Aurora Cannabis (ACB) is finally getting some attention. In fact, the name has slowly been building momentum. That and market share. Global market share.
Within the past two weeks or so, the Canadian cannabis producer has entered the Portuguese medical marijuana market, while agreeing to sell cannabis oils to German pharmacies. The firm now operates in 24 countries on five continents. The firm lists among its business lines, not just cannabis and hemp production, but engineering and design... breeding and genetics research... wholesale and retail distribution... home cultivation, as well as the development of derivative products. In other words, these guys do it all.
For those that did not see it last week, Cowen replaced Canopy Growth (CGC) with Aurora Cannabis as the firm's top Canadian cannabis producer. Why? For one, ACB now commands a 20% share of its home market. Vivien Azer, who initiated ACB with "Outperform" rating last week was the first analyst across the financial industry to cover cannabis producers, which is why this news seems important. Azer sees the company as uniquely positioned to drive leadership in both share and profitability, though she is aware of the potential for the firm to need to raise cash later in the year.
Enter the Dragon
No, not Bruce Lee. Several Canadian cannabis producers have taken on investment or agreed to alliances with larger operations, thus reducing the need to raise cash. Coca-Cola (KO) had at one time been rumored to be kicking the tires at Aurora. No news or even rumors since. Til now. Enter activist investor Nelson Peltz. Who? Yep... that guy. Founding Partner at Trian Fund Management. Non-Executive Chairman at The Wendy's Co. (WEN) , and a director at Procter & Gamble (PG) . That guy.
Apparently, Aurora has taken Peltz on to advise on future potential partnerships and continued global expansion. The plan is for Peltz to help the firm in maximizing potential markets to target. In return, Peltz receives options to purchase 19.96 million shares at a price believed to be around $7.74. As I type out this note, the last sale I see is $8.92, up 12% for the day.
Looks like the name hit some resistance this morning short of reaching a 61.8% retracement of the autumn selloff. My belief is that the name is an add the closer it gets to $8.50, now that the 50 day SMA has crossed over the 200 day (golden cross), and the 12 day EMA has crossed over the 26 day (bullish MACD).
Do we see $11 this year? If I didn't think so, we'd make a sale on this pop. I'm not making a sale today.
Aurora Cannabis is a holding in TheStreet's Stocks Under $10 portfolio. Click here to learn more about this portfolio, trading ideas and market commentary product.
This commentary was originally sent to subscribers of TheStreet's Stocks Under $10 portfolio.
Chris Versace and Stephen "Sarge" Guilfoyle are co-portfolio managers of Stocks Under $10.