Sundial vs. OrganiGram: Which Cannabis Stock Is a Better Buy?

: SNDL | Sundial Growers Inc. News, Ratings, and Charts

SNDL – Shares of cannabis concern Sundial Growers (SNDL) are down 95% from their record highs, while shares of OrganiGram (OGI) are down 70%. While these names may appear to be attractive cannabis bets for contrarian investors, a closer look at these companies’ weak financials and steep valuations may tell a different story. Read on.

Cannabis stocks have been volatile this year. Not dissimilar to most nascent industries, stocks prices in the cannabis space have experienced big spikes and sharp declines over the years. Several marijuana producers are still unprofitable and are burning cash at a rapid clip. This means they must regularly raise equity capital, which dilutes shareholder value.

However, investors are nevertheless bullish on the expanding pot market in North America and the prospect of pot legalization in the U.S. and several other regions. This potential makes the sector attractive to investors with large risk appetites.

With this in mind, we compare two beaten-down pot stocks—Sundial Growers (SNDL) and OrganiGram (OGI)—to evaluate which is a better cannabis bet right now.

Click here to check out our new  Cannabis Industry Report for 2021

Sundial Growers stock is down 94% from record highs

Sundial Growers is a Canada-based company that produces and markets cannabis products for adult-use markets. It produces and distributes cannabis flowers, pre-rolls, and vapes. Sundial offers products under multiple brands, including Top leaf, Sundial Cannabis, Grasslands, and Palmetto.

Sundial Growers went public in August 2019 and its stock hit  a record high of CAD11.5 that month. It is now trading at CAD0.83 per share, 94% less than its record high.

One of the major reasons for Sundial’s poor performance is the staggering dilution of its shareholder equity. In July 2020, Sundial had just over 100 million shares outstanding. This rose to 1.66 billion at the end of Q1 of 2021.

Sundial has more than CAD700 million in debt on its balance sheet. The  company is also losing market share in  Canada. At the close of 2020, Sundial had 2.7%  market share in Canada, which is a decline from  its  3.5% market share  in the prior-year period.

Sundial harvested close to 28,000 kgs of dried cannabis in 2020. Given its average selling price per gram of CAD$4.14 in the December quarter, the company had around CAD116.8 million of total inventory. But its total gross sales of CAD74 million in the last year indicates that Sundial sold just 60% of its cannabis produce in 2020 as a result of  lower-than-expected demand.

Sundial Growers’ stock is valued at a market cap of CAD1.37 billion, which means it’s trading at a 24.6x forward price to sales multiple, which is extremely steep for a company that’s forecast to grow its top line by just 11% this year.

Is OrganiGram stock a better bet?

OGI is also a Canada-based pot stock that has  underperformed the market in the last two years. OGI stock is currently trading 70% below its record high despite 88% gains in 2021.

In its  fiscal second quarter of 2021, OrganiGram reported gross sales of CAD19.2 million, representing a 29% decline year over year. Its net sales were down 37% at CAD14.6 million. Bay Street analysts forecast OGI’s Q2 sales at CAD19.6 million.

Further, OrganiGram reported a CAD$66.4 net loss, much wider than its prior-year net loss of CAD6.8 million. Its adjusted EBITDA loss in fiscal Q2 stood at CAD8.6 million in Q2 compared to an EBITDA loss of CAD59,000 in the last year.

OrganiGram attributed its less than impressive results to challenging industry dynamics amid COVID-19 as well as staffing limitations at its facility.

Its sales were down in Q2 due to lower wholesale revenue and  lower selling prices. The falling prices of dried cannabis for OrganiGram and Sundial points to intense competition among marijuana companies in Canada, which has impacted their bottom-line negatively.

Looking ahead, OGI’s management said the company is on track to generate higher sales in Q3 based on  an expansion of its product portfolio and an improvement in consumer demand.

