3 Canadian Cannabis Trends To Watch Entering The New Year
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The Canadian cannabis sector ended on a high note last week and many investors are monitoring how the sector closes out the year.
2017 started the year off strong and then the sector pulled back in the second and third quarter. During the fourth quarter, Canadian cannabis stocks have surged higher and we expect 2018 to be a banner year for the sector.
From international markets to acquisitions, licensed medical marijuana producers are laser focused on growth. Many of these companies have focused on increasing production capacity before the recreational market opens in 2018 and we expect this trend to become even more pronounced over the coming months.
Today, we have highlighted 3 important trends within the Canadian cannabis sector that investors need to be aware of.
Leading Licensed Producers Secure Supply Agreements
Earlier this month, Aphira (APH.TO) (APHQF) surged higher after the licensed medical marijuana producer secured a supply agreement with Shoppers Drug Mart. This development was a catalyst for the entire sector and we have seen companies like CanniMed Therapeutics (CMED.TO) (CMMDF) and Canopy Growth Corp. (WEED.TO) (TWMJF) enter similar agreements.
Under the agreement, Aphria will supply Shoppers Drug Mart with Aphria-branded medical cannabis products and we are favorable on this relationship. The market responded favorably to this announcement and broker-dealers increased their price target on Aphria after it was reported.
We are favorable on this trend and expect to see Canadian licensed marijuana producers secure more agreements like this in the coming months. This is a positive trend for cannabis stocks and investors should monitor this opportunity going forward.
International Markets Represent a Significant Opportunity
Over the last year, we have seen Canadian licensed medical marijuana producers expand their reach into new markets like Australia, Germany, Chile, Colombia, Israel, Denmark, South Africa, and many more.
We are favorable on international medical marijuana opportunities and believe that Germany will be one of the largest drivers of growth globally. Companies such as Aurora Cannabis (ACB.TO) (ACBFF), Cronos Group (MJN.V) (PRMCF), and Maricann Group (MARI.CN) (MRRCF) are focused on this market and are in the process of obtaining a license.
In the first quarter of 2018, Germany is expected to announce the companies that will receive a medical marijuana license and this will be a major catalyst to the companies that receive one. We remain bullish on the companies that are focused on this and continue to monitor developments around it.
M&A Activity Starts to Heat Up
In the last month, we have seen a significant increase in merger and acquisition (M&A) activity within the Canadian cannabis sector and this a trend that we do not expect to slow down.
Aurora Cannabis has been one of the companies capitalizing on this trend and the licensed medical marijuana producer has a war chest of cash for investments and acquisitions. Aurora is attempting to acquire CanniMed Therapeutics and we think the combined company would be an even more attractive investment opportunity.
Over the next year, we expect to see a lot of consolidation within the Canadian cannabis sector and this would be very beneficial for investors. The premiums associated with the acquisitions have been significant and we will keep an eye on how this situation continues to evolve.
Disclosure: This report was authored by and is property of Technical420.All information and data relied upon in drafting this report is publicly available.The author believes and considers its ...
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