The Althea Group Holdings Ltd (ASX: AGH) share price is on the rise today. This follows an announcement that company’s subsidiary has entered into a cannabis beverage production agreement. Althea’s subsidiary, Peak Processing Solutions, has struck a deal with Collective Project Limited to manufacture canned, cannabis-infused beverages at its Ontario facility.

What does Althea do?

Althea is a supplier of medicinal cannabis. The company operates in the highly regulated medical cannabis markets across Australia, the United Kingdom, and Germany. It also has plans to expand into emerging markets throughout Asia and Europe. Althea’s Peak Processing Solutions subsidiary is an extraction and manufacturing business based in Canada. Work was recently completed on Peak Processing’s manufacturing facility and licensing of the facility with Health Canada is currently underway.

What does the new agreement mean?

The new agreement is an important milestone for Peak Processing Solutions and provides validation of the company’s industry-leading production capabilities. Manufacture under the agreement will commence once Peak Processing Solutions is granted its Health Canada Standard Processing Licence. Once licensed, Peak Processing Solutions will support clients with a suite of professional services including product and brand development, regulatory affairs, warehousing, and distribution.

Peak Processing Solutions aims to leverage Canada’s ‘Legalization 2.0’, which allows the sale of cannabis-infused edibles, drinks, nutraceuticals, and cosmetic products. The subsidiary is being positioned as a leading contract manufacturer for consumer brands looking to supply recreational cannabis and create cannabis infused products.

How are cannabis shares performing?

The Althea share price has more than doubled since March when it hit a low of 16 cents per share. In this respect, Althea has outperformed other ASX-listed cannabis companies. For example, Cann Group Ltd (ASX: CAN) has seen its share price increase 55% from its March low. Meanwhile, the Auscann Group Holdings Ltd (ASX: AC8) share price has increased 14% over the same period.

What is the outlook for the cannabis market?

Despite the coronavirus pandemic, the global medical marijuana market is predicted to grow by US$22.33 billion over the next four years, with a compound annual growth rate of 24%. In fact, cannabis sales in the United States surged in the wake of the pandemic. On 16 March, sales of recreational marijuana increased by 159% in California, 100% in Washington State, and 46% in Colorado, compared to the same day in 2019.

Australia’s cannabis market is forecast to grow from $52 million in 2018 to $1.2 billion in 2027. This would make it the fifth largest market in the world. The jump in value is the anticipated result of regulatory changes that have come into effect in recent years, lifting restrictions on the use of cannabis for certain purposes. Althea, Auscann, and Cann Group all stand to benefit from this burgeoning market.

More reading

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Motley Fool contributor Kate O’Brien has no position in any of the 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 Scott Phillips.

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The Tyro Payments Ltd (ASX: TYR) share price is down by 4.17% this morning, after the payment solutions company released its latest transaction volumes. Data released by Tyro shows transaction volumes recovering in June, with volumes up 7% for the month to date compared to 2019.

Despite these numbers, the Tyro Payments share price has dropped to $3.68 in morning trade. 

What does Tyro Payments do?

Tyro Payments is a technology company that provides payment solutions and complementary business banking products. The company is Australia’s 5th largest merchant acquiring bank by number of terminals in the market (behind the four major banks). Used by more than 32,000 merchants in the first half of FY20, Tyro processed over $11.1 billion in transaction value, generating $117.3 million in revenue.

Tyro Payment’s technology platform enables debit and credit card payments. It can be integrated with point of sale systems and is capable of accepting alternative payment types such as Alipay. Traditionally focused on in-store payments, Tyro has recently expanded to eCommerce. Tyro Payments also offers loans in the form of merchant cash advances as well as merchant transaction accounts. In 1H FY20, Tyro Payments originated $37.4 million in loans and held merchant deposits totalling $9.7 million.

How has Tyro Payments been performing?

Tyro Payments was recording significant increases in transaction volumes in early calendar 2020, prior to the onset of the COVID-19 crisis. Transaction volumes increased 27% in January and 30% in February. With the onset of the pandemic in March, growth in transaction volumes fell to 3% as many merchants closed stores.

Transaction volumes fell 38% in April (to $0.911 billion from $1.468 billion) and 18% in May (to $1.285 billion from $1.562 billion) as the crisis took hold. More recent data, however, has shown strong signs of recovery. June volumes are up 7% to $1.016 billion from $0.946 billion over the same period in FY19. Thanks to early strong gains, Tyro Payments’ year-to-date transaction volumes are up 15% to $19.491 billion from $16.890 billion in FY19.

What is the outlook for Tyro Payments?

The company IPO’d last year at an issue price of $2.75 per share in the biggest float of 2019. The Tyro Payments share price dropped dramatically in the March correction, losing nearly 80% of its value from peak to trough.

Since then, however, the Tyro Payments share price has almost quadrupled from a low of 97 cents with shares currently trading at $3.68. This indicates investors are bullish on Tyro Payments’ prospects. As a result of the increase in share price, Tyro Payments entered the S&PASX 300 Index (ASX: XKO) in the latest rebalance.

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Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Tyro Payments. 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 Scott Phillips.

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At lunch on Monday the S&P/ASX 200 Index (ASX: XJO) has recovered from a poor start and is trading roughly flat. The benchmark index is currently at 5,942.8 points.

Here’s what has been happening on the market today:

Altium update disappoints.

The Altium Limited (ASX: ALU) share price is sinking lower today after the electronic design software company warned that it was likely to fall short of analyst consensus estimates in FY 2020. This is because the pandemic is impacting its performance during the latter weeks of the financial year. This is historically a strong part of the year for Altium.

Metcash results.

The Metcash Limited (ASX: MTS) share price has edged lower today after releasing its full year results. In FY 2020 Metcash delivered a 2.9% increase in revenue to $13 billion and a 1.8% decline in underlying earnings before interest and tax (EBIT) to $324.2 million. On the bottom line, the company posted a reported loss after tax of $45.9 million due largely to non-cash impairment charges to goodwill. Excluding these charges, profit after tax would have been roughly flat at $209.7 million

SEEK’s encouraging update.

The SEEK Limited (ASX: SEK) share price is trading slightly higher after the release of a trading update. The job listings company’s update revealed that its weekly billings have been improving since falling heavily at the peak of the pandemic. It also provided its expectations for the full year. It expects revenue of approximately $1,575 million and earnings before interest, tax, depreciation, and amortisation (EBITDA) of ~$410 million in FY 2020.

Best and worst ASX 200 shares.

The Austal Limited (ASX: ASB) share price has been a standout performer on the ASX 200 on Monday. It is up 9% to $3.67 after revealing that the U.S. government will invest US$50 million into its U.S. business. The Altium share price is the worst performer on the ASX 200 today with a disappointing 10% decline after its update.

More reading

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James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Altium and Austal Limited. The Motley Fool Australia has recommended SEEK Limited. 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 Scott Phillips.

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