Aleafia Becomes First Cannabis Stock to Top TSX Venture 50 Performance Rankings
February 25th, 2019
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The TSX Venture exchange has become a popular place for cannabis companies to list their shares, particularly after Canada legalized recreational cannabis last year, but 2019 was the first year that a cannabis company topped its annual performance rankings.
Aleafia Health Inc. (TSX-V: ALEF) (OTCQX: ALEAF) (FRA: ARAH), a vertically-integrated licensed producer with a clinic network and over 50,000 patients, was named as the 2019 TSX Venture 50 top performing company of the year. The TMX Group’s annual performance awards are based on three equally weight criteria, including market capitalization growth, share price appreciation and trading volume.
The award demonstrates the company’s increasing popularity in the space. Over the past 52 weeks, the company’s stock price rose from a low of $0.47 to a high of $4.70 before settling at its current levels of around $2.37, making it a popular stock for active traders interested in the cannabis industry. As such, daily trading volume averaged roughly 1.42 million shares over the past three months, providing significant liquidity for investors.
Research Proves a Strong Catalyst
Aleafia Health’s stock reached all-time highs back in late-September when it partnered with Cronos Group Inc. (NASDAQ: CRON) to study the effects of medical cannabis on insomnia and daytime sleepiness. Under the terms of the deal, Cronos Group would provide funding for the study, which would be conducted by doctors at Aleafia’s health clinics. The company also formally launched Aleafia Labs to focus on these research projects.
The company’s stock also moved sharply higher when it announced positive results from its benzodiazepine study. After conducting a study with 146 patients, the company reported that 45.2 percent of patients stopped consuming benzodiazepines—as a sedative or anti-anxiety medication—following a medical cannabis prescription. The patients further reported decreased daily distress due to their medical condition.
These research projects leverage the company’s wholly-owned network of more than 20 Canabo Medical Clinics with over 50,000 patients. With the largest medical cannabis dataset in the world, the company enables researchers to validate cannabis science, product teams to innovate, and management to build a strong portfolio of intellectual property. The division had already generated $612,000 in revenue by the third quarter of 2018.
Appealing to Both Traders & Investors
Many cannabis stocks appeal to active traders that look for important catalysts and price movements, but only a fraction of these companies are also attractive on a fundamental basis to long-term investors. Aleafia Health is an existing licensed producer with an experienced management team, 98,000 kilograms per year of production capacity expected this year, and a network of medical cannabis clinics with over 50,000 patients.
The company already generates tangible revenue from its medical cannabis clinics, research activities and supply agreement with CannTrust Holdings Inc. (TSX: TRST). After merging with Emblem Corp., the company has amassed a significant production footprint that it’s expanding further through strategic investments around the world. At the same time, its massive cannabis dataset provides an invaluable competitive advantage.
Currently, the company trades with a market capitalization of about $375 million, which is lower than many other licensed producers. As the company scales up production and research activity, investors may become increasingly interested in the growing revenue and cash flow. The R&D activity could also pave the way towards valuable revenue streams from licensing, which may help boost revenue and margins over the long-term.
Aleafia Health Inc. (TSX-V: ALEF) (OTCQX: ALEAF) (FRA: ARAH) represents a compelling opportunity within the nascent cannabis industry. In addition to having a very active stock, the company’s business has been rapidly expanding from both a production and research standpoint. Investors may want to keep an eye on the stock as it continues to focus on growing its operations and announcing new research.
For more information, visit the company’s website at www.aleafiahealth.com.
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