Is This the Next Big Cannabis IPO?

Canopy Growth Corp (TSX:WEED)(NYSE:CGC) and other big pot stocks may have already reached their peaks, and that’s where this company could be a significant opportunity for investors today.

| More on:
Initial Public Offering (IPO) concept image, businessman selecting stock trading interface

Image source: Getty Images

Global competition in the cannabis industry is starting to heat up. One company out of Alberta looks to be a big player on that stage. Sundial Growers has operations in Canada and the U.K. and has some ambitious goals for the future, including a listing on the NASDAQ.

This week, the company announced its plans for an IPO on the U.S. exchange. It could be a great opportunity for investors to invest in what could be the next big global cannabis brand.

Why Sundial could rival some of the top cannabis companies

Although Sundial isn’t a big company today, that could soon change as it recently acquired Bridge Farms Group out of the U.K., which will be key to its international growth.

Bridge Farms expects to have 3.5 million square feet of space to grow cannabis by the end of next year. However, that may just be the start, as Sundial CEO Torsten Kuenzlen stated that “expedient global expansion requires a combination of organic growth and strategic acquisitions.”

With competition in the industry becoming fiercer and companies already having staked out positions in key parts of the world, Sundial isn’t looking at the slow-and-steady approach, but instead is definitely going to be more aggressive in its plans.

The company, however, is taking on two different strategies. In Canada, where it has two operations in Alberta and a third being built in B.C., the company will focus on premium inhalable products.

With the legalization of edibles being around the corner and vaping being very popular in the U.S., it’s a segment of the market that could be significant.

In its U.K. operations, which will include Bridge Farms and three other locations, Sundial will  focus primarily at producing high volumes while trying to be a low-cost producer as well.

It could be a great way to tap into strategic segments and various types of customers. And the company’s attention to detail could give it a big advantage in the industry, as one of the ways that Sundial ensures high-quality crops is by using computers to monitor several different variables.

Could now be a great opportunity for a new competitor?

Canopy Growth Corp (TSX:WEED)(NYSE:CGC) and other cannabis producers have been venturing into global markets in an effort to dominate other parts of the world while they wait for legalization to take place in the U.S.

However, the passing of the farm bill has seen Canopy Growth focus more on the hemp market recently, which could leave a door open for Sundial to grab some market share outside North American.

Ever since Canopy Growth got rid of its co-CEO Bruce Linton and other scandals weighing down the industry, investors could be looking for viable alternatives. That’s why for Sundial, it’s perhaps the perfect time to get into the market and offer investors a new option.

Canopy Growth and other companies have already fallen short of investor expectations in the past, and as long as Sundial can deliver on its promises, it could have a good chance of being able to steal away investors.

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 David Jagielski has no position in any of the stocks mentioned.

More on Cannabis Stocks

A cannabis plant grows.
Cannabis Stocks

TLRY Stock: Here’s What’s Coming in 2023

Tilray Inc. (TSX:TLRY) is geared up for big growth this decade and looks like one of the top cannabis stocks…

Read more »

A person holds a small glass jar of marijuana.
Cannabis Stocks

Canopy Growth Stock: Here’s What’s Coming in 2023

Canopy Growth stock has made a lot of new moves in the last few months, but where is the company…

Read more »

A cannabis plant grows.
Cannabis Stocks

Better Cannabis Buy: Canopy Growth Stock or Tilray?

Only two TSX weed stocks can deliver substantial returns in the highly anticipated growth of the global cannabis market.

Read more »

Medicinal research is conducted on cannabis.
Cannabis Stocks

Is Tilray Stock a Buy in January 2023?

Tilray stock has lost 50% of its value in the last 12 months, in line with its peers.

Read more »

Pot stocks are a riskier investment
Cannabis Stocks

Are Cannabis Stocks Still a Thing in 2023?

The whole question of whether cannabis stocks are still relevant in 2023 is an interesting one. Here's my take on…

Read more »

A cannabis plant grows.
Cannabis Stocks

Why Canopy Growth Stock Fell 72% Last Year

Canopy Growth stock is a beaten-up cannabis giant that is trading at a discount compared to historical multiples. But is…

Read more »

Cannabis grows at a commercial farm.
Cannabis Stocks

Is SNDL Stock a Buy in January 2023?

SNDL is among the worst-performing cannabis stocks in the last three years. But is SNDL stock a buy right now?

Read more »

a person watches a downward arrow crash through the floor
Cannabis Stocks

Why Tilray Stock Fell Almost 60% in 2022

Tilray is a Canadian cannabis stock that is down 93% from all-time highs. Let's see if TLRY stock is a…

Read more »