Canopy Growth Corp (TSE:WEED)(OTCMKTS:TWMJF): A Good Time To Buy Low

When we last reviewed Canopy Growth Corp (TSE:WEED)(OTCMKTS:TWMJF) on March 29, 2017, the Company’s stock price was in the midst of retracing an upward move to flirt with (but not break through) the Company’s highest closing price of $10.02 on November 15, 2016 after a strong upward trend that started back in July of 2016 from about $2.00. This was the second time that the stock has approached (in terms of the daily closing price), the $10.00 level. During last year’s upward trend, the stock made an intra-day high of $14.39 on November 16, 2016 before retracing down to about $5.58 about a week later, which is near where the stock is trading now, and amounts to about 50 percent of the gains made from last year’s uptrend.

From a technical analysis perspective, the chart exhibits mixed signals. However, a deeper analysis of the fundamentals and status of the Company tells a different story.First, a little background on the Company for those not familiar with it. Canopy Growth Corp is a world-leading diversified cannabis company, offering diverse brands and curated cannabis strain varieties in dried and oil extract forms. Through its wholly‑owned subsidiaries, Canopy Growth operates numerous state-of-the-art production facilities with over half a million square feet of indoor and greenhouse production capacity. Canopy Growth has established partnerships with leading sector names in Canada and abroad.Canopy Growth’s most recently reported financial statements for the 9-month period ending December 31, 2016 show consistent profitability, steadily increasing year-to-year revenues, and a very strong balance sheet with little debt. The Company is the largest in the Canadian cannabis sector, in terms of market capitalization, which is currently at $632.99 million, on 104.99 million shares outstanding as of May 09, 2017.In its effort to continue expanding its production capacity, on May 2, 2017, Canopy Growth Corp announced the closing of the acquisition of rTrees Producers Limited Inc., a late-stage applicant in Health Canada’s Access to Cannabis for Medical Purposes Regulations. The site will operate as Tweed Grasslands (“Tweed Grasslands”), and will be Canopy Growth’s newest facility. Tweed Grasslands will initially operate a 90,000 sq. ft. facility in Yorkton, Saskatchewan. As the markets for medical and recreational cannabis develop, the facility will expand operations as needed to a capacity of over 300,000 sq. ft.

“After years of hard work setting up the business we’re now excited to be focused on the task of producing medical cannabis for people all across Canada,” said Andrew MacCorquodale, Head of Operations for Western Canada, Canopy Growth and founder of Tweed Grasslands. “With support and expertise from our new colleagues at Canopy Growth we hope to be licensed and fully operational in Saskatchewan within months”

Tweed Grasslands will supply medical markets in Canada and abroad, as well as the Canadian recreational cannabis market upon the establishment of a national regulatory framework.In an effort to continue expanding its product line, On April 19, 2017, Canopy Growth Corp announced the launch of Tweed’s curated CraftGrow line, which brings high quality cannabis grown by a diverse set of producers to Tweed Main Street’s customers. By choosing to participate in CraftGrow, producers with cultivation and sales licenses can furnish their harvests to Tweed, on a wholesale basis for sale through Tweed Main Street. All CraftGrow cannabis is subject to Tweed’s rigorous Quality Assurance program, including accredited lab testing, prior to being approved for sale.Unlike the price chart, the fundamentals of the Company paint a much more appealing picture. Canopy Growth Corp has strong financials, and continues to expand its production capacity through acquisition, and continues to also expand its product line as well. Perhaps the most crucial factor that puts the stock in the “buy” column, is the upcoming legalization of recreational use of cannabis in all of Canada. The pending legislation is expected to pass and take effect in July of this year. This will only result in a positive effect for all cannabis related companies. The bottom line is that there is no fundamental reason for Canopy Growth’s stock price to be going down. But savvy investors that are looking at the Company’s price chart are more than happy to see the price continue to dip; this way they can get in on a sound investment at a lower price. We will be updating our subscribers as soon as we know more. For the latest updates on WEED/TWMJF, sign up below!Disclosure: We have no position in WEED/TWMJF and have not been compensated for this article.