Is Canopy Growth a Smart Long-term Buy?

: CGC | Canopy Growth Corporation News, Ratings, and Charts

CGC – Canopy Growth (CGC), the world’s largest cannabis company by market cap, has seen challenges thus far in 2020.

Though cannabis stocks had a dismal 2019, investors entered into 2020 with renewed optimism, because more states in the US were expected to legalize marijuana and Cannabis 2.0

Unfortunately, the world has been hit with the coronavirus pandemic, which has stunted growth within the cannabis industry.

Canopy Growth (CGC), the world’s largest cannabis company by market cap, also has seen challenges thus far in 2020.  They have been struggling to generate revenues, consolidate their balance sheet, and become profitable. 

However, CGC is the market leader in the Canadian adult-use recreational marijuana market and one of the top players in Germany, home to the largest medical cannabis market outside of North America.

CGC also has plenty of cash on their balance sheet from the multi-billion dollar investment from Constellation Brands (STZ). Although cash alone will not be enough to create a successful company, in this challenging environment, it’s very valuable because it gives them the ability to weather the economic storm we are currently in.

So, with this in mind, is CGC a smart long-term buy for investors?

Constellation Brands (STZ) seems to think so.  

At the end of last week, CGC announced the exercise of 18,876,901 warrants by Greenstar Canada Investment Limited Partnership to purchase common shares of CGC. Greenstar Canada Investment Limited Partnership is an indirect, wholly-owned subsidiary of Constellation Brands (STZ).

The warrants, which were originally issued on November 2, 2017, were exercised at an exercise price of C$12.9783 per common share for an aggregate of approximately C$245 million. This effectively injects C$245 million dollars into CGC from STZ.

Bill Newlands, president, and chief executive officer at STZ had some positive remarks regarding the transaction, “While global legalization of cannabis is still in its infancy, we continue to believe the long-term opportunity in this evolving market is substantial. Canopy is best positioned to win in the emerging cannabis space and we are confident in the strategic direction of the company under David Klein and his team.”

David Klein, chief executive officer at CGC stated that, “This additional investment validates the work our team has done since attracting the initial investment in 2017. It also strengthens our ability to pursue the immense market and product opportunities available to Canopy in Canada, the U.S., and other key global markets.” 

By exercising these warrants, it can be interpreted that STZ believes that at current valuations, CGC’s stock is a good investment.  And it shows that STZ has confidence in CGC’s future, as a premier global cannabis company.

Want More Great Investing Ideas?

9 “BUY THE DIP” Growth Stocks for 2020

REVISED 2020 Stock Market Outlook– Discover why there is more downside ahead and the Top 10 picks for the bear market.

9 Simple Strategies to REGROW Your Portfolio – Learn the 9 strategies employed by Steve Reitmeister to generate consistent outperformance…even during bear markets.

 


CGC shares were trading at $15.38 per share on Wednesday afternoon, down $0.38 (-2.41%). Year-to-date, CGC has declined -27.07%, versus a -10.55% rise in the benchmark S&P 500 index during the same period.


About the Author: Aaron Missere


Aaron is an experienced investor who is also the CEO of Departures Capital. His primary focus is on the cannabis industry. He also hosts a weekly show on YouTube about marijuana stocks. Learn more about Aaron’s background, along with links to his most recent articles. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
CGCGet RatingGet RatingGet Rating
STZGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


Where Do Stocks Go from Here?

The S&P 500 (SPY) has already made new highs just above 6,000. However, that seems to be a point of stiff resistance. This begs the question of what happens next? And what should an investor do to stay on the right side of the action? Read on below for Steve Reitmeister’s time answers and top 10 stocks.

3 Streaming Stocks Benefiting from Cord-Cutting Trends

As streaming continues to dominate the digital entertainment landscape, the global streaming market presents a lucrative investment opportunity. So, it could be ideal to invest in fundamentally solid streaming stocks Netflix (NFLX), Walt Disney (DIS), and Roku (ROKU). Read further...

3 Gold Stocks to Buy as Safe-Haven Demand Grows

Gold is a stable investment now due to its role as a safe-haven asset during economic uncertainty, rising demand, industrial use, and growth, bolstered by central bank purchases and interest rate cuts. Therefore, investors should consider investing in top gold stocks such as Newmont (NEM), Barrick Gold (GOLD), and Agnico Eagle Mines (AEM). Read more...

3 AI Stocks Transforming Industries and Driving Future Growth

With rapid digitalization, rapid adoption, and development, as well as surging demand, the AI market is on the rise. Amid this backdrop, investors could buy fundamentally solid AI stocks NVIDIA Corporation (NVDA), Microsoft (MSFT), and Meta Platforms (META) poised for substantial gains. Continue reading...

What Happens After 6,000 for Stocks?

The S&P 500 (SPY) has the petal to the medal after the election and 2nd Fed rate cut. However, stocks are now pressed up against serious resistance at 6,000 which begs the question of what happens next? Investment pro Steve Reitmeister shares his timely market views including a preview of his top 10 stocks. Get the full story below...

Read More Stories

More Canopy Growth Corporation (CGC) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All CGC News