Looking through the sea of cannabis companies, we can easily pick out Hexo (NYSE:HEXO) as one of the most recognized names. On any given weekday (barring market holidays), there’s no shortage of trading volume when it comes to HEXO stock.
Not that life has always been a breeze for HEXO stockholders. There have been deep valleys, to be sure. Yet, there have also been incredible price rallies.
We’ll certainly take a closer look at what’s been going on lately with HEXO stock. However, it’s also important to look at what keeps a cannabis cultivator like Hexo at the top of its game.
Certainly, product innovation is part of the equation. There’s another component that’s worth considering, though. Just remember that without highly advanced operations, Hexo wouldn’t be able to meet the considerable demands of the cannabis market.
HEXO Stock at a Glance
The month of January has been quite good to HEXO shareholders. I suppose you could call it a reward for the investors’ patience and loyalty.
Things weren’t always looking so great for HEXO stock. Last March, the share price plunged to a 52-week low of $1.38. But then, this couldn’t really be blamed entirely on the company as the world was in the midst of the Covid-19 pandemic.
At that time, there was a concern over whether HEXO stock would slide under the key $1 level and stay there permanently. As it turns out, those fears were unfounded.
The bulls took back control of the price action as HEXO stock roared back to the $4.50 level – not just once, but twice. This took place in June, and then again in December.
What the bulls really needed was a big, sustained push, however. They achieved this in January as the HEXO stock price catapulted to an impressive 52-week high of $7.82.
As of Jan. 22, HEXO stock settled comfortably at $6.69. It’s possible that the bulls are taking a breather, waiting for the next catalyst to spark another share-price spike.
Purpose-Built Manufacturing
While it’s nice to know that the bulls are showing signs of life, prospective HEXO stock holders should also want to know about the company’s value proposition.
An essential aspect of this is Hexo’s vast cannabis manufacturing facilities. The company calls its cannabis cultivation facilities “purpose-built,” and that’s an apt description.
Driven by state-of-the-art automation, Hexo’s manufacturing process is considerable even amid a highly competitive cannabis landscape. At a whopping 1,310,000 square feet, the company’s crown jewel is Hexo’s facility in Gatineau, Quebec, Canada.
The Gatineau site is dedicated to greenhouse cultivation and advanced automated manufacturing. Hexo also owns a 912,600-square-foot processing and manufacturing center in Belleville, Ontario, Canada, which also facilitates product distribution as well as research and development.
In addition, Hexo also owns these Canadian facilities:
- A 58,000-square-foot warehouse and distribution center in Montreal, Quebec
- A 14,200-square-foot research laboratory in Vaughan, Ontario, for the development of edible products
- A 14,000-square-foot genetics and breeding laboratory in Brantford, Ontario
Big Share of a Huge Market
As you can see, each of the aforementioned sites has a specific purpose and is quite capacious. Their total capacity is a mind-boggling 2,328,400 square feet.
This is not just for bragging rights, but to meet the demand of the vast market for cannabis products. With a current annualized run rate of 90,000 kilograms, Hexo’s facilities are well-equipped to meet that demand.
So far, it certainly appears that Hexo’s strategy of mass-scale production is paying off. Currently, the company controls more than 33% of the market share in Quebec, which is the second-largest province in Canada.
It’s more than fair to say that in Canada, Hexo is a powerful competitor among cannabis producers. The company has supply agreements and arrangements with government-run and private retailers in all 10 of the nation’s provinces. With that, Hexo’s market reach covers 98% of Canadians.
The Takeaway
Hexo’s ability to meet the needs of the Canadian cannabis market is well-established.
Prospective HEXO stock investors should take note of the company’s vast, purpose-built operations. And with this in mind, a long position is certainly worth considering.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
