|Bid||174.00 x 900|
|Ask||205.67 x 1100|
|Day's Range||182.89 - 184.85|
|52 Week Range||150.37 - 214.48|
|Beta (3Y Monthly)||0.65|
|PE Ratio (TTM)||45.99|
|Earnings Date||Jan 8, 2020|
|Forward Dividend & Yield||3.00 (1.63%)|
|1y Target Est||226.70|
David Duncan, Silver Oak Cellars CEO, told Yahoo Finance his brand is actually increasing in popularity with millennials.
Canopy Growth (NYSE:CGC) is unquestionably one of the leading names in the cannabis sector. There are some good reasons for that. It is one of the sector's largest growers. And while oversupply has become a prevailing theme in the cannabis sector, at some point this should become a competitive advantage.Source: Shutterstock Canopy also has a boat load of cash from Constellation Brands (NYSE:STZ). As of Sep. 30, CGC had holdings of 700 million CAD in cash, cash equivalents and marketable securities on hand, largely coming from Constellation's investment.For these reasons, and more, Canopy Growth should be a survivor of the cannabis wars. This was a point echoed by InvestorPlace contributor Todd Shriber when debating if the recent boost in Canopy stock was the beginning of something real, or just a dead cat bounce.InvestorPlace - Stock Market News, Stock Advice & Trading TipsI'm not sure if that matters. The entire cannabis sector is out of favor with investors. Which means Canopy is looking more and more like the tallest of the seven dwarfs. And that's not an enviable position to be in. There Is Still a Massive Opportunity in CannabisIn a report released in May 2019, Grand View Research, Inc. estimates the size of the global legal marijuana market to reach $66.3 billion by the end of 2025. What was even more eye-opening about the report is that it says the industry is expected to expand at CAGR of 23.9% during that time. * 7 Tech Stocks You Should Avoid Now However, 2025 is a long way off. And that's why it's important for investors to understand why the cannabis industry is still a risky proposition. There Is Still a Lot of Risk with Canopy Growth StockThe problem with Canopy Growth stock is the same problem that besets all marijuana stocks. There are many things we don't know. One question is when will the fundamentals of supply and demand get on track in Canada? Another question is when will legalization actually become a reality in the U.S.? The first question is in the process of resolving itself. The latter is less clear.When investors were dreaming of becoming marijuana millionaires in 2018, they ignored the law of unintended consequences. Sure, there was pent-up demand. And the major cannabis companies, like Canopy Growth, were going to offer a product that was a safer and cost-effective alternative to the black market.All that was required was legalization. And that's where reality set in. Full legalization in the U.S. is still a way off. And even in Canada, which achieved full legalization in October of 2018, the regulatory process has bogged down the process of getting supply chains in order. This meant that bigger was not better and Canopy, among others, got stuck with too much supply. Constellation May Also Be Losing PatienceConstellation has invested $4 billion into Canopy Growth, giving it a 37% stake in the company. However, as Will Healy wrote in a recent article, this investment does not come without strings attached. And Constellation may be ready to pull on those strings.Simply put, Constellation is seeing falling revenues in their core markets and they need to start seeing a return on their investment in Canopy Growth. And as Healy pointed out, a falling CGC stock price creates the not completely unreasonable scenario where Constellation may decide to buy Canopy Growth outright. The Bottom Line on Canopy Growth StockThere's a ton of risk that comes with Canopy Growth. But there's a ton of risk with any cannabis stock. If you look at the stock of any of the major cannabis companies, they're all the same. Every stock got a lift at some point in 2019, but all have since been on a downward trend.Some will make the argument then that investing in the leader is the least bad option. But a least bad option is still a bad option if the company is not ready to turn a profit. And Canopy Growth is not ready to turn a profit and may not be profitable in 2020.Nevertheless, Canopy Growth looks like it will be there when the industry does become profitable. But there are better options for speculative investors right now. And no matter if Canopy Growth is first or worst, it's a speculative stock. Invest at your own risk.As of this writing, Chris Markoch did not have a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Retail Stocks to Buy That Dominated Thanksgiving Shopping * 6 Manufacturing Stocks to Buy as the Economy Recovers * The 7 Best Cryptocurrencies to Buy as Blockchain Heats Up The post Investing in Canopy Growth Stock Is a Risky Game of Follow the Leader appeared first on InvestorPlace.
