A prominent analyst sees sizeable appreciation ahead for Aurora Cannabis (ACB).
Vivien Azer, an analyst at Cowen, put Aurora at the top of list of top marijuana stocks with the most potential.
The analyst report included a C$14.00 (US$10.47) per share price target for Aurora as well.
That’s 45% higher than the C$9.60 (US$7.18) closed at on Saturday.
Azer cited several factors for the bullish stock recommendation and raised price target. They included Aurora’s 20% market share in the Canadian marijuana market, the huge annual production capacity of 575,000 kg, and the fact recreational marijuana has only been legal for a few months and the market still has lot more room to grow.
Those are all well-known reasons for almost any big marijuana stock.
What’s not well-known and widely-understood by investors is the different Aurora has been taking on one of the real opportunities for marijuana companies and investors.
Aurora is one of the original “Big Three” Canadian marijuana companies.
Along with Canopy Growth (CGC) and Aphria (APH), Aurora has raised billions of dollars in capital and deployed it by building massive marijuana cultivation and distribution facilities throughout Canada.
These companies are the blue chips of the marijuana industry.
However, regardless of how much Canada’s legal marijuana market grows, it will always be a relatively small piece of the global marijuana business at best.
It’s simple math.
Canada is just small. It has about the same population as California.
As a result, the maximum potential for the marijuana industry is capped at around $7 billion to $10 billion.
If a company the size of Aurora is going to grow significantly, it’s going to have to go beyond Canadian borders.
That’s exactly what Aurora has been doing for the last few years.
Aurora has been leading the charge internationally with an aggressive acquisition and investment strategy.
Azer took notice in the analyst report.
According to the Cowen research, Aurora has operations or direct investments in 23 international markets including Germany, Australia, and Denmark.
The report also noted a big change in the global potential for medicinal use marijuana. The Cowen research also reported Aurora increased its estimate of the potential international medicinal marijuana market from $9 billion to $31 billion.
Aurora shares surged following the research report. They closed up 12.5% on the day to C$12.80 (US$8.10).
But now, after this jump, is Aurora a buy?
We’re going to have to say “No.”
That doesn’t mean Aurora won’t go up. It will surely hit new highs at some point.
But we’re just encouraging marijuana investors to look at more targeted opportunities.
That’s why we don’t cover the big marijuana stocks like Aurora, Aphria, Tilray (TLRY), and Canopy Growth too much.
Frankly, they’ve already had their big runs and another 45% potential gains (or about 30% after today’s jump) isn’t much.
Many other marijuana stocks can deliver that in a week or a month.
Aurora may do well. It’s in a great sport in Canada and internationally. But the big gains will go to small companies staring at truly massive growth opportunities.
But if you really want to capitalize on the marijuana bull market, you want to buy shares in companies which are going to ride certain marijuana industry niches which still offer the exponential growth potential only found in the marijuana industry.