Disclaimer: I’m not a financial professional, and the opinions below are my own. Research stocks that you wish to invest your capital in.
I’m not a stock expert by any means, but I do understand an opportunity when I see one. Most people are looking for an up and coming market to invest their dollars in; whether it be blockchain, cannabis, or artificial intelligence. With the ongoing legalization of cannabis throughout the United States, and the passing of law that made recreational cannabis legal in Canada (2018), we could potentially see the explosion of an upcoming industry.
When new markets pop up, it is important to consider what businesses are to grow within an exploding market. When it comes to the cannabis industry, one company stands out to me the most.
That company is Canopy Growth Corporation (NYSE: CGC).
A couple important notes on the state of the cannabis industry (Source: New Frontier Data):
- 16% Annual compounded growth rate in the U.S. for legal cannabis sales (medical/recreational)
- 88% of people believe Cannabis should be made legal in one way or another
- The 2017 Market for the cannabis industry was ~$10 billion
- Grand View Research projects the cannabis industry to be worth $146 billion by 2025.
- The 2019 Farm Bill will have a major impact on CBD related products.
- CGC is currently sitting at a market cap of $16.7 billion.
With a growing (and very speculative) market such as the cannabis industry, a lot of the growth is based on news leaks, and speculative (obviously) information. I try to avoid investing based on this premise, as it doesn’t provide a long term formula for growth and wealth generation.
Here are a couple of the reason’s that I believe Canopy Growth is set up for long term financial success.
- They are the first major Canadian company to have a major presence on the U.S. farm bill.
- Constellation Brands (makers of Corona beer) invested $5 billion into the company for growth of the brand and the development of CBD related products.
- CGC operates in 14 countries and 5 continents, making it the largest Cannabis country in the world.
- Canopy is investing ~$150 million into an industrial complex facility within the United States.
- Canopy experienced %95 revenue growth from 2017 to 2018.
While the company has also seen a downward trend in operating income and profit, the opportunity of a $5 billion dollar investment from one of the largest beverage makers in the world is a huge plus. With backing from such a large player in the retail space, Canopy will be able to use such a large investment towards research of new products, production facilities that will cut costs, and increasing profit margins.
The cannabis industry is getting geared up for a boom across the world, and CGC is at the forefront of what many call the next agricultural revolution.
For more information regarding CGC, check out Trading View for technical data and trading tips.