OGI Should Be Avoided by Long Term Investors
Organigram Holdings Inc. (NASDAQ: OGI) is a leading licensed producer of high-quality medical and recreational cannabis. Based in Canada, and founded in the year 2013, OGI started as a Medical Cannabis provider and subsequently focused on producing high quality indoor-grown cannabis for adult recreational consumers as well. OGI is increasingly focusing on extending its global footprint.
OGI focuses on operational excellence to translate the same to strong financial results and in turn help the shareholders. Since commencing operations at its main facility in Moncton, New Brunswick, OGI has continued to expand the main facility.
Listed in 2019 in NASDAQ, the stock has witnessed downturn till 2021 when it has regained some of the lost ground. The stock has almost tripled in 2021 and has witnessed good demand from the investors. But this short-term momentum can just be gambling unless we do a deep dive into the fundamentals of the company and it’s growth outlook for next few years.
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Some Organigram Fundamentals
With a market cap of approximately 1.3B this is one of the penny stocks in the NASDAQ stock exchange. The stock has primarily been favorite of the day traders or people looking for short term gains by either going long or short on the stock.
The stock has an ROA (Return on Asset) of -16.97% and ROE (Return on Equity) of -52.40%. The debt/equity ratio of 37.74 makes the company highly leveraged company. Though the quarterly revenue has grown year on year from 12M in 2018 to 87M in 2020, the gross profit has gone down significantly, and the company posted net loss of 56M in 2020. From level of 1.05 USD in October 2020, it reached 6 USD in Feb 2021. There has been lots of volatility in the stock in the recent past but for long term investors the risk is much more intense when compared to the reward that is expected to be gained from this stock for years to come.
In summary, any long term or medium-term investor should stay away from the stock. Only if you are a day trader and understand your risk profile you may plan to capitalize on the short-term volatility in the stock.