Bullish Flag or Descending Triangle?Since the parabolic price movement to the upside which occurred after the stock split ACB has since consolidated into a bullish flag or a descending triangle.
ACB trade ideas
Inverse Head & Shoulders breakout for ACB?ACB has been on a nice bullish uptrend since the 12 for 1 stock split, that was a great move on their behalf, however, it is interesting to see them buy a U.S asset & issue shares immediately after lol.
An inverse head and shoulders is similar to the standard head and shoulders pattern, but inverted: with the head and shoulders top used to predict reversals in downtrends
An inverse head and shoulders pattern, upon completion, signals a bull market
Investors typically enter into a long position when the price rises above the resistance of the neckline.
Aurora = $0.01I remember at the very beginning of legalization after Trudeau got elected, I thought this company had potential. I examined them closely but decided to sell them at $0.42 because I did not like their management. Sure enough, shortly after the stock rose to 1.00 then 2.00 and so forth. I had already moved onto Canopy, Organigram, and Aphria. And I will say this, not a single day has gone by that I have ever felt the slightest amount of remorse for selling Aurora. Their management pump and dumped scheme inflated their stock on expansion plans that were way too big and unsustainable. The expansion came at extreme dilution to a company that had no proven record. The company should have gone bust as soon as they tried to do this but they opportunistically rode the hype wave of legalization, and worse yet, were able to reward themselves millions. As I realized years ago, their management was parasitic. If it was up to me, they should go to jail for profiteering, but anyone foolish enough to not practice due diligence also deserves to lose their money. I am sorry to say but this company will go bankrupt because it has no backbone. Their facilities will be bought by one of the few remaining players in the MJ space for pennies on the dollar, which brings me to the company's ultimate share price target - one cent. I am not trying to fear monger, I am not even shorting it, I am just cautioning NEW investors to stay away or else lose all your money.
You have been warned.
Value Investment - ACB - Defensive Stock All comments and likes are very appreciated.
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Fair Value and Profit Drivers |
Our fair value estimate for Aurora is $6 per share, assuming a 1.33 CAD to U.S. dollar exchange rate as of Feb. 13 and based on a DCF with a 10-year explicit forecast.
We forecast Canadian medical volume to decline about 3% per year on average from fiscal year 2020 to 2029 as consumers shift to the recently legalized recreational market. We forecast recreational volume to rise about 15% per year on average as distribution expands, consumers convert from the black market, and non-consumers become consumers. We forecast prices will grow about 2% per year on average as capacity will rise adequately to meet demand.
We forecast about 18% average annual volume growth for Aurora’s international medical business amid wider legalization and distribution. Our volume forecast is muted by the emergence of cheaper suppliers in lower cost labor countries; however, Aurora’s production expansion into some of these countries helps protect its share. We forecast prices will rise roughly 3.5% per year on average, as it will take time before lower cost producers can effectively compete.
We expect the company’s operating margin excluding mark-to-market plant items will become positive by fiscal 2022. By 2029, we expect that margin to reach about 35%, due to the full-ramp up of production and fixed cost leverage against overhead expenses.
We forecast Aurora to reach positive free cash flow generation in 2023, as capital expenditures remain high in the near-term to fund capacity expansion. On average, we forecast capital expenditures 23% of sales through our 10-year forecast period and falling to about 8% by 2029, as we think Aurora has frontloaded capacity expansion through investments and acquisition. This will allow capital expenditures to fall rapidly while still allowing Aurora to meet demand growth.
We assume a cost of equity of 7.5%, reflecting the low cyclicality of revenue, our forecast 35% operating margin, and low operating and financial leverage.
Risk and Uncertainty |
As a cannabis producer, Aurora faces numerous risks, largely around regulation. However, it faces additional investing risk relative to its Canadian peers.
The most important risk is the pace and status of legalization, which determines when and where cannabis can be legally sold. Aurora’s home market of Canada has already legalized recreational cannabis, so U.S. legalization remains uncertain.
Aurora does not operate in the U.S. and is focusing on the Canadian and international markets instead. As such, the impact is minimal. However, peers with better U.S. exposure have more potential upside as a result. Current laws make it virtually impossible to operate a cannabis company in both the U.S. and Canada, excluding hemp-derived CBD. Although there is growing public support for legalization, it is politically divisive, with most Republican support coming only in the form of state’s rights. This poses a risk for federal legalization and adoption of recreational cannabis.
Regulation around supply is also a risk. Businesses must be licensed by governments to operate cultivation and dispensaries, with licenses specifying production levels. However, governments have at times expanded too slowly or too quickly.
Another risk is the black market. Years of government efforts have done little to stem illegal cannabis, but a change to the ease of accessing black market supply could impact pricing power and thus profitability.
