Aurora Cannabis (NYSE:ACB), Canopy Growth (NYSE:CGC), and Tilray (NASDAQ:TLRY) combined made less than $150 million in the last quarter, yet all three marijuana stocks have market caps of at least $6.7 billion, with Canopy’s market cap a whopping $16 billion. We’re talking about stratospheric price-to-sales (P/S) ratios for all three stocks.
My Motley Fool colleague Sean Williams even wrote recently that “no sane investor can justify” Tilray’s valuation after its latest quarterly update. Sean is going to think I’ve gone crazy, but I think it’s possible that Tilray isn’t overly expensive.
Actually, I think Aurora, Canopy Growth, and Tilray could even be big-time bargains right now. Absurd? Insane? Maybe, but just follow my train of thought here.
A view on valuation
I don’t think any stock, regardless of the industry, should be valued on historical sales or earnings. True