CBD market: where to next for Cann Group and AusCann share prices?
With America’s CBD market expected to grow significantly in the next few years, below we take a look at two ASX-listed cannabis stocks aiming to take advantage of this global trend.
The $18 billion question
The cannabis (CBD) market has experienced incredible growth over the last few years, as countries around the globe loosen regulation and commercial prospects become more viable around the sale of cannabis products.
One of Canaccord Century’s analysts – Bobby Burleson – recently estimated that sales figures of the US CBD market could reach $18 billion by 2024.
At current levels, this would equate to a CAGR of 45%.
More locally, Canaccord was keen to point out that the number of patients in Australia requesting access to medical cannabis products – and having such access approved – has skyrocketed in recent times.
August 2019 approvals were 31% higher than they were in July, and on a year over year basis: approvals have increased more than ten-fold, rising a staggering 1,160%, according to Canaccord.
With such enthusiasm building around the CBD market – both locally and abroad – today we take a look at two ASX-listed cannabis stocks: CANN Group Limited (ASX: CAN) and Auscann (ASX: AC8).
Cann Group share price: where to next?
Canaccord recently initiated coverage of the Australian CBD stock: Cann Group (ASX: CAN), putting a speculative buy recommendation and a 12-month price of A$2.60 per share on the young company.
At current price levels, this would imply potential upside of around 49%.
It’s been a volatile year for Cann Group, with the company seeing its share price fall from A$2.00 in January to A$1.71 per share today.
Even so, Canaccord analysts look to be impressed by the company’s recently updated production capabilities. Here, Cann Group noted that its production capacity had been increased to '70,000kg of dry flower per annum.’
Complimenting these capabilities, CANN Group Limited also has a five-year supply agreement in place with Aurora Cannabis. This agreement should help with the sale of the flower the company produces.
Aurora Cannabis has seen its stock appreciate some 26,000%, since May 2014.
Auscann share price at a glance
Like Cann Group, Auscann (ASX: AC8) has faced a difficult year, with its share price dropping around 40% since January.
In spite of this, Auscann remains committed to a worthy goal, with the company centrally involved in the production of 'cannabinoid-based pharmaceuticals.’
Though the company remains early-stage, according to its latest investor presentation it is well funded into FY20, ‘with over $35M in cash as of 30 June 2019.’
Positively, in describing its path to market, the company noted that it had 'all required Australian licenses received. Proprietary capsules developed and are expected to be releases to click for trails towards the end of 2019.’
Though Auscann and Cann Group have yet to see the kind of stratospheric share price gains like Aurora Cannabis, they both look to be well positioned in the fast-growing CBD industry.
Only time will tell how they perform in the long-run.
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