Boston Beer (SAM) witnesses robust depletion and shipments owing to innovations, quality of products and strong brands. These have been aiding its quarterly performance.
The bull case for Canopy Growth (NYSE:CGC) stock at this point essentially is that the market has overreacted. Cannabis plays have been hammered this year amid disappointing revenue growth and fears of cannabis oversupply. Canopy Growth stock hasn't been spared: it's down 65% from its late April highs.Source: Jarretera / Shutterstock.com But there are reasons why its near-term results have disappointed investors. One of those reasons looks particularly key. Health Canada, that country's cannabis regulator, has been slow to approve retail licenses. Especially in Ontario, Canada's most populous province, the retail infrastructure is lagging the industry's production capacity.That should start to change in 2020. Meanwhile, Health Canada is starting to approve licenses for so-called "Cannabis 2.0" products like vapes and edibles. The hope is that more retail locations selling more products will ease the industry's overcapacity. That, in turn,will boost the revenue and margins of Canopy Growth and other cannabis producers.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIt's an intriguing theory, particularly with CGC stock near its lows. But there are still valid concerns about Canopy Growth stock, even after its 60%-plus decline. And if Cannabis 2.0 can't fix Canopy Growth stock, it's difficult to see what can. The Rollout of Cannabis 2.0Last week, Canopy Growth unveiled its extensive Cannabis 2.0 portfolio.Canopy Growth is launching a broad lineup of vaping products. In partnership with Hummingbird Chocolate, Canopy is unveiling multiple chocolate products under several brands. * 7 Retail Stocks to Buy That Dominated Thanksgiving Shopping The company will release several beverages, including the trademarked Distilled Cannabis, a clear liquid made from whole cannabis flower. Its Tweed RTD (ready to drink) flavored beverages contain THC (tetrahydrocannabinol) and CBD (cannabidiol). Canopy will also offer sparkling water under its Quatreau brand, THC-heavy Deep Space carbonated beverages, and unflavored mixers.The release of such a broad portfolio highlights one of the reasons why many cannabis bulls have chosen Canopy Growth stock. The multi-billion dollar investment by Constellation Brands (NYSE:STZ,NYSE:STZ.B) in CGC last year gave it enough capital to lead the industry. Canopy's plans for Cannabis 2.0 suggest it has a real chance to do so. The Case for CGC StockMeanwhile, CGC's rivals have very real financial concerns. Aurora Cannabis (NYSE:ACB) continues to dilute its shareholders, but it still has a significant balance sheet problem. Hexo (NYSE:HEXO) has focused on edibles from the start, but it, too, needs to conserve its cash.Canopy has no such problems. Thanks to the Constellation investment, it still has 2.7 billion CAD in cash and investments. Cash burn has been an issue in recent quarters -- its cash balance shrunk over 400 million CAD in Q3 alone -- but that problem should moderate going forward.That balance sheet gives Canopy plenty of options. It can be aggressive on pricing, hoping to outlast its rivals. It could pick up assets down the line, assuming distressed companies look to sell themselves before (or after) going bankrupt.More broadly, bulls can argue that the problem with the Canadian cannabis industry is not a long-term issue. The slow pace of regulatory action has caused many of the sector's problems, including oversupply and lower-than-expected revenue.Those problems will be fixed: Canopy Growth's management projected after Q3 that supply and demand would return to balance by the middle of next year. And once that happens, optimism towards the worldwide cannabis sector will return. Few, if any, companies will be better-positioned for that opportunity than Canopy Growth. The Risks to Canopy Growth StockI'm sympathetic to that bull case, particularly with Canopy Growth stock below $20. But there are risks to CGC stock that are worth noting.First, Canopy Growth stock might be cheaper than it was, but it's not cheap. Even backing out cash net of debt, the company is valued at about $5 billion. That's roughly eight times the mean Wall Street 2020 top=line estimate.Second, it's not yet clear that Cannabis 