There should be a lot packed into the shortest month of the year for cannabis investors. Several important quarterly updates are on the way. Other key developments could be in store as well. And thanks to 2020 being a leap year, we have an extra day in February to make the month a little longer than it usually is.
Three top marijuana stocks for investors to watch in February are Aurora Cannabis (ACB -0.36%), Canopy Growth (CGC 3.57%), and Charlotte's Web Holdings (CWBHF 5.00%). Here's what to be on the lookout for with these three stocks.
1. Aurora Cannabis
Aurora Cannabis hasn't stated yet exactly when its fiscal 2020 second-quarter results will be announced. But since the Canadian cannabis producer reported its Q1 results on Nov. 14, look for the next quarterly update in mid-February.
There are several reasons to expect another dismal quarter for Aurora. In the company's Q2 conference call, now-departed Chief Corporate Officer Cam Battley wouldn't say whether or not Aurora anticipated revenue growth in the second quarter. But CFO Glen Ibbott did state that capital expenditures would be similar to the Q1 level even though Aurora is putting the construction at its Aurora Nordic 2 and Aurora Sun facilities on hold.
One area that will almost certainly look worse for Aurora is its international sales. In December, Germany suspended Aurora's medical cannabis license because the company didn't have a required permit to distribute irradiated medical cannabis products. Aurora's license was reinstated in early February 2020, but the company lost two months of sales in Germany.
Cantor Fitzgerald analyst Pablo Zuanic thinks that Aurora might replace CEO Terry Booth and secure a big consumer packaged goods partner thanks to the efforts of billionaire investor Nelson Peltz. Investors will definitely want to watch and listen for any signals that either development is a possibility.
2. Canopy Growth
Canopy Growth already named a new CEO in December. David Klein took the helm at Canopy after serving for several years as the CFO for the company's biggest shareholder, Constellation Brands. Klein had also been a member of Canopy Growth's board of directors.
Like Aurora Cannabis, Canopy Growth hasn't said when it will report its next quarterly results but is likely to do so in the middle of this month. This will be Klein's first quarterly conference call as Canopy's CEO, so it will be interesting to hear what he ways about what's next for the company.
Investors especially hope to hear about a plan for Canopy to achieve profitability -- or at least hear a reason to think that a plan will be on the way soon. Canopy Growth has been spending heavily for a long time. The appointment of Klein as CEO increased optimism that the company would be more fiscally disciplined going forward.
The company should also provide an update on when it expects to launch its cannabis-infused beverages. Canopy originally planned to begin introducing its new beverage products in January. However, it announced that the launches were being delayed because more work was needed to finalize the process of scaling up to commercial production levels.
3. Charlotte's Web Holdings
Let's make it three in a row: Charlotte's Web could also announce its results for the 2019 fourth quarter later this month but hasn't scheduled the earnings release yet. Those results could be pretty good due to a couple of key factors.
First, Charlotte's Web usually experiences its strongest sales in the last quarter of the year. A big reason for this is that Q4 tends to have higher direct-to-consumer sales of the company's CBD products.
Second, the greatest number of retail locations in the company's history carried Charlotte's Web's products in the fourth quarter. At the end of Q3, more than 9,000 stores stocked the company's CBD products, up from 3,680 at the end of 2019.
It's possible, though, that Charlotte's Web's Q4 update could slip into March as it did last year. Even if that happens, there's still an important development to watch with the company. Legislation has been introduced in the U.S. House of Representatives to make CBD foods and dietary supplements legal in the U.S., eliminating the need to wait a long time for the FDA to take action. Any progress on this bill would be great news for Charlotte's Web.
My hunch is that Charlotte's Web could be the biggest winner in February. I don't expect either Aurora Cannabis or Canopy Growth to post impressive quarterly results. Charlotte's Web stock is down nearly as much as Aurora's shares over the past six months, but I think the outlook is more positive than it's been in a while for the company.