Given the once-in-a-lifetime nature of the cannabis legalization movement in each country, there is more than enough excitement in the wild world of cannabis stocks.
Here is a quick snapshot of two cannabis stocks, Tilray and 4Front Ventures (formerly Cannex Capital). One has a much greater valuation; the other has a much greater cannabis production track record. Both have annual profit for 2018 between $5-15 million.
Based on the assumption that, as it stabilizes, the universe of cannabis stocks will become more appropriately valued, I predict the following: Tilray is positioned for a stagnant or declining stock price; and 4Front is positioned for (stock price) growth of over 100% over the next few years.
Tilray produced 6,478 kilograms of cannabis flower and derivative products in 2018. In 2017, Tilray produced 3,024 kilograms. Total Sales for 2018, were $43.1 million. Tilray’s market cap, as of August 2019, is $2.59 billion. Total revenue for 2018, was $43.13 million, with gross profit of $14.27 million.
Cannex (now 4Front Ventures), on the other hand, produced over 15,000 kilograms of cannabis flower and derivative products in 2018. 4Front’s market cap as of August 2019, is $82.69 million. Total Revenue for 2018, was $11.9 million; Gross Profit was $8.56 million. Trailing twelve month (ttm) revenue is $13.94 million.
(Note: For greater detail, check out my article on Seeking Alpha: Cannex: A Proven Operator with Promising Growth Prospects, which goes into great detail on Cannex, which became 4Front Ventures via its merger with 4Front.
|Tilray (TLRY)||4Front (FFNTF)|
|Stock Price ($)||26.49||0.5284|
|Market Capitalization ($m)||2,590||83|
|Revenue 2018 ($m)||43.1||11.9|
|Gross Profit 2018 ($m)||14.3||8.6|
|Production Cost per Gram||5.67||1.50|
|Kilograms Cannabis Produced 2018||6,478||15,500|
|Stock Price 52 Week High||300.00||2.25|
|Stock Price 52 Week Low||26.02||0.379|