W - Wayfair Inc.
| Previous Close | 106.32 |
| Open | 105.37 |
| Bid | 109.00 x 900 |
| Ask | 0.00 x 1000 |
| Day's Range | 105.14 - 110.18 |
| 52 Week Range | 76.60 - 173.72 |
| Volume | 1,128,919 |
| Avg. Volume | 2,029,344 |
| Market Cap | 10.063B |
| Beta (3Y Monthly) | 2.47 |
| PE Ratio (TTM) | N/A |
| EPS (TTM) | -7.47 |
| Earnings Date | Oct 31, 2019 |
| Forward Dividend & Yield | N/A (N/A) |
| Ex-Dividend Date | N/A |
| 1y Target Est | 153.13 |
- Yahoo Finance Video
UBS initiates Wayfair at neutral, OpCo bullish on Nike
UBS initiated coverage of Wayfair at neutral with a price target of $125. Oppenheimer recommends Nike as a top pick within its consumer growth & eCommerce coverage, rating Nike as an outperform stock with a $100 price target. Yahoo Finance's Myles Udland, Jen Rogers and Emily McCormick discuss on The Final Round.
- Zacks
Wayfair Launches Hykkon, Expands Presence in UK & Germany
Wayfair (W) introduces a flagship brand, Hykkon, which offers over 700 products for the living room, dining room and bedroom. This is likely to aid growth in its European business.
- Business Wire
Wayfair Introduces New Flagship Brand, Hykkon
Wayfair Inc., one of the world’s largest online destinations for the home, today unveiled Hykkon, a carefully curated collection of stylish yet timeless home furnishings to help customers discover exciting design at an affordable price. Hykkon is the first flagship brand for Wayfair’s European business and launched today across Wayfair.co.uk and Wayfair.de. “We’re thrilled to launch our first flagship brand across Wayfair Europe, which gives our customers premium access to an in demand, modern assortment at an affordable price point,” said Martin Reiter, Head of Europe, Wayfair.
- Barrons.com
Head of Social Security Andrew Saul Bought Up Wayfair, Rolls-Royce Stock
Saul recently disclosed August stock transactions. He hadn’t owned any shares of home-decor firm Wayfair at the end of 2018, although he did own an investment in aircraft-engine firm Rolls-Royce.
- Insider Monkey
Is Wayfair Inc (W) Going To Burn These Hedge Funds?
Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the second quarter. You can find write-ups about an individual hedge fund's trades on numerous financial […]
- Business Wire
Wayfair Unveils Winners of Dream Classroom Giveaway
Wayfair (NYSE:W), one of the world’s largest online destinations for the home, announced today the winners of the Dream Classroom Giveaway, a contest awarding five teachers across the United States with brand-new classroom furniture, storage, and décor. Conducted by Wayfair Professional, Wayfair’s business program, nominations from the public were accepted through a contest website earlier this year. “We’re thrilled to announce the Dream Classroom Giveaway winners.
- TheStreet.com
Wayfair Gets Outperform Rating, $145 Price Target From Wolfe Research
Wayfair dips slightly after an analyst at Wolfe Research initiates coverage of the stock with an outperform rating.
- Zacks
Do Options Traders Know Something About Wayfair (W) Stock We Don't?
Investors need to pay close attention to Wayfair (W) stock based on the movements in the options market lately.
- American City Business Journals
Wayfair execs drop off list of 400 richest Americans
The company's co-founders, Niraj Shah and Steven Conine, hit the rankings for the first time last year with a net worth of $2.2 billion.
- American City Business Journals
Amazon opens its first '4-star' store in Massachusetts
As online retailers look for additional ways to get products in front of customers, Amazon is bringing a physical store in the same mall that's home to Wayfair's first full-service retail home store.
- Business Wire
Wayfair Schedules Third Quarter 2019 Earnings Release and Conference Call
Wayfair Inc. , one of the world’s largest online destinations for the home, today announced that it will release financial results for its third quarter ended September 30, 2019 before the opening of the market on October 31, 2019.
- Benzinga
UBS Needs More Clarity On Wayfair's Profitability For A Bullish Stance
Wayfair performs well on data and delivery, both of which are “critical future frontiers in retail,” Lasser said in the initiation note. Wayfair’s penetration of U.S. households should increase from an estimated 9% to 15% by fiscal 2021 and 18% by fiscal 2023, Lasser said.
