The cannabis space had been in a bit of turmoil in 2019, and many of the biggest companies in the industry saw their stock price crash. However, it should be noted that the cannabis industry is here to stay, and when the sector gains momentum, large companies like Canopy Growth could benefit.
The Canadian cannabis company is the biggest in the industry by market cap, and there are several factors why the Canopy stock could emerge as one of the best investments in the sector. Hence, it could be worthwhile for investors to take a closer look at the Canopy stock.
Since the middle of May, the stock has actually performed quite impressively, and up until its quarterly earnings announcement, it had rallied by as much as 70%. However, following the earnings report, the stock soon tanked by as much as 20% and declined further in the following days.
That being said, it should be kept in mind that the company still has C$2.5 billion in cash and that comfortably cushions its liabilities of C$420 million. The strength in its balance sheet comes from the company’s partnership with Constellation Brands, which recently exercised more warrants and took its shareholding to 38.6%.
It should be noted that Constellation may eventually decide to acquire Canopy, and if that happens, it would be good for the shareholders. However, at the same time, investors cannot ignore the fact that just over a year ago, the stock was trading at more than $50 a share, and now it trades at less than $10 a share.
Hence, the recovery path is expected to be long. The stock has, however, continued to recover, and on June 8, it has rallied by as much as 9%. The stock experienced a major dip after it announced its quarterly earnings, but the dip in the stock could well prove to be a buying opportunity.