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Wednesday, October 21, 2020

CANOPY GROWTH CORP COM NPV (OTCMKTS:TWMJF) Piles Up Catalysts

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CANOPY GROWTH CORP COM NPV (OTCMKTS:TWMJF) has continued to be one of the true leaders in the North American cannabis patch, advancing nicely off its post-election sell-the-news correction swing low. We pegged this one as a leader early on, and we still like the story, particularly because the Canadian marijuana plays are still running toward major catalysts given their inner radical position relative to PM Trudeau’s promise to steer Canadian law toward a full recreational legalization of pot sometime in 2017.

According to Bloomberg, Canada’s push to legalize marijuana could be a “game changer” for the recreational pot industry with the potential to reach C$6 billion ($4.5 billion) in sales by 2021. As far as recent action goes, we’ve witnessed 62% added to share values of the name over the past month of action. Market participants may want to pay attention to this stock. TWMJF is a stock whose past is littered with sudden rips. Moreover, the name has seen an influx in interest of late, with the stock’s recent average trading volume running topping 380% over what the stock has registered over the longer term.

CANOPY GROWTH CORP COM NPV (OTCMKTS:TWMJF) bills itself as a company that, through its subsidiaries, produces and sells medical marijuana in Canada.

The company offers dry cannabis and oil products primarily under the Tweed and Bedrocan brands. It also sells its products through online.

According to company materials, “Tweed is the most recognized marijuana production brand in the world. It has built a large and loyal following by focusing on quality products and meaningful customer relationships. Tweed doesn’t just sell marijuana, it facilitates a conversation about a product we’ve all heard about but haven’t met intimately yet. It is approachable and friendly, yet reliable and trusted. As marijuana laws liberalize around the world, Tweed will expand its leading Canadian position around the globe.”

Also from their materials, “Bedrocan is the epitome of medical-grade cannabis. Bedrocan BV pioneered medical cannabis in Holland through decades of selection and refinement, leading to standardized, whole bud cannabis strains that patients can rely on. Bedrocan Canada supplies the same standardized strains to the Canadian market through exclusive licensing rights to the American continents, an arrangement it will also enjoy for all future genetic advancements. Due to its consistency over time, Bedrocan’s strains have been used in clinical research in seven European countries. That commitment to research didn’t stay on the east side of the Atlantic – Bedrocan Canada recently launched one of the largest clinical cannabis studies in the world, the EQUAL Study, to evaluate quality of life before and after medical cannabis use.”

The company was formerly known as Tweed Marijuana Inc. and changed its name to Canopy Growth Corporation in September 2015. The company is headquartered in Smiths Falls, Canada.

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Canopy Growth just announced on Thursday that it will acquire all of the issued and outstanding shares of Mettrum Health Corp., creating a world-leading diversified cannabis company with six licensed facilities, and a licensed production footprint of approximately 665,000 sq. ft., with significant acreage for expansion.

The total transaction is valued at approximately C$430 million and will be satisfied by the issuance of common shares in Canopy Growth. Under the terms of the Arrangement Agreement, Mettrum shareholders will be entitled to receive 0.7132 common shares of Canopy Growth for each common share of Mettrum, representing consideration of C$8.42 per Mettrum common share based on the closing price of Canopy Growth common shares on the Toronto Stock Exchange on November 30, 2016. Upon completion of the Arrangement, existing Canopy Growth and Mettrum shareholders are expected to own approximately 77.7% and 22.3%, respectively, of the pro forma company.

Currently trading at a market capitalization of $992.5M, TWMJF has a significant war chest ($33.60M) of cash on the books, which is balanced by an appreciable load ($5.51M) of total accumulated debt.

TWMJF is making real money, with trailing revs already coming in at $17.78M. In addition, the company is starting to see major topline growth, with quarterly y/y revs increasing at 245%. So, the balance sheet is in great shape, the financials are soaring along, and the legal catalysts are out in front. The only drawback is how much speculative capital may already be hanging out in this stock. But it should have a tough time finding negative catalysts. We will update the story again soon. For continuing coverage on shares of $TWMJF stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!

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