Bulls And Bud Of The Week: Margins Matter And 'Hot Boxin' With Mike Tyson'

Welcome to the second installment of “Bulls and Bud,” where we take a look at some of the most promising stocks and brands in the legal cannabis industry.

Margins Matter

Aurora Cannabis ACB and Canopy Growth Corp CGC were the biggest cannabis players to announce earnings last week, and both showed solid revenue growth.

Aurora pulled in net revenue of $40.9 million, representing a 363-percent increase from one year prior, and Canopy pulled in $73.9 million, representing a 283-percent increase from one year prior.

Investors seem to have been pleased with those numbers, but there’s a certain truism that shouldn’t be trivialized: Margins matter. And no matter how you slice it, both companies are coming face to face with the reality of shrinking margins. Now I’m not suggesting either company is going to take a major nosedive anytime soon, nor do I think either company is currently at risk of imploding. But the question investors must now ask themselves— are current valuations valid giving these shrinking margins?

The truth is, in order for Canopy and Aurora to continue crushing it, they’re going to have to sell a lot more weed, and do so while ensuring the average selling price per gram doesn't fall any further in the near term, which is what both encountered last quarter.

There’s no doubt both will continue to expand their operations, but if these aggressive expansion strategies continue – which one could argue is paramount to securing dominance – they need to get these margins in check. I’m confident they will, but how long this will take is still anyone’s guess.

The Supreme Earnings You Might Have Missed

Now while much of the earnings focus last week was on Canopy and Aurora, a much smaller Canadian player, Supreme Cannabis SPRWF, also announced solid earnings boasting not only a 359-percent increase in revenues, but also improved margins. Supreme also made some big inroads last quarter.

Worth noting…

• The company’s 7 Acres facility was approved for additional production capacity;
• It landed a very lucrative deal to develop a premium cannabis brand with Wiz Khalifa, one of the most successful rappers in the world; and
• It started trading on the TSX, which is certainly going to allow it to put more asses in the seats.

Although Supreme doesn’t come close to the swagger of the big dogs in the space, its latest quarter shouldn’t go unnoticed by investors. If Supreme can continue this momentum, it could easily end the year over $3.00 a share.

'Hot Boxin’ With Mike Tyson'

We’ve all had this conversation… With whom would you most like to get high?

For me, the list is long, and seems to change with the seasons. There are the obvious choices, such as Snoop and Willie Nelson.

There are former pot smoking presidents who I suspect would be fun to share a joint with, such as Bill Clinton and George W. Bush.

I sometimes think I’d like to get high with Rihanna, but then quickly realized that I’d be so smitten, and have such tremendous feelings of inadequacy, I’d probably just end up giving her all my weed the second she smiled at me.

Over the decades, I’ve imagined sharing this wonderful plant with hundreds of different people, but there’s one person that will always have top spot on this list: Mike Tyson.

Iron Mike’s life seems like something dreamed up by an accomplished screenwriter, and found in the pages of an extravagant movie script. But there’s nothing fictional about the champ’s life story. Truth is, I find him to be one of the most fascinating people on the planet.

Of course, I’m also a huge fight fan, and having spent my teenage years watching Tyson demolish every fighter who stood before him, like a wrecking ball descending upon a house of cards, I would be lying if I said this warrior of epic proportions wasn’t someone with whom I’d be honored to smoke with.

So as you can imagine, when I first learned of Tyson’s new podcast, "Hot Boxin’ with Mike Tyson," I was floored. Because while I may never have the honor of sharing a joint with one of the greatest heavyweights of all time, I can live vicariously through those who do, and record it for my viewing pleasure.

A Cannabis Podcast That Stands Out

Now there are plenty of cannabis-focused podcasts out there, and some of them are quite good. But "Hot Boxin’ with Mike Tyson" stands out because in this podcast you almost feel like you’re in the room with Mike and his guests. They wax poetic about the healing benefits of cannabis while not taking themselves too seriously. I would actually argue some of these conversations are somewhat intimate, and a bit inspiring for folks like myself who admire Mike, as well as some of his guests, including Tito Ortiz, Danny Trejo and DJ Pooh.

Tyson’s co-host, former NFL offensive tackle Eben Britton, is also on point as the sort of ringmaster in this circus of knowledge, joy and entertainment.

Although it's clear "Hot Boxin’ with Mike Tyson" is a cannabis-themed podcast, it’s actually much more. It’s a glimpse into a world that is foreign to most people, but offered in a way that makes you feel like more of a participant in the conversations, and less like just a random viewer.

Either way, as the cannabis market continues to evolve and grow, it’s nice to see a cannabis-themed podcast also offer a more evolved form of cannabis-themed entertainment.

You can binge watch all 16 episodes here.

Jeff Siegel is the co-founder and managing editor of Green Chip Stocks, a private investment community focused on socially-responsible investing. He is an expert in renewable energy and cannabis investing, has been a featured guest on Fox, CNBC and Bloomberg Asia, and is the author of the best-selling book, "Investing in Renewable Energy: Making Money on Green Chip Stocks."

Photo by Javier Hasse.