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3 Canadian LP’s Focusing On Global Expansion In 2020

Mar 6, 2020 • 7:18 AM EST
6 MIN READ  •  By Michael Berger
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2020 is proving to be a tough year for the stock market and the cannabis sector has not been insulated from this trend. During the last month, we have seen a significant spike in the amount of volatility in the markets and much of the increase is related to the spreading of the Coronavirus at the global level.

Although the concerns related to the coronavirus are justified, we believe that the recent decline is starting to look overdone and is a trend that we are closely following on a going forward basis. We believe that the Canadian cannabis sector has been impacted due to the leverage that it has to emerging international markets and the recent pullback has caught our attention.

When it comes to the cannabis sector, we have a strong conviction level as to the growth prospects that are associated with the international opportunity. We believe that the international market will prove to be a major catalyst for the companies that are levered to it and have been highly focused on this vertical. Today, we have highlighted 3 companies that are positioned to capitalize on the global cannabis opportunity and that have been impacted by the recent pressures that are associated with the coronavirus.

Aleafia Health: An Attractive Long-Term Growth Opportunity

When it comes to the international cannabis opportunity, several Canadian cannabis producers come to mind. Although the market is most excited about companies like Canopy Growth, we believe that there are a number of opportunities that are flying under the radar and trading for a discount when compared to their peers. Aleafia Health (ALEF.TO) (ALEAF) is a company that meets our criteria and we are favorable on the exposure that it has to the domestic and international cannabis opportunity.

During the last two years, Aleafia Health has been highly focused on the international cannabis opportunity and has acquired strategic assets that have attractive leverage to a number of markets in the European Union (EU). These acquisitions have quickly proven to be accretive for the business and we are bullish on the long-term growth prospects associated with them.

We believe that Aleafia Health’s management team has had its finger on the pulse of the global cannabis market and are favorable on the risk-reward profile. At current levels, we believe that the market is not fully valuing the company’s international exposure and find this to be of importance. When it comes to measuring the success that the business has had in Canada, there is a lot to be excited about with Aleafia Health when it comes to the recreational and medical opportunity.

2019 was a banner year for Aleafia Health’s medical cannabis business and we expect 2020 to be even more significant. During this time, the company has onboarded tens of thousands of new patients and this has proven to be a substantial value driver for the business. We are bullish on the trend associated with Aleafia Health’s medical cannabis business and believe that the market does not fully appreciate it.

Over the next year, we expect to see Aleafia Health record substantial growth and are favorable on the management team’s focus on profitability and cash flow. These are important areas for a company to be focused on (especially in the cannabis industry) and believe that this is an aspect of the business that is not fully appreciated by the street. In a world where cannabis companies are recording large losses and weakening balance sheets, Aleafia Health has been profitable and has been cutting costs to shore up the balance sheet. The company is well funded and we are bullish on the growth prospects that are associated with the business.

We are excited about Aleafia Health due to the growth prospects that are associated with the existing business, the leverage that it has to burgeoning verticals within the industry, the international opportunity for the business, and the management team’s focus on creating value for shareholders. To learn more about Aleafia Health, please send an email to to be added to our distribution list.

Canopy Growth: A Fully Funded Global Growth Story

During the last year, Canopy Growth (WEED.TO) (CGC) has proven to be susceptible to large pullbacks and has traded lower with the rest of the cannabis sector. From an international exposure standpoint, Canopy Growth is considered to be a global cannabis leader and has been highly focused on being a leader in the space.

From a capital standpoint, Canopy Growth has the strongest balance sheet on a comparative basis and has the most solid cash position in the industry. This is an important aspect of the story and a major differentiator for the business for when it is compared to companies like Aurora Cannabis or HEXO Corp.

Canopy is well positioned to further capitalize on the international cannabis market and we expect to see the company make additional acquisitions later on this year. Valuations have plummeted when compared to this period last year and Canopy Growth is positioned to capitalize on this. Many companies in the space are under pressure and do not have enough capital to execute. This puts Canopy Growth in an important position and we are bullish on the long-term opportunity.

We believe that the strength of Canopy Growth’s balance sheet will play an important role in its ability to become the global cannabis leader. During the last quarter, the company has been under considerable pressure and this is a trend that our readers need to be aware of. We believe that Canopy Growth has attractive catalysts for growth and is an opportunity that we are excited about.

Aurora Cannabis: A Global Cannabis Leader that has Come Under Pressure

When it comes to the international cannabis opportunity, Aurora Cannabis (ACB.TO) (ACB) is one of the first companies to come to mind. The Canadian cannabis producer was an early mover on several burgeoning international markets and has been nothing short of an execution story. During the last year, the business has been under considerable pressure and the market has become concerned about the management team’s ability to execute on previously announced acquisitions and to otherwise scale the business.

From a capital standpoint, Aurora Cannabis has been under considerable pressure as overall company expenses have rapidly increased. The company recently announced a major shakeup in the management team as it works to reduce expenses and strengthen the balance sheet by divesting non-core assets.

With cannabis operations in more than 20 countries, Aurora Cannabis is highly levered to the global cannabis opportunity and is a story that we are closely watching. Although the last twelve months have been challenging for the business, the company has substantial growth prospects and we will monitor how the story evolves from here.

2020 has been a tough year for the cannabis sector and Aurora Cannabis has been impacted by this. During the last quarter, several leading broker-dealers that are focused on the cannabis industry lowered expectations on Aurora Cannabis and have downgraded the stock. These brokers have also significantly decreased the price target that is assigned to the business and this is a trend that we are closely following.

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Authored By

Michael Berger

Michael Berger is Managing Partner of StoneBridge Partners LLC. SBP continues to drive market awareness for leading firms in the cannabis industry throughout the U.S. and abroad.


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