Cannabis weekly stock report: pure plays fared worse than diversified weed producers

Two of the big winners over the first five days of June were California-based Amyris Inc. and B.C.-based Village Farms International

Amyris Inc. is not a pure cannabis play—its recently announced Baby Cream to Powder contains natural ingredients other than weed. Photo by Amyris Inc.

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Last week, Investopedia writer and St. Stephen’s University macroeconomics instructor Matthew Johnston picked a trio of top cannabis stocks for June 2020, based on them having the lowest 12-month trailing price-to-sales ratios.

The three were Village Farms International Inc., Amyris Inc., and Aphria Inc.

Of them, only Leamington, Ontario–based Aphria is a pure-play cannabis stock.

Delta, B.C.–based Village Farms International is a greenhouse company that grows vegetables in addition to cannabis; Amyris is an Emeryville, California–based synthetic biotech firm that includes cannabis in its health, wellness, fragrance, and beauty products.

Last month, Amyris announced the launch of Baby Cream to Power, which is derived from natural products other than cannabis.

This week, we’re checking in to see how these three stocks fared in the first week of June.

Aphria had a bumpy five days, opening last Monday (June 1) at $5.78, reaching $6.18 by June 3, and then falling back to close at $5.87 by week’s end. That amounted to a nine-cent gain, or 1.6 percent—not much at all.

Village Farms International fared better, opening the week at $7.20 and closing at $8.11. That was a healthy 12.6 percent gain over five days.

But the big winners were shareholders in Amyris, which announced a funding agreement with institutional investors on June 4 to raise $200 million through a private placement.

“We believe that this financing positions us very well for continued industry leading revenue growth with our consumer brands and ingredients portfolio, toward our goal of profit and positive cash generation,” president and CEO John Melo said in a news release. “We are committed to strong value generation for shareholders while making our planet healthier.”

On June 1, Amyris shares opened at US$3.85 and closed the week at US$4.68. That was a whopping 21.6 percent gain over just five days.

Amyris and Village Farms also ended the week with far bigger percentage share-price hikes than Canada’s best-known licensed producers.

Nanaimo-based Tilray, for example, saw its shares fall 0.1 percent since the start of June, closing at US$9.48 on Friday.

Shares in Canopy Growth Corp.—based in Smith Falls, Ontario—declined by 3.3 percent since June 1 to close the week at $22.19.

Edmonton-based Aurora Cannabis posted big gains near the end of May, but the shares retreated in the first week of June, dropping 2.5 percent to close at $18.79 on Friday.

And Toronto-based Cronos Group shares lost a penny on the week to close at $8.85.

If there’s a lesson here, perhaps companies that rely on weed in their diversified overall product line—rather than the pure-play cannabis producers—might be the safer bet over the short term.

Charlie Smith

I'm the editor of the Georgia Straight newspaper in Vancouver, as well as a CannCentral contributor.

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