Why the Auscann Group Holdings Ltd share price surged higher today

The Auscann Group Holdings Ltd (ASX:AC8) share price has been a big mover this morning. Here's what you need to know…

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Auscann Group Holdings Ltd (ASX: AC8) share price has jumped higher this morning after emerging from its trading halt.

At the time of writing the medicinal cannabis company's shares are up 4% to 60.5 cents.

Why did the pot stock jump?

AusCann placed its shares into a trading halt on Wednesday in order to raise capital through institutional investors.

According to the release the company raised $12 million through the issue of 24 million shares at 50 cents per share. This was a 13.8% discount to the last close price.

Cornerstone investments were made by AusCann's strategic partner Canopy Growth Corporation and also leading Australian fund manager Tribeca.

Management intends to use the funds to develop its cultivation and manufacturing activities, as well as accelerating its medical outreach programme.

That programme is key, in my opinion to its future growth prospects, as convincing doctors to prescribe medicinal cannabis products ahead of the current standard of care will not be easy.

But this programme has worked well for Canopy Growth Corporation in Canada. So by leveraging its partner's expertise, I feel there is a good chance AusCann could succeed should clinical trials provide strong results.

Should you invest?

Investors certainly do have a lot of choice when it comes to pot stocks. As well as AusCann, there are other promising companies such as Creso Pharma Ltd (ASX: CPH), Zelda Therapeutics Ltd (ASX: ZLD), and Cann Group Ltd (ASX: CAN).

At this point in time I think AusCann is arguably the best in the industry. But having said that, it remains a touch too soon for an investment for me.

So I'll continue to watch from the sidelines for the time being and focus on other areas of the market.

Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »