Pot stocks have been having a moment ever since the November election, including Canopy Growth stocks, which have risen 51% since November.
The Canadian cannabis giant has been eagerly awaiting for the US to legalize marijuana on a federal level so it can take advantage of the massive market.
But is buying stocks right now in the world’s biggest pot stock necessarily going to make you millions? Let’s find out.
Photo by: Burak K
Future Prospects of Canopy Growth Stocks
Canopy Growth’s vape, value, and cannabis-infused beverages have given the company a big boost in Canada’s recreational market, where Canopy Growth holds 15.5% of the market share. Thanks to this growth in Canadian recreational and medical markets, the company saw its top-line grow by 77% year-over-year in its September-ending quarter.
Expansion in the US
In addition to the company’s success in Canada, the potential for expansion southward into the US market is another big reason to buy Canopy Growth stocks right now (obviously pending federal legalization). Legal cannabis sales in the US are projected to grow 18% annually over the next five years, and the company launched its online US store, Shop Canopy in July. This along with federal legalization should give a boost to Canopy Growth stocks in the future.
Canopy Growth’s presence in Germany
Canopy Growth also has a leading position in Germany’s medical marijuana market and owns 54% of Canada’s cannabis beverage industry. Additionally, beverage giant Constellation Brands owns 38.6% of Canopy, which will help it gain momentum in a bourgeoning market. And this can benefit Canopy Growth stocks.
Photo by: CRYSTALWEED Cannabis
Other Factors to count before buying Canopy Growth Stocks
But despite cannabis being a high-growth industry, like other pot stocks, the company has been unable to consistently come out with a positive net income. This is mainly due to the high operating costs inherent in the cannabis industry and the company spending in excess of market demand.
That said, Canopy Growth has focused on cutting costs and closing down production facilities, allowing the company to reduce operating expenses by 19% year-over-year and move towards profitability. And analysts expect Canopy’s sales to rise by 40.4% to $560 million in fiscal 2021 and by 41.5% to $792 million in 2022, according to Motley Fool.
Despite Canopy not being yet profitable, given the company’s potential for high growth, its potential entry into the US market pending federal legalization, and improving margins, I believe it’s a good stock to invest in right now.
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