Canopy Growth Corp (NYSE: CGC) hasn’t been having the best of times in the market as of late. However, this dip is an interesting one, and if big banks are right, it’s one that will reverse relatively soon. Today, we’ll talk about:
- Why I think now is the time to get involved in CGC;
- what we’re seeing from the stock today; and
- what we’ll be watching for ahead.
Why Now Is The Time To Get Involved In CGC
As mentioned above, Canopy Growth hasn’t been having the best of times in the market as of late. While the stock ran as Canada worked toward the legalization of recreational cannabis, since the big day, October 17, 2018, CGC and others in the space have been tumbling.
While some look at this and get upset, I see an opportunity, and big banks seem to be seeing the same thing. In fact, at the end of the third quarter, the Bank of Montreal owned about $73 million in United States-listed cannabis stocks. CIBC and US Bancorp are also interested in the industry. At the end of the third quarter, they owned $5 million and $2 million, respectively in US-listed cannabis stocks.
So, what’s the big deal? Well, cannabis is a hot ticket in an emerging market. Few regions have legalized cannabis for recreational use, but in the areas that have, demand has been incredibly high. While we don’t know what demand in Canada has been, we do know that CGC recently made an offer to buy back about $600 million in convertible senior notes. Just a few months ago, it needed this money. Now, less than a month after legalization in Canada, they are ready to pay it back. That says a lot of you ask me.
However, it’s important to keep in mind that for CGC and others in the sector, Canada is a very small part of the equation. Cannabis reform is happening around the world, and the smart companies in the sector are getting their feet wet everywhere that they can. Of course, Canopy Growth is one of these companies. In fact, it has recently moved its products into the United States, Germany, and several other regions around the world. As laws change, CGC is going to be well positioned to take advantage. This is what the company is working toward!
Here’s the bottom line. We all know what an emerging market can be. Technology was one at one point, cryptocurrency, essentially everything had to emerge at some point. Right now, we are watching as the cannabis industry emerges. While this happens, there are few names that will become the clear leaders. Through the work the company has done over the past several years, and strides they have made in the past several months, I believe that CGC is a company that will emerge as one of these leaders.
What We’re Seeing From The Stock
Canopy Growth is experiencing some slight declines in the market today. Nonetheless, this drop is an opportunity to get in at a discount in my opinion. As is normally the case, our partners at Trade Ideas were the first to alert us to the declines. Currently (11:56), CGC is trading at $42.40 per share after a loss of $0.19 per share or 0.45% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on CGC. In particular, we’re interested in following the stock through the shift in investor sentiment that we believe is just around the corner. As far as the company goes, we’re excited to learn more about sales in Canada and continued efforts toward global growth. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!