Aurora Cannabis Inc (TSX:ACB)(NYSE:ACB) has been falling over the past several months along with other marijuana stocks as investors have grown frustrated with the industry.
From scandals to underperforming sales and a lack of profitability in the industry, there’s been a big sell-off taking place which has sent Aurora down to almost two-year lows.
Opportunistic investors might see this is a potential opportunity to buy Aurora on the decline. The danger, however, is knowing if the stock has reached a bottom or not. It dd rally 7.8% yesterday as cannabis stocks got a boost from the one-year mark of legalization.
However, fundamentally, that still hasn’t changed the problems in the industry. While Aurora and other marijuana companies will certainly get a boost from edibles when they become available for sale, and that could help the stock rally.
And the good news is that while Aurora has seen sales climb and its share price fall, it’s made its price-to-sales multiple shrink to just 21. For most stocks, that would be a very high multiple for the stock to be valued at.
But relative to where it has been in the past, that’s pretty cheap when you consider cannabis stocks were trading at more than 100 times sales not too long ago.
With the company getting close to breakeven in its most recent quarter, Aurora could be in a good position to surprise investors with a positive result sooner or later. For that reason, along with the stock being a lot cheaper than it was before, it may not be a bad idea to buy Aurora today.
