|Bid||190.66 x 900|
|Ask||190.79 x 1000|
|Day's Range||189.33 - 191.02|
|52 Week Range||163.52 - 214.48|
|Beta (5Y Monthly)||0.65|
|PE Ratio (TTM)||44.24|
|Earnings Date||Apr 01, 2020 - Apr 05, 2020|
|Forward Dividend & Yield||3.00 (1.57%)|
|Ex-Dividend Date||Feb 09, 2020|
|1y Target Est||225.26|
Molson Coors (TAP) announces the acquisition of Detroit-based Atwater Brewery. The company's objective is to ensure that beer is relished by customers across the markets.
Diageo's (DEO) acquisition and expansion efforts as well as operating margin growth are likely to aid results in the first half of fiscal 2020.
Canadian cannabis company Canopy Growth Corp. said Wednesday it has named Judy Schmeling as chair of its board. Schmeling has been a board member since Nov. of 2018 and also sits on the board of Constellation Brands Inc. , Canopy's biggest shareholder, as well as on the board of Casey's General Stores. Canopy shares rose 1.1% in premarket trade, but have fallen 46% in the last 12 months, while the ETFMG Alternative Harvest ETF has fallen 41% and the S&P 500 has gained 26%.
Canopy Growth (CGC) has recently enjoyed the rebound in the cannabis market, as sentiment, at least temporarily, has grown more optimistic for the overall sector.In this article we'll look at why the company has a good chance of under performing in the infused beverage market, and what that could mean over the long term for Canopy Growth. We'll also look at the positive impact an increase in same-store sales could have on the company going forward.Product returnsOne of the major concerns I have for Canopy Growth is its inability to accurately identify demand trends, which in the last quarter came back to bite them, as it had product returns of just under $27 million, much of that coming from a lack of demand for its oil products.I don't think that's only from misreading demand, but from misreading the trend itself. It remains to be seen if oils will be the positive catalyst some following the industry, and some in the industry itself, have believed it would be. Canopy Growth was definitely wrong in its assumptions concerning demand for oils.As a result of primarily excessive inventory, the company noted in its latest earnings report that it had identified $15.9 million in product inventory that exceeded demand, or had become obsolete.The key issue here to me is that the company was not only overly optimistic concerning oils in particular, but may have went after the wrong market segment altogether.I draw that conclusion from the fact that its major competitor Aurora Cannabis had stated in the past it wasn't convinced oils were going to be as popular as some companies believed.Infused beveragesAs this relates to infused beverages, I'm concerned the same thing could happen. So far, much of the outlook for infused beverages is related to theory rather than reality.Obviously, with large brewers like Constellation Brands (STZ) and other industries looking at the cannabis sector for growth opportunities, the assumption is they will be able to generate significant sales in the infused beverages segment. The level of demand for infused beverages has yet to be proven.If it doesn't meet expectations in any significant way, Canopy Growth could face some strong headwinds beyond what they already do. Why this would have a major negative impact on the company is because the market is looking for its partnership with Constellation Brands and infused beverages to drive a lot of future growth.Some good newsOne positive thing Canopy Growth has going for it is its same-store sales performance. Last quarter same-store sales from retail outlets it owned were up 17 percent in gross revenue. When including new store openings, that number jumped to 24 percent.This is important because Ontario is going to start opening up approximately 20 stores a quarter, starting in April 2020. If it is able to perform well in those stores, it could go a long way toward consistent growth. The significance of that is it's doing it without the sales of derivatives.If the company is able to figure out derivatives, it could add nicely to the top and bottom lines. So far the company hasn't shown it can project demand in specific segments with accuracy, so it remains to be seen if it can