Canopy Growth Corp: 2020 Could Be a Big Year for This Pot Stock
Looking to Profit From Pot Stocks in 2020? Read This
If you are looking for pot stocks to consider in 2020, there’s one name that should not be left out: Canopy Growth Corp (NYSE:CGC).
For investors who have been following the cannabis industry, Canopy Growth needs no real introduction. But for everyone else…
The Smith Falls, Ontario, Canada-based company, which started in 2013, has become one of the biggest players in the legal weed industry, with diversified operations in cannabis, hemp, and cannabis devices.
Canopy Growth is also one of the few marijuana companies that have gained mainstream attention.
Unlike many pot stocks that trade over the counter, Canopy Growth is listed on both the Toronto Stock Exchange and the New York Stock Exchange.
Moreover, CGC’s popularity also got boosted by the fact that Constellation Brands, Inc. (NYSE:STZ), an international producer and marketer of beer, wine, and spirits, has taken a 38% stake in the company.
Today, the No. 1 reason why investors are considering pot stocks is the sheer growth in their businesses. As one of the most dominant companies in the industry, Canopy Growth’s numbers do not disappoint.
The company reported earnings in mid-November. In the second quarter of Canopy Growth’s fiscal-year 2020, which ended September 30, 2019, it generated CA$118.3 million of gross revenue, representing a whopping 408% increase year-over-year. (Source: “Canopy Growth Reports Second Quarter Fiscal 2020 Financial Results,” Canopy Growth Corp, November 14, 2019.)
Consumers have been warming up to the company’s products. In the reporting quarter, Canopy Growth’s owned recreational pot stores in Canada delivered 17% in same-store sales growth.
While CGC is based in Canada, it is a global company with operations in over 12 countries on five continents. And its international business has been booming, too.
In its second fiscal quarter, total organic global sales in Canopy Growth’s medical segment grew 23%.
Why CGC Stock Deserves Attention in 2020
The best part is that, going forward, Canopy Growth Corp might be able to capitalize on a major catalyst.
That catalyst is “Cannabis 2.0,” which refers to the second wave of pot legalization in Canada. This second phase of legalization will bring cannabis derivatives—such as edibles, concentrates, and topicals—to dispensary shelves.
Canopy Growth is well prepared for this new era.
In fact, the company recently revealed a whole portfolio of Cannabis 2.0 products. For instance, its cannabis chocolate products, which include “Tokyo Smoke Go,” “Tokyo Smoke Pause,” and “Tweed Bakerstreet” chocolate bars, will arrive in retail locations in early January 2020. (Source: “Canopy Growth Provides Update on 2.0 Product Rollout,” Canopy Growth Corp, December 6, 2019.)
Meanwhile, the company has a line of ready-to-drink mixed “Distilled Cannabis” beverage products. These products, which include “Tweed Houndstooth & Soda,” “Houseplant Grapefruit,” and “Houseplant Lemon,” are also expected to hit dispensary shelves in January 2020.
After that, Canopy Growth will launch its Distilled Cannabis spirits products in early February.
The pot giant is going to enter the vape market as well. In November, Canopy Growth’s chief technology officer Peter Popplewell revealed the company’s lineup of vape pens and vape cartridges. The company expects its vape products to become available to consumers in late January.
Keep in mind that Canopy Growth is already a leader in the Canadian recreational pot market, with an estimated market share of 25%, twice as much as its closest competitor.
By launching a large portfolio of pot-derivative products, the company’s first-mover advantage could continue in the Cannabis 2.0 era. (Source: “Driving the Global Cannabis Industry,” Canopy Growth Corp, last accessed December 9, 2019.)
Canopy Growth Corp (NYSE:CGC) Stock Chart
Chart courtesy of StockCharts.com
Analyst Take
Canada’s Cannabis 2.0 is not the only thing CGC investors can look forward to in 2020. Canopy Growth Corp also plans to enter the U.S. cannabidiol (CBD) market in the coming months.
Meanwhile, in Europe, the company’s Danish greenhouse recently received good manufacturing practice (GMP) certification. It’s expected to start production in the first quarter of its fiscal 2021 (the second quarter of calendar-year 2020).
If these expansion plans work out, I wouldn’t be surprised to see Canopy Growth stock getting even more investor attention.