2.0 will be the blockbuster for which bulls hope. Cannabis derivatives are expected to bring in new consumers, but consumers simply may not be interested in them.Meanwhile, CGC's competition will be intense, with the likes of Cronos (NASDAQ:CRON), Tilray (NASDAQ:TLRY), and many others similarly releasing edibles and vapes. There already are legitimate worries about Canopy's plans to be all things to all consumers, plans which so far haven't worked out. At the least, Canopy needs to execute much better than it has so far, and it has to do so without a permanent CEO in place. CGC's Margin ProblemFinally, Canopy Growth stock is significantly dependent on Cannabis 2.0 products at this point. If demand for pot derivatives doesn't materialize, the stock is in real trouble.The company's deal with Acreage Holdings (OTCMKTS:ACRGF) targets a U.S. recreational market that may not open up for years. The CBD opportunity in the U.S. looks less attractive after the struggles of the sector's leader, Charlotte's Web (OTCMKTS:CWBHF). International markets haven't changed much in the past 18 months.The long-running concern about CGC stock, and cannabis producers more broadly, is that production is going to be a low-margin, commoditized business. There's early evidence to suggest that indeed will be the case. If derivatives don't drive real revenue at high margins, the company's long-term profit outlook will drop even further.In other words, CGC stock remains a risky bet to make. And it's tough to make a compelling case as to why the bet should be made right now. CGC's execution has been weak. It has repeatedly missed its guidance. Stocks across the sector remain falling knives, and Canopy Growth stock is largely in that category.That said, I can see why cannabis bulls see CGC as attractive below $20. If its long-term opportunity is even close to what optimists believe it is, there's a path to a longer-term rally. That path requires the company's Cannabis 2.0 to be successful, meaning those products will likely define the performance of CGC stock next year.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Retail Stocks to Buy That Dominated Thanksgiving Shopping * 6 Manufacturing Stocks to Buy as the Economy Recovers * The 7 Best Cryptocurrencies to Buy as Blockchain Heats Up The post Cannabis 2.0 Highlights the Rewards a and Risks a of Canopy Growth Stock appeared first on InvestorPlace.
VICTOR, N.Y., Dec. 04, 2019 -- Constellation Brands, Inc. (NYSE: STZ and STZ.B), a leading beverage alcohol company, announced today it will report financial results for its.
Canopy Growth (NYSE:CGC), with a $6.5 billion market capitalization, and 2.7 billion CAD in cash, remains better positioned than most of its peers.Source: Shutterstock Nonetheless, like most other marijuana equities, it continues in a downtrend. Worse, little on the horizon has appeared that could keep Canopy around. This decline could bring a grim scenario that would prevent most of Canopy Growth's long-term success from accruing to shareholders.In late October, I urged investors not to trust the rally in the high-flying pot stock. It would go on to lose about one-third of its value in a post-earnings plunge before bouncing off its lows. At the current stock price near $18.70 per share, it has lost about 10% of its value since I made that prediction. Unfortunately for Canopy Growth bulls, it continues to trade below the 50-day moving average.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThe company also remains in limbo in the C-suite. Canopy Growth investor Constellation Brands (NYSE:STZ) used its influence to oust the company's founder from the CEO position in July. Since that time, it has not found a permanent replacement. As InvestorPlace's Will Ashworth mentions, it may even miss its self-imposed deadline to appoint a new CEO by the end of 2019. Constellation and Canopy GrowthStill, Constellation has made Canopy Growth what it is today. Thanks to Constellation's investments, the cannabis name still holds one of the strongest balance sheets in the industry. Canopy's size and remaining funds leave it well-positioned despite analyst projections of continuing losses. * 9 Tech Stocks You Wish You'd Bought During 2019 However, this could go poorly for shareholders. The reason why is that stock declines place Constellation in a better position to buy