What Earnings Season Tells Us About 3 Top Pot Stocks

top pot stocks

Pot stock turbulence is nothing new, but the last few months have been particularly unpredictable for this sector. Many cannabis companies are seeing growth, but none seem to be a sure-fire winner that can provide investors with a safe, reliable return. That's why we're using some of the recent earnings reports from the top pot stocks to get an indication of where the sector might be heading. Take a look:

3 Top Pot Stocks: Cronos Group (TSX:CRON) (NASDAQ:CRON)

top pot stocks

Cronos is a global cannabinoid company with production and distribution across five continents. The company focuses on developing intellectual property through research, technology, and product development. Its portfolio includes a global health and wellness platform, as well as two adult-use brands and two hemp-derived CBD brands.

On May 8, Cronos published its first-quarter 2020 financial results. For the period, which ended March 31, 2020, Cronos earned $8.4 million in net revenue, up YOY from $5.4 million. The increase was driven mainly by continued growth in the adult-use Canadian cannabis market.

Still, the company missed out on profit by posting a loss of $6.5 million. This was mostly due to an inventory write-down of $8 million on dried cannabis and cannabis extracts. The write-downs were a result of oversupply issues in the Canadian market.

Finally, the company's operating loss of $45.1 million represents an increase from $34.9 million from Q1 2019. This indicates that Cronos is losing ground in the fight to fit into the crowded Canadian cannabis market. Nevertheless, CRON is currently trading up at $9.36.

3 Top Pot Stocks: Aurora Cannabis Inc (TSX:ACB) (NYSE:ACB)

Like Cronos, Aurora is a global cannabis company serving both the medical and consumer markets. Headquartered in Edmonton, the company's brand portfolio includes Aurora Drift, San Rafael '71, Daily Special, AltaVie, MedReleaf, CanniMed, Whistler, and ROAR Sports. Together, these brands represent Aurora Cannabis on five continents in the medical, performance, wellness, and recreational business segments.

>> 3 Red Hot Pot Stocks to Watch While They're Still Cheap

On May 14, Aurora published its financial results for the third quarter of fiscal 2020, which ended March 31, 2020. For the period, net revenue came to $78.4 million. This is up 18% from the previous quarter. Cannabis net revenue was also up 15% to reach $72.6 million. In addition, medical cannabis net revenue, both Canadian and international, showed healthy growth of 13.5%.

These extremely positive results led ACB to its biggest single-day percentage gain in its history. The day after the report, ACB stock gained an astounding 68.7%. As of today, Aurora is up 165% from its pre-report numbers and is trading at $15.30.

In the report, Aurora Cannabis's CEO added that the company is on track to deliver positive adjusted EBITDA by Q1 2021. ACB also improved its cash position last quarter to reach $230.2 million. In total, its cost-cutting measures seem to be working, as the company spent $154.6 million in Q3. This represents a 43% decrease from Q2.

3 Top Pot Stocks: Delta 9 Cannabis Inc. (TSX:DN) (OTCQX:VRNDF)

top pot stocks

While Cronos and Aurora are two of the biggest pot stocks around, this next entry on our list is quietly making a name for itself. Delta 9 Cannabis is a vertically integrated company that sells cannabis products through its wholesale and retail sales channels. Its wholly-owned subsidiary, Delta 9 Bio-Tech Inc., is an LP of medical and recreational cannabis and operates an 80,000 square foot production facility in Winnipeg, Canada.

Delta 9 recently published its financial results for the three-month period ending March 31, 2020. In the quarter, operating revenues came to $11.75 million, up 109% from $5.63 million for the same quarter in 2019. What's more, adjusted EBITDA was $1.65 million, a year-over-year improvement from a loss of $1.98 million.

This led Delta to post earnings per share of $0.02, making it one of the remarkably few pot stocks to post actual profit. The company's CEO, John Arbuthnot, attributes this success with the company's ability to remain fully operational despite the outbreak of COVID-19.

Also of note for Q1, Delta 9 received approval from Health Canada for its new purpose-built cannabis processing center. Going forward, this will allow it to fully automate bottling, packaging, capping, and labeling of its consumer-packaged dried cannabis products. So, while DN stock might only be trading at $0.39 right now, keep an eye on this one.

More Top Pot Stocks to Watch Out For

Tilray (NASDAQ:TLRY) also posted positive quarterly results recently. Still more companies, like Canopy Growth (TSX:WEED) (NASDAQ:CGC), will report in the weeks ahead, so pot stock investors hoping to get the jump on earnings season can take a close look at our list if they believe the industry outlook will be largely positive. Good luck and happy hunting!

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