HEXO stock has been an investor favorite for quite some time. The reason is simple: there is a lot of bang for your buck here. At $7.75 CAD per share at present, it's hard to find cannabis securities matching HEXO Corp (TSX:HEXO) (NYSE:HEXO) in terms of value for money and production output.
Analyst BUY Rating
It would seem plenty of investment analysts are in agreement also. The world-renowned Beacon Securities has "reissued their buy rating" on HEXO stock. Seaport Global Securities has set a buy rating and a $12.00 price target for the company. Oppenheimer and CIBC both set an 'outperform rating' and a $7.00 price objective for the company.
Investors should take note of these positive ratings at a time when the cannabis market is weeding out the weak from the strong. HEXO stock has always proved itself as one of the strong companies. It produces, markets, and sells cannabis in Canada and is expected to come in with a six-figure yield at its peak.
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Capacity and Size
Not many companies are able to hit a six-figure yield. Such high capacity will be the true measure of success as it shows the ability to meet demand. For a bit of perspective here, the two largest cannabis companies, Canopy Growth Corp (TSX:WEED) (NYSE:CGC) and Aurora Cannabis (TSX:ACB) (NYSE:ACB), have market caps of approximately $15.2 billion and $9.1 billion CAD respectively.
As a result, they produce the biggest amount of annual product. Aurora estimates 700,000 kilos annually and Canopy estimates 525,000 kilos annually.
This is all well and good, but what's impressive about HEXO is that it is significantly smaller than those competitors. It has a market cap of $1.6 billion CAD, yet, it is estimating an annual output of 108,000 kilos. Hitting six-figures, although it is much smaller, shows HEXO is keeping up with the competition, but HEXO stock trades for a much smaller price.
Quebec
A 1 million sq. ft. expansion in Gatineau, Quebec is one of the reasons for this excelled production. HEXO will be supplying the province of Quebec alone with approximately 200,000 kilos of marijuana over the next five years. Its relationship with the province makes it the top-supplier here and this means a lucrative and continual revenue stream.
This is surely one of the reasons analysts are so bullish on HEXO stock. Bang for your buck. What do you think? Are you a fan?
Featured image: Canva