Canopy Growth outright.Yes, Constellation recently stated it would not provide additional cash outside of the exercise of warrants. Nonetheless, as things stand now, Constellation already owns 38% of the company. Moreover, as people drink less, revenues for STZ have fallen, and profits have not increased significantly. Hence, Constellation needs cannabis to return it to consistent growth. Buyout DangerThis could hurt investors as any buyout could come at a much lower stock price. Despite losing nearly two-thirds of its value since the spring, Canopy trades at levels too high for fundamentals to rescue it. The stock sells at almost 25 times sales. That far exceeds Constellation's price-to-sales ratio of 4.3 and that of Altria (NYSE:MO), which trades close to 4.7 time sales.I do not think Canopy will fall to a comparable P/S ratio anytime soon. However, in a buyout situation, the growth investors who bought Canopy Growth would exchange it for a slower-growth, dividend-producing investment. This means equity losses, which mounted quickly, could take years to recover.As mentioned before, I think Constellation's cash will help Canopy Growth weather a downturn in cannabis equities. However, the potential for a buyout at a lower price means reduced profits or steeper losses for shareholders. For this reason, I would think twice about investing in marijuana with Canopy Growth. The Bottom Line on Canopy GrowthA buyout by Constellation could hamper the growth potential of Canopy. Marijuana equities have sold off sharply since the spring as a weed supply glut and legal barriers have forced cannabis companies to revise revenue and earnings forecasts downward. This has hammered marijuana stocks, Canopy Growth included.However, Constellation's firing of Canopy's previous CEO points to its power in the company. Moreover, Constellation needs marijuana to reinvigorate sales and earnings growth. Such conditions point to a likely takeover, especially if the pot stock falls to a much lower price.Such a move means two things for current shareholders. Not only will they have sustained massive losses in a volatile stock, but they will also have to recover those losses in a slow-growth equity. This means it could take years to recover their investment.Since the attributes of Canopy Growth may not accrue to shareholders, investors should consider avoiding this stock.As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can follow Will on Twitter at @HealyWriting. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 9 Tech Stocks You Wish You'd Bought During 2019 * 5 Under-the-Radar Marijuana Stocks With Over 100% Upside * Watch These 5 STARS Stocks as They Change the Future The post A Constellation Buyout Would Harm Canopy Growth Shareholders appeared first on InvestorPlace.
The past two years have been the best of times and the worst of times for Canada's biggest cannabis producer, Canopy Growth (NYSE:CGC). In 2018, Canopy Growth stock exploded onto the scene as a hugely popular growth company that was a pioneer of the potentially massive legal cannabis market. CGC stock roared from about $20 to roughly $60, thanks to the nationwide legalization of cannabis in Canada as well as a multi-billion dollar investment from alcoholic beverage giant Constellation Brands (NYSE:STZ).`Source: Shutterstock But 2019 has played out very differently for Canopy Growth stock. Canopy has gone from a hugely popular growth company to a poster child for bubble stocks, as the stock's stretched valuation has crumbled under the weight of a choppy legal cannabis rollout in Canada, slower-than-expected cannabis legalization elsewhere, and an array of cash burn, margin, and profitability concerns.Ultimately, CGC stock dropped from a $50-plus high in early May to a sub-$20 price tag in December.InvestorPlace - Stock Market News, Stock Advice & Trading TipsFortunately for the owners of Canopy Growth stock, 2019 is almost over, and 2020 could usher in a new (and better) era for Canopy Growth. Specifically, there are three reasons to believe that CGC stock will rebound a great deal over the next 12 months. Further, the numbers indicate that if the tide does turn in the near-term, Canopy Growth stock could nearly double. Three Reasons Why Canopy Growth Can ReboundFirst, the conditions of the cannabis market in Canada should improve. Legal