This has been a much less volatile week, compared to last, for the cannabis sector. We saw stock prices for most of the large-cap licensed producers stabilize, as we await some of the biggest companies in the sector to report earnings. 

In May, we will get earnings from Aurora Cannabis (ACB) and Canopy Growth(CGC). What we will be looking for are positive signs that these companies were able to further reduce spending, in hopes of becoming profitable. 

ACB is forecasting dismal growth this quarter but has a goal to bring operating costs down to $40 million. CGC, on the other hand, expects to write off between $700 and $800 million in goodwill and impairment charges while bringing operating costs down as well. 

So far, two cannabis companies have bucked the trend this quarter: Aphria Inc. (APHA) and The Valens Company (OTC:VLNCF). These companies were able to generate a profit, despite the tough economic conditions during the COVID-19 crisis. 

Aurora Cannabis (ACB - Get Rating)  finds some stability

Despite the disappointing news of the upcoming reverse stock split for ACB, the selloff has seemed to have subsided for now. ACB on the NYSE has been able to maintain about a $0.70. Investors are gearing up for another quarterly earnings report from ACB and patiently await further details regarding their operating expenses. 

Investors should also be focused on management changes. The company is still on the hunt for a long-term CEO, after Micheal Singer replaced Terry Booth as interim CEO. There are still many uncertainties for ACB as they fight for survival.

OrganiGram (OGI - Get Rating) raises more money

This week OGI announced that it has established an at-the-market equity program that allows the company to issue up to CA$49,000,000 worth of common shares to the public from time to time. 

These shares will be sold on the NASDAQ and the Toronto Stock Exchange at the company’s discretion when they need additional capital. This recent news has pushed the stock to fresh 52-week lows as investors accept the reality of further dilution in order to keep operations running. 

Aphria (APHA - Get Rating) falls despite a strong quarter

Despite the strong quarter that APHA posted last week, the company continued to sell off this week. Although the company is well off of its 52-week lows hit during the initial COVID-19 market crash, the stock has not been able to buck the bearish trend in the sector despite recording its 4th consecutive quarter. 

However, we do believe that Aphria will continue to be one of the rising stars in the cannabis sector, as they are profitable during challenging economic times, when many of their peers are not.  Uncertainty surrounding the entire sector is justified but a strong balance sheet and profitability should pave the way for a bright future for this company.

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ACB shares were trading at $0.72 per share on Friday afternoon, up $0.01 (+0.70%). Year-to-date, ACB has declined -66.67%, versus a -12.00% 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...

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