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Monday, January 18, 2021

How CANOPY GROWTH CORP COM NPV (OTCMKTS:TWMJF) Prospects Stack Up

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CANOPY GROWTH CORP COM NPV (OTCMKTS:TWMJF) is one of the central players in the Canadian cannabis patch, with a market cap of nearly three-quarters of a billion dollars and over $100M in cash on the books. However, TWMJF stands out to us as the only one of the big players in that space that is anywhere near that size and still refuses to report audited results. In other words, one has to take it on faith that these numbers are for real.

That may be why the stock lagged others in the space such as APHRIA INC COM NPV (OTCMKTS:APHQF), AURORA CANNABIS IN COM NPV(OTCMKTS:ACBFF), and ORGANIGRAM HLDGS I COM NPV (OTCMKTS:OGRMF) during any sector-wide pullbacks. However, for similar reasons, when the buzz is clicking in the space, the stock may actually outperform because it likely carries around more short interest on the float on a regular basis given the increased odds of some kind of accounting scandal.

CANOPY GROWTH CORP COM NPV (OTCMKTS:TWMJF) is one of the bigger growers. The company produces and sells medical marijuana in Canada. It 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.”

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As we noted above, TWMJF has been at times a bit riskier than other similar plays in the Canadian cannabis patch given that the company refuses to get on board with audited financial data. However, there’s another issue to appreciate here that bears watching: diversification as a theme in the space.

Just recently, we’ve pointed out clear moves by both ACBFF and APHQF to diversify operations and end markets to buffer against the volatility of marijuana as a commodity market. In each case, the move has been dramatically rewarded by investors. TWMJF has not really followed suit. But, if our read on the space is correct, we may see this type of strategy implemented here as well. If so, it may be an important catalyst to come for the stock. In fact, the same might be said for its accounting standards. After all, a lack of audited filings is a bad thing, but one supposes that is already in the price of the shares. What isn’t in the price of the shares is a potential announcement of audited financial records, which would imply an almost certain uplisting for shares on the OTC in the US, off the pink sheets.

We’ve witnessed 13% added to share values of the company over the past month of action, but this action is running counter to the larger trend in the name. The situation may be worth watching. TWMJF has evidenced sudden upward volatility on many prior occasions. Moreover, the listing has witnessed a pop in interest, as transaction volume levels have recently pushed 12% over the long run average.

Currently trading at a market capitalization of $1.17B, TWMJF has a significant war chest ($102.4M) of cash on the books, which stands against about $1.7M in total current liabilities. One should also note that debt has been growing over recent quarters. TWMJF is pulling in trailing 12-month revenues of $39.9M. In addition, the company is seeing major top line growth, with y/y quarterly revenues growing at 190.8%. We will update the story again soon as developments transpire. 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!

Disclosure: we hold no position in $TWMJF, either long or short, and we have not been compensated for this article.

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