In mid-2014, we jumped headfirst into the cannabis industry after determining that it represented a once-in-a-lifetime opportunity. After leaving an equity research job at Raymond James Financial, we launched Technical420.com with the goal of identifying leading companies and educating the market about an emerging opportunity.
Fast-forward a few years and our thesis about the cannabis industry has been proven to be accurate and during this time, we successfully identified several leading cannabis businesses that were micro-cap companies at the time. One of the companies we identified early on was Aurora Cannabis Inc. (ACB.TO) (ACB) which has been nothing short of an execution story and represents one of the most attractive long-term opportunities.
Aurora Cannabis: A Global Cannabis Leader
During the last year, Aurora Cannabis has significantly advanced its fundamental story and has been reporting strong revenue growth on a quarter-over-quarter basis. This is a trend that we expect to continue for the foreseeable future and are impressed with the way that the company has been able to scale the business.
We believe that the Canadian cannabis producer is one of the best positioned to capitalize on the global opportunity and are favorable on the leverage that it has to significant international markets. From South America to Europe, from Australia to North America, Aurora Cannabis has been able to expand its reach and gain market share in strategic markets all over the world.
Through a combination of organic and inorganic (investments and acquisitions) growth initiatives, Aurora Cannabis has been improving its growth prospects and this is an opportunity that we are excited about. Last year, the company made a massive acquisition of ICC Labs, a leading Latin American cannabis company and we believe that this transaction was immediately accretive.
The Latin American cannabis market represents a significant opportunity and this acquisition made Aurora Cannabis a leader in this space. The growth prospects associated with cultivating cannabis in Latin America are very attractive and we believe that this acquisition significantly improved the company’s ability to produce premium low-cost medical cannabis.
Earlier this month, Aurora Cannabis reported a massive development and was one of three winners in Germany’s public tender to cultivate and distribute medical cannabis selected by the German Federal Institute for Drugs and Medical Devices. This represented a major milestone for the Canadian cannabis producer and consider this market to be a major opportunity.
During the last two years, Aurora Cannabis has been highly focused on the European cannabis opportunity and this development will significantly strengthen its position in this burgeoning market. We have been very favorable on the European cannabis opportunity due to the size of the market and better prices and margins associated with the sale of medical cannabis products. With a population of more than 600 million, Europe is almost twice the size of the United States and we are favorable on the company’s leverage to this market.
Continues to Advance and Improve its Story
Last month, Aurora Cannabis reported a significant development and appointed Nelson Peltz as a strategic advisor to the company. This was a massive addition that resonated very well with the market and we are not surprised by the response due to Peltz’s deep knowledge of the consumer-packaged goods industry that will likely prove to be invaluable to the company.
Following this announcement, Aurora Cannabis Executive Chairman Michael Singer told CNBC that the company’s new partnership with activist investor Nelson Peltz is one of many strategic relationships that it hopes to foster as it works to broaden its product portfolio. Nelson is someone who proactively works with companies to maximize value for shareholders and we are excited about his relationship with Aurora Cannabis.
One of the reasons we are excited about the addition of Peltz is due to the traction that the cannabis industry is generating with mainstream industries. Several multi-billion-dollar industries (i.e. beverage, cosmetics, wellness, pharmaceuticals) are starting to show interest in the cannabis industry and we expect Peltz to help Aurora Cannabis when it comes to capitalizing on these new market segments.
A Company with Catalysts for Growth
Aurora Cannabis is one of the best capitalized cannabis companies and we find this to be important when it comes to executing on its previously announced initiatives. We believe that the company is well positioned to increase market share in emerging international cannabis markets and expect this to be a major value driver in the quarters ahead.
Over the next year, we expect to see the Canadian cannabis producer report significantly stronger revenue numbers, and this is a trend that we expect to continue in the years ahead. Aurora Cannabis has several major catalysts for growth, and we are favorable on the direction that the company is going.
2019 has been a significant year for Aurora Cannabis and we are barely through the first quarter. The stock has been a top performer during this time, and this is an opportunity to be watching. To learn more about the leading global cannabis company, please contact us at email@example.com.