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Saturday, November 28, 2020

Canopy Growth Corp (NYSE: CGC) Continues to Lead the Troops

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We continue to survey the larger cannabis plays as they consolidate or correct in front of full Canadian recreational legalization projected for this fall, and Canopy Growth Corp (NYSE: CGC) provides another interesting case study. The stock has been maintaining a leadership position as it has greater access to institutional capital following its uplist onto the big boards.

To further build on its top-tier narrative, the company just announced the acquisition of all remaining outstanding shares of its Chilean in-market entity, Spectrum Cannabis Chile SpA. According to the release, “This transaction brings Spectrum Cannabis Chile fully under the Canopy Growth umbrella and directly supports the Company’s plans for development within the LATAM region which is home to more than 600 million people. Thanks to progressive regulations and Government support, Chile is known throughout Latin America as an ideal location for medical and pharmaceutical research. The country has more clinical studies per resident than any other in Latin America.”

Canopy Growth Corp (NYSE: CGC) 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 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, the company has been faring better than most of its peers on the charts over the past few months. Recent action has seen 8% piled on for shareholders of the company during the trailing week as well. What’s more, the stock has registered increased average transaction volume recently, with the past month seeing 36% above its longer-run average levels.

“Chile is an important part of our strategy for this region and completing this acquisition marks another successful step forward in our plan,” said Mark Zekulin, President and Co-CEO, Canopy Growth. “Spectrum Cannabis Chile, working closely with the team at Canopy Health Innovations in Canada, will continue to lead regional research activities with a focus on developing additional evidence to support the use of cannabis-based medicines across Latin America and the world.”

At this time, carrying a capital value in the market of $6.2B, CGC has a significant war chest ($323.2M) of cash on the books, which must be weighed relative to about $1.6M in total current liabilities. CGC is pulling in trailing 12-month revenues of $77.9M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 55.6%. We will update the story again soon as further details emerge. Sign-up for continuing coverage on shares of $CGC 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 $CGC, either long or short, and we have not been compensated for this article.

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