HEXO stock is currently selling for $6.63 USD on the NYSE. Growing over 50% since the end of 2018, these shares seem to be on a continual incline. It's one of the fastest growing shares in the Canadian cannabis stock market, yet HEXO Corp (TSX:HEXO) (NYSE:HEXO) doesn't have the same international reach as some of its larger rivals.
Should this concern investors? So far it seems it hasn't. But is HEXO stock able to keep up longterm?
International reach is an important factor for investors to consider. When you know that the market opportunity in the US dwarfs that already legal in Canada, HEXO is behind. It's inevitable that the US market will mature and more states will legalize marijuana, so the opportunity here is too big to ignore.
At present, the true capacity is stifled because marijuana remains illegal at the federal level in the US, but analysts predict a change is on the horizon.
HEXO Corp has not approached the US market with gusto, but rather, seems focused purely on Canada and, recently, Europe. Forming a joint venture in Greece, it is building a production facility there and will ship medical cannabis products to several major European markets.
HEXO Stock Flourishes in Canada
Back home in Canada, its recent acquisition of Newstrike Brands (TSXV:HIP) allows HEXO Corp to market marijuana products in eight of Canada's ten provinces. Combined, those eight account for 95% of the total Canadian population.
The acquisition also brings HEXO's peak production to 150,000 kilos annually.
The province of Quebec remains HEXO's leading revenue driver. It has a major supply agreement with the province for its adult-use recreational marijuana market. This supply agreement gives HEXO a 30% share of Quebec's adult-use market.
According to The Motley Fool:
"HEXO's goal is to be a top-tier player in Canada and eventually to achieve 2% market share worldwide."
If it can hit those targets, HEXO will be in line for billions of dollars in revenue annually. HEXO stock looks attractive when you consider that. Further, according to the United Nations, the global marijuana market is worth $150 billion per year.
Enticing metrics, but couldn't HEXO achieve far more than 2% of that total?
With its peers already gaining momentum in the US market, HEXO Corp could find itself ousted if and when it tries to enter.
HEXO stock may peak at the same time because the US still represents the largest cannabis market in the globe.
What do you think?
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