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Investing $5,000 in companies that compete in a growing industry like cannabis can be great for your portfolio.
Though it’s unlikely that bankruptcy is in the near future of either company, you definitely shouldn’t take a risk by investing in either of these stocks.
Despite undergoing a business transformation plan over the last two years that was intended to right-size its production capacity relative to the level of demand in the Canadian market, there has only been 60 million Canadian dollars in cost savings so far.
Nor will growth be able to save the day, as its quarterly revenue has shrunk by 1.86% in the last three years.
In sum, the long shot of a turnaround happening in the next few years isn’t enough of a reason to buy this stock when there are better alternatives out there.
With trailing revenue of $589.31 million, it also has a claim to being one of the world’s leaders in the cannabis space.
Its quarterly revenue has risen by nearly 44% in the last two years, and its quarterly earnings before interest, taxes, depreciation, and amortization have expanded by 72.2%.
Furthermore, Tilray’s recent diversification into craft beer hasn’t exactly juiced the stock.
Nor will the anticipated $20 million in cost synergies left to be realized from last year’s merger with Aphria make much of a difference.
While Tilray probably has a better chance of making a recovery than Aphria, there’s really no reason to invest in it unless you’re especially daring.