Bell Potter slaps buy rating on this profitable, dividend-paying ASX cannabis share

This cannabis share is smoking the market on Monday…

| More on:
two men in formal business clothing closely inspect a bud from a cannabis crop.

Image source: Getty Images

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 Cronos Australia Ltd (ASX: CAU) share price was a strong performer on Monday.

The medicinal cannabis company's shares ended the day 15% higher at 55 cents.

At one stage, the Cronos Australia share price even reached a record high of 58 cents.

Why did the Cronos Australia share price fire up?

Investors have been scrambling to buy the company's shares over the last two trading sessions thanks to a bullish broker note out of Bell Potter.

According to the note, the broker has initiated coverage on the company with a buy rating and 60 cents price target.

Based on the current Cronos Australia share price, this implies further potential upside of 9.1% for investors.

What did the broker say?

Bell Potter likes the company due to its leadership position in medicinal cannabis distribution. It explained:

Cronos Australia is a medicinal cannabis company that is the market leader in distribution to pharmacies and provides patient consulting services through its clinic business. The key driver for the impressive growth in the past 24 months has been the CanView platform which provides the widest range of medicinal cannabis products compared to competitors (Anspec, Health House).

The current system provides access to patients, doctors and pharmacists. The transition to CanView 2.0 streamlines the consultation and prescription process.

In addition, the broker highlights that Cronos Australia is a profitable, dividend-paying cannabis share. The only one of its kind in Australia. Furthermore, it feels its valuation is fair and its growth outlook is strong. The broker concludes:

We initiate coverage on Cronos with a Buy recommendation. We expect the momentum observed in FY22 to continue into FY23 and translate into strong revenue and earnings growth. Cronos is currently the only profitable dividend paying medicinal cannabis company on the ASX and the valuation does not appear demanding relative to the expected growth.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Broker Notes

Man with rocket wings which have flames coming out of them.
Broker Notes

These ASX 200 shares could rise 40%+

Big returns could be on offer from these shares according to analysts.

Read more »

a man in a business suite throws his arms open wide above his head and raises his face with his mouth open in celebration in front of a background of an illuminated board tracking stock market movements.
Broker Notes

Analysts say these ASX shares are top buys in June

Brokers are urging investors to buy these shares. Let's find out why.

Read more »

A man in trendy clothing sits on a bench in a shopping mall looking at his phone with interest and a surprised look on his face.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

Woman and man calculating a dividend yield.
REITs

What price target does Macquarie have on Goodman Group shares?

Goodman Group posted an interesting set of numbers in Q3. Here's Macquarie's take.

Read more »

Miner looking at a tablet.
Broker Notes

Why Macquarie expects this ASX 200 copper stock to surge 36% in a year

Macquarie forecasts some hefty gains ahead for the ASX 200 copper miner. But why?

Read more »

two women celebrating good news on phone
Broker Notes

Top broker names 3 ASX All Ords stocks with between 30% and 77% upside

These 3 stocks offer compelling potential upside.

Read more »

Woman on her phone with diagrams of tech sector related elements linking with each other.
Broker Notes

A leading fund manager is buying these ASX 200 tech shares

Let's see why the fund manager has these shares in its focus portfolio.

Read more »

A young man wearing a black and white striped t-shirt looks surprised.
Broker Notes

Broker says these ASX 200 shares can rise 40% to 80%

Bell Potter sees scope for these shares to rocket from current levels.

Read more »