- Barrons.com
Wayfair Stock Is Looking Strong, but It Still Has Something to Prove, Analyst Says
Wayfair stock has climbed this year even as many of its retail peers languish. Yet UBS says investors should wait before jumping in.
- PR Newswire
Sotheby's International Realty Announces Collaboration with Luxury Home Furnishings Brand Perigold
MADISON, N.J., Sept. 25, 2019 /PRNewswire/ -- Sotheby's International Realty Affiliates LLC today announced an affiliation with Perigold, the luxury home furnishings retailer, to introduce premium pieces into the Curate by Sotheby's International Realty(SM) augmented reality (AR) app. The collaboration enables Sotheby's International Realty® agents to create virtual stagings with distinguished Perigold furniture and décor within the app and on the Sotheby's International Realty global website. "Our collaboration with Perigold builds upon the continued excitement from our global network and agents to provide clients with the latest and best in technology," said John Passerini, global vice president of interactive marketing, Sotheby's International Realty Affiliates LLC. "Perigold's fine furnishings include pieces from cutting-edge innovators and heritage-rich mainstays, making them ideally situated to advance the Curate by Sotheby's International Realty AR app.
- Business Wire
Wayfair Professional Launches Turn-key Solution for Business Customers to Furnish Spaces
Wayfair (NYSE:W), one of the world’s largest online destinations for the home, announced that customers of its business program, Wayfair Professional, can instantly purchase complete furnishings and fixtures for pre-designed rooms in just a few clicks.
- TheStreet.com
Wayfair Shares Lower as Berenberg Initiates Online Retailer at Sell
The company's huge product selection `can be overwhelming and difficult to curate,' analyst Graham Renwick wrote.
- Business Wire
Wayfair Appoints Anke Schäferkordt to Board of Directors
Wayfair (NYSE:W), one of the world’s largest online destinations for the home, today announced the appointment of Anke Schäferkordt to its board of directors. Schäferkordt brings extensive experience in media and international markets to the Wayfair board drawing upon her long tenure as a visionary leader and chief executive for the Germany-based media powerhouse RTL Television and Media Group RTL.
- Reuters
SoftBank leads financing round in Brazilian home goods retailer MadeiraMadeira
Japan's SoftBank Group Corp has led a $110 million financing round for Brazilian online home goods platform MadeiraMadeira, according to a statement on Tuesday. SoftBank's fresh capital for MadeiraMadeira comes from its $5 billion Latin America fund, launched in March, which has been directed to sectors ranging from banking and real estate to home goods and delivery services. Investment firm Light Street Capital is also participating in the funding round, alongside SoftBank and Flybridge Capital, which is already an investor in MadeiraMadeira.
- GuruFocus.com
Wayfair: A Long-Term Turnaround Opportunity
The retailer’s strategy could catalyze its financial prospects Continue reading...
- Bloomberg
At Home CEO’s Gut Check Prompts ‘Revisit’ of Whole Business
(Bloomberg) -- After Lee Bird witnessed At Home Group Inc. lose half its market value in one day this June, the chief executive officer decided to reconsider everything.“This past 90 days has been a revisit of our whole business,” Bird said in an interview. “We obviously lost the faith of our investors.”In response, the home-goods retailer pulled back on its ambitious store-opening plans and revamped marketing to tout what it claims are the lowest prices in the industry. And after staying out of the e-commerce fray because the cost of implementation and shipping could hamper profit, the company now plans a full online offering by 2022.The efforts come none too soon, as a shakeout in retail has left legacy chains struggling to survive the arrival of digital-first competitors like Amazon.com Inc. and Wayfair Inc. Consumers at all income levels are also more discount-oriented, using the internet to seek out deals. At Home appeared immune to these woes until June 6 when weak sales and increased costs from President Trump’s tariffs on Chinese goods led to a cut in its earnings forecast that hammered the stock.“A long list of little things have gone against the company,” said Brad Thomas, an analyst at KeyBanc Capital Markets. “A few have been company specific, but it’s more about housing slowing down about a year ago.”At Home also had little room for error, with its valuation soaring after revenue gained an average 23% annually over the past three years. But investors bolted after the company’s same-store sales fell the past two quarters -- the first declines since going public three years ago. The company’s earnings have also missed analysts’ projections twice in the past three quarters.