In addition to operational risks, Aurora also faces significant financial risk. The company has yet to generate positive free cash flow. Unlike its peers that have funding backstops through their deep-pocketed strategic investors, Aurora has higher dependence on capital markets. There is material risk that Aurora would need to issue incredibly dilutive equity to fund itself amid ongoing cash burn. For example, Aurora had to offer dilutive terms to satisfy convertible notes holders and issue stock at low prices through its at-the-market equity issuance program.
I and/or others I advise hold a material investment in the issuer's securities.
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All comments and likes are very appreciated.
Best Regards,
I0_USD_of_Warren_Buffet
ACB goldgreenboiWork out where you want to buy and sell based on the info provided on the chart, make your own financial decisions . This is the treasure map . No X marks the spot however.
Hint:
Horizontal Lines are strong levels and solid targets.
Trend Lines are not as reliable or as solid as Horizontal Lines.
ACB Financials are growing exponentially, their sales and timing are impeccable with the markets.
Canada legalised Cannabis on 17th October 2018.
B uy the R umour, S ell the N ews.
1 May 2019 - Canada would introduce excise tax on all products containing THC, and introduce three new product classes for recreational sale: cannabis edibles, cannabis extracts, and cannabis topicals.
NYSE:ACB
TSX:ACB
FWB:21P
Potential Relief Rally to $8-9 upcoming? Price action in the MJ Sector are known for their extremely quick movements and the euphoria is short lived as retail traders take their profits. A quick and massive short squeeze plus hype from overall market sentiment is what it will take for this movement (Since much of the traders of ACB are retail traders). Historically it has done exactly just that.
Waiting to see if the next 2W candle (Ending January 31, 2020) creates a higher high above $3.02 and closes above $2.92 with strong volume. A close above 2.92 will form a bullish hammer on ACB's monthly chart, further solidifying this trend change.
Note: Historical price action between $4-5 moves quickly as there is little support/resistance developed in this zone. Strong buying pressure that lasts until $4 will leave many shorts who entered from mid November to now in the red, which may potentially cause a short squeeze into the neckline of the monthly Head and Shoulders (Around $6). A short squeeze that causes an artificial increase in price will further drive in retail investors to buy more from this hype, and perhaps lead to another short lived Bull Market as we have seen occurred thrice before.
What goes up, must (possibly) go downACB has had a tough time lately along with the entire cannabis sector, but things are looking good going into 2020. ACB has just hit a critical support level and has shown a slight bullish trend. The previous drastic price movements were largely due to hype as the company was still stabilizing, but now they've been in the game for a while and are ready to make some money. Big things coming in 2020.
Bear Stampede to the bottom until the Christmas week. Just another pointless prediction, but I am often close to reality. Just experience, or perhaps logical thinking.
I took a beating this season. I gave back anything I made in the spring. Why, because I am human, and my bias' clouded my normal logical thinking. I too fell into that death trap. I got out months ago, and bought real estate. I negotiated very well and pretty much made back my losses in that deal. Well I guess that remains to be seen when and if I resell.
As for the markets, its still a hold. I expect to see a similar year-end pull back, mini-crash until Christmas week. Investors step in after Christmas pushing markets up until Spring.
The key point is, you should be in cash right now, or other investments, hopefully, ETF's. If you are buying and holding anything in the POT sector, all I can say is, ouch! I bet you won't do that again. Following the bear stampede over a cliff has never been a good strategy.
In my opinion investing with your bias is a sure way to lose money. Invest with the trend, the path of least resistance, and is a much much better method. Read all you can find about trend trading. I have a great reading list on www.wealthandgrowth.com to get you started.
-Randal
Is the bounce completed? Are bulls ready to overpower bears?Well, watching the shorter 1m, 5m and 15 min charts, I need to take profits off the table back to neutral until the bulls really show up. Bounce players would not be overly convinced here until new short term resistance at 3.03 and $3.07-$3.08 is broken. We have short term support at $2.82. I fear that on any sector or market weakness, the bears will pie drive this down to the low $2s based on the two Bear Flags and Pennant seen this week.
Getting ready for another oversold bounce from ACB $2.80s CDNShort sellers are creating wonderful bounces on this name. Short term Bearish Flag was issued yesterday with target high $1.90-2.20 adding to the selling pressure with stop loss triggers at $3 is sending this down to retest the 52 week lows of $2.82 CDN. Oversold on the 1 hour timeframe and these generally creates a nice bounce. Grab your profits again short term on this name (one hour overbought is a good time to exit to reload cheaper). Going back long on this name myself sub $3s to short term sell above $3. Short sellers getting extended and overexposed to a short squeeze. Currently, the bears rules ACB but are getting exhausted. Volume yesterday Dec 17th was one of the highest at 2019-12-17 Short volume: 14,847,715 Total volume: 44,794,500 33.15% which means 1/3 of the trading was short. Short are assured buyers and likely have a short stop loss just above $3 CDN.
