Is OGI Stock in the Midst of a Huge Rally?

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OrganiGram Stock Made a Massive Jump & Could Keep Rising

There was a long while when I was extremely bullish on some large but lesser-known Canadian marijuana stocks. OrganiGram Holdings Inc (NASDAQ:OGI) was one of them.

But when Canadian pot stocks began to tank following marijuana legalization in Canada and investors shifted toward U.S. pot stocks, OGI stock fell. But in recent weeks, shares of OrganiGram Holdings Inc have surged back to life.

Which leads me to ask: Is OrganiGram stock back?

In my mind, it does appear that OrganiGram Holdings Inc is on the rise again, but there’s a catch.

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First, the good news. OGI stock has been greatly outperforming rival Canadian marijuana stocks, up by 71% in 2021 so far.

Compare that to Canopy Growth Corp (NYSE:CGC) and Aurora Cannabis Inc (NYSE:ACB), which have fallen by 52% and 20% year-to-date, respectively.

Chart courtesy of StockCharts.com

Why OGI Stock Could Keep Soaring

So what accounts for OrganiGram stock’s performance compared to pot stocks in a similar position?

The first thing that’s always been a feature of OrganiGram Holdings Inc is its under-the-radar profile. While CGC stock and ACB stock often stole headlines, OGI stock often managed to stay out of the spotlight.

For most stocks, especially marijuana stocks, that’s not usually a good thing. A good portion of investment in the marijuana stock market comes by way of retail investors. As such, having a well-known name and profile can help attract investor dollars.

But OrganiGram Holdings Inc being criminally undervalued for years has actually worked out in the long run for OrganiGram stock investors. While other pot stocks saw their price-to-earnings ratios soar out of control, OGI stock kept things a little bit closer to reality.

It was a bit of a tortoise-and-hare situation. OGI stock has made steady gains for a long time, based on the strength of the market and OrganiGram Holdings Inc’s solid fundamentals.

Canopy Growth Corp and others, meanwhile, grabbed attention with bold acquisitions and other massive deals. This was a great way to gin up interest and encourage share-price growth, but this has often resulted in fast corrections when the hype wore off.

OrganiGram stock was able to avoid the tumultuous ups and downs that plagued other marijuana stocks, but that doesn’t mean OrganiGram Holdings Inc has been immune from overall market trends.

When enthusiasm about Canadian pot stocks faded following Canadian pot legalization and investors turned toward U.S. pot stocks, OGI stock also suffered.

But over the past few years, OrganiGram Holdings Inc has made a strong return to form, as evidenced by its huge share-price gains in 2021.

The big question is whether those gains will continue in 2022. In my mind, there are good reasons to believe they will.

First, if you look at OrganiGram stock’s progression in 2021, it shows a peak of over-340% gains within days in February.

This was motivated by many factors, but as you can see in the above chart, there was a move upward by the overall pot stock market as optimism built up over the return to normalcy following the year-long COVID-19 pandemic (oh, how bright things looked back then).

Of course, as we now know, the pandemic didn’t suddenly disappear at that time.

Another huge factor in the rise of marijuana stocks was the “Reddit” crowd and their love of “meme stocks.” You may remember the run on GameStop Corp. (NYSE:GME)—and other stocks that were largely considered to be without much value—by retail investors communicating over social media.

Well, pot stocks also became the subject of some of the meme investors. This led many marijuana stocks to spike in value, especially OGI stock.

Then shares of OrganiGram Holdings Inc began a slow descent. I don’t think they’ll achieve 340% gains in 2022, but there’s still room for OrganiGram stock to rise as the company continues its steady business growth.

Which brings us to OrganiGram’s financials.

The company’s gross revenue rose by 51% month-over-month and 31% year-over-year in the third quarter of 2021, hitting $29.1 million. (Source: “Organigram Reports Third Quarter Fiscal 2021 Results,” OrganiGram Holdings Inc, July 13, 2021.)

The company was able to grow its recreational marijuana net revenue by 40% over the previous quarter. It also made several acquisitions and continued its steady financial growth.

In other words, despite all the factors outside of OrganiGram Holdings Inc’s control, like meme stock rushes and a global pandemic, OGI stock remains on a growth path for the foreseeable future.

What’s more, as Canada’s legal marijuana market expands while its marijuana black market shrinks—and international opportunities open up—OrganiGram stock could experience significant gains in 2022.

Analyst Take

Having said all that, there’s still a good deal of volatility in the marijuana stock market, especially with Canadian marijuana stocks. So, if you’re looking for safe picks in the pot stock market, it might be better to opt for U.S. pot stocks.

On the other hand, if you want to diversify your portfolio of marijuana stocks, OGI stock could be a solid choice. Despite the volatility surrounding Canadian pot stocks, it appears that OrganiGram stock is ready to surge in 2022.

OrganiGram Holdings Inc is small enough to make large gains as more and more retail investors seek out strong marijuana stocks that are listed on a major U.S. exchange.

2022 could be a wonderful year for OGI stock investors, with a reasonable expectation of gains somewhere between 30% and 50% (if the economy keeps bouncing back and the company continues to improve its financials).