CEOs have an insider’s view that is second to none. When they talk, it pays to listen closely. They drop clues that can be used to find great investments. That’s what happened last week with a rock star CEO in the cannabis industry.
Bruce Linton founded Canopy Growth Corp (NYSE: CGC, TSX: WEED) in 2013. Back then, Canopy was only worth $100 million – but in the next six years, Linton grew Canopy into a $15 billion global juggernaut and the largest cannabis company in the world. That’s one of the fastest growth rates in the history of the stock market. It made early investors rich and Linton was widely considered the Pied Piper of the global cannabis industry.
If the cannabis industry had a rock star CEO – it was Bruce Linton. His insight and connections in the cannabis industry are unparalleled. That’s why it came as such a big surprise last week when Constellation Brands (NYSE: STZ), which owns 38% of Canopy, fired Linton. After the news hit the wire, Linton quickly called into CNBC and dropped a hot investment tip about one of his favorite cannabis companies that cannabis investors need to know about.
Kevin O’Leary, the billionaire investor famous for his role on NBC’s Shark Tank, asked Linton if there were any cannabis companies he would consider investing in. Here’s what Linton said.
Yeah, that’s a good question. So, like, when I’m on the road marketing, I would tell everybody, ‘You should buy at least half of your portfolio with Canopy, and if you’re looking for a second one, what I like in the Canadian market because of how they run themselves is OrganiGram.’ I found them to be pretty solid. And if you’re trying to diversify, I like Rivers. Canopy Rivers is structured so that you actually have about 14 investments in one portfolio, but it’s done by people who know the sector. So, those would be my diversified portfolio choice and my individual.
Here’s a transcript of the full interview. I agree with Linton that this is easily one of the most promising cannabis companies in the industry, and here’s why: Organigram Holdings (TSX: OGI, NASDAQ: OGI), founded in 2013, has quickly evolved into one of the largest cannabis companies in Canada and the world with a market cap of $1.03 billion. Shares of Organigram trade in both Canada and the United States. In Canada, shares trade on the Toronto Venture Stock Exchange under the ticker symbol OGI. I see average daily trading volume of 1.26 million shares so this ticker is plenty liquid. In the United States, Organigram achieved a listing on the NASDAQ exchange in May under the ticker symbol OGI. I see average daily trading volume of 920,000 shares, so this ticker is plenty liquid too.
Four Key Factors That Make Organigram Stand out from the Crowd
1 – Organigram Is One of the Largest Producers in Canada
Organigram can currently produce 13,000 kilos of cannabis per year. That’s already pretty good – but looking forward, Organigram continues to ramp its production capacity, expected to reach 113,000 kilos per year by the end of 2019. That would rank Organigram as one of the 10 largest producers in Canada.
2 – Organigram is a Certified Organic Producer
Organigram is unique in the Canadian and global cannabis industries because it’s one of the few organic certified growers. Organigram is organically certified for both its medical and recreational cannabis products by Pro-Cert Organic Systems, which Organigram calls “one of North America’s foremost certification bodies and is accredited by IOAS to provide third-party certification to the Canadian Organic Standards.”
3 – International Expansion into Germany and Serbia
Cannabis is a global market and Organigram has been wisely expanding its footprint into international opportunities. In September of 2018, Organigram announced a $3.83 million investment in Eviana, a European hemp producer based in Serbia. In October of 2018, Organigram announced a 25% stake in German medical cannabis supplier Alpha Cannabis Germany.
4 – Organigram is one of the Few Profitable Canadian Cannabis Companies
Organigram stands out in the Canadian cannabis industry because it’s one of the few companies that is achieving a profit this early in the game. In 2018, Organigram reported earnings of 17 cents per shares. This move into the black made Organigram one of the few profitable companies in the cannabis industry. That’s a testament to strong sales growth and tight operational controls.
5 – Organigram is Up 330% in the Last 24 Months
Organigram’s strength has not gone unnoticed by Wall Street. Investors have dumped hundreds of millions into shares, with Organigram gaining 330% in the last two years. That makes Organigram one of the top performing cannabis stocks in the entire sector. Looking forward, I expect more gains as revenue and earnings continue to expand. Take a look at the impressive run below.
The Big Picture on Organigram Holdings
There are few people in the world with more insight into the cannabis sector than former Canopy CEO Bruce Linton. When he talks about the cannabis industry it pays to listen. Linton recently said Organigram is one of his favorite stocks. This is a stock that investors should keep an eye – I see plenty of growth ahead.
Michael Vodicka owns shares of Organigram Holdings (OGI) and Canopy Growth Corp. (WEED).
About the Author
Michael Vodicka is an equity analyst with more than 20 years of experience trading and investing. His research has been featured in some of the industry’s most respected publications. He has been investing and leading investors in the cannabis sector since 2013.