Aurora Cannabis (ACB.TO) and its wholly-owned subsidiary, Aurora Cannabis Enterprises Inc., is a licensed producer of medical cannabis pursuant to Health Canada’s Access to Cannabis for Medical Purposes Regulations. So far in 2018, the stock was on an impressive uptrend. Our article today will cover why we believe this stock is a good choice to get exposure to this booming sector in 2018 and beyond.
Aurora Cannabis Price in 2018: Is it still a buy?
Absolutely. We still recommend caution and having risk management practices in place however, Aurora Cannabis is a good way to get exposure to the budding Cannabis industry in one’s portfolio.
From a fundamental perspective, the company has 3 productions facilities (Alberta and Quebec) and a 4th one being setup in Quebec. At full capacity, the company can produce more than 100,000 Kg of Cannabis yearly. Production, both existing and projected, is a factor investors need to monitor as it provides an idea of the potential future revenue the company can generate. At press time, increasing annual production is a key focus for most producers. The expectation of a high demand for recreational Marijuana is a very high so most companies are rushing to increase production.
Aurora Cannabis has also engaged in a series of what seems like well thought acquisitions ranging from a Berlin -based Pedanios, the leading wholesale importer, exporter, and distributor of medical cannabis in the European Union. Aurora also holds 19.88% ownership interest in Liquor Stores N.A., a company working on developing a cannabis retail network in Western Canada . Aurora also holds about 17.23% of Radient Technologies shares, an extraction technology company.
Aurora Cannabis’s most recent acquisition was the take up of 70.66% of CanniMed, a Canadian public licensed producer of medical cannabis, specifically oil Cannabis. This will increase Aurora’s production capacity which is a plus for the long term investor. The transaction is referred to as the industry’s biggest takeover yet.
Our chart analysis shows that the stock is on a strong uptrend no doubt. However, if the price falls below 10 CAD, we might see a consolidation happen in the 8 to 10 CAD area. If the price falls below 8, the next major support is in the 6 to 6.50 area. We expect 6 CAD to hold since it was a double top resistance area and back tested successfully early February and it held and it would provide a decent entry.
So Aurora Cannabis is definitely a buy in our books as it provides a strong perspective for growth, competitive production outlook, diversified exposure to various segments in the field. The risk is related mostly to the regulations in the sector so caution is always recommended.