CANOPY GROWTH CORP COM NPV (OTCMKTS:TWMJF) has been sporting breakout-type activity in recent trade, along with the all-star contingency of big Canadian cannabis producers with tons of cash and recent moves to diversify revenue sources. The stock has ripped more than 100% higher since June and thought it was a good time to track down the forces at work and state our case for why this makes sense.
First and foremost, the stock has benefitted from sector-wide strength over the past 4 months. One cannot overlook that basic fact. This is a maturing commodity producer, and it has been pushed by a tailwind of late. However, the company also secured some private placement capital (about $25M) in July on very advantageous terms, added a new facility in Alberta and a new facility in New Brunswick, and continued to release financials that show steady growth. Finally, just recently, the company entered into a JV agreement to form a new company, BC Tweed Joint Venture Inc., together with a large-scale greenhouse operator to develop 1.3 million sq. ft. of new greenhouse growing capacity in British Columbia.
CANOPY GROWTH CORP COM NPV (OTCMKTS:TWMJF) is one of the bigger growers. The company produces and sells medical marijuana in Canada. It offers dry cannabis and oil products primarily under the Tweed and Bedrocan brands. It also sells its products online.
According to company materials, “Tweed is the most recognized marijuana production brand in the world. It has built a large and loyal following by focusing on quality products and meaningful customer relationships. Tweed doesn’t just sell marijuana, it facilitates a conversation about a product we’ve all heard about but haven’t met intimately yet. It is approachable and friendly, yet reliable and trusted. As marijuana laws liberalize around the world, Tweed will expand its leading Canadian position around the globe.”
Also from their materials, “Bedrocan is the epitome of medical-grade cannabis. Bedrocan BV pioneered medical cannabis in Holland through decades of selection and refinement, leading to standardized, whole bud cannabis strains that patients can rely on. Bedrocan Canada supplies the same standardized strains to the Canadian market through exclusive licensing rights to the American continents, an arrangement it will also enjoy for all future genetic advancements. Due to its consistency over time, Bedrocan’s strains have been used in clinical research in seven European countries. That commitment to research didn’t stay on the east side of the Atlantic – Bedrocan Canada recently launched one of the largest clinical cannabis studies in the world, the EQUAL Study, to evaluate quality of life before and after medical cannabis use.”
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As noted above, TWMJF shares have been riding high for a few different reason, including sector strength, strong financial data, new funding on good terms, and several moves to diversify and expand operations.
“The Joint Venture allows us to expand our operational footprint for greenhouse production while increasing our institutional knowledge of operating large-scale greenhouses,” said Bruce Linton, Chairman and CEO, Canopy Growth. “Our cannabis expertise already operating the largest cannabis greenhouse in the sector combined with experience of our new partner’s extensive large-scale greenhouse production record, is great news for our customers and investors.”
Recent action has seen 22% piled on for shareholders of the stock during the trailing month. Market participants may want to pay attention to this stock. TWMJF has a track record that includes a number of dramatic bounces. What’s more, the listing has registered increased average transaction volume recently, with the past month seeing just under 170% above the average volume levels in play in this stock over the longer term.
Earning a current market cap value of $1102.3M, TWMJF has a significant war chest ($116M) of cash on the books, which stands against about $1.7M in total current liabilities. One should also note that debt has been growing over recent quarters. TWMJF is pulling in trailing 12-month revenues of $48.8M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 127.3%. This may be a very interesting story and we will look forward to updating it again soon. Sign-up for continuing coverage on shares of $TWMJF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!
Disclosure: we hold no position in $TWMJF, either long or short, and we have not been compensated for this article.