What is Canopy Growth? How the Largest Marijuana Stock Came to Power.
Canopy Growth (CGC) has become one of the faces of the surge in marijuana stocks. But the average person likely doesn’t know its name. So today, I figured I would let you in behind the Canopy Growth curtain, and then assess its value as a stock.
Here goes…
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10 Things to Know About Canopy Growth
- It has the highest market capitalization of all cannabis stocks, more than $11 billion.
- It is the biggest seller of marijuana in Canada, moving $94 million of product in the latest quarter, up 313% from the year before.
- It serves the medical market in Canada through its Spectrum Therapeutics division, which sells a range of full-spectrum products using its color-coded classification Spectrum system.
- It serves the adult-use market in Canada through its retail store chains Tweed and Tokyo Smoke.
- It has a deal to acquire U.S. heavyweight Acreage Holdings, which is currently active in 20 U.S. states, whenever that becomes legally possible.
- It is currently converting an old vacuum cleaner factory in Kirkwood, N.Y (just over the state line from Pennsylvania) into a facility for processing industrial hemp—which is totally legal in the U.S. now—to make CBD oils, creams and consumables.
- It has a greater global footprint than any marijuana company in the world, with operations and partnerships in Canada, the U.S, Brazil, Chile, Peru, Jamaica, Spain, the United Kingdom, Denmark, Germany, Poland, the Czech Republic, Lesotho and Australia.
- It is backed by alcohol behemoth Constellation Brands (STZ-market capitalization $38 billion), which paid $4 billion for a 38% stake in Canopy last August.
- It is currently without a CEO, as the board fired well-respected long-time CEO Bruce Linton on July 3 (for no particular reason—though speculation is that Constellation wants a more conservative leader aiming for the long term).
- Last, but most important, its stock has been in a downtrend since October 2018, when marijuana sales became legal across Canada.
So, long term, prospects remain bright for the company, assuming it finds the right CEO.
But short term, the tide is still running out.
And it’s not all Canopy’s fault!
All the big Canadian marijuana stocks are in the same boat—though they haven’t lost their CEOs.
And the reason is simple.
Tons of money flooded into the cannabis sector in the months leading up to legalization, with every Tom, Dick and Harry trying to make a buck in the hottest stock market sector of the year.
And when legalization came, the stocks did what they do after every hot-stock peak in which stocks become ridiculously overvalued; they began cooling off—and they’re still cooling off today.
Happily, readers of Cabot Marijuana Investor who followed my advice took profits right at the top, as I sold half our position for a profit of 696%. In fact, I sold half-positions in all six Canadian marijuana stocks I owned on that day, as the sector had gone parabolic and was due for a correction.
But I’m still holding the rest of my Canopy Growth stock, because this correction, like all corrections, will end, and I want my readers to be on board for the stock’s long-term profits.
Because this industry is booming! In fact, of the 15 cannabis stocks in the advisory’s portfolio today, the average revenue growth in the latest quarter compared to the year before was 291%. That’s fast growth!
Canopy’s fiscal first-quarter results will be released on Wednesday, August 14, after the market close. Analysts are expecting revenue of $109 million, which would be a gain of roughly 420% from the year before and 16% from the immediately preceding quarter; and a loss of $0.38 per share, an improvement from the loss of $0.74 in the previous quarter.
Long term, the sky’s the limit; the company has the potential to be the Budweiser of the cannabis industry. And to get there, it’s hiring like mad, all over the world!
For example, looking at the company’s Career Opportunities page, here are just a few of the jobs I see.
In Ottawa, Canopy Growth wants a Senior Project Manager, skilled in managing the integration of acquired companies. Canopy has already acquired a bundle.
In New York City, Canopy Growth wants a Vice President of Investor Relations, as well as a Director of Communications.
In Frankfurt, Germany, Canopy wants an IT Business Analyst to manage the implementation of technology-related projects.
In Denver, Colorado, Canopy wants an Energy Systems Coordinator, to identify and implement energy management, preventative maintenance and conservation projects in the region.
In Atlanta, Georgia, Canopy wants a Director of Regulatory Affairs who will report to the Deputy Managing Director, Canopy Animal Health, to lead the company’s interactions with government authorities responsible for regulating animal health products.
In Buenos Aires, Argentina, Canopy Growth wants a Medical Manager to contribute to the development of medical strategy in the region.
And, of course, all over the world, the company is looking for people to grow, harvest, process and sell its products—whether it’s marijuana, CBD or hemp.
So, long term, there’s no question this company will be a major player, and thus a great long-term investment.
A Better Marijuana Stock Option
But I can’t recommend the stock until it stops falling and starts rising again.
What I am recommending to readers of my Cabot Marijuana Investor advisory is a rare stock in the sector that is going up!
This little-known Canadian company operates a chain of discount liquor stores and is expanding rapidly into cannabis retailing, as well. It’s not growing as fast as Canopy or any of the cannabis pure plays, but its stock is dirt-cheap and likely just beginning a sustained upmove!
For details, click here.
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