fees, distribution hiccups, and supply constraints have killed demand in the legal Canadian cannabis market in 2019. Legal fees will stick around. But distribution hiccups should fade in 2020 as producers gain more experience. Canopy's supply constraints should also ease, since Canopy has dramatically expanded its capacity and increased its growth potential. The launch of new marijuana products, including vapes, edibles, and beverages, should supercharge demand for legal cannabis in 2020. * 9 Tech Stocks You Wish You'd Bought During 2019 Second, the U.S. should make meaningful progress towards cannabis legalization. Canopy has made a big bet on the legalization of cannabis in the U.S. Unfortunately, very little progress was made on that front in 2019. But in November, the House Judiciary Committee approved the Marijuana Opportunity Reinvestment and Expungement (MORE) Act. While the vote was not super meaningful by itself, it sets the stage in 2020 for the Senate to pass the MORE Act and make weed completely legal in the U.S.Third, the positioning of CGC stock has improved in every way. Coming into 2019, Canopy Growth stock was flying high, investors were bullish on it, analysts' estimates for CGC were being hiked to unreachable levels, and its valuation was at historic highs.The stock was positioned to crater on bad news. Exiting 2019, CGC stock is crashing to multi-year lows, investor sentiment towards Canopy Growth stock is bearish, Wall Street estimates have tumbled to more beatable levels, and its valuation is as low as it's been since Canada legalized cannabis. Now CGC stock is positioned to roar on good news. Canopy Growth Stock Could Double in 2020Canopy Growth's long-term profit outlook indicates that CGC stock should trade around $34 in 2020. So if the Street becomes more upbeat on Canopy Growth stock, then the shares could nearly double over the next 12 months.My estimates, based on market data from BDS Analytics, estimate Canopy Growth's share of the legal global cannabis market at just under 2% in 2019. But CGC has a minimal presence outside of Canada, and zero presence in the world's biggest market, the U.S. The legal global cannabis market is projected to grow at a nearly 25% annualized clip to $32 billion by 2022. Yet most market research firms peg the global addressable market for cannabis at somewhere north of $200 billion.Thus, the legal cannabis market will keep growing at a robust rate into 2030. Realistically, I think the market will increase about 15% per year to over $90 billion by 2030. Canopy should control about 10% of that market, with expansion in the U.S. market accounting for the bulk of its market share gains. If CGC reaches that plateau, its 2030 sales will be about $9 billion-plus.At the same time, its gross margins should improve as demand for its products ramps up and black market competition eases. Sustained high revenue growth will increase its profitability. Its profit margins should ultimately be very impressive, reaching levels similar to those of the tobacco and alcoholic beverage industries.Putting all that together, I estimate that Canopy's earnings per share could reach $5 by 2030. Based on a forward earnings multiple of 16, which is average for the market, that yields a $100 price target for CGC stock by 2029. Discounted back by 10% per year, that equates to a 2020 price target of about $34. The Bottom Line on CGC StockAs we head into the final month of what has been a disastrous year for Canopy Growth stock, there's reason to be cautiously optimistic that the shares will rebound tremendously in 2020. Those who buy CGC below the $20 level should be rewarded handsomely in the long-run.As of this writing, Luke Lango was long CGC. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 9 Tech Stocks You Wish You'd Bought During 2019 * 5 Under-the-Radar Marijuana Stocks With Over 100% Upside * Watch These 5 STARS Stocks as They Change the Future The post Why Canopy Growth Stock Could Rebound Tremendously in 2020 appeared first on InvestorPlace.
Little known Chicago-area brewery takes over iconic San Diego beer brand for undisclosed sum less than five years after it was bought for a record price.
Constellation Brands (STZ) agrees to sell the Ballast Point brand and related assets to Kings & Convicts. The sale is likely to boost the company's depletion and margins.
