Still, its top line came in at just C$15.4 million (US $11.70 million). But if it needs to raise additional funds it will be able to do so easily. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Branded products provide a clear path to profitability. Hexo (NYSE:HEXO) stock has traded sideways since my last analysis on Aug. 30. Factset: FactSet Research Systems Inc.2019. Hexo stock is hovering close to its 52-week lows. CNN Sans™ & © 2016 Cable News Network. But this is assuming the company will meet expected FY2020 sales of $259.2 million. Morningstar: © 2019 Morningstar, Inc. All Rights Reserved. This demonstrates that HEXO’s brand is strong in its home market. All of this rides on the success of Truss. Given that we are looking at HEXO as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. The rollout of these higher-margin cannabis products has been a key catalyst for pot stocks. Keep it on your radar, and pounce if the Hexo stock price falls to a lower valuation. The medical marijuana segment of that market alone is expected to quadruple by 2025. Hexo’s market share in Ontario and Alberta should rise as its largest competitors’ market share growth is slowing in those provinces. Copyright © 2020 InvestorPlace Media, LLC. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. Information about your device and internet connection, including your IP address, Browsing and search activity while using Verizon Media websites and apps. All rights reserved. Jefferies sees record Q3 earnings and revenues, sets tone for Wall Street's quarter, Shopify announces data breach affecting fewer than 200 merchants, Billionaire Property Heir Has Big Bets on Troubled Hong Kong, Cybersecurity official: Canada doesn’t ‘respond well to fear-based campaigns’, Shop from your school's list on Walmart.com, Nike is 'just getting started' after blowing away investor expectations, Why Well Health (TSX:WELL) Is the Stock to Buy as the 2nd COVID-19 Wave Hits, Passive-Income Alert: Collect $500/Month From These 3 Terrific REITs, How to Reach $750,000 in Your TFSA by Investing Just $1000 a Month, TFSA Investors: How to Make up to $5,000 a Year in Dividends, Millennials: 3 RRSP Mistakes to Avoid While You’re Still Young. Amid the massive decline of cannabis stocks in 2019, Hexo Corp. (NYSE:HEXO) is not catching a break at all. That’s impressive considering it started from nearly nothing. For example, in January, the governor of New York proposed legalizing marijuana in 2019, noting that legal weed sales could generate US$300 million in tax revenues per year. Even though its revenue came in above analysts’ average estimate, HEXO issued weak guidance for Q1 and full-year 2020. But is this potential upside baked into the Hexo stock price? With hard numbers backing the industry’s growth, it’s no surprise that most cannabis stocks have shot higher in recent months. The Motley Fool’s purpose is to help the world invest, better. 2020 InvestorPlace Media, LLC. Find real-time HEXO - Hexo Corp stock quotes, company profile, news and forecasts from CNN Business. Let’s compare that to its peers. If its gross margin, which was 33% in Q4, increases while its operating expenses fall sharply, expect it to be continuously profitable in 2020. While most investors are paying attention to general cannabis production numbers, I’d place much more value on the company’s partnership with Molson Coors. Canopy’s is 25.4. All rights reserved. Article printed from InvestorPlace Media, https://investorplace.com/2019/10/hexo-stock-cheap-forward-basis-success-not-guaranteed/. The company is on track to launch infused beverage Truss with partner Molson Coors (NYSE:TAP) in December, when infused beverages and edibles become legal across Canada. Warning: Canada’s Housing Market Is About to Crash! Unlike its peers, HEXO may have an edge. Hexo missed its last quarterly sales estimate ($9.76 million actual vs. $10.8 million analyst estimate). However, Hexo remains much cheaper than Cronos (NASDAQ:CRON), which trades at an EV/Sales of 114.6. Aphria and Canopy barely moved without news. The stock is expensive relative to Aphria (NYSE:APHA).