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Best tech/finance blogger on TipRanks. Alex Cho is ranked 7th among all financial bloggers, with a sector focus of technology stocks. The research he publishes captures the long-term growth potential of tech franchises, and market valuation. His research recommendations over the span of five-years has averaged into an annualized return of 19.3% across 392 ratings of which 66% were successful. Over his years of publishing, Alex Cho has been an indispensable source of information for an investment minded audience, which is why his lifetime viewership has exceeded ten million in total since 2012, across various media platforms. Furthermore, he’s frequently cited in various local business journals across the United States, and is frequently tagged with the “in-depth” designation on Google News for his public articles. The quality of his research is well known, and is well-respected which is why he’s frequently cited by other authors, journalists, bloggers and experts. Alex Cho was a former founding partner of Alexander & Cohen Capital Management, has worked as a consultant for mid-stage tech companies looking to raise capital or form an exit strategy, with the most recent consultation billed to a client that was generating revenue of $10 million+ in the web domain/registrar segment. Alex Cho is frequently invited to interview members of management at various Fortune 500 tech companies’ due to his outstanding media credentials, and credibility. Furthermore, he frequently attends various tech media events at the request of the event organizers. Alex Cho has a great relationship with Wall Street and Silicon Valley, as well. In the Venture Capital Space, he has sources that are inclusive of VC Partners, and independent research from PitchBook, Mercury Data, eMarketer, MergermarketGroup, and so forth. Anyone facing the public with investment related material needs quality sources, which should be inclusive of insights from Private Equity and various sell-side institutions and debt rating agencies as well (Standard & Poor’s, Fitch, & Moody’s). Alex Cho publishes with the support of Bank of America Merrill Lynch, Morgan Stanley Americas, Royal Bank of Canada Capital Markets, United Bank of Switzerland AG, Barclays Americas, Goldman Sachs, J.P. Morgan, Credit Suisse AG, PiperJaffray, Wedbush Securities, Oppenheimer & Co., Nomura Securities, BMO Capital Markets, Raymond James, Pacific Crest, SunTrust, Mizuho Securities, Deutsche Bank and Canaccord Genuity. Alex Cho attended ASU via the MAPP program with a 3.76 GPA in business-finance. The genius behind Cho has less to do with his academic accomplishments, but rather his ability to navigate, adapt, and improve the quality of his work through all the activities he has engaged. In the past year, Alex Cho has launched a new marketplace service referred to as Cho’s Investment Research. To learn more about this service, or to receive article notifications, be sure sure to subscribe. We provide frequent updates via our Blog Posts, which goes out to our subscribers.

Aurora Cannabis (ACB) Stock Is in Position for Another Bullish Leg

Cannabis stocks have been trading at aggressive growth multiples for quite some time, but with expectations hinging on future demand and industry consolidation, the large-scale producers like Aurora Cannabis (ACB) could reach production and revenue goals that help justify the present valuation.

Aurora stock has been able to remain stable within its current price-range of $8-$9, because the valuation hinges on the production ramp of a number of large scale grow facilities, which could take production all the way past 300K Kg/year. Hence, Aurora is in a position to trade at a multiple that seems reasonable on a forward-earnings basis assuming they can generate 20% net profit margins on $800M to $1.2B sales, which translates to a net profit range of $160M to $240M in FY’20 where investors would be paying 53x forward earnings at the low-end of earnings, which is still lofty, but seems reasonable for a rapid growth industry.

To reach those type of targets, ACB’s production ramp needs to average into a pretty high figure over the next 12-month. However, the pricing dynamics of cannabis needs to hold steady as well, for the investment into new production to work favorably for ACB.

Jeffries analyst Owen Bennett reports a number of favorable catalysts or news events that could help for some of the larger scale producer stocks:

Crowdsourced data was released by Statistics Canada for each province showing pricing data for the legal and illicit markets. Generally average prices had increased since legalisation (national average 17%) which is likely due to the supply issues we have seen (from scaling/cultivation issues, packaging bottlenecks, LPs keeping product back for extraction, lack of extraction capacity) as well as the muted rollout of retail stores from a number of provinces.

On Thursday, The House Special Committee on Criminal Justice of Missouri voted 7 – 0 to approve decriminalisation for those possessing less than 36g of cannabis. The lead sponsor of the Bill, Rep. Shamed Dogan said this bill as designed as the first step to targeting larger issues such as the opioid epidemic. We are seeing this approach echoed on a national / federal level, where sponsors are focusing on pushing through bills to tackle specific segments of cannabis legalisation (access to banking services, access for vets, etc.), which stand more chance of passing near-term than a widespread bill such as the STATES Act.

Keep in mind, Canada only legalized cannabis everywhere within its borders on October 17th, 2018. The demand for recreational creates an immediate backdrop of demand whereas the shortage of production has yet to reach the market. With pricing still 17% above pre-legalization, the trend in pricing still seems favorable, and the recent regulatory move (only 6 months ago) comes at a time where production is about to ramp considerably over the next 12-24 months. So, the regulatory scenario in Canada, and pricing trends implies that ACB should be in a position to sell at the higher-end of the selling price range, while producing much more in volume. In that scenario, ACB could report stronger margins over the next 12-months and still surprise current expectations.

It’s also worth noting that there are more states in the United States that are decriminalizing cannabis possession, such as Missouri. If more States continue to transition towards legalization/decriminalization over the foreseeable five-year period, the United States rate of consumption will likely grow adding to the growth narrative and diminishing risks tied to industry overproduction.

To read more on the nitty gritty of what’s going on in the rising cannabis industry, click here.


Disclosure: The author has no position in ACB stock.

Next up: Aurora Cannabis: Flooding the Cannabis Market with More Supply


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