This week brought about two big moves in the food and beverage sector. Alcohol beverage giant Constellation Brands, Inc. (NYSE: STZ ) sold its craft beer Ballast Point brand and associated production facilities, ...
In a stunning deal that shows how much the craft-beer industry has changed in recent years, Constellation Brands Inc. on Tuesday unloaded the Ballast Point beer brand — which it bought for a record price in 2015 — to a little-known Chicago-area brewer for an undisclosed sum.
Constellation Brands (STZ) closed at $184.49 in the latest trading session, marking a -0.85% move from the prior day.
Chicagoland-based Kings & Convicts Brewing Co. and Constellation Brands, Inc. (NYSE:STZ and STZ.B), a leading beverage alcohol company, announced today that Kings & Convicts has signed an agreement with Constellation to acquire the Ballast Point brand and a number of its associated production facilities and brewpubs, excluding Constellation’s Craft & Specialty operations in Daleville, Virginia. This transaction is expected to close by the end of Constellation’s fiscal 2020. “We’re excited to welcome the team at Ballast Point into the Kings & Convicts family,” said Brendan Watters, Kings & Convicts’ chief executive officer.
On Nov. 21, in response to several potential class-action suits in the United States, Canopy Growth (NYSE:CGC) issued a brief statement acknowledging the legal issues it could be facing. Although the company believes the claims are without merit, CGC stock fell on the news. Source: Shutterstock InvestorPlace - Stock Market News, Stock Advice & Trading TipsCanopy has enough issues at the moment. Class-action suits are just another to add to the pile. While it can't ignore these potential suits brought by law firms I believe are masquerading as ambulance chasers, interim CEO Mark Zekulin and the rest of the board of directors must keep their eyes focused on continuing to grow Canopy's business. A loss of focus at this point could be fatal. It's got to carry on, leaving the legal matters to its lawyers. That's what they're paid for. Here are a couple of matters more pressing for Canopy as it heads into 2020. Finding a New CEOIt's been a couple of months since Canopy chairman John Bell told the media that the company would have a new CEO by the end of 2019. Well, we've come to Thanksgiving without an announcement. That leaves five weeks to lock down a chief executive. Talk about cutting it close. * 7 Entertainment Stocks to Buy to Escape Holiday Blues The reality is the hiring of a new CEO might slide into 2020. Better to get the right person early next year than the wrong person before the turn of the calendar. The appointment's that important. In August, I recommended three highly-capable executives Canopy should go after in its quest to be the biggest and best cannabis company on the planet. One of my suggestions could be available. From Shoes to Pot?In October, Mark Parker, the CEO of Nike (NYSE:NKE) for the past 13 years and a Nike employee since 1979, abruptly resigned as chief executive. Although Parker will become executive chairman of Nike on Jan. 13, the demands on the 64-year-old businessman won't be nearly as time consuming as those of the CEO.I suggested that Parker was a long shot given his age and commitment to the Nike lifestyle. That said, his understanding of global brands would be incredibly helpful to Canopy as it grows beyond its Canadian roots. My other two suggestions: Williams-Sonoma (NYSE:WSM) CEO Laura Alber and Starbucks (NASDAQ:SBUX) COO Rosalind Brewer are also long shots. Alber has one of the best CEO jobs in the world, and Brewer is likely to succeed Kevin Johnson as CEO.Whoever the company appoints has to be someone familiar with branded products. Until it gets its woman or man locked down, Canopy can't afford to spend a single minute worrying about these class-action suits. Canopy and Constellation Have Got to Kiss and Make UpCanopy's shares fell almost 10% on Nov. 22 after controlling shareholder Constellation Brands (NYSE:STZ) suggested the gravy train was over for its Canadian partner. In its Nov. 22 U.S. Securities and Exchange Commission filing, Constellation had the following to say about its significant investment in the cannabis