Hexo Corp (HEXO.TO)

We get confused that a Canadian company going to U.S. will create a U.S. audience, but suppose America doesn't like your company? He needs this to break above $7 and he expects it'll face resistance at $8.

Doesn't own any of the marijuana producers, as the fundamentals don't warrant the prices. There will be a day of reckoning, which has probably already started. Large producers peaked before legalization, the small ones peaked last January/February. Reality check when these companies start missing sales and EBITDA, and the air pocket beneath the share price collapses, with a 50-60-70% downside. He'll reconsider when the dust settles, but that day is not today. (Analysts’ price target is $9.25)

A billion dollar market cap that trades on 12 times earnings – low for this space, which can see 30 times earnings. It has lower cost production in Quebec and good labour rates. They sell a spray oil that is innovative, which provides for faster onset – and has been award winning. They have a joint venture with Molson-Coors.

He just added to it. He thinks the valuation is attractive compared to its peers. They keep lowering their costs and get a premium for their product. They did a good job in the extracted product market.

The chart looks decent and volume has been strong. You could add to your position with a $4.00 stop. Towards the end of the year, when real earnings occur, there will be a market re-evaluation of this space in general. He would not invest in this space for his clients. (Analysts’ price target is $8.50)

Doing right thing in signing supply agreements with Quebec government. Could be a takeout. Doesn’t like that they haven’t signed international agreements, plus the industry is selling off as a whole. He’d stay with the bigger players. Better ways to play the sector.

He already bought and sold it, but wouldn't buy it here. It's well-funded and well-run. THCX was waiting for a contract from the Quebec government, so it's a good story and will be profitable. But it's had a good run for now. He'd rather buy HMMJ--individual companies are so volatile.

They have a great opportunity in Quebec where they've just secured a big contract to supply cannabis to the retail market here. There's a good chance of it being bought out. Stock is relatively cheap compared to the big 5 as this industry consolidates.

Given the M&A lens, if he was long in the space he would want the names that were trading below the average. This one is 8.5 times. The average is north of 16. This is a more attractive name. The medical side is interesting. He is not sure how the medical market is going to shake out once you get full recreational. This is better than being on pain killers.

They are significantly cheaper than the bigger peers in Canada, yet will have production the same size when they are built. They have lower wage rates than others so their production costs are lower. They have a multiyear agreement with the Quebec Cannabis authority so they have a supply arrangement in place. They have already gone into other product areas. (Analysts’ target: $7.42).

He spoke of a market analyst comment that says this company trades about half the cost on a EBITDA basis compared to Canopy (WEED-T) and other big players. They recently received approval in Quebec.