Should you stick around with this pot stock – AusCann (ASX: AC8)?

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Australian Economy

When discussing about cannabis, many ASX listed pot stocks come into picture. One such stock that has done well in the past is AusCann Group Holdings Limited (ASX: AC8). AusCann Group is into manufacturing and cultivation, supply of medical cannabis products. The Company focuses on investigating opportunities in the medical cannabis sector, including acquisition or investment in other international plant breeders, producers and suppliers. They believe Australian patients have the right to access high quality, cost effective, cannabinoid medicines.

In an attempt to achieve this and to enhance the reach in market, AusCann snapped up an agreement with Australian Pharmaceutical Industries Limited (ASX:API). API is a well-known wholesaler of pharmaceutical products in Australia, and will help AC8 to enhance the distribution setup. Further, AusCann has a tie up with Tasmanian Alkaloids, and both the groups have been working on processes to produce final dosage form of cannabinoid pharmaceuticals that can be distributed into the domestic and international markets. AusCann is thus trying to scale up its existing medical liaison team with more emphasis on the educational programs being targeted for the doctors in cannabinoid medicine. The group’s joint venture in Chile has been on track with few harvesting updates.

Lately, AC8 bagged a research and development agreement with Canadian Group Jade Cannabis, which will help in the development and optimisation of the AusCann cannabis cultivation system. This news has come after the recent update from AC8 on completion of second harvest in Chile. Thus, the group is expediting its operations in all key jurisdictions.

AusCann (ASX: AC8) traded at a market price of $1.250 as at June 27, 2018 but was seen to be moving down by 3% on June 28, 2018 during early trading hours. It has seen a performance change of a staggering 236.84% over the past 12 months. The stock price changed from $0.360 as at June 26, 2017 to $1.280 as at June 26, 2018. The 52 weeks low for the stock has been $0.360 and 52 weeks high for the stock is $1.860. The company has an Earnings per share of -0.009 AUD. However, despite the boost in the cannabis sector with Canada moving an inch up on legalization of use of small amounts of cannabis for recreational purposes by adults and US FDA approving the first cannabis based drug, AC8 has fallen about 20.99% in last three months, as at June 27, 2018. This has been owing to the speculative future of cannabis. Along with AC8, many other pot stocks have also taken a back footing recently. Amidst this, AusCann was seen to surge up to more than 14 per cent to reach $1.23 after a big drop in the share price and large trading volumes when the news of the latest partnership broke.

For its Tasmanian facility, Canadian developed, state of the art, Argus Controls systems and Conviron cannabis are put in place to grow rooms. To support the cultivation operation, AusCann is developing a suite of proprietary advanced analytics. These analytics will be refined and deployed as part of the research engagement with Jade Cannabis. With expansion plans in Canada and Australia, and boost from the legalization of recreational cannabis in Canada, AC8 remains a stock to stick to at the current price of $ 1.235. While many pot stocks have emerged lately and are yet to report profits, the key to success would be resilient fundamentals and partnerships with a support from capabilities to explore global export opportunities. Looking at this, AusCann is one stock striving to achieve better performance despite the volatility in the sector.


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