producer:"[Constellation] does not plan to make additional cash contributions to Canopy beyond any possible exercise of the warrants. Constellation believes that Canopy is adequately capitalized with more than C$2.7 billion cash and marketable securities on hand as of September 30, 2019."Can you blame it?Canopy Growth stock is down 33% year-to-date. Over the past year, CGC is off more than 46%. In the same period, STZ stock has a total return of 16% year-to-date, but it's down almost 5% over the past 52 weeks. A lot of that has to do with Canopy's disintegrating stock price, not some deterioration of its beer, wine or spirits businesses. Canopy has the strongest financial position among the top six Canadian cannabis producers. In early November, I highlighted how it and Cronos Group (NASDAQ:CRON) tower over the other four major competitors. The new CEO will be pleased to inherit a business whose balance sheet is as solid as they come. The Bottom Line on Canopy Growth StockYes, it has recorded some massive losses in recent quarters -- 1.7 billion CAD in the first six months of fiscal 2020 -- but the long-term prognosis for the company remains intact. The ambulance chasers are launching suits because, in a stock market like the one we've got right now, somebody must pay for making investors look silly. And it isn't going to be the lawyers. Suck it up, snowflakes. You win some. You lose some. That's the game of investing. Live with it. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Things to Watch for into 2020 for Safer Income & Growth * 7 Entertainment Stocks to Buy to Escape Holiday Blues * 5 "Strong Buy" Biotech Stocks With More Than 80% Upside The post Ignore the Canopy Growth Ambulance Chasers appeared first on InvestorPlace.
What most investors don’t know is that core earnings, when adjusted for unusual gains and losses hidden in footnotes, are a lot worse than they realize. Answer: Most investors are not aware of the more severe decline in core earnings. Over the trailing 12 months, GAAP earnings fell 1% while adjusted core earnings fell 6% for the largest 1,000 companies by market capitalization in each period.
Canopy Growth Corp., the Canadian cannabis company that is the market leader thanks to a $4 billion investment from a major drinks company, will not be profitable on a per-share basis by fiscal 2022, MKM analyst Bill Kirk said Friday.
MKM analyst Bill Kirk offered 10 questions he suggests analysts attending Canopy Growth Corp.'s Dec. 3 investor meeting should ask the Canadian cannabis market leader in a note Friday in which he said profitability will remain elusive for the company. "Unlike market expectations, we do not expect Canopy to become a profitable organization by FY2022 (on EPS)," Kirk wrote in a note to clients. "Current spending is the beginning of what is needed to capture future profitable opportunities. Existing cultivation businesses will continue to be under pressure as more supply comes online." Brand differentiation in the new sector is unpredictable, he wrote, although Canopy should benefit from better R&D than peers, thanks to its $4 billion investment from Corona beer maker Constellation Brands Inc. , he wrote. The company's excessive executive compensation policy is to blame for its losses and inventory levels remain a risk if demand does not materialize or is delayed, he said. Kirk suggests investors ask about that policy and whether cuts have impacted morale. He suggests asking whether the FDA's update on CBD will affect the company's plans for CBD beverages and how much more labor the products to be released under Cannabis 2.0., the launch of derivatives in Canada, require. Kirk rates Canopy stock as neutral with a C$23 ($17) fair value stock price estimate, below it's current price of C$25.54. U.S.-listed shares were up 2.2% in premarket trade Friday, but are down 30% in 2019, while the ETFMG Alternative Harvest ETF has fallen 31% and the S&P 500 has gained 26%.
Unfavorable foreign-currency translation impact, elevated operational costs and beer-consumption decline in the domestic market remain headwinds for Owens-Illinois (OI).
In the latest trading session, Constellation Brands (STZ) closed at $185.68, marking a +0.88% move from the previous day.
