Anyone that follows the cannabis sector closely can immediately attest to the fact that the general mood of the sector has recently lost some of the excitement it had garnered immediately following the election last November when the number of US states that have legalized cannabis in one way or another increased to twenty-nine. Most, if not all stocks in the cannabis sector enjoyed a brief period of exuberance, be it rational or irrational, which elevated stock prices for just about the entire sector.
The “new highs” that the stocks in the cannabis sector were experiencing did not last very long. Profit-taking, short-selling, and a general sense that the initial hysteria caused many of the stock to be severely over-bought. Add to that the uncertainty generated by the subsequent mixed signals that the Trump administration has been putting out regarding the enforcement of federal marijuana laws, and it’s no wonder investors are becoming a bit uneasy about initiating any new positions in the sector.
For those companies in the cannabis sector that have become wildly over-valued, the market will eventually force a correction. That’s what free markets do. And that is, to some extent what is happening now with the cannabis sector. A quick scan through the daily charts of stocks in the sector will show a similar pattern throughout.
However, when a closer analysis of the fundamentals and business activities of some of the companies in the sector is conducted, there are some gems to be found. While there are numerous cannabis related companies that have little to no revenues, even less assets, and a stock price to reflect as much, there are a few that, in spite of the downward trending price chart, the fundamentals are sound. CANOPY GROWTH CORP COM NPV (OTCMKTS:TWMJF) is one such company.
First, a little background on the Company for those not familiar with it. Canopy Growth Corp is a world-leading diversified cannabis company, offering diverse brands and curated cannabis strain varieties in dried and oil extract forms. Through its wholly‑owned subsidiaries, Canopy Growth operates numerous state-of-the-art production facilities with over half a million square feet of indoor and greenhouse production capacity. Canopy Growth has established partnerships with leading sector names in Canada and abroad.
Canopy Growth Corp has recently added PUF Ventures Inc (CSE: PUF), a London, Ontario based late-stage Access to Cannabis for Medical Purposes Regulations (ACMPR) applicant, to its curated CraftGrow line. The CraftGrow line brings to market high quality cannabis grown by a diverse set of producers, to Canopy Growth’s Tweed Main Street customers. By choosing to participate in CraftGrow, producers with cultivation and sales licenses can furnish their harvests to Tweed, on a wholesale basis for sale through Tweed Main Street.
All CraftGrow cannabis is subject to Tweed’s rigorous Quality Assurance program, including accredited lab testing, prior to being approved for sale. Pending a license to cultivate and sell cannabis products, PUF will become the fourth company to join CraftGrow. The program accelerates speed to market for newly licensed producers and provides brand and product exposure by selling partner products via the tweedmainstreet.com website to the market’s largest group of actively registered customers. Mark Zekulin, President of Canopy Growth commented:
“Our approach with CraftGrow and Tweed Main Street is to establish a diverse online marketplace for legal medical cannabis products. People can seamlessly access Canada’s leading cannabis brands with one medical document rather than being tied to a single producer. For new producers, having access to the largest group of registered patients in the country can go a long way towards building brand awareness. And for us, it’s an opportunity to position ourselves as the online source of cannabis in Canada, while bringing more product variety and reliability to our customers.”
By joining CraftGrow, PUF’s own master grower will have the opportunity to work with Canopy’s team to share expertise, technology, and best growing practices to maximize yield and ensure high quality product lines. PUF will also be able to source strains and lineage directly from Tweed’s own breeding facility to add to its product line. Adding the PUF Ventures strains to their line of products, Canopy Growth Corp continues to expand their revenue base.
TWMJF stock continues to pull back from its 2017 high of US$10.25 that it reached on its last upswing on February 14, 2017. The stock is currently trading at US$5.89. Current market capitalization stands at US$618.32 million, on 104.99 million shares outstanding as of June 16, 2017.
Canopy Growth Corp’s most recent financial statements report steady revenues, positive cash flow, and a strong sheet. Additionally, the company continues to expand. We’re finding it difficult to make an argument to not buy this stock based solely on the price action depicted on the stock’s price chart. A savvy investor may interpret the current price dip as a discounted buying opportunity. We will be updating our subscribers as soon as we know more. For the latest updates on TWMJF, sign up below!
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Disclosure: We have no position in TWMJF and have not been compensated for this article.