OrganiGram stock is valued at a market cap of CAD918 million, which means it has a 12.7x forward price to sales multiple. While analysts expect its sales to decline close to 17% to CAD72 million in fiscal 2021, they are  forecast to rise by 58% to CAD114 million in 2022.

The final takeaway

We can see that both Sundial Growers and OrganiGram are unprofitable pot stocks that are under the gun. Both companies are high-risk bets given their widening losses and tepid revenue growth. However, OrganiGram looks like a better bet given its significantly lower valuation and accelerating revenue growth numbers for fiscal 2022.

Click here to check out our new  Cannabis Industry Report for 2021


SNDL shares were trading at $0.79 per share on Tuesday morning, down $0.04 (-4.40%). Year-to-date, SNDL has gained 66.84%, versus a 11.16% rise in the benchmark S&P 500 index during the same period.


About the Author: Aditya Raghunath


Aditya Raghunath is a financial journalist who writes about business, public equities, and personal finance. His work has been published on several digital platforms in the U.S. and Canada, including The Motley Fool, Finscreener, and Market Realist. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
SNDLGet RatingGet RatingGet Rating
OGIGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


:  |  News, Ratings, and Charts

History Lessons Say Stocks About to Head Lower Again

Yes, history has a way of repeating itself. Like how periods of high inflation are followed by recessions and bear markets time and time again. Or how periods of high stock valuations often lead to extended bear markets like 2000 to 2003…and yes that may be repeating now. Before you believe that the next bull market has emerged you may want to read this article to appreciate why the odds point to more downside ahead.

:  |  News, Ratings, and Charts

The 3 Top Aerospace and Defense Stocks to Buy Now

The U.S. aerospace and defense industry is evolving, supported by lucrative fiscal investments and rapid defense technology advancement. Moreover, given the growing tension between China and Taiwan, it could be wise to add quality aerospace and defense stocks, Lockheed Martin (LMT), L3Harris Technologies (LHX), and Raytheon Technologies Corp. (RTX) to your portfolio now. Continue reading…

:  |  News, Ratings, and Charts

After the Bear Market Rally What Comes Next?

The stock market is in the midst of an impressive and blistering rally. From the mid-June lows, the S&P 500 (SPY) is up 14%, while the Nasdaq Composite is closing in on a 20% gain. Some of the factors behind this rally are extreme bearish positioning, better than expected economic data, marginally positive news on inflation, and odds of a 'soft landing' that have increased from implausible to 'pretty unlikely'. In today's commentary, I want to reiterate why I continue to see this as a 'bear market rally' rather than the start of a new bull market. Then, I want to provide some more insight on the thinking behind today's trade alert. We will conclude with an overview of the portfolio. and a couple of quick notes from my recent visit to Iceland. Read on below to find out more…

:  |  News, Ratings, and Charts

2 Momentum Stocks Crushing the Bear Market

Valero Energy (VLO) and Shell (SHEL) have maintained strong momentum amid the highly uncertain market conditions. With recession fears expected to keep the market under pressure in the near term, it could be wise to buy these stocks now to benefit from their momentum, which might continue for some time based on their fundamental strength irrespective of the market conditions. Read on…

:  |  News, Ratings, and Charts

After the Bear Market Rally What Comes Next?

The stock market is in the midst of an impressive and blistering rally. From the mid-June lows, the S&P 500 (SPY) is up 14%, while the Nasdaq Composite is closing in on a 20% gain. Some of the factors behind this rally are extreme bearish positioning, better than expected economic data, marginally positive news on inflation, and odds of a 'soft landing' that have increased from implausible to 'pretty unlikely'. In today's commentary, I want to reiterate why I continue to see this as a 'bear market rally' rather than the start of a new bull market. Then, I want to provide some more insight on the thinking behind today's trade alert. We will conclude with an overview of the portfolio. and a couple of quick notes from my recent visit to Iceland. Read on below to find out more…

Read More Stories

More Sundial Growers Inc. (SNDL) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All SNDL News