Business Studies Scholarship Program – Canopy Growth Corp’s Potential To Be a Great Investment

Canopy Growth Corp‘s Potential To Be a Great Investment

Daunte West

3/15/2020

Name: Daunte Sevaaetasi West
From: Huntsville, Alabama
Grade: 12th
School: New Century Technology High School
Votes: 0

Q4 2019 hedge fund letters, conferences and more

Canopy Growth Corp is an up and coming marijuana dispensary based in Ontario, Canada. It is one of my favorite stock ideas because the legalization of marijuana is expanding throughout the united states, which will bring an influx of new marijuana products and companies. I believe Canopy Growth will be one of the more successful companies in the weed business.

Canopy Growth has a market cap of 3.83 and since they started trading, their stock has fluctuated, but overall has been profitable due to legalization of marijuana in Canada. Analysis predict Canopy Growth Corp will jump in 2020 and after suffering a decrease in stock value due to corona virus.

I personally see a jump from its current value of $10 a share to over $75 a share. At its peak Canopy Growth Corp was selling at $49 a share in 2018 because Canada legalized recreational and medical marijuana. Since then their stock has fluctuated due to competition from other Canadian marijuana companies like Aurora Cannabis, Cronos Group, and Tilray.

Canopy Growth Corp and Aurora Cannabis Inc vs Other Canadian Weed Producers

In terms of product capacity, Canopy and Aurora stand well ahead of the other Canadian marijuana producers. Canopy growth announced that it made roughly $62 million in the quarter ending December 31st of 2018. $43.4 million of that stemmed from the adult use recreational marijuana market.

On the other hand, Aurora Cannabis reported a total revenue of $40.7 million with $21.6 million in recreational marijuana sales. I believe the company is being overlooked right now because the market for marijuana has been in decline. But people don’t understand that the illegal marijuana markets still dominated the market and once that market is taken over by actual legal companies like Canopy Growth Corp, these companies will explode in value.

Canopy Growth has the potential to dominate the sale of medical and recreational marijuana. The only thing holding the company back is the current presidency in the united states. Under the Trump administration or other Republicans, the legalization of marijuana throughout the entire U.S. is just not realistic.

But with the election of a liberal Democratic president, I see the legalization of recreational marijuana expanding throughout the entire nation. Canopy already has a head start on new upcoming U.S. dispensaries and is seen as the top dog in Canada.

A Bright Future In America

With the U.S. legalization of weed in America I see nothing but a bright future for the company. As of today, I own 8 shares of Canopy Growth Corp at a price of $10.76 a share. With a total equity of $85.76. I bought Canopy Growth at $14 a share in early November 2019, and since then the price has jumped to around $25 until the unfortunate corona virus outbreak that has caused a crash in the market.

Right now, I have a -$26.24 return but im holding on to my shares because I expect a huge jump toward the end of 2020. The analysis right now rates the investment as a 39% buy, 57% hold, and 4% sell as of 3/15/2020. I also bought 65 shares or Aurora Cannabis at $3.07 a share around the same time I started investing in Canopy Growth Corp. But since then Aurora Cannabis has been on the decline and never really jumped.

It is now at a year low of $0.79 a share, coming out to a total -$147.56 return on my investment. My equity is at a depressing $51.68 a share from the $198 I invested. Analysis right now rates the investment as a 14% buy, 67% hold, and a 19% sell. I’m still holding on to hope for Aurora though, although I wished I invested more into Canopy Growth. Recently, Aurora Cannabis’s CEO stepped down so I believe Canopy Growth will have the upper hand over their most important legal rival.

Conclusion

In conclusion, the future for Canopy Growth Corp in the weed industry is bright. I’ve read various articles with analysis stating that Canopy Growth has great potential and should be a long-term investment because of the expanding recreational marijuana industry.

Personally, I don’t smoke marijuana or use marijuana products, but I know so many people who do in my little community of Huntsville, Alabama. If Canopy Growth Corp is able to reach as far as us and have influence in the united states, they are surely gonna increase exponentially. With the passing of the corona virus I expect to have a positive return on my investment within weeks.

Hopefully, with the upcoming presidential election a democratic candidate is elected, and the legalization of recreational marijuana throughout the entire U.S. begins. I have nothing but confidence for Canopy Growth Corp and I believe this passing year is huge.