There’s been a fair bit of debate in the industry on which cannabis company holds the most promise. Major giants such as Aurora Cannabis (NYSE: ACB) have been the top pick in the industry for the most part, but small, younger upstarts such as HEXO Corp (TSE: HEXO) have more upside potential given their smaller size.
Today, analysts from Stifel, which started covering the industry, issued a research note where they vouched that Canopy Growth Corp (NYSE: CGC) still remains the most attractive company to invest in, despite its size.
Saying that Canopy Growth had multiple avenues of expanding into the U.S. market besides its current hemp facilities in the state of New York. The company also had acquired the option to buy out Acreage Holdings, one of the largest multi-state-operators in the country should the U.S. legalize cannabis on a national level.
“The benefits of the Constellation partnership go beyond capital and cannot be understated as Constellation has aided Canopy in the development of its national supply chain and in its new product development,” the analysts said. “We believe Canopy Growth is the furthest along in developing its large scale national infrastructure for the Canadian market with its advantaged supply chain capable of furthering Canopy’s market leadership.”
While Canopy is regarded as a strong company, most analysts have passed it by in favor of Aurora for their top pick in their industry, especially since Aurora has a larger production capacity.
However, Stifel analyst said Canopy is in the best position for the second wave of legalization in Canada thanks to it’s lucrative $4 billion investment from Constellation Brands (NYSE: STZ).
While just the marijuana plant is legalized in Canada, the upcoming second round of regulations in October promises to open up another massive area of the cannabis industry. According to one study, topical markets alone could be worth $2.7 billion in Canada.
While cannabis stocks are expected to surge across the board, those that already have relationships with companies involved in the edibles or beverage industries, such as Constellation Brands for Canopy or Molson Coors (NYSE: TAP) for HEXO, are figured to have the best bet of taking advantage of this change.
Shares of Canopy Growth inched up 1 percent in response to the news, but for the first hour of Thursday’s trading session the stock actually fell almost 4 percent before recovering. Over a longer term, Canopy surged in January as well as an in April, but the past month or so has seen the company shed a fair bit of it’s earlier gains.
Canopy Growth Corp
Canopy Growth Corp through its subsidiaries is the licensed producer of medical marijuana in Canada. The company grows, produces and sells medical marijuana. It operates diverse brands and variety supported by over half million square feet of indoor and greenhouse marijuana production.
It sells medical marijuana under various brand names including Tweed, Bedrocan, and Mettrum. A majority of the revenue is derived from the sale of medical marijuana by Tweed and Bedrocan in Canada. – Warrior Trading News