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Value Investors: 1 High-Growth Medical Cannabis Stock to Buy

Nikhil Kumar
·3 min read
Marijuana plant and cannabis oil bottles isolated

Aurora Cannabis (TSX:ACB)(NYSE:ACB) is a Canadian-headquartered cannabis company focused on producing, innovating, and selling consistent, high quality cannabis and cannabis products for both the global medical and consumer use markets. The company has differentiated itself through purpose-built growing facilities, and owns one of the most technologically advanced indoor agricultural growing facilities in the world. These facilities consistently produce high-quality cannabis at scale, lower the risk of crop failure, and provide low per-unit production costs.

The company spends a significant amount on research and innovation in plant genetics, cultivation, consumer insights, and product development. Further, it owns a broad and growing portfolio of successful brands that align to the needs of consumers and patients.

Global leader in consumer and medical markets

Aurora is the global leader in consumer and medical markets that have significant and near-term profit potential. It has a cost structure that provides a path to near-term, sustainable, and growing positive earnings before interest, taxes, depreciation and amortization (EBITDA) and cash flow. The company’s principal strategic business lines are focused on the production, distribution, and sale of cannabis and cannabis-derivative products in Canada and internationally.

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The company’s primary market opportunities are the global medical cannabis market involving the production, distribution and sale of pharmaceutical-grade cannabis products in countries around the world where permitted by government legislation. Currently, there are approximately 50 countries that have implemented regimes for some form of access to cannabis for medical purposes.

Huge potential of medical cannabis

Longer term, the increasing success of medical cannabis regimes globally may lead to increased legalization of adult-use consumer markets. Consumer demand for products containing cannabidiol (CBD) derived from hemp plants could provide the company with an exciting growth opportunity in the coming years.

The company’s current principal medical markets are Canada and Germany. Aurora has established a market position in both countries. Currently, only Canada and Uruguay have implemented federally-regulated consumer use of cannabis regimes and the company has primarily focused on the opportunities in Canada. Aurora has established a top-three market position in the Canadian consumer market overall.

Effective corporate strategy

The global cannabis industry is a rapidly developing business opportunity that offers the potential to positively and significantly impact the lives of millions of people worldwide. Aurora’s strategy is squarely focused on establishing a strong leadership position in three distinct, rapidly growing markets that the company currently operates in today, which includes medical cannabis, consumer cannabis, and hemp-derived CBD.

This growth strategy is built upon a foundation supported by Aurora’s unique competitive advantages. Aurora’s highly valuable portfolio of brands resonate with both patients and consumers in several markets. Aurora provides patients worldwide with access to consistent and effective medical cannabis products.

Bright future outlook

A growing number of progressive countries around the world have established legal medical-cannabis programs, of which Canada has the most sophisticated market, and Aurora is the Canadian market leader in the medical category as measured by registered patients. Aurora has more than 85,000 medical patients in Canada and has developed a strong presence in Europe. Servicing the needs of patients in select countries remains a strong near-term international opportunity for Aurora.

The post Value Investors: 1 High-Growth Medical Cannabis Stock to Buy appeared first on The Motley Fool Canada.

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Fool contributor Nikhil Kumar has no position in any of the stocks mentioned.

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Motley Fool Canada 2021