It's a big month for the marijuana industry and there's been lots of excitement surrounding pot stocks of late. Hopes for marijuana legalization in the U.S. are on the rise with the passing of the Marijuana Opportunity Reinvestment and Expungement (MORE) Act in the House earlier this month. And a wave of big earnings reports in April could set the stage for lots of activity in the sector.
Three stocks that investors should have on their watchlists this month include Sundial Growers (SNDL 1.40%), OrganiGram Holdings (OGI -1.91%), and Verano Holdings (VRNO.F -1.15%). Their latest round of earnings reports is within the next few weeks and they could be among the most active pot stocks this month.
1. Sundial Growers
Sundial Growers has been transforming its business, and with the acquisition of liquor store operator Alcanna now in the books (the deal closed on March 31), the business is bigger and more diverse. Alcanna is among the largest private-sector alcohol retailers in Canada and its subsidiary, Nova Cannabis, owns or operates 78 pot shops across multiple provinces.
But that acquisition won't factor into its upcoming earnings result, which Sundial recently said will come out on April 14, and will cover the last three months of 2021. The company was supposed to release earnings in March, but there were delays in filing and so the results won't come out until later this month. The big thing for investors to watch will be Sundial's top line, which has shown little to no growth in recent periods. Meanwhile, the business has continued to burn through cash, to the tune of $173 million Canadian dollars over the trailing 12 months.
However, any sort of progress or revenue growth could add more bullishness around its shares, which are up more than 30% in the past month and well ahead of the S&P 500's gains of 4%. Renewed hype around cannabis legalization in the U.S. has made pot stocks hot buys of late. But whether Sundial is able to build on that or give back some of those gains, will depend on if it can give investors something positive to take away from its upcoming earnings report.
2. OrganiGram Holdings
Edibles producer OrganiGram has also been popping, with its shares up around 20% in the past month. It's not nearly as volatile a stock as Sundial is, but it has also benefited from more interest in the cannabis industry. It reports its earnings on April 12, just a few days before Sundial does.
OrganiGram has been steadily growing its sales in recent quarters and it is coming off a record-setting performance in the previous quarter where it posted CA$30.4 million in revenue for the period ending Nov. 30, 2021. In the process, it secured the No. 4 spot in market share in Canada among nationally licensed producers at 7.5% compared to 4.4% a year earlier. Another positive was that its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss shrank to CA$1.9 million (versus a loss of CA$5.7 million in the prior-year period).
If OrganiGram can continue building on those numbers it could be a good month for the stock and suggest that the business is on a positive trajectory.
3. Verano Holdings
Multi-state marijuana operator Verano reports its earnings numbers on April 7 and they will include its results for the full year of 2021.
It will be a big test for the company as many rival MSOs have struggled to generate much in the way of quarter-over-quarter revenue growth of late amid supply issues. If Verano can separate itself from the pack and show some positive growth, its shares could pop on the results. Unlike OrganiGram and Sundial, investors have been overlooking Verano's stock this past month as it has fallen by 2% despite the excitement in the cannabis sector. A strong earnings report could put it in the spotlight again and lead to some renewed bullishness.
When Verano last reported its earnings in November, its sales of $206.8 million for the period ending Sept. 30, 2021, grew by a modest 4% from the previous quarter. And its adjusted EBITDA profit (net of fair value changes due to biological assets) of $110.7 million grew by 36% as the business trimmed its overhead expenses and benefited from a better gross margin.
If Verano can deliver another improved quarter, it may only be a matter of time before the stock starts to rally.