CGC Stock: What Is the Next Big Move for Canopy Growth?

CGC Stock: What Is the Next Big Move for Canopy Growth?
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Canopy Growth Stock Soars in 2019

While the year has been, overall, fantastic for marijuana stocks, one company above all others has stood out: Canopy Growth Corp (NYSE:CGC).

While CGC stock hasn’t necessarily outperformed all its competitors in terms of gains, it has made the biggest strides toward long-term dominance of the marijuana industry.

After all, Canopy Growth already sits atop the industry when we consider market cap.

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Chart courtesy of StockCharts.com

But rather than rest on its laurels, the marijuana giant has continued to grow and consolidate its gains.

Canopy Growth’s most recent achievement in 2019 was its acquisition of Acreage Holdings Inc (OTCMKTS:ACRGF, CNSX:ACRG.U)—or, I should say, its proposed acquisition of the American cannabis producer.

The terms of the deal are as follows: Canopy Growth has the right to totally acquire Acreage Holdings for $3.4 billion. There’s an important caveat, however: Canopy Growth has a requirement to exercise that right when cannabis production and sale becomes federally legal in the United States. (Source: “Canopy Growth Announces Plan To Acquire Leading U.S. Multi-State Cannabis Operator, Acreage Holdings,” Canopy Growth Corp, April 18, 2019.)

Following the approval of shareholders from both companies and the Supreme Court of British Columbia, Canopy Growth will pay $300.0 million immediately.

“Our right to acquire Acreage secures our entrance strategy into the United States as soon as a federally-permissible pathway exists,” said co-CEO and Chairperson Bruce Linton. (Source: Ibid.)

The acquisition will also require an amendment to the Constellation Brands, Inc. (NYSE:STZ) deal that Canopy Growth struck in 2018.

The Acreage Holdings deal will give Canopy Growth one of the strongest footholds in the U.S. ahead of pot legalization in the country.

While this plan is a tad premature in my view, considering that U.S. federal legalization could still be a few years off, it’s important in that it tells investors that Canopy Growth stock is not going to be tied to the Canadian market only, and that it is very much looking to expand.

We’ve already seen Canopy Growth set up operations around the world, from Latin America to Europe, and the company will continue its attempts to dominate the global marijuana market.

Its entry into the American market is the next logical step, and a move that has long been heralded by Canopy Growth itself. After all, the company made its intentions very clear when it announced that it would be seeking ways to enter the U.S. cannabis market when the Agriculture Improvement Act of 2018 was passed, virtually legalizing cannabidiol (CBD).

So there are many reasons to be bullish on CGC stock. I didn’t even touch on the massive investment from Constellation Brands, which represents the strongest partnership between marijuana and Big Alcohol to date.

But with all these milestones achieved by Canopy Growth, where can the company go next?

CGC Stock Prediction

There’s no denying that Canopy Growth stock has had a fantastic run in 2019.

Banks have upgraded the company’s projections, analysts have been bullish on the company, and overall, the sentiment surrounding the company is positive.

But a lot of that is based on what Canopy Growth Corp has already achieved. What’s the next step?

The first and most obvious way for Canopy Growth to see major stock gains in the near future would be via its quarterly reports.

While Canada has been a mixed bag since legalization, due to slower-than-expected sales and a thriving pot black market, we’ve still seen huge revenue increases.

If Canopy Growth can keep those earnings numbers growing and combat the setbacks that it and many other marijuana companies have faced in Canada, then expect its shares to continue to rise.

But the biggest moves for Canopy Growth will come in one of two ways: either the U.S. gets serious about marijuana reform on a federal level (which will benefit all pot stocks, but especially CGC stock) or the company will find new markets to expand into.

If Canopy Growth further entrenches its position in the European markets—combined with its already strong place atop the marijuana industry—I expect that investors will flock once again to its stock.

Similarly, expanding to new markets around the world—or even making good on its promise to enter the U.S. cannabis market via CBD—could all help spur big stock gains.

That is to say, I could see Canopy Growth stock hitting $100.00 sometime in 2020, effectively doubling its value within a year-and-a-half. And that, frankly, is the lower-end projection. The CGC stock prediction has so many variables that could result in a dramatic scaling up of that number.

U.S. legalization, acquisitions, partnerships… Canopy Growth has proven itself to be more than capable of encouraging investors to jump in on the stock.

The future, I would say, is as bright as it has ever been for Canopy Growth stock.

Analyst Take

In my mind, there is no marijuana stock that is better suited for long-term success than Canopy Growth Corp.

It’s already the darling of banks and analysts. Many firms have rated it among their top picks or have continued to raise its price target.

Furthermore, doubters of CGC stock have been proven wrong time and time again. I’ll admit it: several years ago, when I first started covering marijuana stocks, I too was doubtful about Canopy Growth.

But that doubt was short-lived. This stock has since impressed me at every turn and has made me a believer in its potential.

With that in mind, investors looking for a long-term position in the marijuana market could do a lot worse than Canopy Growth stock.