OGRMF Stock: Is Organigram an Undervalued Pot Stock?

OGRMF Stock

It’s a rare thing to find a truly undervalued cannabis stock in the present market. Considering the future potential of OrganiGram Holdings (OTCQX:OGRMF) (TSXV:OGI), along with its current fundamentals, OGRMF stock could just be that… undervalued… and significantly.

It’s all hearsay until you do the numbers though, so let’s make an argument for OGRMF stock.

OGRMF Stock: Is It Undervalued?

If truth be told, the real time to buy OGRMF stock was at the end of December, when an industry-wide slump hit and OrganiGram stock dropped below $3.20 USD. It has since been paring those loses and at the time of writing is trading hands for $4.79, up 2.1% on the day. 

But analysts are doing the math and still consider the current price of OGRMF stock undervalued.

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Potentials: Take-Over

One of the biggest potentials lying in wait for OrganiGram is a take-over by a larger business. The company has yet to cozy up with a big alcohol or tobacco company, for example. This can be considered advantageous but may also raise an eyebrow or two considering many of its peers already have this covered.

But because many think a take-ver of sorts is an inevitability, this gives investors food for thought. A future deal by a major company (whether beverage, cannabis, or tobacco) will surely boost the value of this stock down the line—if a take-over or deal happens, that is.

It also gives OGRMF stock rooms to grow; at its current reasonable price, investors can feel assured that there is much more return to be had from OrganiGram Holdings.

Fundamentals

A take-over is almost expected because the company is thriving so well on its own. It’s hardly going unnoticed. For example, OGRMF stock has gained 29% over the past month thanks to strong supply deals and positive quarterly results. Those supply deals mean OrganiGram has every province in Canada covered, barring Quebec. This ensures that the company is capable of supplying eager Canadians with cannabis for years to come.

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OGRMF Stock: Strength in Numbers

Let’s look at the numbers for OrganiGram Holdings:

  • The most recent quarter showed revenue of $3.2 million CAD and EBITDA of -$1.7 million CAD;
  • Net sales increased by 131% to $12.4 million CAD in 2018;
  • Registered patient list rose by 112% to 15,730 in 2018;
  • Low production costs: Q4 showed a production rate of $0.26 CAD per gram, down from $0.66 CAD per gram in the previous quarter.

The Bottom Line

OrganiGram’s ability to undercut competitors’ production costs make it a dangerous rival. It gives the company a competitive advantage and helps to make it a prime acquisition target for a company needing mass marijuana production at low costs. The potential here is so massive that OGRMF stock may be considered undervalued at its current rate.

What do you think?

 

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