improve in that area in the months and years ahead.Consensus VerdictWall Street is unsure Canopy Growth is worth the gamble, with 7 out of 16 analysts in the last 3 months rating a Buy on the stock, and the majority maintaining a Hold. With a downside potential of nearly 6%, the stock’s consensus target price stands at $22.61. (See Canopy Growth stock analysis on TipRanks)ConclusionSince Canopy Growth received the $4 billion cash infusion from Constellation Brands, it has been touted by many as the cream of the crop in the cannabis sector. For some time I've been one of the few that have went against the grain with that conclusion, for the reasons of its poor track record of identifying legitimate trends in the industry, along with providing the right products to meet what demand is there.From what I've seen so far, the infused beverage market could be a negative catalyst for Canopy Growth. That has in part been confirmed by the recent decision of the company to push back the release of infused beverages. I think that's not necessarily a bad decision, because it needs to get this right.If it were to bottle up a lot of products that once again have to be returned, it would underscore the fact it has difficulty in accurately identifying demand in certain segments, which if isn't able to break out of that weakness, it would crush the share price of the company, even with over $2 billion in cash remaining from Constellation's investment in Canopy.If Canopy can't overcome these things, its bottom line will take further hits, and questions on the sustainability of any meaningful growth trajectory would increase.I, for one, am not convinced it will be able to do so. If it fails with infused beverages, there's not a lot of tailwinds left to drive it. On the other hand, if it does succeed at some level with infused beverages, the combination of the increase in stores in Ontario, and secondarily, in Quebec, could be enough in the way of catalysts to help the company turn around.To find good ideas for cannabis stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
I recently wrote that Aurora Cannabis (NYSE:ACB) stock isn't headed for $0, but it's still too early to buy. However, in the past couple of weeks, multiple Wall Street analysts have updated their outlook for Aurora. Some analysts are getting more pessimistic on the fundamental outlook for Aurora in the first half of 2020. Others are getting more bullish on the potential long-term value opportunity in Aurora stock.Source: Jarretera / Shutterstock.com Aurora's next earnings report is less than a month away. I think it's still too early to be buying the dip. Besides, there is at least one better option out there for speculative cannabis investors. Management Is ConfidentOne of the biggest Aurora bulls on Wall Street is Cantor Fitzgerald analyst Pablo Zuanic. Zuanic recently met with Aurora management. This week, he said he came away from the meeting even more convinced that Aurora's massive selloff is a buying opportunity.InvestorPlace - Stock Market News, Stock Advice & Trading TipsZuanic says there are three primary drivers of Aurora's underperformance in the past month, none of which are real reasons to sell the stock. First, CCO Cam Battley was let go. Zuanic says the market seems to think Battley resigned, but that's not the case. In fact, he says some more fresh blood would be good news for Aurora."We think ACB would benefit from some pruning and from bringing in an outside CEO renown in the investment community for both sound growth strategy and financial discipline (cost/cash flow)," Zuanic says. * 7 Earnings Reports to Watch Next Week Second, traders have been speculating that Aurora may significantly write-down the value of certain assets after a recent property listing price came in below expectations. Zuanic says Aurora's move to sell non-core assets is part of its cost management plans and should be considered good news for the balance sheet.Finally, Aurora's credit facility requires it to have a total funded debt-to-adjusted shareholders equity ratio at or below 0.25:1 by Sept. 30, 2020. Zuanic says all Aurora needs to get its ducks in order prior to this deadline is to generate around $21 million in earnings before interest, taxes depreciation and amortization (EBITDA) per quarter by the September quarter.Company management and Zuanic himself are confident that goal is still within reach."We would make use of the recent pullback," Zuanic said in conclusion. Cantor has an "overweight" rating and $3.85 price target for Aurora stock. Balance Sheet ConcernsThe same week Zuanic came out with his bullish commentary on Aurora, Bank of America analyst Christopher Carey downgraded the stock to "underperform." Carey also cut his price target to just $1.15.Like many Aurora bears, Carey's primary concern is the company's balance sheet."With [balance sheet] risks to remain a core investment thesis in 2020 in our view, and lingering uncertainty especially on financial covenants, we struggle to envision a scenario where shares have sustainable support," Carey wrote in the downgrade note.Carey credits Aurora with taking several steps to improve its balance sheet, including spending cuts, deferred capex and asset sales. However, he says Aurora is still not in position to meet the terms of its credit facility.Bank of America expects weakness in the Canadian cannabis market to continue throughout the first half of 2020. Without impressive growth numbers to support the bull thesis for cannabis stocks in the near-term, Carey says investors will remain focused on balance sheets. "Unfortunately, ACB has the weakest in our group, while valuation is still near group high," he said.In other words, Aurora has a lot of good things going for it. But at this point of uncertainty and at the current valuation, he simply can't recommend the stock. A Better Option Than Aurora StockLong-time readers know I've been like a broken record when it comes to cannabis stocks. There will likely ultimately be some huge winners in the space in the long term. But there is simply too much risk and uncertainty at this point to be picking one winner. * The 10 Best Value Stocks to Own in 2020 If you insist on picking one stock, I believe Canopy Growth Corp (NYSE:CGC) is the best pick in the space today. It certainly has a lot less risk than Aurora. Canopy has a strong balance sheet and a major financial backer in Constellation Brands (NYSE:STZ). In addition, I think there's a good chance Constellation may step in and buy out Canopy as soon as the financial outlook for cannabis stocks clears up.In the meantime, rather than buying a single stock, cannabis investors should consider owning a basket of at least four or five cannabis stocks to diversify their portfolio. Analysts expect the difficult cannabis market to persist in the first half of 2020. It would be wise for cannabis investors to consider clash flow, debt levels and valuation. In addition to Canopy, investors should consider other top-tier stocks such as Tilray (NASDAQ: TLRY) and Cronos Group (NASDAQ:CRON).As of this writing, Wayne Duggan did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * The Top 5 Dow Jones Stocks to Buy for 2020 * 7 Fintech ETFs to Buy Now for Fabulous Financial Exposure * 3 Tech Stocks to Play Ahead of Earnings The post Is It Finally Time to Buy Aurora Cannabis Stock? appeared first on InvestorPlace.
Announcement of Periodic Review: Moody's announces completion of a periodic review of ratings of Constellation Brands, Inc. New York, January 17, 2020 -- Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of Constellation Brands, Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers.
Coca-Cola (KO) launches Powerade Ultra and Powerade Power Water under Powerade Sports drink category. This is likely to aid the company's sales.
Cannabis stocks performed terribly in 2019, and Canopy Growth (NYSE:CGC) was no exception. Despite the backing -- to the tune of $4 billion -- of Constellation Brands (NYSE:STZ), and over a full year of legal cannabis sales in Canada, CGC has yet to turn a profit. With investors souring on the cannabis industry in general, Canopy Growth stock lost 23% of its value in 2019. That number is actually misleading because CGC went into 2019 just as it was beginning to recover from a slump. It actually closed the year down a whopping 52% from its high at the end of April. So it is big news that CGC has strung together multiple days of significant growth. After a 4.4% pop on Wednesday, that's 21% in just three days.Source: Shutterstock What is going on with Canopy Growth? And more importantly for investors, can it sustain this rally to the point of a full-blown recovery? Why the Sudden Optimism Around Cannabis Stocks?This week has been an anomaly if you've been following cannabis stocks. For much of 2019, the story was rather grim. However, this week has seen many of them pop. CGC is up 21% since Monday. Hexo (NYSE:HEXO) is up 38%. Aurora Cannabis (NYSE:ACB) is up 25%. Cronos (NASDAQ:CRON) is up 23%.InvestorPlace - Stock Market News, Stock Advice & Trading TipsEven lowly CannTrust (NYSE:CTST) has seen an 11% gain.There seem to be two factors that have lit a fire under these stocks this week. The first is the news that the first edibles under Canada's "Cannabis 2.0" rollout hit stores. The second is the introduction of a bipartisan bill in the U.S. that would bypass Food and Drug Administration restrictions and legalize hemp-derived CBD nationally for use in foods and supplements in the American market. What If Cannabis 2.0 Also Stumbles?Having Congress take action to eliminate the confusion over CBD sales in the U.S. will undoubtedly help cannabis producers. Many of them already sell CBD products in that market (the FDA hasn't been enforcing its ban), but legalization would likely provide at least a modest boost to sales. * 7 Earnings Reports to Watch Next Week The bigger issue for most cannabis stocks is the Cannabis 2.0 rollout in Canada. What happens if it also stumbles the way the initial legal recreational marijuana launch did? After all, that disaster was the reason so many cannabis stocks went through the roof in 2018 (in anticipation) and then tanked as reality hit. Unfortunately Cannabis 2.0 got off to a rocky start, with a lengthy waiting period between legalization of edibles and when companies could actually sell them. Even with edibles and cannabis-infused drinks now available (nearly a month after legalization), there are once again shortages in stores. Ontario -- by far the country's largest market -- remains critically underserved, with a fraction of the expected retail locations open. Canada's second-largest province played spoiler by announcing a ban on the sale of most cannabis edibles. Despite legalization at the federal level, Quebec is concerned that sweetened cannabis products would appeal to minors. Consumers are balking at the price of what edibles are available.Adding to the industry woes, legal recreational marijuana sales across Canada were dropping through the fall.The industry pinned a lot of hopes on Cannabis 2.0 being the point where the legal marijuana market in Canada found its legs. Instead, it's showing all the signs of being a repeat of last year. Bottom Line: Canopy Growth Stock Remains a Risky BetAt under $25, CGC can be a tempting investment. Twice in the past year and a half, the stock has been trading in the $50 range. The company has a new CEO in place, the backing of a multinational beverage conglomerate, and Canada's Cannabis 2.0 market has launched. After being beaten down for virtually eight straight months, CGC just strung together three straight days of gains for an impressive 21% boost. * The 10 Best Value Stocks to Own in 2020 Unfortunately, many of the challenges that caused Canopy Growth and other cannabis stocks to perform so poorly last year remain, especially in the Canadian market. There has been some optimism to start 2020 because of the edibles launch and the promise that Ontario will open more recreational cannabis stores, but that may not be enough. The investment analysts polled by CNN Business rate Canopy Growth stock as a "hold," and their median 12-month price target of just $19.77 represents 20.6% downside. Of the 21 analysts, the most optimistic has a $25.28 price target. Maybe they're all wrong. Maybe 2020 will be the year the legal recreational marijuana market takes off in Canada, powering cannabis stocks to a recovery. But I wouldn't bet on it.As of this writing, Brad Moon did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * The Top 5 Dow Jones Stocks to Buy for 2020 * 7 Fintech ETFs to Buy Now for Fabulous Financial Exposure * 3 Tech Stocks to Play Ahead of Earnings The post How Long Can the Rally in Canopy Growth Stock Last? appeared first on InvestorPlace.