“It’s hard, but I get paid a lot of money so no one is going to tear up for me,” said Bird, who bought $500,000 worth of shares on Monday.The stock had declined 54% this year through Tuesday’s close. Just a year ago, the retailer sold additional stock to the public for $33.20 a share. The shares climbed as much as 7% to $9.16 on Wednesday, their fourth straight daily gain. The increase in value-driven shoppers should put At Home in a solid position. Much like Costco Wholesale Corp., the chain has a low-cost operating model -- it opens stores cheaply in locations vacated by the likes of Sears and about 70% of its inventory is private label or exclusive.Pricing ModelThat helps the retailer keep prices low, but not enough shoppers were getting the message because of “all the noise” on discounts and deals coming from competitors, Bird said. At Home uses a pricing model of everyday low prices -- a strategy popularized by Walmart Inc. that eschews promotions and instead tries to convince shoppers of constant value. Meanwhile, most retailers employ a model of high introductory prices and then discounts.“The average American is not aware that At Home is a low-price leader,” KeyBanc’s Thomas said.To help remedy this, At Home for the first time is running regular shopping events every two weeks, often tied to seasonal events. There’s currently a focus on fall decor on its website and in stores. A year ago, the chain would have been highlighting a few specific deals, but not a whole category. Early results are that it’s lifted sales, Bird said.Besides opening stores, revenue gains will also come from its first push online, he said. In the fourth quarter, the company will test letting customers buy items online and picking them up at stores. If all goes well, more locations will be added next year, with the goal of shipping purchases to customer’s homes from locations by 2022, he said.Despite the turmoil, the company still sees growing to 600 stores from 200 in the U.S. But it will get there at a slower pace, expanding 10% a year, down from a current rate of 17%. That means it would take more than a decade to reach that goal.“We know we have a huge white space in front of us,” Bird said. “I feel good about the adjustments we’ve made.”(Updates with share trading Wednesday in eighth paragraph. A previous version was corrected to show about 70% of inventory is private label or exclusive.)To contact the reporter on this story: Matt Townsend in New York at mtownsend9@bloomberg.netTo contact the editors responsible for this story: Anne Riley Moffat at ariley17@bloomberg.net, Lisa Wolfson, Jonathan RoederFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- InvestorPlace
Is Overstock a Buy Below $10?
After almost 20 years as CEO of Overstock (NASDAQ:OSTK), Patrick Byrne resigned from the company and board August 22. The highly controversial leader's resignation caused OSTK stock to briefly jump by more than 15%. However, shares dropped to $15 by the beginning of September.Source: Shutterstock As I write this, Overstock stock has recovered most of those losses trading around $20. Still, it's well below its January 2018 all-time high of $89.80.My InvestorPlace colleague, Dana Blankenhorn, recently highlighted logistics consultant Brittain Ladd's belief that Byrne should have been fired years ago. It's hard to argue with that sentiment. Byrne was not the man or woman you would want running the local McDonald's (NYSE:MCD), let alone a company with more than 2,000 employees and revenues of more than $1.8 billion.InvestorPlace - Stock Market News, Stock Advice & Trading TipsPerhaps it was Byrne's family's relationship with Warren Buffett that kept the board at bay all these years. Or maybe it was Byrne's significant ownership stake in the company. Whatever the case, Byrne is gone from the company. Currently, Jonathan E. Johnson III, the head of its Medici Ventures blockchain subsidiary, is running Overstock on an interim basis. * 10 Stocks to Sell in Market-Cursed September Anybody but Byrne would be a better CEO at this point. As my colleague stated about OSTK in August, it's hard to see any future for the company. Or for that matter, Overstock stock.That said, I'm sure some would choose to speculate on OSTK stock.Is $15 the buy zone? Or should you wait for single digits? It Isn't Worth $15In March, I suggested that speculative investors might be interested in buying OSTK stock below $15. That's because Byrne might sell its hugely unprofitable retail business to focus on its blockchain investments.Of