Hydropothecary Stock Forecast
Today we saw another major partnership between marijuana and alcohol by way of Molson Coors Brewing Co (NYSE:TAP) and Hydropothecary Corp (OTCMKTS:HYYDF, TSE:HEXO) forming a joint venture to bring marijuana-infused drinks to Canada come legalization.
The news has sparked a massive rush of investor interest in Hydropothecary stock, which has catapulted upward by 20% over the past five days as a result.
We’ll get into the specifics of the deal below, but right now, the Hydropothecary stock forecast is looking very bright.
While the 20% gains we’re seeing over these past few days are likely not sustainable, I believe that the company will come out with a healthy uptick in stock value even after we see a bit of a drawback when the hype wears off.
Furthermore, I was already bullish on Hydropothecary stock earlier this year when I covered the company’s earnings report for the third quarter.
Chart courtesy of StockCharts.com
The company at the time announced that HEXO stock had confirmed a Quebec deal that will see it supply some 200,000 kilograms of cannabis to the province over a five-year period. (Source: “Hydropothecary reports fiscal 2018 third quarter results,” GlobeNewswire, June 28, 2018.)
The earnings report also detailed the expansion to a 250,000-square-foot. greenhouse that was a month ahead of schedule.
If you’re keeping track, this means we have a company that:
- Just struck a deal with a major alcohol producer to create cannabis-infused beverages,
- Had a pretty stellar recent quarterly report,
- Struck a deal with one of Canada’s largest provinces to be a key marijuana supplier, and
- Is ahead of schedule in regards to expansion products so that it can up its production capacity.
Those are all very compelling reasons to be big on Hydropothecary stock.
As such, I believe we could see the company emerge from 2018 with significant gains to the tune of 40%.
While the market is still highly volatile and I do believe that we’re going to see a marijuana correction after the legalization hype fades, Hydropothecary’s dealmaking has put it in one of the better positions to profit in 2018.
Molson Coors Hydropothecary Deal
The joint venture will see one of the largest alcohol producers on the planet look to create non-alcoholic, cannabis-infused beverages for consumers.
The details of the deal have Molson Coors retaining a controlling interest in the joint venture. It is expected to close by the end of September.
The two companies are going to structure the venture as a single, standalone company with an independent board of directors and management team.
“Canada is breaking new ground in the cannabis sector and, as one of the country’s leading beverage companies, Molson Coors Canada has a unique opportunity to participate in this exciting and rapidly expanding consumer segment,” said Molson Coors President and CEO Frederic Landtmeters. (Source: “One of the world’s largest beer makers is about to start producing marijuana-infused drinks,” Business Insider, August 1, 2018.)
“While we remain a beer business at our core, we are excited to create a separate new venture with a trusted partner that will be a market leader in offering Canadian consumers new experiences with quality, reliable and consistent non-alcoholic, cannabis-infused beverages.”
The marijuana industry is going to be anything but predictable to round out 2018 as Canadian marijuana legalization hits. We’re going to see big rises and large falls. But that makes finding the steady, long-term marijuana stocks all the more important.
In my mind, Hydropothecary stock is one of those picks.
It has shown a strong eye for good deals, has solid financials to back the company, and has already made several impressive gains in 2018. As such, I’m very high on the Hydropothecary stock forecast.