You hear that? That's the sound of the beginning of a big rebound in marijuana stocks. Year-to-date, the ETFMG Alternative Harvest ETF (NYSEARCA:MJ) is already up almost 10% -- and we are less than three weeks into the year. That's a huge gain in a short amount of time.The big rebound in pot stocks can be attributed to favorable fundamental developments (multiple cannabis companies have reported strong fourth quarter numbers in early January), favorable legal developments (among other things, Illinois just legalized recreational marijuana), and a whole bunch of investors deciding that with the new year, comes new opportunity.That's the good news for cannabis bulls. The better news? This big rebound in marijuana stocks is just getting started.InvestorPlace - Stock Market News, Stock Advice & Trading TipsOver the next several quarters, everything is going to improve for the cannabis sector. Demand trends will re-accelerate thanks to new vapes and edibles products, as well as retail footprint expansion. Supply overhang issues will ease with rebounding demand. International markets will start to take off as governments around the world follow in Canada's footsteps. Revenue growth trends will improve. Margins will bounce back. Losses will narrow.All in all, things will just get better for the cannabis sector in 2020, and as they do, depressed and beaten-up pot stocks will rebound. * The Top 5 Dow Jones Stocks to Buy for 2020 With that in mind, let's take a deeper look at four marijuana stocks to buy for the big 2020 rebound. Canopy Growth (CGC)Source: Shutterstock The cannabis market's biggest and most important company, Canopy Growth (NYSE:CGC), has been leading the pot stock rebound in 2020 so far. Year-to-date, CGC stock is up more than 15%.Canopy will continue to be a leader in this rebound for the rest of 2020 for one very simple reason: this is the best cannabis company out there by a mile.They have the biggest balance sheet -- thanks to a multi-billion dollar investment from Constellation Brands (NYSE:STZ) -- with the most resources and firepower to invest in things like product development, international expansion, strategic acquisitions, and production build-out. They also have the biggest sales base, the most production capacity, and the widest global distribution network.The management team is arguably the best in the business, as Constellation has infused the company with experienced talent. They also have the most visible pathway to dominating the ultra-valuable U.S. market, thanks to a planned acquisition of U.S. cannabis company Acreage.All in all, Canopy Growth has significantly differentiated itself from the pack in the cannabis world. As the leader, if pot stocks keep rebounding throughout the rest of the year, CGC stock will lead that rebound. Cronos (CRON)Source: Shutterstock The only other "high quality" cannabis company that has won the multi-billion dollar support of a consumer staples giant is Cronos (NASDAQ:CRON). This unique feature should propel meaningful out-performance in CRON stock in 2020.Cannabis market trends will rebound in 2020 thanks to new products, retail footprint expansion, favorable legislative progress, and international growth, among other things. As those trends rebound, investors will rush back into the marijuana industry like its early 2019 all over again.When investors flocked into the space back then, they did most of that flocking into two names -- Canopy and Cronos -- because those were the smartest and safest investments given their fortified balance sheets, huge investment capability, and tremendous financial support. Of note, Cronos stock outperformed Canopy stock in the first three months of 2019 by a tally of 80% to 60%, mostly thanks to the fact that CRON stock was cheaper than CGC stock (15-times one-year forward sales for CRON, versus 30-times for CGC at the beginning of 2019). * 10 Cheap Stocks to Buy Under $10 In 2020, the same dynamic will repeat. Investors will rush back into the space amid improving fundamentals and trends. They will specifically rush back into the smartest and safest investments in the space, CRON and CGC. And CRON will be the bigger winner, because CRON stock (9-times one-year forward sales) remains way cheaper than CGC stock (14-times one-year forward sales). Aphria (APHA)Although most pot stocks are up big in early 2020, shares of cannabis producer Aphria (NYSE:APHA) are not, mostly because the company reported second quarter numbers in January that missed across the board. Revenues missed estimates, as did profits. And management dramatically cut its full-year guide.Consequently, APHA stock is actually down 1% in 2020, while many of its marijuana peers are up 10% or more.This weakness won't last. It's a gross overreaction to a few headline second quarter misses. Underneath those misses, the numbers were actually pretty good. Revenue growth accelerated sequentially, from up 8% quarter-over-quarter in Q1 to up 9% quarter-over-quarter in Q2. Volume growth also accelerated, and by way more, going from 7% growth in Q2, to 18% growth in Q2. Gross margins reversed course, after dropping from 53% in Q4 to 50% in Q1, and shot back up to 57% in Q2. At the same, Aphria reported a huge sequential increase in adjusted EBITDA after a sequential drop in Q1.In other words, all of the company's important underlying trends improved meaningfully in the second quarter. Revenue, volume, margin, and profit trends all got better.And that's before the launch of new vapes and edibles products. As such, the numbers will only get better in the third and fourth quarters. As they keep improving, investors will push APHA stock way higher, especially considering its relatively depressed valuation base (2-times one-year forward sales). Aurora (ACB)Source: Shutterstock Last, but not least, on this list of marijuana stocks to buy for the big rebound in 