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Monday, November 23, 2020

Canopy Growth Corp (OTCMKTS:TWMJF) is Pulling Every Lever in Reach

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Canopy Growth Corp (OTCMKTS:TWMJF) has clearly been one of our favorites all year. This is a great time of the year to reflect; looking back just a few months ago you could have added TWMJF to your portfolio for just under $7 we now stand at just a hair under $20 with a few days remaining in the year. So what has spurred this cannabis juggernaut? 

The company has found more legitimate footing since its landmark investment interest from Constellation Brands. Now are watching shares continue to run as the company finds new and innovative ways to expand production amid a boom in the space. The most recent move from management is yet another example of this trend.

The company just announced, along with Canopy Rivers Corporation, that the two companies have signed a definitive joint venture agreement to form a new company, Les Serres Vert Cannabis Inc., together with Les Serres Stéphane Bertrand Inc., a largescale tomato greenhouse operator in Mirabel, Quebec. According to the release, “under the terms of the agreement, Vert Mirabel will, subject to satisfaction of certain conditions, lease the 700,000 sq. ft. greenhouse facility from Bertrand. Vert Mirabel will also be provided with an option to acquire the property.” The big idea here is to convert a tomato greenhouse into a state-of-the-art cannabis cultivation facility to further expand the company’s total capacity.

Canopy Growth Corp (OTCMKTS:TWMJF) is one of the bigger growers in the industry. 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 noted above, we are dealing here with a hot stock now turning every dial to “full” to push out capacity to its greatest reaches. The latest move is indicative of this trend

According to the release, “Bertrand currently produces tomatoes and other vegetables under 700,000 sq. ft. of modern greenhouse, most of which was built in 2015. The entire greenhouse will be upgraded and retrofitted for cannabis production by April 2018. With the assistance and guidance of Canopy Growth, the application for this site has been submitted; and subject to Health Canada and other standard regulatory approvals, the Company anticipates being ready to begin production by May 2018.”

“The joint venture allows us to expand our operational footprint for greenhouse production, and establish a much larger foothold in Quebec,” said Bruce Linton, Chairman and Chief Executive Officer, Canopy Growth. “The fusion of Canopy’s cannabis expertise with the greenhouse expertise of Les Serres Stéphane Bertrand is fantastic news for our customers and investors.”

Now commanding a market cap of $1904.4M, TWMJF has a significant war chest ($108.9M) of cash on the books, which compares with about $1.6M in total current liabilities. TWMJF is pulling in trailing 12-month revenues of $57.9M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 106.7%. As more color becomes clear on the name, we will review the situation and update our take. Sign-up for continuing coverage on shares of $TWMJF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout 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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