Stockhouse.
FULL DISCLOSURE: Organigram Holdings Inc. and Valens GroWorks Corp. are clients of Stockhouse Publishing.