This Is The Latest Marijuana Stock To Skyrocket

Pyxus International Inc PYX ripped more than 27 percent Monday. Cannabis stocks have been on fire in recent months ahead of the upcoming legalization of recreational marijuana in Canada, and Pyxus may be well-positioned in the Canadian market.

Pyxus And Cannabis

Pyxus operates in several markets, including tobacco, legal Canadian cannabis, industrial hemp and e-liquid. The company is one of only two public, independent leaf tobacco merchants in the world.

Earlier this year, Pyxus announced it would be branching out into the marijuana business by investing in Canada’s Island Garden and Goldleaf Pharm. On Oct. 2, Pyxus announced subsidiary GoldLeaf Pharm acquired a Canadian medical marijuana cultivation license. Canada’s Island Garden has previously received approval for the sale of medicinal cannabis oils as well.

Citron’s Take

Given the red-hot trading action in cannabis stocks in 2018, investors are right to be skeptical of marijuana stocks. A company like Pyxus, which only recently invested in its marijuana subsidiaries and even changed its name from Alliance One, might typically raise red flags for investors, but Citron's Andrew Left said the addition of Bryan Mazur gives the Pyxus team major credibility.

Mazur previously spent six years as a Vice President at Keurig Dr Pepper KDP. Citron said the addition of Mazur combined with market enthusiasm for cannabis stocks and Pyxus’ relatively small float of just 8.3 million shares is the perfect recipe for the type of explosive moves like the stock is experiencing on Monday.

Major Growth Potential

In a recent press release, Pyxus said both of its Canadian subsidiaries are in position to begin producing cannabis for recreational immediately following legalization on Oct. 17. Pyxus has a 75-percent ownership stake in Canada’s Island Garden and an 80-percent stake in GolgLeaf Pharm. Canada’s Island Garden currently has 20,000 sq. ft. of indoor growing capacity with plans to expand into a 250,000 sq. ft. greenhouse. GoldLeaf is in the process of completing a 20,000 sq. ft. indoor growing facility in Ontario, and Pyxus expects the two companies to have a combined 1 million sq. ft. of capacity within the next three years.

Pyxus certainly seems to have some impressive growth potential ahead, but longer-term investors should be cautious in cannabis stocks after many of them experienced major gains ahead of the October Canada legalization. Pyxus is now up 177.4 percent year-to-date.

The stock traded around $35.26 at time of publication.

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