Organigram stock has gained over 28% over the past month on the broader recovery of the cannabis sector. Let's analyze the recent developments from Organigram Holdings (TSX:OGI) (NASDAQ:OGI).
The cannabis sector may be in its nascent stages compared to other industries, but some patterns are already emerging with regards to companies that might prosper in the long run. One company that could well prove to be one of those is Organigram Holdings.
Major Cannabis Cultivator
It should be noted that many of the bigger companies in the sector like Aurora Cannabis (TSX:ACB) (NYSE:ACB) and Canopy Growth (TSX:WEED) (NYSE:CGC) have gone through significant troubles due to poor earnings. In such a scenario, Organigram is already a major cannabis cultivator with the output of as much as 10,000 kilos a year. Additionally, it produces cannabis at one facility in Monkton, and that, in turn, reduces overhead costs considerably, all good news for Organigram stock.
It has become abundantly clear over the past months that many companies in the cannabis sector face an uncertain future with regards to finances. However, Organigram Holdings does not have such concerns. It is a well-capitalized company, and at the end of the last reported quarter, it had $34.1 million in cash as well as short-term investments.
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This means Organigram can spend on expanding its business in 2020 or pick up assets if any are available at attractive valuations.
Organigram stock is up 2.40% to C$3.43.
The most important thing with regards to the cannabis sector in 2020 is that analysts expect the retail cannabis space generate significant growth. Organigram Holdings is well placed to take advantage of such a state of affairs. The company has also gone into the cannabis derivatives market, and that is another area in which Organigram can generate meaningful growth.
Organigram’s earnings for the fiscal first quarter proved to be quite encouraging, as it generated C$25.2 million in revenue, which reflected a rise of 100% year-on-year. Such an encouraging result has proven to be another feather in the cap for the company, and investors could do well to track Organigram stock over the coming weeks.
Featured image: Canva