2020 is Aurora (NYSE:ACB).Aurora has long been the second-biggest player in the Canadian cannabis market, coming in right behind Canopy in terms of sales, volume, and production capacity. But investors have increasingly expressed concerns over the company's balance sheet and liquidity, as Aurora features one of the worst balance sheets in the cannabis sector and has a major cash burn problem.Ultimately, these concerns have kept ACB stock depressed. These concerns could ease dramatically in 2020. Aurora will launch of suite of edibles and vapes products over the coming months. They should also be opening a ton of new stores.This combination will reignite demand trends at Aurora, and revenue growth rates should start improving. As they do, more favorable supply-demand dynamics will push up margins. Bigger revenues plus bigger margins equals smaller losses. Smaller losses mean less cash burn.As cash burn becomes less of a problem in 2020 (and as the company's improved revenue growth trajectory illuminates a more visible pathway towards profitability), investors will become less concerned about the company's balance sheet and liquidity. The more those concerns fade, the more ACB stock will rally.As of this writing, Luke Lango was long CGC. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * The Top 5 Dow Jones Stocks to Buy for 2020 * 7 Fintech ETFs to Buy Now for Fabulous Financial Exposure * 3 Tech Stocks to Play Ahead of Earnings The post 4 Marijuana Stocks to Buy for the Big 2020 Rebound appeared first on InvestorPlace.
Philip Morris' (PM) performance is bearing adverse impacts of declining cigarette sales volume. However, expansion in RRPs and strong pricing are significant upsides.
PepsiCo (PEP) is benefiting from its growing snacks business for a while now. It is also strengthening the Frito-Lay North American with flavorful products.
The cannabis industry enjoyed tremendous investor enthusiasm in 2018, fueled in large part by major developments which seemed to open up the space for new opportunities. In spite of the fact that cannabis stocks overall failed to perform up to expectations last year, 2019 has already revealed continued anticipation regarding this growing industry. If cannabis stocks are to thrive going forward, it's likely that many companies will have some growing up to do.
The appetite for Constellation Brands (STZ) buying the rest of Canopy Growth (CGC) appears very low after the company reported another equity loss from the large cannabis investment. If anything, Constellation Brands has huge regrets from making such a large gamble on the Canadian cannabis business near the peak of the market. Canopy Growth jumped to recent highs and Constellation Brands doubling down on Canopy Growth appears very unwise and highly unlikely here.FOMOOne can argue Canopy Growth still trades around $20 due to the inherent put on the stock. This fear of missing out on a Constellation Brands bid for the rest of the company has the stock overvalued, thereby limiting the actual potential of a bid.Constellation Brands owns 35% of the outstanding shares of Canopy Growth and owns warrants to purchase a controlling interest in the cannabis stock with one huge hitch. The warrants have exercise prices far above the current price of Canopy Growth with prices starting at C$50.40 per share.Constellation Brands could save substantial amounts of money by purchasing the rest of Canopy Growth for $30 per share. The latter would still offer a 50% premium above where the stock traded in the prior couple of months.An offer by the wine & spirits company to pay $30 now would cost an additional $7.0 billion.Lack Of FundsThe bigger issue is paying up to a $10+ billion market cap for a money losing company with FY21 (March) revenue expectations of only $583 million. Not only is the price not right here, but also the shareholders of Constellation Brands have no interest in absorbing quarterly EBITDA losses in the $100 million range.Constellation Brands just forecast free cash flows in the $1.5 billion to $1.6 billion range while promising shareholders a substantial portion of those cash flows returned to shareholders via dividends and stock repurchases through 2022. The company already has net debt of $11.5 billion so one shouldn’t foresee another $7 billion spent on the rest of Canopy Growth.The more likely outcome is an aggressive move to snap up a controlling interest (another 15% of the company) in the scenario where the stock dips down to $10. The one hesitation is the company won’t want to absorb the quarterly losses, but investors should be much more comfortable with a Constellation Brands put on the stock somewhere around $10 where a market valuation of $3.5 billion and a large level of cash would provide a more reasonable valuation to pay for the leading cannabis stock.Either way, one needs to watch for the new CEO to implement cost reductions before Constellation Brands could ever build a bigger position. CEO David Klein doesn’t actually start at Canopy Growth until January 14, but he has a mandate to rationalize costs which include curtailing production growth similar to Aurora Cannabis (ACB).Consensus VerdictThe market’s current view on Canopy Growth is a mixed bag, indicating uncertainty as to its prospects. The stock has a Moderate Buy analyst consensus rating with 7 recent "buy" ratings. This is versus 9 "hold" ratings. Furthermore, the $22.59 price target suggests a downside potential of nearly 10% from the current share price. (See Canopy Growth stock analysis at TipRanks)TakeawayThe key investor takeaway is that Canopy Growth isn’t a safe bet here due to the involvement of Constellation Brands. The more likely outcome is further weakness before the wine & spirits company would get more aggressive with snapping up more Canopy Growth shares versus waiting until warrants are exercisable at far higher prices.
