HEXO stock is one of the most watched cannabis stocks at present. Management seems to be making all the right moves, and this mid-tiered cannabis company could be the next global behemoth. Analysts and investors are taking note.
Considering its size, HEXO Corp (TSX:HEXO) (NYSE:HEXO) is continually generating impressive growth. It is considerably smaller by market cap than the leaders in the industry, yet this is the stock that has analysts excited.
Let's check out HEXO stock this week.
HEXO Stock
The Canadian cannabis producer has seen explosive growth in 2019. The company's Q2 2019 results were impressive, and the recent Newstrike Brands (TSXV:HIP) acquisition was deemed a clever move. Both of these announcements helped to push HEXO stock to the $7 USD mark in mid-March.
Today, on the NYSE American, HEXO stock is selling for $6.33 USD, up 1.12% at the time of writing. At this price, is there a case for HEXO to be considered undervalued... still? Can HEXO stock offer quality prospects for investors?
Q2 Results
The company has fared very well since Canada made recreational cannabis legal in October 2018. Importantly, HEXO Corp showed that it could grow its brand without the need for billions of dollars of investment.
The Q2 results showed gross revenue of $16.18 million in its first full quarter following marijuana legalization. This, when compared to the $1.18 million generated for the same quarter of the 2018 fiscal year, shows how HEXO capitalized on a booming demand.
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The company increased its production capacity and continues to do so. With its most recent acquisition of Newstrike Brands, HEXO is now in line to produce an output of 150,000 kilograms of dried cannabis flower annually. Revenue can only go skyward, and HEXO stock should go up with it.
According to SeekingAlpha:
"HEXO is definitely a firm, investors should put on their watch list because it is a viable contender to take a nice chunk of the market."
HEXO Stock: Newstrike Brands Acquisition
Growing your business through acquisition is usually a smart move. For HEXO, the Newstrike acquisition sets the stage for strong growth in the near future. One of the biggest considerations of this merger (apart from the increased production capacity) is the cannabis edibles market.
Prior to this acquisition, Newstrike created a joint venture with Neal Brothers—a provider of food products for over 30 years. The purpose of the venture is to make and sell cannabis-infused edibles.
This arm of the cannabis industry is expected to bring in massive revenue growth once Canada's government legalizes cannabis edibles nationwide. This is expected in October 2019.
Already with a presence in eight provinces across Canada, HEXO now has a firm hand in the edibles space through its Newstrike acquisition. This sector could easily be one of the biggest revenue drivers for this industry in years to come, so it's worth being aware of this.
Seeking Alpha says further:
"If [HEXO] can leverage Newstrike and Neal Brothers to capitalize on the edible market in a way that creates a significant recurring customer base, it's probable that the business will do quite well for shareholders in the long run."
HEXO Corp's two most recent announcements show a strong case for this company. So should you be watching HEXO stock?
Featured Image: Canva
