Tilray Stock Is a Buy as It Blazes Higher on Today’s Earnings

Stocks to buy

Tilray’s (NASDAQ:TLRY) latest quarterly earnings beat estimates. The company also reported an unexpected profit, which fueled a 2.1% increase in Tilray stock today as premarket trade began.

In addition, Tilray is entering interesting new markets with their agreements, and their upcoming products should do wonders for their growth. Tilray has made a deal with Whole Foods, which will now sell its hemp powders to customers. This product will be created by Tilray’s subsidiary Manitoba Harvest.

Tilray’s adjusted earnings of nine cents a share beat the year-ago figure by a large margin, showing improved performance this year. Net revenue increased by 23% in the third quarter from the prior-year quarter. The increase in overall revenue was attributable to both cannabis and beverage alcohol sales.

Gross profit increased by 31% from the prior-year quarter, and gross margin increased to 26% versus 25%.

International cannabis revenue rose an astounding 4,000% over the year-ago period. At the same time, the company has maintained its share in the Canadian market at 10.2%.

CEO Irwin Simon said the company remained on track to generate over $4 billion in revenue by 2024.

These two pieces of news capped a great few weeks for the cannabis sector. Last week, House legislators passed a bill that takes marijuana off controlled substances. Even if it is unlikely to survive the Senate, it was still a huge development and major win for the industry.

In the last year, TLRY stock has fallen 62.56%. Therefore, you can make a case to treat the stock as a value play after such a steep correction.

Plus, there are other positives to consider:

  • Tilray merged with Aphria in 2021, creating the world’s largest cannabis company and making it a great candidate to take advantage of the current tailwinds benefitting the cannabis space.
  • The global cannabis market will be worth over $33 billion by 2025.
  • Weed stocks could benefit substantially from the legalization of marijuana in the U.S. Besides; investment firms are also increasing their spending on marijuana research and development, leading to better products; Tilray is no exception.

Still, it’s also important to consider the bear thesis. As InvestorPlace’s Stavros Georgiadis points out, it needs to stitch together several quarters of positive performance for investors to believe it is capable of sustainable results. In addition, shareholders have suffered through massive dilution as the company looked to drum up cash for operations and acquisitions.

However, the company has shown positive signs in the past two quarters. From a valuation perspective, it is compelling to invest in the company at this stage. Tilray stock is a cautious buy with many catalysts and an industry-leading position.

On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.

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