Canopy Growth (TSX:WEED): 1 of the Best Marijuana Stocks to Buy

Canopy Growth Corp’s (TSX:WEED)(NYSE:CGC) growing operations and its deal activity make it one of the best marijuana stock to buy.

| More on:
edit Cannabis leaves of a plant on a dark background

Image source: Getty Images

The marijuana space is becoming big and confusing. There are several companies in Canada and the U.S. trying to win investor confidence in this nascent industry by putting out ambitious growth plans. 

But if you’re a long-term investor and are thinking of getting some exposure to this new growth area, then I highly recommend sticking with the big players, which have durable competitive advantages and the best chances to meet your expectations.

With theme in mind, I believe Canada’s largest pot producer, Canopy Growth (TSX:WEED)(NYSE:CGC), is your best bet. Here is why.

Growing operations

Canopy is one of the few weed companies that very early amassed the size and the market share in this new industry. What positions Canopy to deliver superior returns over the long run is its market size, capacity to ramp up production, and its vast international reach.

Canopy currently operates weed-growing facilities with over 2.4 million square feet of space. The producer has been expanding its operations quickly, which will deliver the potential to manage more than five million square feet of production space by next year.

With this market power, the producer is also consolidating its position in the market where some companies are looking to exit. In a development reported by Bloomberg News, Canopy was nearing a deal to buy Acreage Holdings in what would be the first major cross-border cannabis merger.

The deal, which could be announced as soon as this week, would be a major milestone for Canopy, as it will be able to bring one of the largest U.S.-based pot firms under its umbrella. Acreage has cultivation, processing, and dispensing licences or agreements with holders in 19 states in the U.S. It also manages a chain of retail stores called The Botanist.

As part of its plan to build an extraction and manufacturing facility in the U.S., a much bigger market for both medical and recreational marijuana, Canopy acquired a hemp licence in New York State early this year.

Initiatives like this and the company’s partnership with the Constellation Brands make Canopy a formidable player in the marijuana space and more appealing to investors looking for exposure to the U.S. cannabis market.

Constellation, the maker of popular Modelo and Corona beer, raised its stake in Canopy to 37% last August after investing about US$4 billion with the option of taking majority control of the company in the future.

Bottom line

Trading around $61 a share at the time of writing, Canopy stock has already surged more than 60% this year, benefiting from its leading position in the industry and due to its growing sales, which, according its CEO, will hit $1 billion mark in 2020.

For many conservative investors, the stock may look too pricey after such a massive rally, but that perception may not be true for a company that’s in its initial stage of growth. Canopy’s smart deal activity and its position in the market suggest to me that its stock is well on track to hit an $80 mark this year.

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 Haris Anwar has no positions in the stocks mentioned in this report.

More on Cannabis Stocks

A cannabis plant grows.
Cannabis Stocks

Canopy Growth Stock Is Rising But I’m Worried About This One Thing

Canopy Growth stock is soaring as the legalization effort makes real progress in both Germany and the United States.

Read more »

Cannabis grows at a commercial farm.
Cannabis Stocks

Why Canopy Growth Stock Could Double in 2024

Canopy Growth (TSX:WEED) stock saw its share more than double in the last two weeks. So, can it do it…

Read more »

Coworkers standing near a wall
Cannabis Stocks

Why Is Everyone Talking About Canopy Growth Stock?

Canopy Growth stock (TSX:WEED) saw shares surge in the last two weeks for a variety of reasons investors can dig…

Read more »

Pot stocks are a riskier investment
Stocks for Beginners

Why Shares of Cannabis Stocks Are Rising This Week

Cannabis stocks received a boost this week as the White House urged the drug enforcement administration to reschedule the drug.

Read more »

A person holds a small glass jar of marijuana.
Stocks for Beginners

Why Canopy Growth Stock Jumped 16% on Wednesday

Canopy Growth stock (TSX:WEED) is up 16% on Wednesday, adding to a surge of 60% growth in the last week…

Read more »

Pot stocks are a riskier investment
Cannabis Stocks

Is the Worst Over for Canopy Growth Stock?

Down 99% from all-time highs Canopy Growth stock has burnt investor wealth and remains a high-risk investment.

Read more »

Pot stocks are a riskier investment
Cannabis Stocks

Steer Clear: This Stock Spells Trouble

A newly listed cannabis stock is outperforming in 2024 but investors should stay clear to avoid trouble and losses.

Read more »

Cannabis stocks have fallen.
Cannabis Stocks

2 Best Marijuana Stocks to Buy This Month

Marijuana stocks in the U.S. such as Green Thumb and Curaleaf can help you deliver outsized gains to investors in…

Read more »