OrganiGram stock has picked up very well over the past couple of weeks with a gain of 10% following quarterly earnings.
Let’s review the impact on OrganiGram Holdings (TSXV:OGI) (NASDAQ:OGI)’s fundamentals after the recent earnings report.
About Earnings and Analysis
Although it is true that pot stocks have managed to create a lot of value over the better part of two years, and especially in the period following the legalization of the product in Canada, the past few weeks have not been as great. The past few weeks have seen the momentum going out of the sector, as many cannabis companies reported losses and weak overall earnings.
In fact, OrganiGram Holdings was one of the few pot companies to report positive quarterly earnings, and there are plenty of factors that are currently in favor for the company.
First and foremost, OrganiGram is currently trading at only eight times its 2020 sales, and that makes it one of the cheapest stocks in the sector. However, there are specific competitive advantages that make OrganiGram such a compelling company. The company only deals in the premium cannabis category and has steadfastly tried to make its product the best in its segment. It has not only been able to drive margins higher, but its products have also been recognized by the Canadian Cannabis Awards.
OrganiGram stock is trading lower by 2% at $6.18 on the Nasdaq.
Additionally, the company has claimed that its cost of production per gram of produce is the lowest in the industry. The company’s indoor growing system, a proprietary IT system named OrganiGrow, and its machine-operated packaging system have reduced costs considerably.
OrganiGram Holdings is now trying to develop edibles, beverages, and vapes, and is also trying to enter the overseas markets. Additionally, the company wants to use biosynthesis to create CBD, something which only one other company is currently trying to do. OrganiGram has collaborated with Eviana and 1812 Hemp in order to enter the lucrative hemp industry as well.
On the financial side, OrganiGram’s balance sheet is strong. It has $88 million CAD in cash, and in addition to that, it enjoys a $140 million CAD credit line from the Bank of Montreal. That being said, the company still needs to raise its production capabilities considerably and has to rope in high-value partners to truly find its way into the top five companies in the industry.
OrganiGram stock is one of the biggest cannabis stock gainers this year, with a jump of 50%.
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