course, we know that never happened under Byrne's watch. But as recently as the end of June, the former CEO is on record suggesting offers were possible."Two very attractive acquirers that I would have put high up on my list have shown up," Byrne said June 25 at the Fortune Brainstorm Finance conference in Montauk, New York. "People have seen that our earnings have turned."How much could Overstock get for a business that saw revenues decrease by 23% in the second quarter while reducing its loss by 62%, from $64.9 million in the second-quarter 2018 to $28.2 million this past quarter?Wayfair's (NYSE:W) gross profit margin in Q2 was 23.9%. It trades at 1.4-times sales. In the latest quarter, Overstock's retail business had a retail gross margin of 19.7%. OSTK trades at 0.4-times sales.Let's assume that its retail business could go for halfway between Wayfair's multiple and its own. That would mean a multiple of 0.9 or $1.47 billion based on trailing 12-month revenue of $1.63 billion.This assumes that the company could find someone to buy its retail operations. Secondly, GARP Research analyst Bill Baker stated in February that he thought Overstock could fetch $100 million for its retail business, a far cry from $1.5 billion. OSTK Stock Below $10 Might Be A BuyLet's assume Overstock could get $100 million for its retail business. At a current market capitalization of $721 million, this suggests the blockchain businesses are worth $621 million or $17.64 a share.Medici and tZero generated tremendous losses in the second quarter from just $6.2 million in revenue. This means that the blockchain assets would have to be worth significantly more than what the balance sheet says they are or as a multiple of sales or earnings.Frankly, I don't think there's a hope in Hades that its blockchain assets are worth anywhere near $18 a share.However, below $10, a speculator might bet on those assets adding up to more than $350 million on a combined basis.With or without Patrick Byrne, I wouldn't go near OSTK stock unless "risk" is your middle name.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 * 10 Stocks to Sell in Market-Cursed September * 7 of the Worst IPO Stocks in 2019 * 7 Best Stocks That Crushed It This Earnings Season The post Is Overstock a Buy Below $10? appeared first on InvestorPlace.
- InvestorPlace
7 of the Worst IPO Stocks in 2019
It's been a good year for IPO stocks.The first eight months of 2019 have seen 107 IPOs priced, down about 20% from the same period last year. However, the total proceeds raised add up to $42.5 billion, 23% higher than in the first eight months of 2018.For example, SmileDirectClub, the company that provides in-home teeth straightening at a fraction of the cost, filed its preliminary prospectus Sept. 3. It expects to raise up to $1.3 billion in its IPO selling 58.5 million shares at between $19 and $22 a share, valuing the company at a jaw-dropping $3.2 billion. InvestorPlace - Stock Market News, Stock Advice & Trading TipsGenerally, it's been a seller's market, so you would think there wouldn't be any stinkers. Think again. * 7 Stocks to Buy In a Flat Market Despite a relatively healthy IPO market that's produced an average return of 33% year-to-date through Sept. 3, almost double the S&P 500, several IPOs have wet the bed. Here are what I believe are seven of the worst IPOs in 2019. The Worst IPO Stocks: The We Company (WE)Source: Mitch Hutchinson / Shutterstock.com The first of my worst IPO stocks in 2019 is The We Company, the holding company for office co-working giant WeWork, which currently has 528 locations in 111 cities across 29 countries. Its growth since opening its first location in New York City in early 2010 is mind-boggling. That's the good news. The bad news is that WeWork may never make money. "On the key question of future profitability, it is impossible to tell if WeWork's costs will continue to be double its revenues, or if the per-unit trends justify additional investment," wrote Financial Times contributor Rett Wallace Sept. 3. "Investors relying on the prospectus may have trouble telling what gets more elevated, their consciousness or their blood pressure."WeWork has yet to price its shares, but the cynicism facing this IPO suggests it will be nearly impossible for it to come out of the gate with a positive first-day return. In addition to the fact it loses money, has a nosebleed valuation and relies heavily on CEO and founder Adam Neumann, is the presence of a three-class share structure that will make it virtually impossible for institutional investors to exert any pressure on the company should it continue to lose money for an extended period. While it's not uncommon for tech companies to