Canopy Growth Stock Rose 35% in November: Is it a Buy Today?

Canopy Growth (TSX:WEED) stock has been making headlines these last few months, but does that make it a buy today?

| More on:
Pot stocks are a riskier investment

Image source: Getty Images

Canopy Growth (TSX:WEED) shares soared 35% in November before coming back down to earth and seeing just a 2% rise from the first to the last day of the month. Even so, Canopy Growth stock has seen shares increase by 47% since the end of October to date. So, what’s been happening, and should investors consider the cannabis stock?

Making headlines

The growth for Canopy Growth stock started back in October with an announcement from the White House. President Joe Biden stated that there would be a pardon in place for anyone convicted of federal charges of simple marijuana possession. Biden then asked governors to follow this lead and stated the Secretary of Health and Human Services and Attorney General should start reviewing how marijuana is classified under federal drug laws.

This alone sent shares of Canopy Growth stock up about 30% before coming down slightly. However, it wasn’t long before shares started climbing upwards again. While it wasn’t directly related to the news from the White House, Canopy Growth stock moved ahead with its U.S. takeover plans.

The company’s shares surged yet again about 30% when it stated it would fast track its plans for the U.S. market. This included the creation of a U.S. company to hold its cannabis investments, including Acreage, Wanna and Jetty. In fact, Acreage was the next move that sent shares soaring, with Canopy Growth stock moving to 100% ownership.

Earnings improvement

While Canopy Growth stock still operates at a loss, its recent earnings report also sent shares up about 30%. The second-quarter loss came in at $78.1 million, which is down from $162.6 million the year before. Further, it posted revenue of $117.9 million, beating consensus estimates of $113.13 million.

Higher sales came from the company’s BioSteel business, which sells sports and health drinks. However, it looks like the company will soon see growth in its recreational cannabis sector once more — especially if midterms help.

With the Democrats holding on to a narrow Senate majority, Canopy Growth stock chief executive officer David Klein believes this will be key to cannabis legalization and reform. Only time will tell, but given the wave of states legalizing recreational and medical use, it does look likely.

Bottom line

Canopy Growth stock had a lot of growth in a short period of time, of course, leading to some dips in the market as well. There continues to be a volatile situation, one that is likely to get worse before it gets better should we enter a recession in 2023, which analysts continue to believe is likely.

With this in mind, is now a good time to invest in Canopy Growth stock? The cannabis producer maxed out its share price around $70 before. Given that, its current share price of $4.70 looks like a steal. But I would certainly not base its current share price on a guarantee of a return to past prices.

That being said, it’s clear marijuana legalization will happen in the United States. Canopy Growth stock is now ready to take that on, which could end up being a US$50 billion industry by 2026, according to estimates. In that sense, today looks like a great time to get in on Canopy Growth stock, but only if you’re willing to go through some rough times to get to strong long-term returns.

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 Amy Legate-Wolfe has positions in Canopy Growth. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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 »