Replies to post #9516 on OrganiGram Holdings Inc (OGI)

[FUNMAN]

Forget Apple! Buy These 3 High-Growth Pot Stocks Instead

These unique cannabis stocks have the ability to outperform Apple.

By: Sean Williams
Jan 28, 2020 at 7:51AM

IMO, OGI is the 1 stock in this article that can double in 12 months. I don't think Apple can do that. - FUNMAN

https://www.fool.com/investing/2020/01/28/forget-apple-buy-these-3-high-growth-pot-stocks-in.aspx

When it comes to top-tier investment ideas, technology and innovation kingpin Apple (NASDAQ:AAPL) usually finds its way onto the list. A quick look at Apple's track record speaks for itself, with substantive U.S. smartphone market share and rapidly growing service revenue derived from its Watch and streaming platforms. Not to mention, Apple has enough cash on its balance sheet that it could (in theory) purchase all but a few dozen publicly traded companies.

This year, investors are buzzing about Apple's upcoming release of 5G-capable iPhones. Consumers' ability to access even faster data downloads is liable to lead to a strong upgrade cycle and help push Apple's earnings growth into the low double-digit percentage range.

Apple's branding, cash hoard, and market share make it a relatively safe bet for investors -- but it's certainly not the only bet they should be making with their money. Although cannabis stocks grossly underperformed the stock market (and Apple) as a whole in 2019, there are a trio of high-growth pot stocks that I believe could handily outperform the largest publicly traded company in the U.S. over the next decade.



OrganiGram Holdings

There's no doubt that Canada had an opportunity to be a global cannabis leader and completely dropped the ball over a variety of regulatory issues that got in the way. But if there's one Canadian pot stock that's stood head and shoulders above its peers, it's OrganiGram Holdings (NASDAQ:OGI).

Though OrganiGram lost money in its fiscal fourth quarter, the company did something that no other Canadian grower has previously done -- it reported an operating profit without the aid of one-time benefits or fair-value adjustments. During the fiscal third quarter, OrganiGram's net sales of $24.8 million Canadian were enough to outpace cost of goods and operating expenses by CA$1.2 million. No other cannabis stock has been able to generate an operating profit without the aid of fair-value adjustments or some one-time revaluation of assets.

What else makes OrganiGram special is the company's focus on a single cultivation and processing facility in New Brunswick. Aside from the fact that the Moncton campus is near eastern Canadian provinces with higher-than-average cannabis-use rates among adults, the simple fact that OrganiGram is working with only one cultivation farm means it's easier to control supply chain costs and adjust operations to meet demand and domestic market conditions.

As one final nod, OrganiGram's management expect a fully functional Moncton to produce around 230 grams per square foot. This could wind up being more than double the average yield per square foot of its peers.

OrganiGram may not be the best-known Canadian pot stock, but it's the best positioned to succeed over the long run.



Planet 13 Holdings

Another pot stock that should outperform Apple in both the growth and value column is Planet 13 Holdings (OTC:PLNHF).

Planet 13 is a small-cap, vertically integrated multistate operator (MSO) in the United States that does things a bit different from other MSOs. It's these differences that makes the company such an intriguing investment opportunity.

For one, no MSO offers the unique experience that Planet 13 brings to the table. The company's SuperStore just west of the Las Vegas Strip spans 112,000 square feet (that's bigger than the average Walmart) and will house an events center, restaurant, coffee shop, and consumer-facing processing center, in addition to a large-scale dispensary.

Planet 13 has also done an incredibly good job of incorporating technology into its SuperStore, as well as personalizing the experience and maximizing its layout to drive margins. Self-pay kiosks help drive quick sales throughout the store, while high-margin derivatives near the checkout line and a centrally located immersion station encourage consumer interaction and add-on sales.

Most important, there's lots of transparency, with Planet 13 reporting its foot traffic, purchases, and average ticket size each month. Though this is a store where sales can ebb and flow with tourism, the company has seen a steady improvement in foot traffic and average sales ticket since opening its doors in November 2018. With a new location set to open just minutes from Disneyland in Santa Ana, California, in the second half of 2020, Planet 13 looks to be on track to achieve recurring profitability before the year is over.



Innovative Industrial Properties

Finally, investors should consider forgoing the purchase of Apple shares in favor of cannabis real estate investment trust (REIT) Innovative Industrial Properties (NYSE:IIPR).

Like any REIT, Innovative Industrial Properties' goal is to acquire assets that it can then lease for extended periods of time. The only difference is IIP wants to acquire medical marijuana grow farms and processing sites, as opposed to more traditional real estate. Since the beginning of 2018, IIP's portfolio has expanded from 11 properties to the 47 it owns today in 15 states. The weighted-average remaining lease length on these properties is a healthy 15.5 years, with an average return on invested capital of 13.3%. This means achieving a complete payback on its $510 million in invested capital in a little over five years.