have a dual-class share structure in place to ensure the founder can maintain a long-term vision, a three-class share structure takes the cake. It hasn't gone public yet and already it has to be considered one of the worst IPOs of 2019. Peloton (PTON)Source: Sundry Photography / Shutterstock.com Peloton, which filed its preliminary prospectus Aug. 28, considers itself to be a technology company that happens to sell interactive fitness machines.In addition to being a technology company, it believes itself to be a media company, an interactive software company, a product design company, a social connection company, an omni-channel retail company, an apparel company and a logistics company. That's like RCI Hospitality Holdings (NASDAQ:RICK), which operates a chain of strip clubs under the name Rick's Cabaret, calling itself a tech company, because, in addition to operating nightclubs, it also operates more than a dozen websites.In a nutshell, Peloton is a company that sells fitness bikes and treadmills between $2,245 and $4.295. Also, it streams classes for these machines for a monthly subscription of $39. In fiscal 2019, it generated $719 million in revenue from the sale of fitness products and $181 million in sales from monthly subscriptions. Including $14.7 million in other revenue, fitness product sales have gone from 84% of its total revenue in fiscal 2017, to 79% in the past year with most of the gains from its monthly subscriptions.Its gross profit margin for fitness products and the monthly subscriptions are 42.9% and 42.7% respectively. However, much like Wayfair (NYSE:W), it has to spend a boatload on marketing to attract and retain customers. As a result of these acquisition costs, Peloton lost $195.6 million before tax in 2019, almost three times what it lost in 2017. * 7 Deeply Discounted Energy Stocks to Buy Just have a look at Nautilus (NYSE:NLS) to understand the risks of investing in fitness equipment. You're far better to invest in Apple (NASDAQ:AAPL) and ride its growth in wearables. Peloton is most likely going to be a dud. Luckin Coffee (LK)Source: Keitma / Shutterstock.com Luckin Coffee (NASDAQ:LK) is China's fastest-growing coffee chain in terms of the number of stores open and cups of coffee sold. It went public May 16 at $17 a share, generating a 19.9% first-day return. Since then, LK stock has gone sideways. They say that you can often pick up an IPO stock for less than its initial pricing within 12-24 months. I have no doubt Luckin is in that category. It's been terribly over-hyped. In mid-August, Luckin reported its first earnings report as a public company. Its results were much worse than expected, sending its stock down by more than 15%.How bad were its second-quarter 2019 results?Luckin was expected to lose 43 cents per share. It lost 48 cents or $49.6 million on $132.4 million in revenue. That means it loses 37 cents for every dollar in sales. In April, Starbucks (NASDAQ:SBUX) CEO Kevin Johnson called Luckin's heavy discounting "unsustainable."Furthermore, while Luckin has only been in business for two years in China, Starbucks has been operating there for the past 20 years and has almost 4,000 stores. As Starbucks plays the long game in China, it has both the experience and financial wherewithal to wait out Luckin. Luckin's IPO is an example of how alluring China is to North American investors. Eventually, that's going to come back to haunt them. Wanda Sports Group (WSG)Source: Juan Carlos Alonso Lopez / Shutterstock.com If you're a triathlete, you've probably familiar with China-based Wanda Sports Group (NASDAQ:WSG), a global sports events, media and marketing platform that owns the Ironman triathlon brand.In late July, WSG went public at $8 a share, raising $190 million by selling 23.8 million shares of its stock. Its stock lost 35.5% on its first day of trading and it's flatlined ever since. WSG is a spinoff of Dalian Wanda Group, the privately held holding company of Chinese billionaire Wang Jianlin, who also owns a controlling interest in AMC Entertainment (NYSE:AMC). Jianlin initially thought Wanda Sports could raise more than $500 million from its IPO. Unfortunately, WSG went public below its IPO target price of $9-$11. Chinese IPOs, in general, have done poorly in 2019. As of the end of July, 11 of the 18 Chinese IPOs this year were trading below their IPO price. WSG is one of those 11. * 7 Best Tech Stocks to Buy Right Now Unlike many IPOs in 2019, Wanda Sports makes money. In 2018, it earned $61.9 million in net income from $1.3 billion in revenue. That's a net margin of just 4.8%, not much better than a grocery store chain. If you are a triathlon athlete, it's probably better to invest in yourself and not