Trade Initiation: Canopy Growth Corporation (CGC)
Last week I bought an initial position in Canopy Growth Corporation at a share price of $50. This company is an early entrant to the Canadian Pot industry as a producer of both medical and recreational marijuana, a new market that opens up the first of October, now that the country has legalized it. Pot stock have been hot - really really hot. There's no doubt that many of them, Canopy probably included, are over valued right now. While I was looking to speculate there's a lot of publicity in this area right now. I would say that I felt Canopy was one of the better stocks, though we all know there's another out there that has been surging in astronomical proportions due to shortage of stock availability. The nice thing about Canopy is that they're adequately capitalized and won't likely look to raise cash through offering more shares. However, there are a lot of other companies out there that will need to and even more that will be looking to go public and cash in. As that happens, I expect the stock to get hit with dilution.
While this stock is meant to be an investment with a 12-18 month horizon, its volatility may not allow for that. I'm looking to purchase on wide scales on the way down, but at the same time, I'm prepared for the stock to go to about $83 at which point I might sell the current position. Major catalysts are the October 17 date in which Canada's repeal of marijuana as an illegal drug is lifted. This isn't a catalyst in a positive sense, as it could become a "sell the news" kind of point to watch out for. Additionally, as Canopy and others report after this date, I don't expect there to be these explosive revenue numbers to back the valuations of many of the stocks. This is another potential trigger that could burst the bubble - and it is a bubble, have no doubts about that. We will reach a point where this will pop and stocks will lose significant value. I hope to be out or slowly buying positions when that happens and signs of a bottom form. From there, I expect Canopy to have the potential to be a long term value and the potential for a buyout, given Constellation Brand's investment in the company already.
Have no doubts. This is pure speculation. I missed the crypto run where I could've capitalized on the craze and walked away with decent money. I might be late to this one as well, but I wanted to take the chance. We'll have to see how it goes.
Notes:
Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash. Ratings are based upon 12-18 month outlook on stock direction and not necessarily related to moves I make due to financial positioning.
While this stock is meant to be an investment with a 12-18 month horizon, its volatility may not allow for that. I'm looking to purchase on wide scales on the way down, but at the same time, I'm prepared for the stock to go to about $83 at which point I might sell the current position. Major catalysts are the October 17 date in which Canada's repeal of marijuana as an illegal drug is lifted. This isn't a catalyst in a positive sense, as it could become a "sell the news" kind of point to watch out for. Additionally, as Canopy and others report after this date, I don't expect there to be these explosive revenue numbers to back the valuations of many of the stocks. This is another potential trigger that could burst the bubble - and it is a bubble, have no doubts about that. We will reach a point where this will pop and stocks will lose significant value. I hope to be out or slowly buying positions when that happens and signs of a bottom form. From there, I expect Canopy to have the potential to be a long term value and the potential for a buyout, given Constellation Brand's investment in the company already.
Have no doubts. This is pure speculation. I missed the crypto run where I could've capitalized on the craze and walked away with decent money. I might be late to this one as well, but I wanted to take the chance. We'll have to see how it goes.
Notes:
Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash. Ratings are based upon 12-18 month outlook on stock direction and not necessarily related to moves I make due to financial positioning.
Nothing on this site should be taken as advice, research, or an invitation to buy or sell any securities. All views expressed are solely of my own and I am not a professional money manager. Please consult with your financial adviser before taking any action in your own portfolio.
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