Canadian cannabis producer Tilray (TLRY) expands its product base and improves its bottom line. Given Cannabis Stocks' 52-Week Lows, Is TLRY Stock a Bargain Now?
Minnesota became the 23rd state to legalize recreational marijuana after Gov. Tim Walz signed the law into legalization on May 30. The new legislation comes into force on August 1st and applies to adults aged 21 and over.
This follows Maryland's new recreational legalization policy, which begins July 1 after voters approved November 8 for recreational use of cannabis by those 21 and older.
Maryland will tax recreational weed at a 9% rate, while medical marijuana is tax-free.
In Congress on April 27, bipartisan lawmakers in the Senate and House of Representatives re-introduced a much-anticipated bill to free up banking services for the marijuana industry. Currently, most pharmacies deal in cash because cannabis is not federally legal and banks do not want to take the risk associated with the Category 1 drug.
At the same time, from 2014 to 2022, the states collectively generated more than $15 billion in tax revenue from adult marijuana use. In 2022 alone, states where marijuana is legal raked in approximately $3.8 billion in cannabis taxpayer dollars.
Tilray Medical's division expanded its certified medical cannabis products into the Czech Republic in April, expanding its roster of over 20 countries served.
TLRY stock hits bottom
Tilray shares hit a 52-week low of 1.56 on June 9th.
Shares plummeted more than 21% on May 26 after the company announced it will offer $150 million in senior convertible notes to help pay down debt.
TLRY is trading well below its 50-day moving average as the stock continues its downtrend. His fall was spectacular. Tilray went public in July 2018 at 17 per share and peaked at exactly 300 in September 2018. Now it's at penny stock levels.
Tilray stock is down over 37% so far this year, but it's fared better than its peers canopy growth (CGC) and worse than Kronos (CRON), which plunged 68% and 31%, respectively.
New products in honor of the 420 celebration
Tilray announced that its top-selling Canadian cannabis brand, Good Supply, is launching a range of new products — including pre-rolls, flower, and vapes — for the unofficial cannabis holiday on April 20 in select provinces across Canada.
Products included names like Rocket Bomb 510 Vape Cartridge, Lava Fuel Whole Flower, and Grandpa's Stash Pre-Rolls and Whole Flower.
Other products launching this summer include the Frozen Watermelon 510 vape cartridge and Monkey Butter 14 x 0.5g pre-rolls.
CBD tea on tap, Montauk craft beers on the way to the races
Tilray cannabis wellness brand Solei on May 11 introduced its new teas, infused with microdoses of CBD, CBN, and THC formulas.
Tilray Brands subsidiary Montauk Brewing Company announced a partnership with Belmont Park and Saratoga Race Course to offer Montauk beers for the 2023 racing season.
Montauk Brewing also sponsored Toast, a craft beer festival featuring 15 New York City craft breweries that took place June 10.
The New York Mets' Citi Field announced April 25 that it has opened two new bars under the Montauk Brewing brand to sell its craft beer.
Tilray subsidiary SweetWater Brewing Company launched its summertime SweetWater Spirits vodka cocktails in a can on May 30. SweetWater also launched summer beers.
Profit: Loss is expected to be smaller
Tilray reported an adjusted loss of 4 cents per share in its third-quarter earnings release on April 10. Revenue declined 4% compared to the year-ago quarter, a slight improvement from declines of 7% and 9% in the previous two quarters.
The company also announced on April 10 that it would acquire hexo (HEXO) for $56 million through the issuance of TLRY common stock. The deal is expected to close in June.
“We are incredibly excited about HEXO's joint future prospects and look forward to seamless integration of the HEXO business into our efficient, long-lived platform,” said Irwin D. Simon, chairman and CEO of Tilray Brands.
Tilray maintained its top spot in the Canadian cannabis market. Management reiterated the expectation of generating positive free cash flow from the operating segments in fiscal 2023.
Analysts are forecasting a loss of 37 cents a share for the 2023 fiscal year ended May, a significant improvement from the loss of $1.10 a share in fiscal 2022. In addition, the forecast for fiscal 2024 is a smaller loss of 16 cents a share share before.
Some states are getting in, others are slow to get going
Connecticut's adult marijuana stores opened their doors for recreational and medical use for the first time on January 10th. Shops are open to adults over the age of 21.
Hundreds waited in line when New York City opened its first recreational dispensary at 4:20 p.m. on December 30
Kentucky Senate President Robert Stivers has hinted that he may be willing to approve limited use of medical marijuana for patients at the end of their lives, but remains skeptical about its effectiveness.
Missouri passed legislation legalizing recreational cannabis after the Nov. 8 vote. For the first time, marijuana companies will be able to deduct business expenses on their Missouri state tax returns, benefiting start-up cannabis companies.
Virginia has also passed legalization, but isn't expected to have pharmacies until 2024.
Tilray's Chief Strategy Officer and Head of International Business Denise Faltischek sees favorable cannabis regulation in Europe, but not before 2024.
Tilray is adding another brewery while awaiting federal legalization
As the company doesn't anticipate federal legalization of cannabis in the U.S. anytime soon, it's expanding its presence in the alcoholic beverages space to seek further growth.
With its recent acquisition of New York-based Montauk Brewing on November 7, 2022, Tilray has expanded its collection of small craft breweries. Montauk specializes in real ales and seltzer sold at Goal (TGT), Whole Foods, Trader Joe's, Walmart (WMT), Costco (COST) and other shops.
Fundamental analysis of TLRY stock
Earnings growth is a cornerstone of top stocks. But TLRY stock's EPS rating is around 51 out of 99. Other Canadian marijuana stocks have medium to weak earnings ratings as they continue to lose money.
Tilray's composite rating is a dismal 6, according to MarketSmith analysis. According to research from IBD, investors should focus on stocks with a composite rating of 90 or higher.
The company's SMR rating – which measures sales, margins and return on equity – is a sub-par E.
Is TLRY stock a Buy?
TLRY stock is not in a base or buy range therefore TLRY stock is not a Buy at this time.
Also, keep an eye out for any improvement in Tilray's fundamentals, including a return to profitability.
IBD advises investors to focus on stocks with stronger fundamentals that are in buy zones. Shares are trading under 2 per share. Institutional investors tend to avoid low-priced stocks.
Follow Kimberley Koenig on Twitter for more stock news @IBD_KKoenig.
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