the owners of the Ironman. You'll be better for it. Greenlane Holdings (GNLN)Source: Shutterstock Greenlane Holdings (NASDAQ:GNLN) is a leading distributor of vaporization products and consumption accessories in the U.S. and Canada. Its biggest claim to fame is that it distributes Juul and Pax vape pens, two of the biggest manufacturers of vaporizers in the world. That was enough to sell 6 million shares of its stock in April at $17 a share, above the high-end of its pre-IPO pricing. As a result, its stock gained 24% in its first day of trading. However, since then, it's fallen to just under $6, prompting the threat of class-action lawsuits by lawyers across the country who believe the company made several untrue statements in its IPO prospectus. In its Q2 2019 earnings report, Greenlane reported $102.9 million in revenue and a net loss of $21.0 million. On an adjusted basis, it lost $2.6 million in the first six months of the year, a significant decline from a $3.1 million gain a year earlier. On Aug. 8, Greenlane announced that it had signed a deal with Canopy Growth (NYSE:CGC) to be the exclusive distributor of the cannabis company's Storz & Bickel vaporizers.This piece of news has done nothing for Greenlane. The reality is that Greenlane's inventories are growing three times as fast as its sales, which suggests that its ties to cannabis are dubious at best. Uber (UBER)Source: NYCStock / Shutterstock.com In one of the most highly anticipated IPOs in several years, Uber (NYSE:UBER) went public in May at $45 a share, raising $8.1 billion in the process. As I write this, it is trading around $31 a share, 32% below its IPO price. Time to buy? Not by a long shot. Likely, Uber will never make money. In May, just before its IPO, I recommended that investors wait six months before buying its stock to see how it trades. Well, almost four months have passed and nothing good has happened to suggest now is the time to buy. In its first quarter as a public company, Uber reported a GAAP loss of $5.24 billion with about $3.9 billion due to share-based compensation. On a non-GAAP basis, the ride-hailing app's adjusted earnings before interest, taxes, debt and amortization (EBIDTA) loss in Q2 2019 was $656 million, 125% higher than a year earlier. Not quite as bad as $5.24 billion, but still a massive loss for a single quarter. That's especially true when you consider that Uber can do very little to ward off the competition."If I look down at my phone I've literally got six ride-hailing apps on there, and five bike-sharing apps, and drivers are the same -- they'll just go with whoever is busy or wherever they can get the peak pricing," said Aaron Shields, executive strategy director at FITCH, a retail brand consultancy. "The competitors on the market are taking advantage of switching costs -- they're dividing up a market and making it more saturated." * The 8 Worst Stocks to Buy Before the Trade Turmoil Cools Off Every time Uber and the rest of the ride-hailing apps does something to reduce costs, growth slows, which makes its business model a big loser. Levi Strauss (LEVI)Source: Davdeka / Shutterstock.com As of Sept. 3, Levi Strauss' (NYSE:LEVI) shares had lost 0.2% from its IPO price of $17. What makes this so egregious is that LEVI stock gained 32% in its first day of trading, which means it's lost $228 million of its market cap in the last five months. In March, before its IPO, I gave InvestorPlace readers seven reasons why they should steer clear of Levi's stock. It appears that I was right. One of my biggest concerns was the amount of debt it carried on its books. "Assuming Levi's goes out at a valuation of $5.78 billion, the company's long-term debt of $1.1 billion will be 19% of its market cap," I wrote on March 21. "That's not a massive amount by any means considering it's got more than $700 million on its balance sheet, but I can't help but wonder why it hasn't paid down its debt over the past four years."The other big concern I had about LEVI was its lack of significant growth in Asia. In the first six months of 2019, Levi's had Asian revenues of $474.4 million, 7.1% higher than a year earlier. That accounts for just 17% of its global revenue. Now, I get that it's an iconic U.S. brand, but there are plenty of American brands growing faster in Asia. I believe that the Haas family picked an ideal time to go public for a company whose best days may or may not be ahead of 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 * 3 Artificial Intelligence Stocks to Buy * 7 Industrial Stocks to Buy for a Strong U.S. Economy * 3 Beaten-Down Bank Stocks to Buy and Hold for the Long Term The post 7 of the Worst IPO Stocks in 2019 appeared first on InvestorPlace.
