Will Canopy Growth Corp. Rise to New Highs After its Latest Acquisition?

Canopy Growth Corp. (TSX:CGC) acquired German distributor MedCann, which could be the start of an acquisition spree to better position Canopy for international growth.

| More on:

Canopy Growth Corp. (TSX:CGC) is the hottest stock on the TSX lately; the stock either crashes or soars on a given day. If you can stomach the volatility, then Canopy may be an interesting trade if you’re willing to make the gamble. The stock is way too volatile and speculative to be considered an investment. Foolish investors know the difference between a speculative trade and a long-term investment; they will never confuse the two.

Canopy acquires German distributor and importer

Canopy is making even larger waves with the announcement that it is acquiring German marijuana distributor, manufacturer, and importer MedCann. Germany is a huge market, and this acquisition could mean that Canopy is ready to become an major international player in the marijuana market.

Germany is in the early stages of allowing its citizens to use marijuana for medicinal purposes. Bruce Linton, the CEO of Canopy, stated that the acquisition “positions us for domestic medicinal production inside Germany.” This could be one of many acquisitions to come that will position Canopy as a leading international supplier of marijuana.

It’s too early to tell whether or not Canopy will be able to be the international leader in this emerging space, but the management team knows what they’re doing and is very well positioned to make Canopy a dominant international producer.

The start of an acquisition spree?

With Donald Trump proposing regulations that restrict American marijuana producers from selling its products across its state borders, this could be the green light for Canopy to go on an international acquisition spree to become to become a world leader in the marijuana space.

Canopy’s American peers will be prevented from growing internationally thanks to these regulations put forth by the Republican government. Their loss is Canopy’s gain, and Canopy looks to be off to an early start of capturing the international market with this well-timed acquisition.

Going forward, we can expect Canopy to make more deals with foreign marijuana distributors like MedCann, and this will make it easier for the company to meet the strict regulations put forth by individual governments.

High risk, high reward

Canopy is looking like a terrific international growth opportunity right now, and this could bring huge upside over the next few years as cannabis becomes regulated or even legalized in many countries around the world. This process could take much longer than traders in Canopy have the patience for, and this could be detrimental to the stock price. Canopy is a stock that is a short-term-trader’s playground, and long-term investors can, and most likely will, get hurt if they jump in and out of the stock.

The volatility is that of a penny stock, and this volatility can be expected for at least the next year. The stock will either skyrocket or crash depending on the sequence of news events that are released in the short term. Be careful when owning this stock if you’re a long-term investor.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joey Frenette has no position in any stocks mentioned.

More on Investing

ETF stands for Exchange Traded Fund
Investing

2 High-Yield Dividend ETFs to Buy to Generate Passive Income

Both of these Hamilton ETFs sport double-digit yields with monthly payouts.

Read more »

engineer at wind farm
Energy Stocks

1 Canadian Utility Stock to Buy for Big Total Returns

Let's dive into why Fortis (TSX:FTS) remains a top utility stock long-term investors may want to consider right now.

Read more »

man in suit looks at a computer with an anxious expression
Tech Stocks

Short-Selling on the TSX: The Stocks Investors Are Betting Against

High-risk investors engage in short-selling, betting against some TSX stocks for bigger profits.

Read more »

woman retiree on computer
Dividend Stocks

1 Reliable Dividend Stock for the Ultimate Retirement Income Stream

This TSX stock has given investors a dividend increase every year for decades.

Read more »

A glass jar resting on its side with Canadian banknotes and change inside.
Stocks for Beginners

How to Grow Your TFSA Well Past the Average

Need to catch up quick with your TFSA? Consider some regular contributions to this top bank stock, as well as…

Read more »

dividend growth for passive income
Investing

Key Canadian Stocks for a Wealth-Building 2025

These three Canadian stocks could outperform next year, given their solid underlying businesses and healthy growth prospects.

Read more »

Tractor spraying a field of wheat
Metals and Mining Stocks

Where Will Nutrien Stock Be in 1 Year?

Nutrien stock has had a rough few years, and this next year may not be easy. But long-term investors may…

Read more »

Canadian dollars in a magnifying glass
Energy Stocks

The Smartest Energy Stocks to Buy With $200 Right Now

The market is full of great growth and income stocks. Here's a look at two of the smartest energy stocks…

Read more »