Canopy Growth (TSX:WEED) (NYSE:CGC) is the biggest cannabis company in the world by market cap. However, over the course of the past months, CGC stock has suffered due to the issues plaguing the cannabis industry. That being said, it could also prove to be one of the better opportunities for investors to buy into one of the most promising companies in the cannabis sector.
key Analysis
In such a situation, it is necessary for investors to take a closer look at the Canopy Growth stock and figure out whether it could emerge as the long term winner.
The coronavirus pandemic has come as a body blow for many companies and particularly for those which have borrowed heavily in recent times. As many companies scamper to stay alive, Canopy will be able to build on its foundations. In addition to that, it can also fuel its expansion by acquiring companies that are put up for sale.
Due to the financial troubles many companies are going through; there is a possibility of some companies going bankrupt. Canopy boasts of a cash balance of as much as C$2.3 billion, and that could help the company with those moves.
The company’s decision to acquire Acreage Holdings if marijuana is legalized in the United States could prove to be a particularly smart move in the long term. Analysts believe that there are many companies that have weak balance sheets, and there could well be a procession of cannabis firms declaring bankruptcy this year. If that happens, then the cannabis industry is expected to get far more rational, and in turn, it is only going to allow Canopy Growth to further strengthen its position as the biggest player.
Moreover, the stock has also rallied in recent days, and that indicates that investors are returning to the sector in a cautious manner. If there is a recovery soon, then Canopy Growth, as the market leader, could profit in the short term as well.
