The Canadian pot market has seen some successes amid the coronavirus pandemic, including that sales have risen steadily in recent months. Statistics Canada reports that cannabis stores recorded sales of 244.9 million Canadian dollars in August. That's up more than 61% from February's tally of CA$151.9 million, right before COVID-19 started pushing people to stock up on supplies -- including marijuana.

This year is also the first full year that cannabis 2.0 products, including edibles, concentrates and topicals, have been available in Canada. One company that's been laser-focused on that new segment of the market is OrganiGram Holdings (NASDAQ:OGI). Although it hasn't been having a great year, down 24% while the Horizons Marijuana Life Sciences ETF (OTC:HMLSF) has fallen just 10%, there's still a lot of potential for the New Brunswick-based business to grow with its cannabis 2.0 products. Let's take a closer look at whether you should consider buying OrganiGram at its current price. 

Cannabis-infused chocolate.

Image source: Getty Images.

A look at OrganiGram's recent results

One of the reasons investors haven't been overly excited by OrganiGram's stock is that it hasn't grown much lately. The company last reported its earnings on July 21 for the period ended May 31. Net sales of CA$18 million for the third quarter were down 27% year over year. That was also down 22% from the second quarter when it generated CA$23.2 million. And in the first quarter of fiscal 2020, sales were CA$25.2 million. On a year-to-date basis, however, the company is showing some modest growth, with sales of CA$66.4 million over the past nine months rising by a modest 4% from the same period last year. OrganiGram attributes the increase to the launch of its new "Rec 2.0" products.

OrganiGram refers to its new vape and chocolate-infused products as "Rec 2.0" -- alluding to the cannabis 2.0 market, which includes edibles and other products (like vapes). Edible products first started hitting store shelves in Canada in December 2019. That's also when OrganiGram first shipped out its Rec 2.0 products, which were vaporizers. At the end of February, it shipped out its first cannabis-infused chocolates.

When the company releases its fourth-quarter results later this month, investors will get a better idea of how well those new products are doing and if they've risen in popularity. So far, however, the growth appears fairly modest, and not enough to generate a huge jump in OrganiGram's top line. Its bottom line is -- unfortunately -- not expected to look a whole lot better. The company has incurred a net loss from continuing operations in each of the past six quarters.

Its loss in Q3 was particularly bad, coming in at CA$89.9 million (in the prior-year period it recorded a net loss of CA$10.2 million), largely due to impairment losses of CA$37.7 million and other factors, including higher costs from to the launch of its new products. OrganiGram stated in its earnings report that it "expects some production inefficiencies to persist in the near term and impact gross margin while it continues to launch new Rec 2.0 products and optimize production." 

Is OrganiGram stock cheap compared to its peers?

OrganiGram is struggling to grow and its bottom line isn't great, but with a big stock price discount, it may be worth taking a chance on. Let's take a look at how the company stacks up to some of its Canadian peers based on its sales, using the price-to-sales (P/S) ratio, which is a useful metric to use when a company isn't quite profitable:

OGI PS Ratio Chart

OGI PS Ratio data by YCharts

The only big pot stock it's clearly cheaper than is Canopy Growth (NASDAQ:CGC), for which investors have normally paid a higher premium. Between its popularity and greater stability through its partnership with Constellation Brands (NYSE:STZ), it's not without reason that investors are willing to pay more for the Ontario-based cannabis producer. OrganiGram lacks that same stability, and compared to other pot stocks on the chart above, it's evident that even though OrganiGram's lost about half of its value in 2020, it's still not an obviously attractive buy even from a price standpoint. 

OrganiGram might not be your buy today

There isn't a compelling reason to invest in OrganiGram today. Even if you're bullish on its new Rec 2.0 products, the results really aren't there yet to prove that those products are in demand with customers and that they'll generate the growth necessary to get investors excited about the company's prospects. In addition to this, OrganiGram is trading for a similar value to Aphria, Tilray, and Aurora Cannabis, all of which are at least three times the size of OrganiGram in terms of market cap. Until there's data there to prove that OrganiGram's new products have it on the path to profitability, there will be little reason to invest in OrganiGram today given its lack of growth. Meanwhile, pot stock pickers should put in the time to research other cannabis companies.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.