Aurora Cannabis Inc. (NYSE: ACB) is a stock that I am particularly fond of. If you haven’t read my full research report on the stock yet, check it out here. In the report, I went over quite a few details of the company and how the recent shelf registration positions it to maintain a leadership rol in global markets.
Nonetheless, I wanted to dive a little deeper into one area where ACB is outpacing companies like Cornos Group (NASDAQ: CRON), Canopy Growth (NYSE: CGC), and Tilray (NASDAQ: TLRY). That area is the international medical cannabis market.
While this market is a relatively small one at the moment, the potential for growth is incredible, and Aurora Cannabis seems to be well positioned to take the lion’s share of the space.
ACB Is Leading The Charge In The International Medical Cannabis Space
While Canopy Growth’s sales show that it is taking the largest market share in Canadian cannabis markets, that’s not the case for sales outside of the United States. In fact, Aurora comes in at #1 over Canopy, Cronos, and Tilray!
The numbers don’t lie. In the last quarter, ACB said that it generated $2.2 million in European sales. Sure, that number isn’t massive for a company with a more than $8.6 billion market cap, but it does tell a very important story.
The truth of the matter is that CRON and TLRY didn’t even provide financial details with regard to their international activities. Moreover, in its most recent earnings report, CGC showed that it produced $2 million in international sales. Sure, that’s not far behind the $2.2 million produced by ACB, but it is still #2.
Some will say that since Tilray and Cronos didn’t provide international sales data, it would be unfair to say that Aurora Cannabis outpaced these companies. Well, that’s not the case.
The truth of the matter is that the total revenues at both of these companies were significantly lower than ACB revenues last year. Moreover, neither one of these companies come close to Aurora in terms of growing capacity. So, it’s safe to say that chances are that they are lagging behind when it comes to the international space.
Aurora Cannabis Has A Strong Chance Of Maintaining Its Lead
With CGC only about $200,000 behind ACB in international sales, the real question here is whether or not the company will be able to hold onto its lead. I believe that it will. There are a few reasons that I’ve come to this conclusion:
- Germany – First and foremost, Aurora Cannabis was awarded the maximum number of lots in a public tender process. As a result, the company will control 5 production lots. It’s also worth mentioning that Aphria (NYSE: APHA) was awarded the same number of lots. Considering that there were only 13 lots, it’s clear to see that ACB and APHA will take the lion’s share of the German medical cannabis market. Moreover, the other winner was Germany’s own Demecan and no lots were awarded to CRON, CGC, or TLRY.
- Activities In Denmark – ACB is also heavily active in Denmark. In fact, the company said that it expects to complete production of its Aurora Nordic 2 facility in the region by mid-next year. The facility is expected to produce more than 120,000 kg of cannabis per year to meet the growing demand in the region.
- Aurora Sun Getting A Boost – Finally, the company recently announced that it will be increasing the growing space at its Aurora Sun facility in Alberta by around 33%. Once the facility boost is done, it will encompass 1.62 million square feet and have the capability of producing around 230,000 kg of cannabis per year.
With growth capacity quickly heading upward, and big moves being made in the international space, I believe that ACB will be able to hang onto its lead in the international cannabis space.
Why This Is Important
While the Canadian and US cannabis markets get all of the attention at the moment, the truth of the matter is that internationally medical cannabis is big business. In fact, it is currently expected that the global medical marijuanna market will grow to be worth more than $40 billion annually by the year 2024.
Those who cement their place as leaders in the space now will likely take the lion’s share of the global market later. That’s exactly what ACB seems to be doing. With production facilities in the works in Germany and Denmark, growing production capabilities at home in Alberta, and a recent shelf prospectus that will likely put the company in the position to enter the United States market, Aurora Cannabis has a real chance of becoming one of these long term lion’s share leaders!
At the end of the day, the more that I dig into ACB, the more impressed I become. In the analysis linked to above, I outlined the argument that the company is undervalued and that the recent fund raise announcement puts the company in a position to compete with regard to investing in infrastructure. This, combined with a global footprint that is unmatched from a revenue standpoint and a likely ability to maintain the leadership role in the international medical cannabis market makes ACB an even more compelling opportunity for long term growth in my opinion.