First Round of Select Dates on Sale January 24 CHICAGO, Jan. 15, 2020 -- Corona Light, the number one light beer import, will be the lead sponsor behind the summer.
Beverage giants have stumbled upon a promising range of hard seltzers, satisfying their need for product diversification as well as meeting consumer preferences.
Investors are always on the lookout for stocks poised to deliver hefty returns. While it’s true anyone can measure a stock’s potential by themselves, as in any field, the pros probably have the best tools at hand to assess the choices the market presents.This is where we turn to the analysts on the Street. Some of the best amongst them are currently employed by famed investment firm RBC Capital, as the company sits at the top of the heap of TipRanks’ Top Performing Research Firms.The company, like many in the industry, begins a new year by reassessing the future potential of stocks under its coverage.With this in mind, we decided to take a look at three tickers the investment firm thinks have the potential to take off in 2020. All currently have Buy consensus ratings from the Street and all, according to RBC analysts, have the potential for gains in the magnitude of at least 25% in the year ahead. Let’s check them out.Constellation Brands (STZ)Cannabis stocks took a heavy beating in 2019, with some companies losing a significant amount of value along the way (Tilray, Aurora and Cronos come to mind). Though not strictly a cannabis stock, with its main business driven by the alcoholic beverage industry, Constellation’s massive investment in Canopy Growth, which boasts the largest market cap among Canadian cannabis producers, has positioned it at the forefront of the struggling pot industry.Despite Canopy’s plethora of struggles last year (consecutive quarters of disappointing results, CEO Bruce Linton being removed and replaced with a Constellation appointment), Constellation’s recent F3Q20 report beat expectations on most fronts. Sales of $2 billion beat the estimate’s $1.95 billion. More impressively, EPS came in at $2.14, beating the consensus’s call of $1.84. The most cheer was provided by the company’s beer business, with Constellation’s Modelo Especial brand up by almost 15%, and cementing itself as the fourth-largest beer brand in the US. The company also raised its guidance of EPS for the whole year, too, from $9-$9.20 up to $9.45-$9.55.The positive print has RBC’s Nik Modi betting on STZ. Modi reiterated an Outperform rating on the stock alongside a price target of $250, which implies 32% upside potential from current levels. (To watch Modi’s track record, click here)The 5-star analyst said, “The beer business is fine and should benefit from the Corona Seltzer launch (expected beginning of FY'21 - March 2020). W&S remains messy due to the divestiture, but there are some green shoots that suggest the portfolio will be in a better place post-divestiture. Canopy is still an overhang, but with David Klein in place, we think costs will come under control. All in all, a lot of noise, but we are nearing visibility into 2021 earnings power.”The Street is currently split down the middle with regards to the alcohol producer’s prospects. 6 Buys and 6 Hold ratings coalesce into a Moderate Buy consensus rating. The bulls, though, have the edge as the average price target comes in at $223 and indicates potential gains of 18% over the coming months. (See Constellation Brands stock analysis on TipRanks)Nutrien Ltd (NTR)A big name in the agricultural industry, Nutrien was formed in January 2018 following the huge merger of Agrium and PotashCorp. The company is the world’s largest agricultural input retailer and fertilizer producer.Technological advancements are an increasingly important growth catalyst in many different industries, and the agricultural sector is no different. Nutrien has been maneuvering itself into a leading position in what is known as digital agriculture. The company’s digital platform was launched almost 2 years ago and provides farmers with data on climate and weather conditions to assist in the process of planting, fertilizing and harvesting. The platform