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Despite the coronavirus pandemic, the Canadian cannabis industry has seen a rise in sales and one of the companies that is a particularly interesting case is that of Organigram Holdings (NASDAQ:OGI). The stock may have declined by as much as 24% this year so far but there are certain factors that might make Organigram an attractive proposition for many investors.
Organigram has not generated much eagerness among investors in recent times due to its lack of growth. On July 21, the company announced its financial results for the three months that ended on May 31.
Organigram generated net sales to the tune of CA$18 million, which reflects a year on year drop of as much as 27%. It was lower than the C$23.2 million that the company generated in the second quarter as well.
That being said, it is however necessary to note that in the past nine months, Organigram generated sales of C$66.4 million and that reflects a modest year on year growth of 4%. The company has revealed that its Rec 2.0 brand is responsible for the growth. Organigram has been highly focused on the Cannabis 2.0 market and Rec 2.0 is a brand dedicated to that segment.
The company is all set to release its financial results for the fourth quarter later on in November and investors would get a better idea about its business then. In Q3 2020, the company suffered losses of as much as C$89.9 million.
The losses were primarily due to the impairment losses to the tune of as much as C$37.7 million. Additionally, the rise in cost for new product launches played its part as well. In its previous earnings report, the company had indicated that it expects some of the ‘inefficiencies to persist’.
Although the company is struggling with both growth and profitability, the Organigram stock is trading at a significant discount. The best way of going about it is by having a look at the price to sales ratio when compared to its peers.
Organigram commands a price to sales ratio of 4.87 and that is roundabout the same sort of premium that is commanded by most of its peers.
The company does not boast of any big partnerships and it is clear to see why it does not particularly stand out among cannabis stocks. Hence, it could be a good idea for investors to may track the stock for the time being.
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