Is Hexo Corp (NYSE:HEXO) The Best Risk/Reward Opportunity In Pot Land?

Hunting for value in pot land is never easy, especially after the cannabis bear market of 2019. Now, we pot stock investors are on the hunt for the…

Hunting for value in pot land is never easy, especially after the cannabis bear market of 2019. Now, we pot stock investors are on the hunt for the next Aurora Cannabis Inc (NYSE:ACB) that can deliver triple-digit gains in short order. We at Insider Financial called the bottom on Aurora Cannabis stock on May 15th and now we are bottom hunting for the next big gainer. We believe that the next pot stock runner could be Hexo Corp (NYSE:HEXO).

NYSE:HEXO is trading at just $.69 a share, down from the 52-week highs of $7.19 and the 52-week low of $.3460 a share. With the shorts having borrowed almost 10% of the float to bet against the stock, it wouldn’t take much to create a short squeeze like what happened with Aurora Cannabis stock.

NYSE:HEXO Daily Chart

NYSE:HEXO Daily Chart


NYSE:HEXO is an award-winning consumer packaged goods cannabis company that creates and distributes innovative products to serve the global cannabis market. The Company serves the Canadian adult-use markets under its HEXO Cannabis and Up Cannabis brands, and the medical market under HEXO medical cannabis. For more information please visit hexocorp.com.

NYSE:HEXO Deal With Molson

NYSE:HEXO and Molson formed a joint venture to explore opportunities for non-alcohol hemp-derived CBD beverages in Colorado. Established in Colorado, the joint venture will be majority owned by Molson Coors and will operate as a standalone entity with its own board of directors, management team, resources and go-to-market strategy.

Exploring hemp-derived CBD beverages is part of Molson Coors’ strategy to grow beyond the beer aisle with wine and spirits and non-alcohol drinks. Molson Coors and HEXO have another joint venture to produce non-alcohol cannabis-infused beverages for the Canadian market called Truss Beverages. Truss has been preparing for launch, including completion of product formulations, branding and construction of a cannabis beverage production facility in Belleville, Ontario. Truss is expected to launch its first beverages in Canada later this year. Sebastien St-Louis, CEO and co-founder of HEXO, said:

“Molson Coors and HEXO have already built a great partnership in Canada that we believe will produce some of the best adult non-alcohol beverage brands in the Canadian market. I am thrilled with the opportunity to bring those learnings to Colorado, under the leadership of Molson Coors, Powered by HEXO.”

Recent Capital Raise

The biggest overhang on NYSE:HEXO has been repeated capital raises. Earlier this month, HEXO raised C$50.04M for working capital and other general corporate purposes. Each Unit comprised one common share and one half of one common share purchase warrant of the company, each Warrant exercisable to acquire one common share at C$1.05/Warrant Share. HEXO is now well-capitalized going forward.

Bullish Cannabis News

Last week, Statistics Canada reported that cannabis sales skyrocketed in March. Bank of America also came out with a Buy rating on industry giant Canopy Growth Corp (NYSE:CGC). In addition, the NY Post was out with a story that a team of Canadian scientists believes it has found strong strains of cannabis that could help prevent or treat coronavirus infections. All of this has contributed to the bullish enthusiasm surrounding the pot sector.

Bottom Line

Currently trading with a market cap of just $238 million, NYSE:HEXO is one name that offers a higher upside than downside in our opinion. With almost 10% of the float short, we expect the rally in HEXO stock to continue as the shorts cover and new buyers come in looking for hot pot stocks to own. With its small market cap and low share price, Hexo Corp is one name that cannabis investors must own.

Good luck to all (except the shorts)!

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Disclosure: We have no position in NYSE:HEXO, NYSE:CGC, or NYSE:ACB and have not been compensated for this article.

Image by An Brechtel from Pixabay

Is Hexo Corp (NYSE:HEXO) The Best Risk/Reward Opportunity In Pot Land?
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