HEXO stock is hot property right now. Starting 2019 off with a bang, these shares have climbed over 25% in a week. It seems HEXO Corp’s (TSX:HEXO) application for an NYSE listing has shown investors the massive potential here.
Despite its gains, HEXO stock is, arguably, still undervalued. Selling for $6.18 at the time of writing, there is a lot of bang for your buck with this stock.
HEXO Stock: Undervalued?
It seems the anticipation of an NYSE listing is setting a fire under this stock. Improved liquidity by way of a major exchange listing will expose HEXO to a wider pool of investors with deep pockets. It’s simple; bigger liquidity equals increased share price. We’ve seen what major listing did for Tilray (NASDAQ:TLRY) for example.
So is the wisest move right now to get in while you can? To ‘Get it while it’s hot,’ as they say.
But is market hype alone driving this bull run or are investors finally seeing HEXO stock’s long-term potential? Because what if HEXO doesn’t get NYSE approval? Then what?
Well, in my opinion, an NYSE listing is only the icing on the cake. There’s a great value to be found in this stock, with or without a major listing.
Operations Matter for HEXO Stock
We are now at a time in the cannabis industry where operating results actually matter. With cannabis now legal in Canada (and elsewhere at various levels), investors can truly see who is, and isn’t, delivering.
Hype won’t get you very far anymore.
With that in mind, HEXO is not only delivering; it is outperforming. With a market cap of only $1.1 billion (one-tenth the size of Canopy Growth (NASDAQ:CGC) for comparison), it has a forward P/E of 21.9.
It is set to be a top 10 producer by annual output this year, with an estimated 108,000 kilograms per year at peak capacity. Also, more importantly, with bigger production numbers, growing costs per gram should decline so expect “better margins and higher earnings per share” in the not too distant future.
HEXO Stock and Revenue Growth
At the core of the potential, is a revenue growth that is second to none. The company reported “$6.7 million in revenue generated in just two weeks and represents more than a 500% increase over the last quarter” in Q1 2019.
You’re not an average company if you can achieve a 500% increase in one quarter; it is significantly larger than that of its competitors.
So while a bigger listing is certainly helping HEXO stock to climb, this is also a case of not letting a good thing pass you by.
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