Canopy Growth (CGC)

Discussion in 'Stocks' started by vanzandt, Nov 5, 2018.

  1. vanzandt


    What's not to like on this one?
    Its pulled way back off its highs. ($37)
    The House flips Liberal.
    Sessions is out more than likely...and he's not a big fan.

    Beto among others, is however a big fan.
    I expect a big push for Federal legalization.
    Trump will be on board. Get them Millennial votes.
    Constellation Brands (STZ) has a 4 Billion stake. (Hey..If you can't beat em...)
    China trade worries mean nothing.
    Interest rate worries mean nothing.
    Its the best of breed in its niche and its not going away.
    I think, all things considered, its one of the best and safest long term stocks out there right now.
    We'll see. If hit hits $35... bet the farm.
    Last edited: Nov 5, 2018
  2. What's not to like?

    1. Sky-high valuation? (As described from a report I read...)

    2. There will be LOTS of new competition flooding the market as legalization proceeds.

    That said, CGC tested its 200 MA and bounced @ 31.82. (That's all a "Price TA/KISS" player needs to know.)

    (I checked the other big pot players... they all broke through their 200 MAs. I suspect CGC did not because of STZ's backing. ??)

    Considering the state of the markets, I'm not sure I want to own any of the pot stocks... or much of anything else, either. However... the pots are ones to have on the radar for when the big smashola comes, everything gets marked down. They throw the baby out with the bath water. We might get a chance to buy the pot stocks like they were penny stocks in a couple of years.... FWIW

    Then again... we can always "make a play which seems to make sense"... so long as we exercise our stops just in case we got it all wrong. And could be it's not really "all wrong", but rather "wrong for just now". In CGC's case and at this time, I wouldn't want to see the 200 MA give way.
    Last edited: Nov 5, 2018
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  3. vanzandt


    As a fundamental fan, I certainly agree about the valuation. I've thought about that. But they are the industry leader and they're backed by deep pockets. I don't see the competition being an issue. Their valuations are probably 4X CGC's. We have to bear in mind its basically a nascent sector right?
    Earnings are on the 14th... I don't expect anything spectacular, probably more negative cash flow as they continue to position themselves as the world leader.
  4. All true. Nascent industries/companies always look like sky high valuations. Sometimes the performance "catches up", but not always.
  5. vanzandt


    Here's a blurb from the other day when the Canook govt approved the $4B (U.S) deal with STZ.

    This investment provides Canopy Growth with significant funding needed to build scale in the more than 30 countries currently pursuing federally permissible medical cannabis programs, while establishing the foundation needed to supply new recreational adult-use markets as cannabis becomes legal in markets around the world.

    "We're excited to expand our strategic partnership with Canopy Growth and to begin helping them build the global scale needed to win long-term," said Rob Sands, chief executive officer, Constellation Brands. "The global cannabis market presents a significant growth opportunity and Canopy Growth is well-positioned to establish a strong leadership position in this fast-evolving category."

    With this investment, Constellation Brands increases its ownership interest in Canopy Growth to approximately 37 percent of outstanding common shares of Canopy Growth and has appointed two members of its executive team, as well as two independent directors, to the Board of Directors of Canopy Growth. Constellation estimates the interest expense associated with this transaction to approximate $55 million before tax with an approximate $0.25 impact on fiscal 2019 comparable basis EPS results. Constellation also continues to evaluate the potential equity in earnings impact from the Canopy Growth investment and related items.

    "Our cash position opens up a world of opportunity for us," said Bruce Linton, chairman and co-chief executive officer, Canopy Growth. "Relative to our valuation, we have never been in a better position to create shareholder value. This investment was a landmark moment for the entire sector when it was announced. Now that the capital is Canopy's to deploy, we're going to quickly get to work increasing our lead by adding strategic assets around the world."

    As previously announced, the transaction includes a restructuring of Canopy Growth's Board of Directors. Canopy Growth management wishes to thank Chris Schnarr and Murray Goldman for their contributions to the company. Mr. Schnarr and Mr. Goldman sat on the Board as it oversaw a transformative period for Canopy Growth from a small start-up to a global, diversified industry leader. Mr. Schnarr will continue with Canopy Growth and transition into a senior leadership role overseeing medical and therapeutic research commercialization. Subsequently, Canopy Growth management welcomes Constellation's President and Chief Operating Officer Bill Newlands and Executive Vice President and Chief Financial Officer David Klein, as well as current Constellation Board Members Judy Schmeling, former HSNi LLC chief operating officer, and Robert Hanson, chief executive officer of John Hardy Global Limited, to the Canopy Growth Board. Their leadership and experience will be invaluable as Canopy Growth continues to grow around the world.
  6. No help to me. I don't follow fundamentals*. Price TA/KISS, only.

    *IMV... fundamentals are the excuse you use for holding a losing position for longer than you should.
    vanzandt likes this.
  7. vanzandt


    Absolutely... but lets let this one run a bit. That 200 MA kiss showed signs of impressive strength to me, that was the day the S&P hit a 6 month low. The fact it held that day bodes well going forward.

    I like today as an entry, which is a ballsy move I know, but I really think once we get done with the midterms... the tide is gonna rise. Wall Street will welcome some gridlock I think. And Canopy will only be better positioned (Stateside) with the Dems controlling the House.
  8. There you go... with your "fundamentals*". :)

    The only thing that's REALLY important... what players do with their money.

    *I rejected the notion of fundamentals years ago. (Not that it's a wrong approach... just that I wasn't going to be able to do it well.) There might be 20 fundie factors, you might be hanging your hat on only 2 or 3 of them... and perhaps drawing a false conclusion. And then what do you do about risk control? Giving the Benefit Of The Doubt to fundies doesn't leave any rational strategy for stop loss. ("Hope the market turns around to save my bacon" ain't a strategy.)

    Fundamental Analysis like Buffet does makes sense for those who can do it thoroughly. But he needs a lot of time and a lot of resources to "turn over every rock" to eventually conclude the market has a company significantly mispriced. We screen jockeys are no where near "in that league".
    Last edited: Nov 5, 2018
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  9. vanzandt


    Truer words have never been spoken. My play here Scat is purely based on anticipating their move. The big players do look at fundy's. They have to. Valuations aside, they're gonna need some exposure to this sector. This isn't like BTC.
    The big catalyst I see for the very near term... is the elections.
    When this thing starts back up, its gonna move fast.
    I may be wrong, but I think it'll be in the mid-$40's very soon.
    We'll see.
  10. vanzandt


    Look at that joker run. :D
    #10     Nov 5, 2018