Canada legalizing recreational marijuana last week is without a doubt going to change the global markets forever. Other countries are frantically looking at ways to get involved in the fast growing cannabis industry.
BUT this massive selloff that these cannabis stocks are experiencing present optimal buy-in opportunities. Not only are institutional investors looking to invade the space but big-time beverage and tobacco companies have shown interest.
The hype of this boom began after Constellation Brandz (NYSE:STZ) decided to increase their 9% stake in Canopy Growth Corp. (NYSE:CGC) to 38% by buying $4 billion worth of Canopy stock.
This deal sent Canopy shares and other marijuana stocks to the roof as some companies saw 200%, 300% and even 500% returns on their stock prices.
Constellation purchased CGC shares at approximately $38 per share. Eight days ago Canopy CGC traded at a high of $59.25 before a 5 day decline of more than 28%!
The reason we LOVE Canopy Growth at these levels is because of the strong buying support at $38 from Constellation Brandz. It will take a whole lot from the market to see a bigger sell off to drop below the $35 price range.
Also, on Friday, top analyst Jim Cramer from The Street said “It’s time to BUY Canadian Marijuana stock Canopy Growth….
Canopy is on path to have 3.2 million square feet of growing space which positions the company to be a top 3 leading grower in the industry. This does not include Canopy’s multiple supply agreements with third-party growers.
CGC claims licenses to produce cannabis in seven of Canada’s 10 provinces. Canopy has won supply agreements with every province and territory that has finalized plans so far, notably including Ontario. The company has a solid strategy of launching retail cannabis stores in several provinces as well.
The biggest reason why we like Aphria APHQF is because they have the lowest cost-per-gram margin in the industry!
To continue to deliver on this low-cost marijuana production, Aphria relies mainly on greenhouse instead of indoor facilities and they are actively investing in automation and other cost-saving technologies to continue to reduce the cost per gram.
One advantage that greenhouses have over indoor facilities is that greenhouses help keep the bud more concentrated in cold-weather climates like Canada.
By this time 2019 Aphria’s total grow capacity is expected to be 255,000 kilograms which is the third most. The amazing part is, 250,000 of the 255,000 will be yielded from greenhouses.
Also, Aphria just applied to list on the NYSE joining other cannabis companies Canopy Growth and Aurora Cannabis. Finally, Aphria is one of 5 Canadian marijuana companies that posts a profit on their annual earnings report.
The biggest advantage for Canntrust that has gone unnoticed by investors is that they have secured a partnership with an alcoholic beverage company to produce CBD infused drinks.
While the investment is not as big as Constellation is with Canopy, but it is still a significant sign for a cannabis company to expand their operations to other industries.
Breakthru Beverage, the largest alcoholic beverage broker in Canada made a strategic investment in Canntrust and is establishing a operation to bring CannTrust’s recreational cannabis products to market.
They also just announced a expansion project at their Niagara facility to add 600,000 more square feet to increase annual production capacity by well over 100,000 kilograms by the end of 2019.
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