Is Aurora Stock Under $ 1 Finally A Purchase?

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<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The cannabis sector seemed to be ready to come back to life To start in 2020. But long before the coronavirus started to conquer the world, Aurora cannabis (NYSE:ACB) and his colleagues felt the selling pressure. Aurora stock is now trading for less than a dollar, causing investors to wonder what’s next. “Data-reactid =” 12 “> The cannabis sector seemed ready to come back to life in early 2020. But long before the coronavirus started sweeping the world, Aurora cannabis (NYSE:ACB) and his colleagues felt the selling pressure. Aurora stock is now trading for less than a dollar, so investors are wondering what’s next.

Is Aurora Stock Under $ 1 Finally A Purchase?

Is Aurora Stock Under $ 1 Finally A Purchase?

Source: Shutterstock

I have not been a fan of Aurora shares for some time. After the summer support failed, there was no reason to keep this name long. I didn’t like it in August or December and wasn’t surprised when it hit new lows in February.

The main problem facing Aurora is similar to many of its colleagues: it does not have enough fundamental data to support its assessment. If financial data is not the catalyst, a stock needs strong technical data for the bulls to stand a chance. But once support waned, ACB did nothing more than move deeper.

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Despite all of this, I don’t want to stay fixed on one position. That said, if the situation justifies switching from bearish to bullish, I will. Has the Aurora share earned this name? Let’s take a closer look.

Rating from Aurora Stock

If you remember February, Aurora gave investors a lot to chew on. The CEO resigned and the company made significant impairments and write-downs. Aurora also announced preliminary second quarter results that were well below Street’s expectations.

In addition, the company said, “We believe that Aurora’s long-term opportunities continue to be very convincing despite slower than expected short-term growth in the industry.”

That was before COVID-19 became the center of the world. However, it is not clear what effect the coronavirus has on the cannabis room. To a certain extent, it can actually help. Panic has increased alcohol sales and at least one analyst has found cannabis sales to be stable.

While most consumers were fine in mid-March, millions have been unemployed for a few weeks. The longer it takes them to work again, the worse the economic impact will be. Not so long ago, New York was a great potential catalyst for cannabis. Given that COVID-19 is devastating the state, the governor says it is clear that legalizing marijuana is on the backbone.

Aurora stock was $ 156 million in cash in the last quarter. Current assets of $ 629.8 million slightly outweighed current liabilities of $ 213.9 million. However, this working capital was $ 45 million in restricted cash and over $ 200 million in inventory.

In addition, ACB is not a positive or profitable free cash flow. The last quarter saw a sequential decline in sales and almost unchanged growth compared to the previous year. The forecasts for the current quarter have assessed the sequential growth flat to negative. In short, the finances don’t make me very excited.

<p class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "ACB shares trading“data-reactid =” 40 “>ACB shares trading

A look at the technical data shows a slightly improved situation, but not much. As you can see from the one-year daily chart, Aurora stock has tended to be lower since support collapsed near USD 7 in July.

ACB share chartACB share chart

<p class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "
Click to enlarge
Source: Diagram courtesy of StockCharts.com “data-reactid =” 54 “>
Click to enlarge
Source: Diagram courtesy of StockCharts.com

Purple arrows on the chart mark this level, which changes from support to resistance in August. Since then, a series of lower lows and lower highs followed before the stocks fell completely in March.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "ACB hit a low of 60 cents before moving on to higher bounced off Canopy growth (NYSE:CGC), Tilray (NASDAQ:TLRY), Cronos Group (NASDAQ:CRON) and others from the room. For the Aurora share, this rally was $ 1.13 before the shares fell below $ 1 again. “Data-reactid =” 56 “> ACB bottomed out at 60 cents before recovering Canopy growth (NYSE:CGC), Tilray (NASDAQ:TLRY), Cronos Group (NASDAQ:CRON) and others from the room. For the Aurora share, this rally was $ 1.13 before the shares fell below $ 1 again.

So what now?

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Over time, the shares have taken an extreme step down , may turn out to be low, but at this point we don’t know for sure. From here the cops need to see Aurora use one higher low. You also need to see the stock break out of this terrible downtrend. If it can do both – break the downtrend and start a higher trend – the Aurora share could have a place as a speculative stake in its own portfolio. “Data-reactid =” 62 “> The stocks have moved extremely downward over time have turned out to be low, but at this point we don’t know for sure. From here the cops have to see how Aurora uses one higher low. You also need to see the stock break out of this terrible downtrend. If it can do both – break the downtrend and start a higher trend – the Aurora share could have a place as a speculative stake in its own portfolio.

Unfortunately we are not there yet and since the financial data are not attractive enough in themselves, Aurora is a passport for me overall. I wouldn’t be short at this point, but I wouldn’t be long either. Instead, use the market decline as an opportunity to buy high-quality stocks at a discount.

<p class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. At the time of this writing, Bret Kenwell had no position in any of the above securities.“data-reactid =” 64 “>Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. At the time of this writing, Bret Kenwell had no position in any of the above securities.

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