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Where Will Canopy (TSX:WEED) Be in 5 Years?

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Investors waiting for the marijuana boom have only one “buy and hold” weed stock in mind. All bets are on Canopy Growth Corp. (TSX:WEED)(NYSE:CGC) to become the most successful licensed cannabis producer. With an overflowing treasure chest and professional management style, success is a foregone conclusion.

Enthusiasm for the future of the cannabis industry remains high. The worth of the global cannabis market is expected to US$ 110.7 million by 2026, or a 726.1% growth from 2018. The CAGR forecast from 2019-2026 is seen to be 32.2%. The rising health concerns and the need for vegan living are major factors.

There is difficulty in predicting where Canopy Growth would be in five years given the unpredictable nature of the cannabis space. However, the largest weed company in terms of market capitalization will certainly be at the forefront within that time horizon.

Cash dictates the future

Canopy Growth is moneyed courtesy of the $4 billion infusion by Constellation Brands (NYSE: STZ) that is equally determined to gain the first-mover advantage in the cannabis market, which is the most compelling reason to buy WEED before it takes flight.

With its financial muscle, Canopy is making strategic acquisitions that would land them the market leadership position. The challenges are manifold, but there’s no stopping now. Canopy Growth is setting its sights on the lucrative foreign markets. A strong international presence is the key to gain a global foothold.

CEO Bruce Linton gave his own assessment. He said, “Canada is sort of a maturing market. The reason we’re not rushing to be highly profitable in the next 12 to 24 months is that we believe this business can be replicated globally and we can be a leader and that will make a much bigger top line.”

With his words, we can’t expect anything spectacular from the stock within a two-year period. Losses will continue and profit will still be elusive. Anyway, all future plans are still on track. Patience is a virtue so investors are advised to be patient until harvest time.

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Cannabis is a global thing

Canopy Growth has already expanded its reach outside the Canadian borders. Their presence is in 16 countries already because as Linton said, “This is a global thing.” They are pushing toward markets in Australia, Denmark, Germany, and Spain is underway. The European market is bigger than the U.S. market.

Meanwhile, Canopy Growth has planted the seeds in the U.S., having obtained the license to produce hemp and build the production facility in New York. But the most crucial is winning the rights to acquire multi-state cannabis operator Acreage Holdings. The decision will be known on June 19.

A fragmented industry

The global cannabis market remains fragmented at present. But in five years, consolidation has occurred and Canopy Growth is standing tall. More than 70% of their grand plans would have been achieved. The stock price would probably be beyond $100. Lastly, profits are trickling in and more investors are coming in.

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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 Christopher Liew has no position in any of the stocks mentioned.

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