- InvestorPlace
Why the Future of Canopy Growth Stock Is in the Hands of the President
President Trump recently suggested that his administration is taking a closer look at legalizing cannabis at the federal level, moving beyond merely letting the states decide what's right. Such a move would be good for Canopy Growth (NYSE:CGC), CGC stock and most importantly, the president's reelection hopes in 2020. Source: Shutterstock First, before I get into the heart of the matter, let me remind readers that this isn't a political dissertation, it's an investment piece. I could care less whether Trump thinks legalizing at the federal level is a vote-getter, which it is because I'm Canadian. I have no dog in this fight, politically or philosophically. Instead, I'm interested in what this would do for the U.S. cannabis industry, on a general level, and for Canopy Growth, more specifically.InvestorPlace - Stock Market News, Stock Advice & Trading TipsLet me address both. What Federal Legalization MeansOne only needs to read the comments after an article on the subject to know that most Americans are supportive of federally legalized cannabis. "That's [Trump's comments] signalling to the rest of his Republicans that you know what, it's basically okay to have a view around cannabis. The reason he is doing it is because in the United States 95 per cent of the country believes in medical cannabis, and 66 per cent believe in adult-use or recreational cannabis," said Acreage Holdings (OTCMKTS:ACRGF) CEO Kevin Murphy recently.Just 11 states and the District of Columbia have legalized recreational pot. A total of 33 have legalized medical marijuana. That leaves 39 states where recreational cannabis is illegal and another 17 states that don't allow medical marijuana. Under the current situation, pot can't be transported across state lines because cannabis isn't legal at the federal level. This means that if you want to sell in Colorado, you've got to make it in Colorado or buy it from a grower that does. State politicians love this set-up because it means local jobs, taxes, etc. * 10 Buy-and-Hold Stocks to Own Forever However, in a country of 325 million, it's an incredibly inefficient way to operate an industry. Could you imagine if a company like Wayfair (NYSE:W) had to live by the same rules? It can't make money as it is, and it's got one of the best logistics systems in retail. Here in Canada, we used to have similar rules in the beer business. Up until 1992, if you wanted to sell beer in Ontario, it had to be made in Ontario. That meant breweries were operating in every province in the country, including Prince Edward Island, which had a population of 130,827 at the time. The Canadian government finally came to its senses and removed those trade barriers. Well, you would think someone who is opposed to government regulations and red tape as Trump is, would see the inefficiencies of a system left up to the individual states.Why should a state like California, whose population is greater than all of Canada, not be able to provide California-grown pot to people living in Rhode Island? If it is a quality product at a reasonable price, you would think "Businessman" Trump would be all over that.I can see how raising the federal minimum wage would rankle some states used to operating lower-wage economies, but failing to legalize pot at the federal level is terrible business. Were the Republicans or Democrats to push for legalizing pot at the federal level -- a process that isn't nearly as easy as it seems -- before the November 2020 election, I believe that this move would motivate a lot of younger voters to get out to cast their ballot. Economically, it would be a boon to all stakeholders. How CGC BenefitsAs you might be aware, Canopy has a tentative deal in place to buy Acreage Holdings for $3.4 billion, but only if the production and sale of cannabis become federally legal. Further, the agreement has a seven-year window before the right to buy the company expires.For this right, Acreage shareholders received an immediate $300 million ($2.55 a share) cash payment as an incentive to wait for federal legalization. In the meantime, Acreage has licenses to produce cannabis in 20 states, 87 dispensaries and 22 cultivation and processing sites. It's a going concern that will continue to grow its business in the U.S. with Canopy lending its expertise, both in terms of growing the stuff, distributing it and building a wider audience. With Bruce Linton having left the company and a CEO search underway, it's a good thing that the Republicans haven't been talking up legalization because the company's controlling shareholder, Constellation Brands (NYSE:STZ), is still ensuring Canopy's ducks are all in a row. The fact that Trump's open to discussing the idea means a CEO hire is probably going to happen sooner rather than later. In the meantime, interim CEO Mark Zekulin is more than capable of running the show. The company's Sept. 4 presentation at the Barclays 2019 Global Consumer Staples Conference stated that Canopy could reach a revenue run rate of C$1 billion in the fourth quarter with its gross margin 40% or higher.Between the second-phase of Canadian legalization (edibles, infused drinks, concentrates), increasing its Canadian distribution at the retail level, international expansion outside North America, and of course, its U.S. push, which includes Acreage, hemp-related sales, etc., the new CEO is going to have their hands full. So, maybe, finding the right person isn't going to happen overnight after all. * 7 "Boring" Stocks With Exciting Prospects What I do know is that CCG benefits greatly from federally legalized cannabis. I'm sure the lobbying is going to intensify in the months leading up to the election. The Bottom Line on CGC Stock I believe that Canopy Growth is one of the best Canadian cannabis stocks available. However, to become a global player, it needs to be a part of the U.S. marketplace. The Acreage deal makes that a reality. Federal legalization is coming, but it can't get here fast enough. 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 * 3 Artificial Intelligence Stocks to Buy * 7 Industrial Stocks to Buy for a Strong U.S. Economy * 3 Beaten-Down Bank Stocks to Buy and Hold for the Long Term The post Why the Future of Canopy Growth Stock Is in the Hands of the President appeared first on InvestorPlace.
