Aurora Cannabis (NYSE:ACB) got the first piece of good news it’s had in a long time this week when ACB stock gained 18% on the day.
Why the bump after losing more than 46% of its value over the past three months?
Investors holding 5% unsecured debentures maturing March 9, 2020, were given a four-month headstart to convert their debentures at a 6% discount from this week’s volume-weighted average price. Approximately 94% of the $230 million in debentures converted early.
This suggests that investors feel ACB stock is worth more than $2.50-$2.75 a share including the 6% discount.
Long-term, Aurora Cannabis stock should be fine. However, it’s always good to have a plan B.
Why not consider these three American cannabis stocks until the Canadian players get their act together?
Trulieve Cannabis Versus ACB Stock
If you bought Trulieve Cannabis (OTCMKTS:TCNNF) at the beginning of 2019, you’d be up 47% year to date through Nov. 21. That compares to -24% for ETFMG Alternative Harvest ETF (NYSEARCA:MJ), the industry-standard for cannabis ETFs.
That’s some performance.
Now, I’m not going to pretend that Trulieve has been on my radar because it surely hasn’t. However, when you look at its business so far in 2019, you have to be just a little impressed with its progression.
On Nov. 18, it reported its third-quarter results that included a 22% sequential increase in revenues to $70.7 million and a 16.8% sequential increase in adjusted EBITDA to $36.9 million. That’s a heck of a lot better than the 24% sequential drop in revenue from Aurora.
For those unfamiliar with the company, it is the largest fully licensed medical cannabis company in the state of Florida. Vertically integrated, it has 39 retail locations open in Florida with another five expected to open by the end of the year.
Currently, it generates just 6% of its sales online. That’s expected to grow to 20% by the end of fiscal 2019. Trulieve also operates in California and Connecticut.
In fiscal 2019, it expects revenues of at least $220 million. In 2020, that jumps to $380 million.
While you might have missed a big part of its jump, the market share it has in Florida suggests business can only get better in the future.
Curaleaf Holdings and ACB Stock
Massachusetts-based Curaleaf Holdings (OTCMKTS:CURLF) has had almost as productive a year in the markets up 29% year to date. However, it could have been so much better. As recently as the middle of May it was trading at a 52-week high of $11.73.
I see the glass being full for Curaleaf despite the summer letdown.
On Nov. 19, Curaleaf reported its Q3 2019 results. It beat analyst estimates on both the top- and bottom-line with total revenue of $61.8 million, 27% higher than in the second quarter and 189% higher than Q3 2018. On the bottom line, it had adjusted EBITDA of $9.0 million, 169% higher than Q2 2018 and 386% better than a year ago.
On a GAAP basis, it still lost a penny a share but profitability is just around the corner.
With the company’s acquisition of Grassroots for $875 million, it now has a presence in 19 U.S. states and according to the company, is now the world’s largest cannabis company. I’m sure Canopy Growth (NYSE:CGC) would have something to say about the claim but there’s no denying it’s performing at a high level.
Curaleaf believes that it will generate $1 billion in revenue and $300 million in adjusted EBITDA in 2020. With $145.6 million in revenue for the first nine months of the year, it should easily surpass $200 million for 2019.
Getting to $1 billion is a big ask, but with Grassroots in the fold, it’s got a much better chance of accomplishing its lofty goal.
If you’re worried about the state of Canadian cannabis stocks, I’d check both of these out.
At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.