Shares of Canadian cannabis grower OrganiGram Holdings (NASDAQ:OGI) closed up 7.9% on Monday, bucking the post-holiday doldrums that enveloped the broader market and the marijuana sector.
Major stock indexes inched down slightly, while shares of the three largest cannabis growers by market cap -- Canopy Growth (NYSE:CGC), Aurora Cannabis, and Cronos Group -- suffered declines in the 1% to 2% range.
OrganiGram is no one-day wonder, however, as shares gained 80.5% in the first half of this year (January through June), according to data from S&P Global Market Intelligence. The stock is up 98.3% so far in 2019 through July 8.
Today's 8% pop
We can likely attribute OrganiGram stock's nearly 8% gain today to favorable comments that former Canopy Growth co-CEO Bruce Linton made about it in an interview with CNBC last Wednesday, July 3. This interview came in the aftermath of Linton's firing from his positions as Canopy co-CEO and board chair. (He was likely shown the door because top management at alcoholic beverage giant Constellation Brands -- which owns a 38% chunk of Canopy -- was unhappy with Canopy's recently reported fiscal fourth-quarter results, which showed mounting losses.)
When Linton was asked which stocks he liked in the cannabis sector, he named three: Canopy Growth, Canopy Rivers (OTC:CNPOF), and OrganiGram. The first two aren't surprises, as Linton founded and, until last week, led Canopy Growth, and Canopy Rivers is a venture capital business that was spun off from Canopy Growth. (And, yes, Canopy Rivers stock also got a nice boost today from Linton's remarks, closing the day up 11%.)
As to Linton's specific comments about OrganiGram, he said that he liked "how they run themselves" and that he thought the company to be "pretty solid."
First half of 2019's 80% gain
We can attribute much of OrganiGram's hefty gain in the first half of the year to overall strength in the marijuana sector, as investors remain enthused about the space's long-term growth prospects. Shares of Canopy, Aurora, and Cronos, for instance, rose 50%, 58%, and 54%, respectively, over this period.
So why did OrganiGram stock outperform shares of these top cannabis players and many others? A big part of this equation is likely that more investors gradually discovered this small-cap stock and bought shares after liking what they learned. It can be considered a second-tier grower, and is on track to produce 113,000 kilos a year by the end of 2019. This gradual discovery theory is supported by the fact that the stock's gain in the first six months of the year was achieved by a steady rise throughout most of this period, rather than giant upward moves on just one or two days.
And what's there to like about OrganiGram? The top thing that many investors probably like is that Wall Street expects the company to be profitable on a full-year basis in fiscal 2020. OrganiGram has several notable advantages over its peers, including its low production costs, thanks to having a high growing efficiency, and that it's the only grower based on Canada's east coast. The latter should give it an edge in capturing market share in the Atlantic region.
In light of Linton's comments, investors may want to further explore OrganiGram, or at least put the stock on their watch list.
Investors don't have long to wait for material news: OrganiGram is slated to report its fiscal third-quarter results on Monday, July 15, before the market opens.