Aurora Cannabis (ACB.TO)

The stock is incredibly hot, and the whole field is hot. If you can choose the right company, you can do very, very well. The difficulty is choosing the right company. He only buys companies that have been around for at least 10 years. They just completed a takeover of a large greenhouse company. A lot of people are going to be burned in this area.

He does not know the company. The company is in play. Cannabis will be maybe 1% of the world when the industry matures. It is speculative right now. The competition from the illegal market is going to be high and will suppress price. The upside is limited in terms of industry demand. If you are going to play it, play the whole group (HMMJ-T).

Chart shows some big upward spikes. There is some support at around $3.50. It spiked today to $5.64, and when you have a big spike like this, it’s really hard to tell what is going to happen the next day. Some indicators are rolling over, just slightly, so he expects this is going to be really volatile.

There are risks in getting from here to there in getting it legalized in North America. It is the second mouse that gets the cheeze. This is as good a company as any to do well in this industry.

A market cap well above $1.5 billion, but only $8 million in sales, so valuation has a real disconnect. A lot of these stocks move on news or momentum, not necessarily on the underlying financials.

Building a massive facility in Edmonton. A little ahead of itself on valuation. Still has a lot of work to do to build that facility, and to get it up and running. However, they are very well-capitalized and have done deals globally, and are selling into other countries. This will probably be one of the leaders.

He is excited about the cannabis industry worldwide. They have been bringing on patients faster than anyone else. It will be one of the largest cannabis greenhouses in the world. He wants to see them execute on everything they said they would, going from a small facility to a large one. See his top picks today.

It is one of his top 4 companies. They have diluted their shares substantially. They have over $100 million in debt. They have the most upside and also the most downside.

They are moving to the big board. It is probably the third Marijuana company to be listed on the TSX. He thinks this won’t attract more investors internationally. This is a step along the maturation phase for this company and for the industry. This company also has a lot of convertible debt.

A lot of the valuation will depend on whether they execute at their new facility. He is warming up a bit to them. They bought a company in Germany and they are also getting into hemp. They are working with radiant technologies to see if their extracts plant can be used with cannabis.

(Market Call Minute) Certainly not his top pick here. They are building a massive operation in Alberta, however.

The 2^nd largest of all the cannabis producers. They have a plan to build an 800,000 ft.² facility in Edmonton, and it is fully funded. He understands they have some of the highest quality cannabis growing. They are also working on international expansion, which is an area that is really going to differentiate some of these companies.

Marijuana stocks are tough to get a read on. They’ve all moved in a similar direction. He doesn’t know what the industry is going to look like or what the regulation is going to be like and how everything is going to play out. This is an industry in its infancy, but as a portfolio manager, it is not something he would look at. Once there is some clarification on what future legislation is going to look like, federally and provincially, then it will be a lot easier to determine which stocks are the ones to own.

A cannabis company that has come roaring on to the scene. They were probably a little slower coming out of the gate than what you saw from a few of the others. This one is proposing a greenhouse project at the Edmonton International Airport, which is being billed as the world’s largest indoor cannabis grow when finished. They have about $150 million on their balance sheet now, that will be used to fund projects. Looking at valuation versus their licensed sales capacity, they are certainly ahead of the others from a valuation standpoint. As long as they continue to execute, it is probably going to be good, however the CEO tends to be a little on the promotional side. If you are a trader, take advantage by Selling when everybody loves it.

The whole industry has had a tremendous run, and everybody is excited about the prospects. It is still very difficult to size up and how much it can generate. There is a tremendous amount of speculation. You will be well suited, on a risk adjusted basis, to stay away from these companies for the time being, especially following the big run up they’ve had.