Why Aurora Cannabis (TSX:ACB) Could Double in Price!

Aurora Cannabis (TSX:ACB)(NYSE:ACB) is a long way from peak performance.

The cannabis company’s all-time high of almost $17 per share is well in the rear view today, with the stock trading at the time of writing at about $10 per share — a price it’s remained at for over a month now.

It’s getting analysts and investors alike frustrated with the stock, wondering if there is any hope to reach those peak numbers again, and, ideally, surpass them.

Well, it turns out that the same rule that applies to the markets as a whole likely applies to Aurora as well. It boils down to one key word we all hate to hear: patience.

Aurora has an incredibly intriguing future ahead of it. While that future can be painful at times, those who stick with the stock will likely see a doubling in share price in the relatively near future. Let’s look at why.

Earnings results

It’s easy to look at Aurora and become discouraged when it comes to the company’s earnings results — or, rather, lack of them. Operating income has been in the red report after report, with the most recent hitting a loss of about $86 million. Granted, it’s an improvement from the last two quarters with a loss of $148 million and $111 million, but it’s still disappointing to see all that red again and again.

But here’s the number I’m most interested in: cost per gram. This is where investors should focus their attention when it comes to the larger marijuana producers; it’s where Aurora has recently had some pretty great results. The company now boasts a cost of sales per gram of $1.42, down 26% from the last quarter and well on the way towards the company’s goal of producing at a cost of $1 per gram.

This metric is already a lot smaller than other leading cannabis producers such as Aphria at $3.90 per gram and $6.40 for cannabis titan Canopy Growth. But what makes this number drool worthy is the cannabis producer’s outlook on production.

Going global

Aurora’s executives have been quite outspoken. In Canada, there isn’t a desperate need to fill when it comes to cannabis; it’s a global phenomenon — one the executives are planning to be set up for in the next five years. To achieve this, the company has been making acquisition after acquisition — 15 in total in fewer than three years. And, of course, it’s been diluting share prices in the process.

While the market cap has been going up, share prices have been going further down. But Aurora is doing this for a reason. The company talks about the cannabis industry being worth about $150 billion globally, with medical cannabis making up $50 billion of that total. That’s a large opportunity looking to be filled.

That’s where Aurora is looking to shine, becoming the leader in terms of production capacity. The goal is to reach 700,000 kilograms of cannabis production per year, making them first even to Canopy Growth at this point in time. No other cannabis producer can get anywhere near numbers like these.

While some analysts have said this would create an oversupply in the Canadian market, again, Aurora is looking for global expansion. It will need the product available once everything is said and done, as the company already has its foot in a number of countries around the world. And again, this need could be in a mere five years.

Foolish takeaway

Aurora offers one of the best options out there. In my view, this is a buy-and-hold investment, with the $10 share mark an opportunity for investors looking to get in on the cannabis market and have some patience with it. The potential for growth is high, and the company continues to be a rival with some of the largest cannabis companies out there for production potential. Even if cannabis goes global and they have a small amount the market share (which, by the way, should be much larger), Aurora stands to make billions in profits.

In the next year, analysts predict Aurora could double to $20 per share. In a decade, with potentially the U.S. and most of Europe on board with cannabis legalization, that number could soar into the stratosphere.

You might be missing out on one of the biggest opportunities in Canadian investing history…

Marijuana was legalized across Canada on October 17th, and a little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.

Besides making key partnerships with Facebook and Amazon, they’ve just made a game-changing deal with the Ontario government.

One grassroots Canadian company has already begun introducing this technology to the market – which is why legendary Canadian investor Iain Butler thinks they have a leg up on Amazon in this once-in-a-generation tech race.

This is the company we think you should strongly consider having in your portfolio if you want to position yourself wisely for the coming marijuana boom.

Learn More About This TSX Stock Now

More reading

Fool contributor Amy Legate-Wolfe owns shares of Aurora Cannabis and Canopy Growth.

Source: The Fool
Why Aurora Cannabis (TSX:ACB) Could Double in Price!
The Fool

The Motley Fool
Contributor at mjcanada.ca
The Motley Fool is dedicated to helping the world invest — better. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, mutual funds, and premium investing services.

In all we do, we take a different approach.

We believe – and have proven over decades – that the individual investor can beat the market.

We believe that anyone can do it, even if they don’t have a lot of time or money to devote to investing.

We believe in a long-term outlook, helping people build wealth over time.

We believe that the person best positioned to take care of your financial future is you.

And we work tirelessly on behalf of our hundreds of thousands of members who are enjoying the opportunities that come with having enough money to do the things that matter to them.

While we are headquartered in Alexandria, Va., The Motley Fool advocates for the individual investor around the globe with offices in the UK, Australia, Canada, Singapore, and Germany.

Related News