Ok, this is the last cannabis stock I’m going to review for a while. So if you’re thinking of requesting I review another one. Don’t.
In all seriousness, my increased coverage of the sector has been for good reason. The sector has also become a larger part of my microcap portfolio in the last year as well. As a contrast to a few years ago, there is actually some cannabis stocks worth talking about. I’m not talking about some of the larger players like Tilray, Canopy, Terrascend or Aurora who together have wiped out tens of billions in shareholder value combined. I’m talking about Canadian microcap players who actually have some good and improving fundamentals. These are ones that trade on traditional investing metrics (or at least starting to), and not just hopium whenever there is a rumor out of the US Congress or White House.
I’m talking about sub $200 market cap names like MTL Cannabis (MTLC), Cannara Biotech (LOVE), Rubicon Organics (ROMJ), Decibel (DB) and others who would like to be in that conversation such as Simply Solventless (HASH) and Glow Lifetech (GLOW).
If I missed your favourite, stay out of my mentions - don’t be that “reply guy”. I really don’t care.
Auxly is larger than any of the above at a $205M market cap and trades on the Canadian big boy exchange unlike the other six I mentioned. Over the Christmas break the stock traded as low as two and a half cents. On the day of their earnings it hit 18.5 and has now settled in at 15.5, which is 9% down from the day prior to the earnings we’re about to review here.
This is my first formal look at Auxly, and the one thing that stands out is their consistency across the last five quarters. Revenue growth in all five were well into the double digits with four of them over 25%, and all profitable on the Net Income line.
It also trades at 7.7 earnings and 10 times cash flow. It sounds like I’m going to have to like it, right? Let’s find out and get this done in time for my afternoon weed delivery.
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