Canopy Growth Corp (TSX:WEED) (NYSE:CGC) is currently trading at one of its lowest price levels in two years. The decline in Canopy stock to the current lows can be attributed to two major issues: Canadian politics and the company’s financial performance in the latest quarter.
Investors generally shunned Canadian cannabis stocks in the run-up to the country’s national election in which incumbent Justin Trudeau faced a tough re-election challenge from a conservative candidate. Investors worried that a win for the conservatives could result in the rollback or a slow rollout of cannabis-friendly regulations. Since coming into power in 2015, the Trudeau administration has been supportive of Canada’s cannabis industry. That resulted in Canada becoming the first developed country to legalize cannabis for recreational use a year ago. Trudeau won the tough re-election contest last month, bringing reprieve to cannabis investors. However, Canadian cannabis stocks like Canopy are still trying to recover from the selloff sparked by fears over Canada’s national election.
As for Canopy, in particular, lackluster fiscal 2020 second-quarter results released last week added to the downward pressure on the stock. That saw the stock take a big plunge to its 2-year low last Friday (November 15).
About Canopy Growth Corp
Canopy is one of the top cannabis companies in Canada. It also has a presence in the hemp market. Moreover, Canopy boasts a significant international footprint in the regulated cannabis industry. Canopy operates multiple cannabis brands and its products cater to both medical and recreational cannabis markets.
Why Canopy Growth Corp is a buy at current level
History repeats itself. In the case of Canopy, history is on the side of the bulls at this point. Canopy is currently trading at $15 price range – one of its lowest price levels in two years. But this isn’t the first time Canopy has dropped this low. Around this time two years ago (November 13, 2017), Canopy was trading at $15. Bears felt like Xmas had come early, but they were wrong. In less than a month, Canopy had sharply reversed course and by the end of December 2017, the stock had almost doubled its price to $30. It was trading even higher in mid-January 2018. As would be expected, investors began booking profits after the stock surged, resulting in a pullback.
That scenario repeated itself almost perfectly a year later. In November 2018, Canopy was on a downtrend and by December the stock was at one of its lowest price levels. However, the stock sharply reversed course in mid-December where it was trading at $25, so by mid-January the stock had almost doubled its price to $47.
With Canopy presently at one of its lowest price levels, you shouldn’t be surprised if it sharply reverses course and begins trending up from current levels. Of course, charts show Canopy has a history breaking out strongly from its November lows.
Cannabis 2.0 and more pot shops in Canada to expand Canopy’s market opportunity
Beyond historic price actions that show Canopy has a way of bouncing back from its lows, there are more reasons to be bullish on the stock. Last month, Canada expanded its cannabis market in what is called Cannabis 2.0 with the legalization of more cannabis-based products for recreational use. The sale of the newly legalized recreational cannabis products will kick off next month. Canopy is of the cannabis companies that have prepared to capture the expanded Canadian cannabis market with a range of products from cannabis-based drinks and edibles to vape pens.
Additionally, Canopy has ample cash reserve, more than C$2.7 billion, that it should readily deploy in areas such as product development and marketing as the need may call for to enable it to take full advantage of Cannabis 2.0.
Moreover, a shortage of cannabis shops has currently limited sales for cannabis companies like Canopy in Canada’s Ontario province. However, Canopy leadership views this as a short-term headwind that should clear soon or later and allow Canopy to realize its full potential in Ontario and Canada’s cannabis market in general.
“We believe our fundamentals are strong and are confident we’re moving in the right direction,” commented Canopy CEO Mark Zekulin.
Considering that Canopy is currently trading at one of its lowest price levels, and taking into account the stock’s history of bouncing back as well as its strong fundamentals, Canopy looks to be a great cannabis play currently available at a steep discount.
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Disclosure: We have no position in Canopy stock and have not been compensated for this article.
What Do Investors See In Medical Marijuana Stock (OTCMKTS:MJNA)?
Medical Marijuana Stock (OTCMKTS:MJNA) has emerged as one of many investor’s favorite pot stocks in the legal cannabis universe in 2020. The stock is already up about 10% in 2020, demonstrating how investors have warmed up to the stock early on in the New Year.
Following a disastrous 2019, cannabis investors lost money but have also learned that their best bets are stocks with strong fundamentals. They are looking for companies that have positioned themselves well in the cannabis industry and have what it takes to go for the opportunities. That is why MJNA stock is catching a lot of investor attention in 2020 because of how it has positioned itself in the cannabis market.
Robust revenue growth and strong financial position have also helped put MJNA on the radar of investors hunting for quality cannabis stocks. Revenue at MJNA more than doubled from $26.5 million in 2017 to $60 million in 2018. MJNA is also not in financial distress as may be the case with other cannabis companies out there. The company finished the third quarter, the most recent reported period, with $5.5 million in cash reserves.
Moreover, MJNA has recently taken steps to expand into new international markets and invest in companies that are leaders in their segments. These prudent actions are helping lift Medical Marijuana stock as more investors learn about them.
About Medical Marijuana stock
Is Tilray Inc (NASDAQ:TLRY) A Buy Or Sell?
For Tilray Inc (NASDAQ:TLRY) and the rest of cannabis stocks, 2019 was no doubt a bad year. But 2020 is shaping up to be a promising year for the stock. To start with, Tilray stock has already gained 8.35% year-to-date. If that says anything, it shows following the broad selloff in Tilray stock last year, we’ve got to a point where sellers are giving way to buyers in the stock.
There are several catalysts that should continue driving NASDAQ:TLRY as you’re about to see. First, below is a brief profile of the company we’re discussing.
Tilray is a Canada-headquartered global cannabis company. It is engaged in activities of cannabis cultivation and processing as well as marketing and distribution of cannabis products. Tilray already has several cannabis products brands to its portfolio. It operates across five continents through subsidiaries in Canada, Australia, Germany, and Portugal.
Following the broad collapse of cannabis stocks in 2019, investors are looking for cannabis stocks that can make a positive impact on their portfolios in 2020. Tilray stands out as an attractive cannabis stock pick in 2020. Here are some of the exciting things about the company.
Tilray CEO sees a bright future for the cannabis industry
On January 25, Tilray CEO Brendan Kennedy spoke on Bloomberg. In that interview, Kennedy framed a rosy outlook for the…
Is Cronos Stock (TSE:CRON)(NASDAQ:CRON) A Buy?
Cronos Stock (TSE:CRON)(NASDAQ:CRON) stock fell 9.22% on January 24, marking its steepest decline so far in 2020. The stock plunge followed an important disclosure that you would only expect from a company that is trying to be straight and transparent with investors. Here’s what happened.
On January 22, after market close, Cronos made a regulatory filing detailing changes in its executive team. In that SEC filing, Cronos revealed that David Hsu and William Hilson have stepped down as its chief operating officer and chief commercial officer, respectively. Unfortunately, some investors read bad news in the executive exits and sold their shares in Cronos.
But a careful reading of the filing doesn’t seem to raise any red flags. Therefore, the big stock plunged points to investors panicking to the degree of responding to a mosquito bite with a missile.
There is no doubt that 2019 was a difficult year for cannabis stocks and Cronos Stock is no exception. But before the uncalled for reaction to Cronos’s regulatory filing, we had been at a point where sellers were starting to give way to buyers in Cronos stock. The stock has gained about 8.0% in the past one month. It had gained more than 13% year-to-date before the January 24 big selloff.
About Cronos Stock
Cronos Stock is a Canada-based global cannabis company. Cronos operates through subsidiaries and…