Aurora Stock (TSX:ACB) (NYSE:ACB) Soars As Earnings Top Estimates

Canadian cannabis firm Aurora Cannabis (TSX:ACB) (NYSE:ACB) has been in all sorts of trouble for the better part of the past months. Considering the fact that it is one of the biggest cannabis firms in the industry, there was a lot of anticipation around its fiscal third-quarter results.

Solid Earnings

The results were released on Thursday, and Aurora reported a loss of $137.4 million. While that is a significant loss, it should be noted that in the prior three months, the company had posted a loss of as much as $1.3 billion. Aurora’s sales rose to $78.4 million for the quarter, which reflects a rise of as much as 19%, and it beat analysts’ estimates as well.

On the other hand, the adjusted EBITDA for the quarter came in at a negative $38.3 million. The high volume of debts on its books has been a major concern for quite some time among investors.

Additionally, the continued dilution of shares in order to raise fresh capital has also been harmful to the Aurora stock. The stock has lost as much as 93% over the course of the past 12 months, and in order to arrest the slide, the company recently completed a 12 to 1 reverse stock split.

It was a move that was aimed at ensuring that the stock traded above $1 and remained listed on the New York Stock Exchange. The company stated that while the coronavirus crisis did not cause any particular disruption to its business, it could have a negative impact on Aurora’s activities in the next quarter.

The company also announced that it sold as much as 12729 kilos of cannabis in the quarter, and that reflects a significant rise from the 9501 kilos that it sold in the same quarter a year ago. Cannabis sales amounted to $69.1 million for the quarter, and that again reflected a healthy year on year rise of 32%. Aurora also pointed out that it aims to turn a profit by the end of 2020.

Curaleaf Stock Gains Momentum At Lower Level

Curaleaf Holdings (CSE:CURA) (OTCQX:CURLF) is now firmly established the biggest multi-state cannabis operators in the United States, and it has expanded its footprint to 17 states in the country. As such, it is also one of the better-known stocks in the cannabis space. That being said, the coronavirus pandemic has come as a major blow.

Major Triggers

Several industries are now in crisis, and it is more pronounced for the cannabis industry since many companies were already struggling with the cash crunch. In such a situation, it could be worthwhile to figure out if Curaleaf is worth investing in.

The company posted its financial results for the fiscal year 2019. Revenues grew from $77.1 million to $221 million, and while the growth is impressive, it is Curaleaf’s widening losses that could a cause for worry. Net loss rose by 13% to hit $69.8 million, and SGA (selling, general and administrative) costs jumped to $121 million from $65.3 million.

Cash balance depleted to $42.3 million from $266.6 million in 2018. Investors could hope to get an updated idea of the situation later on in May when Curaleaf announces its Q1 2020 financial results. However, it is almost certain that 2020 is going to be a challenging year for the company.

Curaleaf may have grown at an impressive pace, and with 53 dispensaries under control, the company is now the biggest cannabis operator in the United States. However, such size can prove to be counterproductive in the current environment, and it is believed that leaner operations could well prove to be more efficient. The scale of the operations may have been impressive prior to the coronavirus crisis.

That being said, the company could well manage to become a major player in the long term, and if cannabis is legalized at the federal level in the United States, then the payoff could be huge. Yet, investors also need to keep in mind that Curaleaf is also suffering from a cash crunch, and in order to stay in the game long enough, it would need access to capital. Hence, it could be prudent for investors to stay away from the Curaleaf stock at this point.

Is HEXO Stock A Better Long-Term Investment Option Now?

The market has rebounded somewhat in recent days in the hopes of the reopening of the economy following the coronavirus pandemic induced lockdown. However, the situation has not been great with pot stocks, which have continued to remain depressed. That being said, it is also true that it could be the perfect opportunity for investors to make clever investments in some of the notable pot stocks in the market. One of the pot stocks that stand out at this point in time is the HEXO Corp (TSX:HEXO) (NYSE:HEXO). There are some factors that make it one of the more compelling stocks in the market.

Key Drivers

Hexo may have had its difficulties in recent times, but it is a company that has the wherewithal to eventually become one of the bigger players in the cannabis industry for years. It is not an attractive proposition merely because of the current rally but for generating potentially handsome returns for many years.

Hexo boasts of the second-highest number of patents among companies in the sector, and on top of that, it recently came up with Original Stash, its premium brand. Hexo has also created a research division and a food research laboratory in order to come up with more products.

However, that is not all. The company has managed to make a move into the potentially lucrative cannabis-infused beverage space and tied up with Molson Coors for the same. Hexo is collaborating with Molson Coors to launch a THC based beverage. According to studies, the cannabis-based beverage market could eventually grow into a $1.5 billion industry by 2026. If the company plays its cards right, then it could corner a significant portion of the market.

Hexo not only has a viable product in the pipeline in collaboration with a well-known brand, but it is also making progress in other avenues. Hence, the potential for growth is there, and investors could consider the stock.