met with immediate success and it took only 6 months from its launch for more than 50% of the company’s North American retail sales customers to start making use of it.Nutrien has also been busy on the acquisition front, the latest of which was only announced last week. The company agreed to purchase Brazilian Ag retailer Agrosema Comercial Agricola, an important player in the Brazilian agricultural industry. The purchase comes hot on the heels of several other acquisitions since the launch of its digital platform and RBC’s Andrew Wong thinks there is more to come.The analyst said, “We believe the company will continue the roll-up strategy in North America, spending ~$300–500M annually on accretive acquisitions. In Brazil, we expect Nutrien to gradually build up a base through acquisitions that may be priced above typical valuations (due to less natural synergies), but eventually build a business model similar to the highly successful North American business. The Wholesale segment is working on several cost savings and expansion projects that should result in lower potash production costs and higher nitrogen volumes.”To this end, Wong kept his bullish call on Nutrien with an Outperform rating and price target of $60. The figure represents potential gains in the shape of 27%. (To watch Wong’s track record, click here)What side of the field does the Street stand on regarding the fertilizer producer’s potential, then? On the growing side, as it happens. A Strong Buy consensus rating breaks down into 6 Buys and 2 Holds. The average price target comes in at $56.60 and therefore indicates room for growth of another 20%. (See Nutrien stock analysis on TipRanks)Mosaic Co (MOS)A fellow giant in the agricultural industry is the US’s largest producer of potash and phosphate fertilizer, the Mosaic Company.Mosaic had a difficult 2019 with its share price losing almost 25% over the year. Slipping margins, bad weather and the effect of the US and China trade war all played their part in suppressing the share price. The recent easing of the trading tensions saw Mosaic’s stock climb out of the doldrums in December; China is one of the company’s biggest markets and its willingness to buy more US agricultural products is a part of the phase one trade deal, and could provide a boon for US fertilizer producers.Like Nutrien, Mosaic has also been busy in Brazil; in 2018, the company acquired Vale’s Brazil-based phosphate and potash business. By the end of last year it had run-rate synergies of $275 million, with the company targeting a further $200 million EBITDA benefit from the business by the end of 2022.Despite a disappointing 2019, Andrew Wong, who also covers MOS, believes the phosphate markets are “close to bottoming." The analyst further added, “Mosaic provides strong leverage to the potash and phosphate markets, and we believe it would be an ideal investment in a commodity upside scenario. The acquisition of production and distribution assets in Brazil further enhances the company’s exposure to the fastest-growing agriculture market and provides significant synergy potential.”With this in mind, Wong reiterates an Outperform rating on the potash producer, along with a $26 price target, which implies possible upside of 26%.With 6 Buys, 1 Hold and 1 Sell, Mosiac receives a Moderate Buy consensus rating from the Street. If the average price target of $24.13 can be met, investors stand to pocket a 17% over the next 12 months. (See Mosaic stock analysis on TipRanks)
Constellation Brands (STZ) has been upgraded to a Zacks Rank 2 (Buy), reflecting growing optimism about the company's earnings prospects. This might drive the stock higher in the near term.
The beer industry is made up of companies specializing in the production of beer, but which also produce other alcoholic and non-alcoholic beverages. Beverages are considered consumer staples and thus the beer industry may be considered a small part of the broader consumer staples sector.
Monster Beverage's (MNST) momentum in the energy drinks category should continue to drive performance. Also, its efforts to innovate and launch products are encouraging.