Canopy Growth (TSX:WEED) Is a Cannabis Investor’s Dream Stock Right Now

If there’s one thing Canopy Growth (TSX:WEED)(NYSE:CGC) is really good at, it’s generating headlines. What a week it’s been for one of Canada’s top-tier cannabis producer. A flurry of attention-grabbing developments has been buffeting the stock around like a kite in a gale, only to leave it up in the air thanks to contrarian buyers looking for value in the legal marijuana space.

The latest big deal, however, isn’t anything to do with the business of cannabis sales itself, but with management. Bruce Linton is out as CEO this week, with some pundits eyeing Constellation Brands, owner of 9.9% of Canopy Growth, as a possible source of the shake up. Constellation Brands is still supportive of its investment, however, and it’s not alone: though Canopy shares ditched 8% on the news, they finished the week up 2.76%.

The element of supplies

Bearish noises are still rumbling in the Canadian marijuana investment scene. While sales is obviously a big issue, this particular voice of dissent was calmed by a reported spike in consumption this April. However, the issue of supply is still out there, with investment gurus on the fence about what kind of impact a glut of supply will have on per-gram prices and profitability.

And a glut there may be, with new production facilities set to come online: Canopy Growth recently proclaimed its newly awarded outdoor growing licence and the completion of initial planting at a facility covering 160 acres. With an estimated demand in the Canadian market for 600,000 kg a year likely to be swamped by projected annual supplies of over 2.5 million kg, a heavily flooded market could undercut sales.

Should new cannabis investors buy Canopy Growth?

It looks as though cannabis is now a long-term bet, with 2018 likely having been the peak for capital gains. Stocks like Canopy Growth remain among the future leaders in the market, and it’s still a sturdy buy in this space.

There is certainly a case for buying Canopy Growth, and it revolves around its acquisition-focused strategy. For example, the pot grower and Acreage Holdings just shook hands on their agreement for the Canadian producer to snap up the latter company upon legalization in the U.S. The two marijuana growers cut a deal that saw a cool US$300 million dished out to Acreage investors.

Canopy Growth also offers diversification across products as well as international borders: vape products, edibles, and beverages are part of its purview, as well as skincare products. With CBD as part of its U.S. operations, Canopy Growth is also able to tap into what could be an eclipsing segment of the cannabis sector.

The bottom line

Cannabis investors bullish on the long-term performance of Canopy Growth have a distinct advantage at the moment. In terms of value, the stock is an attractive play, though traders taking this point of view may decide that the stock could weaken further. That said, this week’s dip on management news was nowhere near as deep its December trough, and the stock has a habit of rebounding.

You might be missing out on one of the biggest opportunities in Canadian investing history…

Marijuana was legalized across Canada on October 17th, and a little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.

Besides making key partnerships with Facebook and Amazon, they’ve just made a game-changing deal with the Ontario government.

One grassroots Canadian company has already begun introducing this technology to the market – which is why legendary Canadian investor Iain Butler thinks they have a leg up on Amazon in this once-in-a-generation tech race.

This is the company we think you should strongly consider having in your portfolio if you want to position yourself wisely for the coming marijuana boom.

Learn More About This TSX Stock Now

More reading

Fool contributor Victoria Hetherington has no position in any of the stocks mentioned.

Source: The Fool
Canopy Growth (TSX:WEED) Is a Cannabis Investor’s Dream Stock Right Now
The Fool

The Motley Fool
Contributor for investorsnews.ca
The Motley Fool is dedicated to helping the world invest — better. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, mutual funds, and premium investing services.

In all we do, we take a different approach.

We believe – and have proven over decades – that the individual investor can beat the market.

We believe that anyone can do it, even if they don’t have a lot of time or money to devote to investing.

We believe in a long-term outlook, helping people build wealth over time.

We believe that the person best positioned to take care of your financial future is you.

And we work tirelessly on behalf of our hundreds of thousands of members who are enjoying the opportunities that come with having enough money to do the things that matter to them.

While we are headquartered in Alexandria, Va., The Motley Fool advocates for the individual investor around the globe with offices in the UK, Australia, Canada, Singapore, and Germany.

Related posts