The Canadian marijuana stocks on our list trade at a premium to their peers in a sector that many consider to be highly inflated
SmallCapPower | December 8, 2017: The marijuana stocks on our list have returned 167% YTD on average as activity in the sector picks up. Provinces continue to roll out plans for recreational marijuana, and even large chain stores such as Shoppers Drug Mart plan to enter the market, as evidenced by Shoppers’ supply agreement with Aphria Inc. The Canadian marijuana stocks on our list today trade at some of the steepest valuations in the sector.
Canopy Growth Corp (TO:WEED) – $18.32
Pharmaceuticals
As Canada’s largest public cannabis company, Canopy Growth owns and operates a number of facilities that comprise approximately 500,000 square feet. In addition, the Company owns a variety of diverse brands that include Tweed and Bedrocan. Canopy recently announced the industry’s largest financing to date, a $245 million equity deal with Constellation Brands Inc (NYSE:STZ), in exchange for 18.9M shares or 9.9% of the Company.
- Market Cap: $3,497 Million
- YTD Total Return: 100.4%
- Forward EV/EBITDA (2019): 112.6x
- Peer Median EV/EBITDA (2019): 15.2x
Aurora Cannabis Inc (TO:ACB) – $7.00
Pharmaceuticals
Aurora Cannabis is a licensed producer and seller of medical marijuana and cannabis oil under the ACMPR. Aurora sells its products over the phone, online or through its mobile app and offers a delivery service to its customers. Currently, the Company is engaged in the construction of its new 800,000 square foot production facility in Alberta called Aurora Sky.
- Market Cap: $2,825 Million
- YTD Total Return: 204.3%
- Forward EV/EBITDA (2019): 31.6x
- Peer Median EV/EBITDA (2019): 15.2x
Hydropothecary Corp. (TSXV:THCX) – $3.06
Pharmaceuticals
Hydropothecary is a licensed producer and distributor of medical marijuana under the Access to Cannabis for Medical Purposes Regulations (ACMPR). With an operational 50,000 square foot facility, Hydropothercary also aims to scale up 250,000-square feet with an expansion that is expected to come online by Q2/2018. Hydropothecary closed a $69M offering of convertible debentures in November to fund its expansion plans.
- Market Cap: $269 Million
- YTD Total Return: 353.3%
- Forward EV/EBITDA (2019): 38.8x
- Peer Median EV/EBITDA (2019): 15.2x
Maricann Group Inc (SNX:MARI) – $2.18
Pharmaceuticals
Maricann is a Canada-based licensed producer of medical marijuana. The Company serves over 11,000 patients, operating primarily through its Langton facility. The Company continues to ramp up capacity at the facility from 44,000 square feet to 217,500 square feet in a fully-funded operation.
- Market Cap: $160 Million
- YTD Total Return: 11.8%
- Forward EV/EBITDA (2019): 76.2x
- Peer Median EV/EBITDA (2019): 15.2x
Disclosure: Neither the author nor any of the principals at SmallCapPower, or their family members, own units in any of the companies mentioned above.