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Marijuana Stocks: Is Canopy Growth Corp. (TSX:WEED) Stock a Buy Under $40?

Middle-aged men increased their cannabis use after legalization more than any other demographic group, a study released by Statistics Canada shows. More than 16 per cent of men aged 45 to 64 had used weed recently in early 2019, as opposed to just under 10 per cent in early 2018. Middle-aged women showed the second-biggest growth, from 7.9 per cent to 11.7 per cent. RELATED Why do Canadians hate to buy marijuana online? Pay cash for pot if you can, federal privacy commissioner urges ‘There are reasons to be wary’ of ID scanners at marijuana stores, lawyer warns READ MORE: Cannabis taxes brought in $186 million in five and a half months For R’Jay Mirosovsky, a Saskatoon man who started using after legalization, the prohibition-era market was just too much of a hassle to navigate. “I think the biggest thing is that I didn’t know where it was coming from,” he says. “My friends were always like, ‘Hey, I’ve got a guy.’ But there’s no real way for me to see what’s actually in it — whether it’s laced with something, how safe it is.” People who are old enough to remember a harsher phase of prohibition were more reluctant to try illegal cannabis than the generation younger than them, says Jenna Valleriani, executive director of Hope for Health Canada. “A lot of it is tied to how these folks grew up and how they learned about cannabis and other drugs,” Valleriani says. “For a lot of folks in that demographic, the illegal status often kept them away from cannabis.” She adds: “Now that it’s legal, there’s just more opportunity. Just issues around access, folks who are middle-aged, under an illegal framework, perhaps wouldn’t know where to access from.” WATCH: NDP urges expungement over pardon for Canadians’ simple pot possession convictions In the end, Mirosovsky waited for legalization. “When it first became legalized in October, I tried it a couple of weeks after that at one of the local stores here. It was fantastic — it was a good experience.” “When I got to work the next day, I was talking to my co-workers, and he was like, ‘You got hosed — that’s a lot of money to pay for that kind of stuff.’ I was taken aback a bit by how expensive it is.” READ MORE: How a weed conviction at 18 got a man banned at the U.S. border — 37 years later Mirosovsky says he smokes but also makes home-made edibles, which his wife prefers. “I actually went to the Saskatchewan Roughriders, one of the pregames, my wife and my brother and a bunch of friends,” he says. “We took an edible before, and it made the game a lot more fun.” WATCH: Ottawa announces legislation to pardon Canadians convicted of simple pot possession Women using less cannabis than men isn’t surprising, Valleriani says. “Across substances, we see that men typically are using more substances than women,” she explains “Historically, there has been a stronger stigma against women who use any drug, including cannabis. It’s been a perception about who women are who use drugs.” Under prohibition buying cannabis could also seem — or be — unsafe. “In terms of when (cannabis) was illegal, purchasing was really difficult. For a lot of younger women, when we think about where they access, they often access through partners, or other men who are acquaintances. I think it’s a bunch of things that just kind of come together.”
15 Aug

Canada’s top marijuana stocks are facing extreme volatility ahead of the planned legalization for the commodity’s recreational use, which is making many investors nervous who want to have some exposure to this high growth industry.

The biggest question is whether they should buy marijuana stocks now or wait until these pot producers show some positive earnings after spending heavily to get ready for this massive opportunity. According to Statistics Canada, Canadian adults spent $5.7 billion on marijuana last year — 90% of it for illegal, non-medical purposes.

Canada is all set to become the first developed world’s country to legalize the use of recreational pot from October 17 after the nation’s Parliament gave a final go-ahead this summer.

For investors seeking high returns, buying a couple of quality marijuana stocks won’t be a bad idea. But in this space, I would advise to stick with the biggest names, which have the capacity to perform in a market that’s still in its infancy.

Among the top names, I like Canopy Growth Corporation (TSX:WEED)(NYSE:CGC) due to the company’s leading market position.

Canopy is the best pot stock in Canada

Canopy is ideally positioned to take advantage of the anticipated demand boom from recreational pot users. What makes Canopy different from other producers is its market size, capacity to ramp up production, the diversification of its product offerings, and its international reach.

Canopy currently operates weed growing facilities with over 2.4 million square feet of space. But the producer has been expanding its operations fast with a potential to manage more than 5 million square feet of production space by next year.

That market power, however, hasn’t yet reflected in the company’s bottom line as it invests heavily to ramp up production and prepare its distribution network.

In the most recent quarter, Canopy posted a net loss attributable to shareholders of $61.5-million, compared to a $12-million loss during the same quarter a year ago. The net loss for fiscal fourth quarter ended March 31 was mainly fueled by a 149% jump in overall operating expenses.

The bottom line

Trading at $37 a share at the time of writing, Canopy stock is up 24% this year, thereby adding to over 300% gains of the past 12 months.  Though I don’t expect a major jump in its share price in the short-run, the timing is good to take a position now to benefit from the company’s future growth. That said, investing in marijuana stock is a risky trade and should suit those investors with the stomach to take losses if the market demand predictions prove wrong and consumers take time to shift to legal channels.

The Motley Fool’s Iain Butler has just revealed an ultra rare “triple down” stock recommendation. And investors all over Canada are rushing to get in. Why? Because past “triple downs” have averaged over 100% returns, and sometimes as much as 440% returns (in just over two years’ time)…

 

Credit: www.fool.ca

 

Credit: www.fool.ca

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