Aurora Cannabis Inc (OTCMKTS:ACBFF) is yet to replicate the tremendous gains it generated last year in the stock market. For the better part of the year, the stock has remained under pressure, and in the process plunged from record highs of $12.30 a share.
Aurora Cannabis Price Action
While the steep pullback raises serious concerns about the stock’s long-term prospects, a closer look at the performance of the overall industry paints a different picture. The Canadian cannabis stock market is down by nearly 20%. Aurora Cannabis is one of the biggest players and appears to have suffered the full brunt of a sell-off that has engulfed the sector.
However, sentiments in recent months have improved significantly, fuelling suggestions that it is only a matter of time before the stock finds its way back to the top. After initially plunging to the $4 a share handle, the stock has bounced back nicely and is currently flirting with the $7 a share handle.
Given the strength of the upward momentum, supported by solid fundamentals, it may be a matter of time before the stock takes out the $8 a share mark, seen as the next substantial resistance level. Above the $8 a share mark, the stock should be on its way back to this year’s highs of $12.30.
Any sell-offs should be limited to the $6 a share handle seen as a substantial support level. Below the $6 a share mark, the stock could plunge to the $4 a share mark on the continuation of the bear run that began early in the year.
In our view, Aurora Cannabis remains well positioned to continue trading higher given recent developments in the Canadian Cannabis landscape.
About Aurora Cannabis
Aurora Cannabis is a vertically integrated and diversified cannabis company, based in Edmonton Alberta Canada. The company is one of the largest cultivators and producers of cannabis in North America. With a capacity of more than 570,000 kg per year, the company continues to control a substantial amount of market share in the burgeoning marketplace.
Why is Aurora Cannabis Surging?
A sell-off wave that had engulfed the cannabis sector is slowly losing its momentum on growing investor confidence about the sectors long-term prospects. Investor confidence in Aurora Cannabis has especially ticked higher on the legalization of recreational use in Canada.
Unlike other companies, Aurora Cannabis has the production capacity that will allow it to be successful in pursuing opportunities in the recreational marketplace. The company has already inked recreational supply agreements in several provinces across Canada affirming how committed it is about pursuing opportunities in the sector.
“With a population of more than 14 million people, Ontario is the largest adult consumer use market in Canada. Being a supplier to this market through the Aurora and MedReleaf brands provides us with a strong presence that positions us well to generate growth and build further brand recognition,” said CEO, Terry Booth.
The pursuit of opportunities in the recreational marijuana sector appears to have strengthened investor confidence in the company’s growth prospects. The result has been a high turnover in traded shares, which has helped push the stock up the charts.
In addition to pursuing opportunities in North America, the company has also set its eye on other emerging markets as it looks to diversify its revenue streams. For starters, the company has set sights on the lucrative German cannabis market through its Pedanios subsidiary. The company is also targeting other European markets that allow legal use of medical cannabis.
Australia is another country that the company has started cannabis sales, as part of its global expansion drive that has also targeted Brazil and Cayman Island. The company has also signed a supply agreement with a South African company, as it also eyes opportunities in Africa.
The expansion drive has helped the company post stellar financial results in recent quarters depicted by impressive revenue numbers.
How Will Aurora Cannabis Fair In The Market?
While Aurora Cannabis has underperformed for the better part of the year, the same may not matter going forward. What matters now is the company reaping the rewards of its aggressive expansion drive that has seen it set foot in major cannabis markets. The company has also strengthened its cultivation and production capacity, a development that allows it to target multiple markets at once.
The stock looks set to continue climbing high as investors take note of the solid fundamentals backing further movement on the upside. That said the recent dip in value presents a unique buying opportunity for investors looking to gain some exposure in the cannabis sector through a company with a stellar track record and solid growth prospects.
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Disclosure: We have no position in ACBFF and have not been compensated for this article.