Last week, we highlighted a few large-scale Canadian Licensed Producers (LPs) that were getting ready to report quarterly financial results as earnings season is starting to kick into high gear for the cannabis industry.
This week, we want to issue an update on three mid-tier or craft Canadian LPs that are getting ready to report earnings. Due to the lower expectations that are associated with this class of operators, we are of the opinion that smaller Canadian LPs would be less impacted by a weaker-than-expected earnings report.
Many mid-tier or craft Canadian LPs have a market capitalization that is less than $50 million and we consider this to be an important factor when trying to determine how much a company can be impacted by reporting earnings that miss expectations.
The first Canadian LP we want to highlight is Auxly Cannabis Group (TSX: XLY) (OTC: CBWTF) which will report third quarter financial results on November 15th. Although Auxly has traded in a tight range during the last month, the stock has fallen more than 50% from its 2021 highs and the trend has primarily been to the downside.
In the upcoming earnings report, we will be highly interested in the amount of revenue that was generated from the sale of cannabis 2.0 products. We consider this to be the most attractive aspect of the Auxly story and expect the market to respond favorably to better-than-expected sales in this vertical. We also believe profit margins will be a point of interest in the earnings report and will monitor how the stock trades ahead of earnings.
Last week, we had the opportunity to speak to Indiva (TSX V: NDVA) (OTC: NDVAF) CEO Niel Marotta about Canopy Growth’s (TSX: WEED) (Nasdaq: CGC) acquisition of Wana Brands, a leading edible brand in the US. We left the meeting feeling confident about the company’s future and believe the terms of its agreement with Wana to be beneficial for the business.
Similar to Auxly, we expect the market to be highly focused on profit margins and the amount of revenue that was generated from the sale of cannabis 2.0 products. Indiva has an attractive portfolio of cannabis 2.0 products and we expect the quarter to reflect strong consumer demand for these types of products. During the last month, Indiva has come under pressure and the stock has fallen more than 50% from its 52-week high. This is an operator that we are highly focused on and that we will monitor ahead of its earnings report.
Aleafia Health Inc. (TSX: AH) (OTC: ALEAF) is another Canadian LP that is getting ready to report earnings and is an opportunity that we are excited about. From international markets to cannabis 2.0 products, the company has reported a series of positive developments so far this year and we believe the opportunity is underappreciated by Wall Street.
During the last month, the Canadian LP has fallen by more than 15% and the stock has fallen more than 80% from its 52-week high. At current levels, we believe Aleafia Health has a favorable risk-reward profile and is trading at discount to its peers. So far this year, the company has reported several important milestones and we are of the opinion that it has significant potential catalysts for growth.
If you are interested in learning more about mid and small-tier Canadian LPs that are getting ready to report earnings, please send an email to email@example.com with the subject “Canadian LP Earnings” to be added to our distribution list.
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