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Aurora Cannabis Shares (TSX: ACB) (NYSE: ACB) are among the most in demand stocks on the TSX, especially after climbing 88% from its low of a few months ago in December!
If you are considering acquiring growth stocks, here are some important things to know.
Aggressive growth
Aurora Cannabis is growing at a fast pace. It brought in $ 1.4 million in revenue in 2016. Revenues have exploded 85 times to $ 119 million in about 3.5 years!
During the last quarter published, the second quarter of fiscal 2019, Aurora Cannabis recorded a net revenue growth of 83% over the previous quarter. This type of crazy growth in sales is extraordinary in the midst of discussions about the global economic downturn.
The company is growing aggressively by making strategic acquisitions and expanding internationally.
For example, last month, Aurora Cannabis expanded its presence in Europe by entering Portugal. It acquired a 51% interest in a license applicant, which allowed Aurora Cannabis to establish a local center for the production of medical cannabis and by-products. Aurora Cannabis is now present in 24 countries on five continents.
In addition, earlier this month, Aurora Cannabis strengthened its position in Canada by completing the acquisition of Whistler Medical Marijuana Corporation.
Increasing costs
Aggressive growth naturally accompanies increasing costs. While Aurora Cannabis has increased its revenues at a steady pace, its costs have also increased. Specifically, the Company's selling, general and administrative expenses – a key measure of non-production costs – were more than 39 times higher than in 2016.
Due to high operating expenses, Aurora Cannabis is not able to generate consistent profits. The company has been profitable in two of the last four quarters reported, resulting in a net loss of $ 71.6 million over 12 months.
Balance sheet strength
Aurora Cannabis has a solid record. The last report on its long-term debt was $ 339 million and its debt-to-asset ratio was less than 12%. However, the strength of the balance sheet has been accompanied by the cost of dilution of current shareholders.
The following chart shows that Aurora Cannabis has diluted its shareholders more than its peers over the past three years.
Weighted average number of ACB shares outstanding (annually) by YCharts.
Take away food
The marijuana industry is very competitive. As a result, none of the marijuana stocks mentioned are still profitable. It is very easy for investors to hurt themselves in their extremely volatile shares over the course of their stock, especially after the increase in the ACB stock.
On the contrary, speculative investors can look for a less risky entry point, less than $ 7 per share. If you already own stocks, consider leaving them at about $ 12-14 per share.
You may be missing one of the greatest opportunities in the history of Canadian investment …
Marijuana was legalized across Canada on October 17, and a little-known Canadian company has just unveiled what some experts believe is the key to taking advantage of the imminent boom in marijuana.
In addition to establishing key partnerships with Facebook and Amazon, they have just signed a landmark agreement with the Ontario government.
A basic Canadian company has already has begun to introduce this technology to the market – this is why legendary Canadian investor Iain Butler thinks he will be one step ahead of Amazon in this technological race that has only been going on for a generation.
We think you should seriously consider creating this business in your portfolio if you want to position yourself wisely for the impending marijuana boom.
Learn more about this stock on TSX now
The crazy contributor, Kay Ng, has no position in the mentioned actions.
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