Recently, shares of Aurora Cannabis (ACB) have had a bumpy ride but this week we saw some good news released for the company…
First, On Wednesday, November 27th Aurora Cannabis announced that they opened the largest cannabis retail store in Canada, at North America’s largest retail space, the West Edmonton Mall. This news comes at the perfect time as investors have their sights laser-focused on the Canadian retail environment because it has been a huge challenge for Aurora Cannabis and its peers to open new stores. That’s because they have faced tough government regulation from Canada, which has caused a slow the rollout of new retail locations. So, this news could be exactly what Aurora Cannabis investors are looking for and are hopefully the first of many new openings when it comes to the brick and mortar retail market.
Now the Ontario market in Canada’s most populous province is still a concern but the sector did receive some support from the Ontario premier Doug Ford as he pledged to expand the retail environment further in 2020 to combat the thriving black market that is sucking potential revenue out of the legal consumer market.
Seond, currently, sentiment in the cannabis sector is at an all-time low, but it doesn’t take a lot to tip the scales in the opposite direction. Investors have been looking for substantial lasting positive catalysts to bring valuations off the ground and something very important occurred this week. Aurora Cannabis’ CEO Terry Booth purchased 270,000 shares of Aurora Cannabis at $3.68 this week. The transaction occurred on Monday, November 25th and was filed on Wednesday November 27th. This was the largest transaction carried out by an insider in Aurora Cannabis over the past 6 months.
Insider buying and selling does not dictate the future of the companies share price, but the fact that Terry Booth has bought almost a million dollars worth of stock at these prices is reassuring for current long term shareholders. We see this as Terry Booth having confidence in the future of his company which is a good feeling after the months and months of declines.
Though Aurora Cannabis has seen weak revenue numbers over the past few quarters, it remains one of our top picks for the cannabis sector. In addition to the good news released this week, we also like that the company has a worldwide presence – they operate in 25 countries – and as they focus on profitability in the short term, they will have the ability to grow international revenues as the sector continues to grow at double-digit year over year numbers. In addition, Aurora Cannabis recently has halted construction at two of their facilities in Edmonton and Denmark, which means they have an “extra” $190 million cash on their balance sheet.
(Disclosure: The author owns shares of Aurora Cannabis )
ACB shares were trading at $2.50 per share on Friday afternoon, down $0.02 (-0.79%). Year-to-date, ACB has declined -49.60%, versus a 27.62% rise in the benchmark S&P 500 index during the same period.
About the Author: Aaron Missere
Aaron is an experienced investor who is also the CEO of Departures Capital. His primary focus is on the cannabis industry. He also hosts a weekly show on YouTube about marijuana stocks. Learn more about Aaron’s background, along with links to his most recent articles. More...
