As Tilray targets more strategic acquisitions, is it time to buy?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Jun 29, 2021
  • Tilray plans to convene a shareholder meeting as it seeks board approval for several strategic initiatives.
  • The company wants to raise cash through the issuance of more common stock to finance acquisitions.
  • TLRY has already acquired fellow Canadian medical cannabis company Aphria.

Tilray Inc. (NASDAQ:TLRY) has convened a meeting with shareholders on 29th July seeking board approval on several strategic initiatives. The company wants to raise more capital by increasing authorised common stock to finance future acquisitions. Tilray has already made a significant acquisition after merging with fellow Canadian medical cannabis company Aphria last month.

The TLRY stock is down more than 70% from its February highs but remains more than 106% up this year. Its share price spiked more than 670% at the start of the year after becoming a target of meme stock traders.

Tilray has an exciting growth story

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Tilray has not been profitable since 2018, but things could get better in the foreseeable future. The company’s bottom worsened last year after it reported a net loss of more than $60 million compared to $12.25 million in the previous year.

Analysts expect Tilray earnings to grow by 32.70% this year before spiking 87% next year. 

The company’s bottom line will also benefit from more than $80 million cost-saving synergies per year from its merger with Aphria. As such, analysts expect the EPS will grow at an average of 49.30% annually in each of the next five years.

Tilray’s growth story looks compelling. It could be the reason investors are willing to invest in the TLRY stock despite current bottom-line concerns.

Source – TradingView

Technical overview: the current rebound could continue

Technically, TLRY shares appear to be bouncing back after a recent pullback. The stock still trades below the 100-day moving average, leaving a lot of room to run. It has also yet to reach overbought conditions in the 14-day RSI.

Investors can target extended rebounds at approximately $22.64 in the short term or higher at $28.27 long term. On the other hand, the immediate support level is $14.18, while $8.31 provides a strong support zone if the stock price experiences a significant pullback.

Bottom line: now seems like a good time to invest in TLRY stock

Although Tilray shares are up more than 106% this year, the company seems poised for significant earnings growth this year and over the next five years. Therefore, TLRY’s 70% pullback from its February highs represents an opportunity to buy before the company returns to profitability.

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