Shares of Canopy Growth Corp (NYSE:CGC) have started surging after a steep pull back from record highs, registered in October. A 50% plus pull back had initially raised concerns. However, not anymore. The stock is powering high as investors react to recent developments that have once again affirmed why Canopy Growth is an exciting pick in the sector.
Canopy Growth Price Analysis
The New York State is fresh from granting the company a hemp license that paves the way for the company to build its first cannabis production facility in the U.S. The passing of the 2018 Farm Bill has also made it easy for Canadian companies to enter the U.S the market after struggling with cross border restrictions in the past.
The stock is already up by more than 50% for the year, making it one of the top performers in the sector. With the rally, the stock has essentially turned bullish after coming under pressure on the broader sector turning bearish late last year.
The rally opens the door for the stock to make a run for the $47 a share level, seen as the next substantial resistance level. A breach of the resistance level should open the door for the stock to make a run for its record highs of $59.25.
On the downside, Canopy Growth faces immediate support at the $33 a share level. Any sell-off followed by a close below the critical support level could give short sellers a reason to continue pushing the stock lower, probably to one-year lows of $20 a share.
About Canopy Growth
Canopy Growth is a Canadian cannabis company engaged in the cultivation processing and sale of medical cannabis in North America. Its product pipeline includes dried flowers, oils as well as concentrates and soft gel capsules.
Canopy Growth is surging in the market on investors taking note of the fact that the company remains well positioned to benefit from growth in the multi-billion industry. Unlike other players, the company boasts of a global footprint with operations in 12 countries. The company already has 4.3 million square feet of licensed cannabis location and is currently working on an additional 1.3 million.
The company’s footprint is set to receive a boost on the New York State granting the firm a hemp license. Plans are underway to spend as much as $150 million in the construction of a production facility in the state. The production facility should go a long way in strengthening the company’s operations in the U.S.
“Canopy has been preparing for and investing in this opportunity for several years now, through strategic acquisitions, infrastructure expansion, and extensive internal research and development. With the door now open, we are moving fast to bring our considerable resources to establish the same market leadership position internationally that we have earned in the Canadian cannabis market,” said Bruce Linton, Chairman, and Co-CEO, Canopy Growth.
The passing and implementation of the U.S Farm Bill clears the way for the likes of Canopy Growth to strengthen their operations in the U.S. For starters, the company will now be able to grow cannabis in the country to take advantage of the huge cannabidiol products market.
Constellation $4 Billion Investment
Renewed investor interest in Canopy Growth also stems from a $4 billion investment in the company by Constellation Brands. The investment accords the company the much-needed financial firepower to ramp up its cannabis infrastructure. The company will also be able to accelerate its marketing efforts as well as enhance its research and development efforts.
A partnership with Constellation Brands also accords Canopy Growth access to a new distribution network across the U.S, Mexico, New Zealand, Canada and Italy. That said the company should be able to reach a wider target market in pursuit of new revenue streams.
For early movers looking to gain exposure in the multibillion-cannabis industry, Canopy Growth is an exciting pick. The stock deserves a spot in any investment portfolio given the company’s large cash position, the key to pursuing opportunities in the sector.
A strong cash position should allow the company to ramp up its operations in pursuit of new revenue streams as well as shareholders value. The setting up of a production facility in New York is another development that affirms the company’s long-term prospects.
After a steep pull back from record highs, Canopy Growth has emerged as a strong buy as it continues to bounce back in continuation of the long-term uptrend.
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Disclosure: We have no position in CGC and have not been compensated for this article.