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Althea Group Holdings Has Tripled Over The Past Year

Stuart Lucy

Stuart Lucy is an Investment Specialist at the Australian Stock Report, and has gained exposure to funds management and investment banking throughout his career. He draws on this experience to provide macroeconomic commentary and actionable investment insights to clients. Stuart is responsible for writing reports, is involved in delivering Macrovue webinars and provides general advice to our members on portfolio construction. Stuart currently holds RG146 General and Securities qualifications.

Althea Group (ASX: AGH) recently released an investor presentation to the market, saying that they have now registered 1925 patients. This represents 25.6% growth on the previous month and represents an incredible annualised growth rate of 1,437%. This growth failed to move the share price however, since Althea is growing roughly in line with previous growth levels. Growth is accelerating for sales of Althea’s SAS product, with new approvals set to pass 3,000 in September.

Althea Group Holdings-1

Althea Group has tripled over the past year, as investors warm to the cannabis space (Credit: Share Café)

Althea is an ASX listed cannabis company which sources and supplies medicinal cannabis around the world. It is one of only a handful of companies that has been licenced to provide medicinal cannabis in Australia. The business only reached a thousand patients in Australia this year and has started treating patients in the UK. Both these markets present huge room for growth, and the company will grow as their product becomes more trusted by doctors through word of mouth referrals.

The company is planning to obtain licenses in the US and Europe, a move that would grow their addressable market and could cause the share price to re-rate. The main danger for the company however is increased competition. Medicinal cannabis can be used for a number of different applications, but the industry has a history of innovation being copied, when other companies take the initial idea and use a different approach that they file a separate patent for to get the same results. As such, investors should carefully consider whether medicinal marijuana companies should be priced as pharmaceutical stocks, as management teams would prefer, or low margin, cyclical agriculture businesses.

If you are willing to look internationally however, the more mature cannabis markets in the US and Canada offer more established companies to invest in. Canopy Growth is the largest cannabis stock by market cap, trades on the NYSE and is worth $13.5bn. The business is a medical market leader in spectrum therapeutics and has operations across 12 countries around the world. The company operates across both medical therapies and consumer products that are designed for recreational use. Recreational marijuana has significant upside because there are so few jurisdictions where it has been legalised. Mass legalisation can help the company grow more rapidly than businesses that only sell medicinal marijuana, especially given its existing dominance in the recreational products space and brand recognition.

 


 

Disclaimer:

This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law, we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

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