HEXO (NYSEMKT:HEXO) (TSX:HEXO) is thrice larger than MedMen Enterprises (NASDAQOTH:MMNFF). Its inventory is up huge thus far in 2019 whereas MedMen’s shares are down yr so far. And HEXO is extra seen to U.S. buyers with its inventory listed on the NYSE American inventory alternate, whereas MedMen is on the market solely over-the-counter within the U.S.
In relation to the longer term prospects for every of those shares, all of this implies… little or no. This is what’s actually necessary in deciding whether or not HEXO or MedMen is the higher marijuana inventory.
The case for HEXO
Based mostly on common buying and selling quantity, HEXO ranks because the No. four hottest marijuana inventory in the marketplace proper now. There are a number of causes behind HEXO’s recognition amongst buyers.
HEXO reigns because the market chief within the adult-use leisure marijuana market in Quebec, Canada’s second most populated province. This market dominance stems from the corporate’s large long-term provide settlement with Quebec signed final yr.
Though restricted manufacturing capability hampered HEXO’s gross sales progress within the final quarter, that should not be an issue for an excessive amount of longer. HEXO’s acquisition of Newstrike Manufacturers, mixed with the corporate’s inside growth efforts, ought to enhance annual manufacturing capability to round 150,000 kilograms within the not-too-distant future.
That extra capability may very well be wanted as HEXO prepares for the launch of the Canadian marketplace for cannabis edibles and different spinoff merchandise. Final yr, big beer maker Molson Coors Brewing chosen HEXO to type a three way partnership focusing on this market. HEXO plans to launch quite a lot of merchandise later this yr, together with cannabis-infused drinks, gummies, and vapes.
HEXO may quickly accomplice with different main corporations that function exterior the cannabis business. CEO Sebastien St.-Louis acknowledged in HEXO’s current quarterly convention name that HEXO is in discussions with greater than 60 giant corporations about potential partnership offers. He expects HEXO to announce its second huge accomplice later this yr with one other deal probably on the way in which in late 2020.
There are additionally a few different noteworthy developments for HEXO that buyers can look ahead to subsequent yr. The corporate expects to be worthwhile in 2020. It additionally plans to enter the U.S. hemp CBD market in partnership with a big U.S.-based firm subsequent yr.
The case for MedMen
Whereas HEXO is absolutely well-liked with buyers, Wall Avenue analysts suppose that MedMen has a lot higher upside potential. The typical analysts’ one-year value goal for the cannabis retailer represents a premium of round 160% above MedMen’s present share value.
There’s quite a bit for buyers to love about MedMen. The corporate at the moment operates 37 cannabis retail shops, with a 7% market share within the greatest prize of all: California. In whole, MedMen owns 86 cannabis retail licenses, together with some that it’ll decide up from pending acquisitions. This ranks MedMen at No. 2 nationally primarily based on its variety of retail licenses.
As an early entrant in a number of core markets, MedMen has been capable of safe prime actual property. With many states proscribing the variety of cannabis retail licenses, the corporate will face restricted competitors.
Roughly 86% of the U.S. cannabis market is not penetrated but. This provides MedMen an enormous progress alternative. The corporate thinks that it might replicate its profitable technique adopted to develop into the retail chief in California in different states.
However MedMen is not targeted solely on the U.S. market. The corporate teamed up with Cronos Group to launch cannabis retail shops in Canada. The provinces within the nation have been sluggish to finalize laws for permitting retail shops to open, however Canada ought to be a giant marketplace for MedMen down the street.
MedMen is not more likely to be worthwhile anytime quickly. Nonetheless, that is primarily as a result of the corporate continues to reinvest closely in growth. When it completes its “land seize” part, although, MedMen may very well be in an incredible place to generate stable earnings.
Higher marijuana inventory
I would not low cost the chance that MedMen will emerge as a giant winner within the cannabis retail business. Nonetheless, for now, I feel that HEXO is the higher decide.
My view is that HEXO is positioned to be one of many high gamers within the Canadian cannabis-infused drinks market. I feel that the corporate is more likely to land extra main companions that can assist it enter the U.S. hemp CBD market. And my hunch is that HEXO will have the ability to enhance its market share exterior of Quebec as its capability grows.