OrganiGram Holdings (NASDAQ:OGI) begun the year on the high with its stock jumping over 30% at the back of the release of its fiscal first-quarter earnings on January 14. However, the fanfare has cooled, and the shares have dipped by around 6% year to date.
Betting on the growth of retail stores
The company is nevertheless poised to benefit from various tailwinds in the industry, such as the additional rollout of retail stores in Ontario as well as the potential opportunities the derivative market presents. OrgniGram is one of the few marijuana companies with supply agreements in all provinces. Similarly, its production facility located in Moncton, New Brunswick, is likely to attain a peak production capacity of around 113, 000 kg per year.
Nevertheless, that is not particularly impressive when you compare to competitors such as Canopy Growth Corp (NYSE: CGC), which has a capacity of 550,000 per year. However, the company’s projected production capacity is among the highest in Canada. Considering OrganiGram’s market position, it is likely to benefit more from the growing retail environment.
During the release of Q1 results, OrganiGram CEO Greg Engel indicated that the growing expansion of retail stores presents a massive opportunity for the sector and the company. He added that spending of Canadians in legal cannabis is growing, which shows massive potential.
Cannabis derivatives present a massive opportunity
Also, the cannabis derivatives market represents a significant opportunity of the company which shipped its first batch of derivatives products in December last year. The company shipped the vaping products, including Flicker, Trailblazer Spark, and Glow 510-thread Torch to various provinces such as Nova Scotia and Ontario.
Engel indicated that the derivatives products had received an exceptional market response. In the second quarter, the company is targeting a rollout of additional derivative products to the market that include dissolvable powder products that contain CBD that can be added to drinks and infused chocolate.
The company could be a major player in the derivatives segment, but investors will be keen on how the segment impacts financial results when the company releases Q2 earnings. Sign-up below for continuing coverage on shares of $OGI stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!