OrganiGram stock has grown over 870% in three years. For any early investors, they’re now sitting on hefty profits. But with the cannabis industry well underway, is OrganiGram Holdings (TSXV:OGI) (OTCQX:OGRMF) still offering investors a significant opportunity for growth?
Let’s check this out
At the time of writing, OGRMF stock is selling for $6.66 USD, down 0.30% on the OTCQX market. OGI is selling for $8.88 CAD, down 0.56% on the TSXV. Although stock is currently down, the company has a lot of positives going for it, suggesting potential growth may be ahead.
Size vs. Capacity
With a market cap of $1.25 billion CAD, OrganiGram is a small-to-mid-tiered cannabis producer. HEXO Corp (NYSE:HEXO) and Green Thumb Industries (CSE:GTII) could be considered direct competitors, for comparison.
OrganiGram is estimating annual cannabis output to reach 113,000 kilograms at peak capacity by the end of 2019. If it can reach this figure, OrganiGram will be placed seventh in terms of cannabis companies with the greatest capacity. For its small market cap and small OrganiGram stock price tag, investors are getting a lot of bang for their buck.
According to the Motley Fool:
“OrganiGram believes it has the lowest cost of cultivation for dried flower (excluding packaging and shipping costs) in the industry. The company’s implementation of more automation and its improving crop yield should lead to even lower costs.”
Controlling production costs is vital to making serious profits, and this is the area that should interest investors wanting strong returns from OrganiGram stock.
OrganiGram Holdings has supply agreements for recreational marijuana with all 10 Canadian provinces. That is no easy feat and again, considering its small size shows a lot of potential in wait. There are only two other cannabis producers that have all 10 provinces covered.
Adding to that, the company is extending its footprint overseas where it is targeting Germany’s medical marijuana market and its CBD market. To do this, it has partnership deals with medical cannabis producer Alpha-Cannabis and hemp producer Eviana.
And don’t forget that Germany offers a door to the rest of Europe where cannabis is legal.
Right now, OrganiGram Holdings is producing roughly 36,000 kilograms of cannabis yearly. It has quite a lot to produce if it wants to jump above the 6-figure mark as expected. Until investors see the company actually reach this capacity, OrganiGram stock may remain polarizing.
Another concern could lie in the fact that it has yet to strike a deal with a major company outside the cannabis industry. This means a disadvantage in terms of cash flow to expand operations and marketing. It may also fall behind rivals that do already have major deals. For example, Cronos Group’s (NASDAQ:CRON) massive deal with tobacco giant Altria (NYSE:MO).
Do you feel OrganiGram stock might see a surge this year?
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