Canopy Growth Corp (NYSE: CGC) has been raising eyebrows as of late. After climbing through August and September, the stock took a bit of a dive in mid-October when the much awaited recreational cannabis market opened in Canada. Nonetheless, the dive seems to have found its bottom and the stock is coming back to life. Now, the real question is simple, “Is now the time to buy?” Today, we’ll talk about:
- Whether or not now is the time to consider CGC;
- what we’re seeing from the stock; and
- what we’ll be watching for ahead.
Is Now The Time To Buy CGC?
This is an interesting question, and while my opinion is yes, it’s important that you put in the due dilligence to figure out what your opinion is. Nonetheless, there’s good reason that I believe that Canopy Growth will be headed up in the future.
Before the Canadian recreational cannabis market opened, investor excitement ensued, and the companies that made an effort to carve their slice got tons of investor interest. Canopy Growth was one of these companies. On October 17, 2018, when the recreational cannabis market opened in Canada, pot stocks from CGC to CRON and TLRY, all found their way toward the bottom. It’s like investors were expecting to see a ton of good news on opening day, and that news hadn’t come.
Nonetheless, while CGC has been on a downtrend, it seems that the stock has found a clear level of support. Perhaps more importantly, it looks like investor sentimate is starting to get bullish again. There’s good reason for this. Remember, there were several companies that worked hard to take advantage of the Canadian cannabis sector. In my opinion, Canopy Growth did the best.
The company has its products in stores with audiences of more than 70% of its target audience. So, from a Canadian cannabis perspective, it’s hard to argue against the fact that CGC is well positioned to take a large chunk of that market. However, that’s not all there is to this story.
While the focus on Canopy Growth seems to have been on the Canadian market, there’s quite a bit more to this company. The company’s global reach is second to none in the space, and it is even part of a medical cannabis study here in the United States. Not to mention, the company has it’s foot in the door in the EU, Germany, and several other key cannabis markets.
A Recent Fundamental Change
Late last week, CGC became an even stronger investment when it released a Fundamental Change Notice. The company made an offer to repurchase $600 million in 4.25% Convertible Senior Notes. These notes are due in 2023. The offer has to do with a deal that was announced in August, when CBG, an affiliate of Constellation Brands, entered into a share subscription agreement. This agreement provided CBG with 56% of the voting control over the company’s common shares. With this announcement, voting control is likely to be restored.
Digging Further In
The Fundamental Change Notice was great news, but I think that if we read between the lines, we can see clues that the stock is going to fly further. Before the Canadian recreational cannabis market opened, CGC wanted to get their hands on the funding in the deal mentioned above. Today, just a few short months later, the company is ready to repurchase the shares. Where do you think this funding came from? There’s a good chance that the Canadian recreational cannabis market is doing as well as, or better than expected. If this is the case, news ahead has the potential to lead to massive gains.
What We’re Seeing From The Stock
One thing is for sure here. It’s clear that investors are excited about Canopy Growth Corporation. This can be seen in the gains in the value of the stock that we’re seeing today. As is just about always the case, our partners at Trade Ideas were the first to alert us to the gains. Currently (10:47), CGC is trading at $43.13 per share after a gain of $3.04 per share or 7.58% 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 story surrounding the company’s continued work to expand its reach both in Canada’s cannabis market and around the world. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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