Cannabis stocks have been enjoying a bit of sunshine these last few weeks. There have been a number of recent updates that have cannabis stock investors wondering if perhaps it’s time to enjoy another round of “How high can they go?”
Among these cannabis stocks, investors may be wondering about Aurora Cannabis (TSX:ACB). ACB stock was once seen as the “it” cannabis stock. With so much production, a focus on the lowest cost per gram, and extensive medical marijuana facilities, it seemed promising. And yet, the stock still hasn’t achieved profitability.
So, let’s look at whether there is a chance, even a slim one, that Aurora Cannabis stock could recover in 2024.
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Broad positive news
First, let’s look over what’s been causing cannabis stocks to climb recently. That comes down to our neighbours to the south, with the United States edging closer to an election. Besides the November election for president, there are also a number of other bills on the way. And that includes ones related to marijuana.
One such movement was a bill that would reintroduce the Cannabis Administration and Opportunity Act. The bill would propose federal legalization of marijuana, calling it “long overdue.” Yet, there is still pushback.
This includes the Secure and Fair Enforcement Regulation Banking Act, or SAFER, which would facilitate banking and other financial services for state-legal cannabis companies. However, right now, cannabis stocks must use cash, which has increased costs for security and money-handling. The news on whether this would go through will reach deadline on May 10.
Good news for Aurora Cannabis stock
While other companies have been reporting widening losses, Aurora Cannabis stock most recently narrowed its third-quarter loss. And now, fourth-quarter and annual results are on the horizon.
While there are unlikely to be any major announcements, it will be promising to see an outlook for the year ahead. Not only are more states likely to open up recreational marijuana, which would be beneficial for Aurora Cannabis stock. The company also has enjoyed more countries legalizing the product.
In fact, there are several countries where the stock already has a foot in the door, such as Australia. Even so, investors will need to watch whether the company manages to outpace earnings estimates or continue to fall below them.
What to watch
So, if you’re interested in the future of Aurora Cannabis stock, there are a few items to consider. In particular, Look for growth in both cannabis and plant propagation segments, particularly international medical cannabis.
Furthermore, track progress towards positive free cash flow by the end of 2024. Was there a continuation of positive adjusted earnings before interest, taxes, depreciation and amortization? And did they achieve the efficiencies planned to reduce selling, general & administrative expenses?
Plus, investors should continue to look at whether there is progress being made in terms of expansion, innovation, and debt reduction. Add on to the future outlook, and it could be a positive earnings report. However, if it falls short, investors may be in for another drop in share price until it can turn things around.
