Out Fox The $treet - July 16, 2020
Yext is a buy at $16.
Aurora Cannabis is a buy on weakness to play a potential deal with 50% upside.
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Stocks to watch on Thursday:
The digital knowledge management company should see a surge in demand as retail stores constantly shift open hours and services offered in store due to COVID-19. The stock has struggled to break strong resistance in the $17-18 range. A break would easily signal a run to previous highs.
Investors need to keep in mind that Yext should return to 30% revenue growth rates once the economy normalizes. Even the worse case scenario in FY21 (January) includes 18.5% growth. The stock has constantly bounced off $16 offering another gift entry point.
The Out Fox model remains highly bullish on the stock.
Aurora Cannabis (OTC:ACB)
As mentioned in the my research today, the Canadian cannabis stock is a buy on any deal with Aphria (OTC:APHA). The key is the C$200 million synergies from the deal and the potential for Aphria CEO Irwin Simon to lead the new entity.
Unfortunately, the deal talks have been called off for now. Aurora Cannabis is down nearly 5% today. As the stock falls under $12, investors might want to play ACB for a potential deal to eventually close in the next few weeks.
Consolidation appears inevitable in the Canadian cannabis sector and Aurora Cannabis can use any deal to solidify a strong shift to EBITDA profits.
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Disclosure: I am/we are long YEXT.
Additional disclosure: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion or consult a financial advisor. Investing includes risks, including loss of principal.