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Why Sundial, Aurora Cannabis, Cronos Group, and Other Marijuana Stocks Surged Today

By Joe Tenebruso - May 28, 2021 at 5:06PM

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More mergers could mean more profits for shareholders.

What happened 

Friday was a good day for cannabis investors. Here's how some of the most popular pot stocks fared:

  • Sundial Growers (SNDL -2.69%), up 15%
  • Cronos Group (CRON -3.45%), up 15%
  • OrganiGram Holdings (OGI -3.51%), up 11%
  • Aurora Cannabis (ACB -4.62%), up 8%
  • Canopy Growth (CGC -6.16%), up 6%

So what

A wave of deal-making has swept over the cannabis sector in recent months. Industry leaders Tilray and Aphria completed their merger earlier this month. Sundial Growers recently snapped up cannabis retailer Inner Spirit Holdings. Canopy Growth reached a deal to acquire The Supreme Cannabis Company in April. And today, investors awoke to the news that HEXO struck a deal to purchase privately held marijuana producer Redecan for roughly $766 million. 

$100 bills are cut into the shape of a cannabis leaf.

Image source: Getty Images.

The industry is rapidly consolidating, and investors appear to be betting that the businesses that remain will have a better chance at generating sustainable profits.

Now what

Canopy, Cronos, and Sundial have cash-rich balance sheets and thus could choose to make additional acquisitions in the coming months. Aurora and OrganiGram have less cash and are therefore more likely to be courted by larger suitors. Yet all of these companies' investors should expect continued deal-making to reshape the marijuana industry in the years ahead.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends OrganiGram Holdings. The Motley Fool recommends HEXO Corp. The Motley Fool has a disclosure policy.

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Stocks Mentioned

SNDL Inc. Stock Quote
SNDL Inc.
SNDL
$2.89 (-2.69%) $0.08
Aurora Cannabis Stock Quote
Aurora Cannabis
ACB
$1.65 (-4.62%) $0.08
Canopy Growth Stock Quote
Canopy Growth
CGC
$3.81 (-6.16%) $0.25
OrganiGram Holdings Stock Quote
OrganiGram Holdings
OGI
$1.10 (-3.51%) $0.04
Cronos Group Stock Quote
Cronos Group
CRON
$3.08 (-3.45%) $0.11

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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