OGI:CC - The Best Cannabis Stock to Buy Right Now
2024-02-23 20:15:00 ET
Canadian investors, we’ve been burned before. I get it. Cannabis stocks remain in a very tricky situation right now. After all, black market sales are still high. There are still a lot of hurdles, and the international market, while growing, isn’t there yet.
But it will be eventually. Even so, I wouldn’t say we’re going to return to those insane prices we’ve seen in the past. Which is why now is such a great time to buy. Cannabis stocks are low, but very few are cheap . Yet they do exist, and the best cannabis stock right now I would recommend in this case would be Organigram Holdings ( TSX:OGI ).
A great year so far
This cannabis stock has already seen a great year so far. The company started out with an approval of its $124 million investment from British American Tobacco back in January. This helped the cannabis producer reduce some significant risks for the stock in the near future.
It also will help Organigram fund a strategic investment pool, called Jupiter. This will target investments in emerging cannabis markets. So you’re not just getting a cannabis producer, but a cannabis investor as well.
What’s more, it gives BAT, a proven producer, an overall equity interest of 45%. The pair have worked well in the past, and the increase in stake will only deepen an already strong relationship. One that has proven profitable, whereas other cannabis stocks cannot claim the same.
More growth to come
The investment will come in three tranches, according to Organigram. They will be used to identify geographic expansion, as well as increase technological advancements for the company. Then, of course, there is the opportunity to grow in the United States.
While focusing on emerging markets for a diverse set of growth opportunities, Organigram realizes that the U.S. will be its biggest market. The benefit it has over others already there? It can look at the mistakes made by rivals, and not repeat them.
“We don’t have to reinvent the wheel, and we’re excited about these opportunities going forward,” said Organigram CEO Beena Goldenberg. What’s more, the company notes “THC inflation,” from tetrahydrocannabinol (THC) still being illegal federally. While this won’t be the case forever, when it becomes legal it will only expand their growth.
Focus on higher margins
Organigram has remained focused on higher-margin areas of the cannabis market, creating profit while others struggle to stay afloat. Analysts have remained positive about the stock, even after the earnings report of a first quarter loss recently.
The cannabis stock reported net revenue of $36.5 million, with adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $100,000. It now expects revenue growth of 16% for fiscal 2025, with more improvements in profit as well.
Shares are still down 33% in the last year, but the company holds a price target of $3.52 as of writing. This would provide a potential upside of 27% as of writing! And we’ve already seen that growth after the company announced the BAT investment. So if you’re looking for a cheap cannabis stock set up for growth, Organigram stock could certainly be worth your consideration.
The post The Best Cannabis Stock to Buy Right Now appeared first on The Motley Fool Canada .
Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Organigram. The Motley Fool has a disclosure policy .
2024