Does Constellation Brands, Inc. (NYSE:STZ) represent a good buying opportunity at the moment? Let’s quickly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend […]
The woes continue for Aurora Cannabis (NYSE:ACB). ACB stock continues to fall as concerns increase about the financial health of the company. The early bet the company made on capacity has deeply hurt the company as sales fall alarmingly short of production levels.Source: ElRoi / Shutterstock.com As a result, investors have begun to balk at the premium stock prices previously commanded by Aurora and other marijuana equities. This has led to a perfect storm that continues to hammer the sector.While I do not think investors should lose all hope for Aurora Cannabis, the pain will certainly continue for ACB stock.InvestorPlace - Stock Market News, Stock Advice & Trading TipsMany had considered Aurora stock a "top-tier" cannabis equity due to its production capacity. As cannabis stocks gained interest, it worked to make itself the world's largest marijuana producer. Admittedly, that may have looked like a smart strategy in the past. * 7 Strong Buy Stocks That Are Bargains Right Now However, Aurora missed out in other critical areas. It has not made a U.S. hemp deal like Canopy Growth (NYSE:CGC). Neither has the company secured key investors from related industries like Canopy with Constellation (NYSE:STZ) or Cronos Group (NASDAQ:CRON) with Altria (NYSE:MO).Now, a supply glut has turned Aurora's bet on production into a huge disadvantage. ACB stock saw a massive drop following earnings in mid-November. While the company beat on earnings, it fell short on revenue. The worsening supply glut likely explains why.The numbers explain the fallout from the supply glut well. Aurora Cannabis produced 41,436 kg of dried marijuana in its most-recent first quarter. Unfortunately, the company only sold 12,463 kg during the same period. In the quarter before, it sold 17,793 kg and produced 29,034 kg. The recent legalization of edibles and beverages will only offer limited help under such circumstances. Exports Will Not HelpSo too will exports. In the previous two quarters, it exported 4,553 kg and 4,481 kg, respectively.Also, do not count on U.S. legalization to stop the death spiral anytime soon. Despite the passage of a bill to deschedule cannabis in a U.S. House committee, legalization still faces a long road. Senate Majority Leader Mitch McConnell has long opposed marijuana reform, though he met with industry leaders and toured cannabis facilities in October.Other politicians have echoed these sentiments. Joe Biden still called it a "gateway drug" before walking the comment back. In my home state of Texas, the Lieutenant Governor blocked a decriminalization bill that likely would have passed otherwise.About 67% of Americans now support legalization, a massive turnabout from 20 years ago when 63% opposed legal status for weed. For this reason, I think the pro-cannabis forces will eventually win these battles. Still, victory will probably not come quickly. ACB Stock Is Set to Fall FurtherWhether Aurora has enough time remains unclear. Aurora stock has fallen 30% since I started my "two difficult truths about ACB stock" in early November. I argued that Aurora will continue to fall as the cannabis stock bubble has not yet wholly popped. I also said the massive dilution and the drop in Aurora Cannabis stock would lead to a reverse split.Unfortunately, both of these remain hard truths despite the equity's difficult November. I have long criticized their massive dilution strategy. Now, others have begun to take notice of the company's precarious finances.Our own Ian Bezek also goes after the dilution strategy on Aurora stock. He calls it not only an effective way to raise money but also a "death spiral." Even though I think Aurora Cannabis may still survive, I also cannot disagree with his description. The Bottom Line on ACB StockOversupply means the pain will continue for Aurora stock. Analysts have considered Aurora a top marijuana stock due to its lead in production capacity. Unfortunately, this has turned into a liability as their ability to produce far surpasses market demand.With the lack of access to the U.S. market and further stock dilution likely coming, the company offers only reasons to bet against Aurora stock.Aurora's bet on supply could benefit the company eventually. However, first, it will have to find a way to survive the supply glut. Although it may do so, the company will have to sacrifice further value in ACB stock to achieve that end. Unless and until it can break the death spiral, investors should stay away.As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can follow Will on Twitter at @HealyWriting. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Strong Buy Stocks That Are Bargains Right Now * 7 Excellent Bank Stocks Worth an Investment * 4 Small-Cap, Big-Dividend Stocks The post An Early Bet on Capacity Will Continue to Haunt ACB Stock appeared first on InvestorPlace.
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