Home Investing & Trading Is CGC the Stock Right For You?

Is CGC the Stock Right For You?

by Alan Daniel
Is CGC the Stock Right For You?

Pot stocks like Canadian Canopy Growth (CGC) went all the way up before coming down and plateauing. The company stock enjoyed significant gains before coming down to reality. We may want to know if this stock is fully beaten down, potentially implying value, or is there more value to shed on CGC stock?

Canopy Growth stock rose to $51.53 on September 7th, 2018 before declining to $15.33 in November 15, 2019. The CGC stock has turned a corner and is now on the rebound at a current price of $24.89.

Is CGC stock on a tear or will it see a correction soon?

Let’s find out.

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Canopy Growth Challenges

The CGC company is still going through different challenges in expanding its line of products and increasing revenues to meet investor expectations.

The latest challenge is that of launching its cannabis-infused beverages in Canada. Apparently, Canopy Growth notified the world that it would delay its cannabis-infused beverages in Canada. The cannabis firm did not provide details on the potential launch of the products. That’s not a problem at the moment, if you believe that the company will have robust revenues from current revenue lines.

Is CGC Losing Money or Investing Money

As with most companies in new industries, Canopy Growth is also losing money as it established a presence in the short term. It is losing money or investing money into production facilities and learning how to optimize these plants for excellent production.

Volatility

We know that Canopy Growth is operating in a volatile space that should grow over time and still is one of the more premium names in the legal cannabis sector.

The legalized Cannabis sector is not for the faint of heart but the sector should pay off for long-term investors.

Canopy Growth Positives

Premium Name and Robust Backing

Remember that Canopy Growth is one of the more premium entities in the Cannabis sector. The firm has the backing of larger age old giants such as Constellation Brands. Constellation Brands has about at 37% stake in Canopy Growth. The beverage brand with over $2 billion in operating cash flow and over $1 billion in free cash flow helped to bolster Canopy Growth with its investments in cannabis company over the past several years.

Global Production and Distribution Network

Canopy Growth has powerful opportunities when it comes to creating a brand and standing out above smaller competitors because of its backing, in addition to its substantial global production and distribution network. The firm will have visibility and a physical presence with “2.4 million sq. ft and additional 3.2 million sq. ft under development in Canada. Expansion is critical for the firm as it grows its space to 400,000 sq. ft globally.”

Marketing, Branding, Licensing, and Channels to Market

One critical aspect to long-term security will be investing in the right relationships to bring about effective marketing, correct branding, and incorporating the right licensing to establish a secure position in the growing legalized market. Canopy Growth is doing what it must and investing efforts to secure these many channels.





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