Jim Cramer on Aurora Cannabis
Jim Cramer believes Aurora Cannabis (ACB) is undervalued in comparison with its cannabis industry peers (MJ). Cramer’s support for the company comes after Aurora Cannabis announced yesterday that billionaire businessman Nelson Peltz will be joining the company as a strategic adviser. Cramer’s cannabis sector picks include Canopy Growth (WEED) and Cronos Group (CRON).
Aurora’s revenue is expected to grow more than 470% YoY (year-over-year) to 316 Canadian dollars in fiscal 2019 (ending June 30), and then 176% YoY in fiscal 2020 to 816 million Canadian dollars.
The company’s sales are expected to cross one billion Canadian dollars in 2021, and its revenue is expected to be 1.5 billion Canadian dollars. The company’s sales growth is expected to slow down to 69% YoY.
These high expectations are industry-wide. Canadian cannabis companies Canopy Growth, Aphria (APHA), and Cronos Group, whose sales are forecast to grow significantly, are expected to lead the global cannabis market as a result of their expertise gained over the years.
In our recent valuation update series for the cannabis sector, we looked at 12 cannabis stocks’ valuation this month. Aurora Cannabis was trading at 12.4x, at a premium to its historical average of 10.1x. It was among the few companies trading at a premium to peers’ median.