Although most REITs primarily grow by acquisition, Innovative Industrial Properties does have a modest organic growth component built in. Every year, IIP passes along rental increases to its tenants, helping it stay ahead of the inflationary curve. It also collects a 1.5% property management fee that's tied to the current rental rate, thereby further lifting its organic growth.

In terms of its bottom line, Innovative Industrial Properties is the most profitable pot stock on a per-share basis. Chances are it's going to become even more profitable. Last week, IIP announced a common stock offering that's designed to raise $217.4 million in cash. This company has quickly put its cash to work in recent quarters, and the expectation is that this newly raised capital will only further enhance its income potential.

As the icing on the cake, Innovative Industrial Properties' nearly 5% yield is five times higher than Apple's dividend yield.

[FUNMAN]

Organigram Stock a Standout Long-Term Winner in the Cannabis Sector

Ignore the short-term noise in the sector and buy OGI stock for long-term success

By Ian Cooper Jan 30, 2020, 5:01 am EST

https://investorplace.com/2020/01/organigram-stock-a-standout-long-term-winner-in-the-cannabis-sector/

Having survived a tough year, investors in cannabis stocks are taking a long, hard look at what 2020 portends. Supply concerns, warnings, and a host of poor earnings were devastating to names like Canopy Growth (NYSE:CGC), Aurora Cannabis (NYSE:ACB), Cronos Group (NASDAQ:CRON) and Horizons Marijuana Life Sciences Index ETF (OTCMKTS:HMLSF).

However, there’s plenty of opportunity to be found in down-and-out cannabis stocks.

For one, support for U.S. legalization is explosive. According to Pew Research Center, 67% of Americans now support its legalization with only 32% of adults now opposing. A Gallup survey found a similar number in favor.

In response, more states are legalizing recreational use, with Illinois just the latest of a growing list. That sort of action in state capitals is contributing to what Arcview Market Research and BDS Analytics say will create global pot spending of $57 billion over the next decade. With the growing talk on presidential campaign trails of federal legalization as a platform plank, we could see higher highs for the sector.

While this all could create the rising tide to lift all ships, over time, I believe one of the top winners in the space will be Organigram Holdings (NYSE:OGI).

In fact, from a current price of about $2.70, I wouldn’t be shocked if we see $10 with patience.

Emerging as a Long-Term Winner
One of the most compelling reasons to own OGI stock is the fact it’s a major grower with the ability to produce peak annual output of 100,000 kilos. Better, its cannabis output comes from its Monkton facility. Having just one campus reduces supply chain costs, as noted by Motley Fool contributor Sean Williams.

Also, OGI has no financing concerns. In fact, the company believes it has enough capital to fund operations and planned capital expenditures. It had $34.1 million of cash and short-term investments at the end of the quarter, in addition to $30 million in undrawn capacity.

Better, OGI could see further upside with the Canadian market well-positioned for retail growth. Retail sales are planned for Ontario and Quebec, which represent 60% of the Canadian population. The recent legalization of edibles and derivatives — so-called Cannabis 2.0 — will be another strong catalyst.

Earnings “Surprisingly Encouraging”

To be sure, CEO Greg Engel recently said, “I still think we’re not going to hit any sense of normalcy or predictability until the fourth quarter of this year,” pointing to the launch of the edible and vaping segment of the market, which was just made legal in October.”

However, its numbers have been solid. The company knocked fiscal 2020 Q1 earnings out of the park, doubling net revenue growth to 25.2 million CAD ($19.3 million) year over year. That beat estimates for 21 million CAD. OGI also returned to positive EBITDA for the quarter.

“Despite ongoing industry challenges, we are pleased with solid Q1 2020 results and our return to positive adjusted EBITDA during the quarter, said Engel. “Our team was also successful in shipping the first of our Rec 2.0 products as planned and on schedule in December of 2019. We also look forward to the launch of the remainder of our vape pen portfolio followed soon after by our premium cannabis-infused chocolate products. In addition to an exciting line-up of 2.0 products, we are rolling out a couple of new core strains, such as our high THC Edison Limelight, across the country following their success as limited-time-offers in smaller markets.”

Analysts were impressed. Jefferies analyst Owen Bennett noted it’s a “return to the Organigram of old.” CIBC analysts also said the numbers were “surprisingly encouraging.”

Bottom Line on Organigram Stock

With plenty of demand and legalization efforts, the long-term growth story is still very much intact with Organigram stock. With great earnings, the fact it’s a major grower, and Canadian growth, OGI stock is high on the list of top cannabis stocks to buy and hold, long-term.

As of this writing, Ian Cooper did not hold a position in any of the aforementioned securities.