Searching For Opportunity: Is Canopy Growth Corporation Becoming Attractive?
A note from The Mean: A few weeks ago I asked a writer to write about “pot stocks”. I find the topic interesting and I’ve been an investor in the stock market for 20 years. I hesitated to publish this because I didn’t want to front like we are financial advisors – we’re not. But I do think the path of cannabis corporations is something that is important to the culture and community. You probably smoke Canopy bud and don’t even know it. All that to say, this isn’t advice. There are no shortcuts. Do your homework. Work hard. Have fun. Enjoy life. That’s all the advice I can give. But if you’ve never heard of Canopy Growth and you consume the sticky icky, you might learn a thing or two about how the culture is being shaped. Enjoy!
If you have been following the Cannabis market, you should know that it has not been pretty for investors. When markets get this cheap, the best thing to do is evaluate if there are any good investment opportunities. Canopy Growth Corporation is one of the better Cannabis companies you can invest in, so has it become attractive at these low prices?
Canopy Growth Corporation presents an opportunity to play the cannabis market at this point in time. The new CEO David Klein is making the right decisions for the company, as he has put profitability at the forefront by stopping expansion in Canada. The company also quietly launched cannabis infused beverages, which were a big focus when Constellation Brands invested in the company.
No Profits Yet, But Sales Are Growing
One of the main issues with investing in Canopy Growth Corporation is the inherent risk due to not showing profits yet. This is due to the fact that they have invested heavily in domestic and international expansion. Although this has been the case, Canopy has stopped its expansion in Canada, as it seeks to move toward profit sooner. Management is currently aiming for profitability within the next three to five years.
While there are no profits yet, we can also look toward their sales growth as a reason to invest in the company. Strength within sales growth is a key component for strong stocks. In fiscal Q3, Canopy’s net sales grew 49% YoY.
Cannabis Infused Beverages Launching
Canopy began sending their Tweed Houndstooth & Soda drink to retailers as well as provincial boards. This move is a small step forward for a company that was promising dozens of drinks available back in December. There were not any more details released on when other beverages would hit the markets, but we should expect more news on that in the coming months.
If Canopy is too risky of an investment for you, another way to consider playing the cannabis market is in Constellation Brands, who owns 38% of Canopy. In the future, Constellation Brands will help Canopy with the global distribution of their cannabis beverages, helping the company grow their sales in that product category. Constellation is a well run company that is slightly less risky than Canopy, but owns a significant amount of the company and has exposure to the cannabis market.
Canopy or Constellation Brands
If you are someone who strongly believes in the future growth of the cannabis market, and you want direct exposure to it, then Canopy Growth Corporation (CGC) would be the stock for you. Canopy is the largest player in the cannabis market right now, and they are poised to benefit strongly if the United States moves toward legalization. Their cannabis infused beverages are an exciting product and we can expect to see more releases within that category in the future.
If you are worried about how risky the cannabis stocks are given recent price action within the group, then Constellation Brands (STZ) would be a better stock for you. Constellation is exposed to growth in the cannabis market given their 38% stake in Canopy. They are poised to benefit from the rollout of cannabis infused beverages, and will be a part of Canopy’s success. Since they are a large beverage company, you are not taking as much risk as you would be by purchasing Canopy’s stock.
Editor’s Note: Loud News Net does not provide investment advice. This article is merely entertainment only. Do your own due diligence.