Aurora Cannabis Inc (TSX:ACB) has been down 15% in the past month as the stock shows no signs of recovery. Year-to-date it has declined more than 35% and it could be a great price to buy today.
Aurora recently announced that it had reached a deal with MedReleaf Corp (TSX:LEAF) to purchase the medical marijuana company for $3.2 billion, a record high in the industry. However, that hasn’t been enough to stop the stock’s downward spiral.
Marijuana stocks as a whole have struggled this year, and the hype just hasn’t been there this year. Aurora in particular is an expensive pot stock, as it has not been uncommon for its share price to trade at more than 100 times the company’s sales.
Assuming the deal with MedReleaf goes through, Aurora will be putting itself in a strong position to take advantage of a growing industry and a lot of potential in the medical marijuana segment. The big question for investors is whether or not there is enough growth to justify the company’s high valuation.
Between Aurora and Canopy Growth Corp (TSX:WEED), the two companies would combine for a market cap of around $13 billion, and some estimates have the entire industry falling well below that number.
However, the problem with the marijuana industry is that estimates are based on black market numbers, and until we see the impact of legalization, it’ll be hard to gauge just how much demand there truly is.
But if you’re bullish on the industry, then it could be a good time to buy Aurora as the stock is hovering around five-month lows.
