The cannabis sector has become a major topic discussion with mainstream financial media outlets and this is a trend that we are watching.
The interest was driven by some high-flying stocks and we are monitoring how the sector closes out the week. Today, we wanted to highlight 3 companies that have been highlighted on CNBC and provide an update on these leading Canadian opportunities.
Tilray: Watching the Decline
After trading as high as $300 a share, Tilray (TLRY) has been trending lower is trading near the $160 level this morning. The Canadian cannabis producer has been one of the hottest stocks to watch and mainstream media has been all over this story.
Tilray has attractive leverage to the global cannabis market and we think this will be one of the biggest names in the industry in 2019. When the shares were trading near their highs, the market cap was north of $20 billion and we think this is a very inflated number. The recent decline has been significant, and the shares are no longer trading at overbought levels.
Over the next month, we expect to see Tilray announce a massive bought deal financing and we expect the pricing of this deal to be at a much more reasonable level. We are cautious at current levels and continue to keep a close eye on this one.
Canopy Growth: Continues to be a Leader
Canopy Growth (WEED.TO) (CGC) has been trending higher while Tilray has been under pressure and this a trend that we are monitoring closely. The Canadian cannabis producer is by far the largest and most diverse licensed cannabis producer in the world and is comprised of several wholly‑owned subsidiaries.
During the last year, Canopy has significantly increased its reach by making investments and acquisitions of companies all over the globe. These moves have been major successes for the company and we are favorable on the growth prospects from here. Last month, the Canadian cannabis producer received a $5 billion investment from Constellation Brands (STZ) and Canopy plans to use the capital to make investments in emerging legal cannabis markets.
Canopy Growth was the first publicly traded licensed Canadian medical marijuana producer and has a greater breadth of multi-site management than any other cannabis firm in the world. Canopy currently has cannabis operations in 12 countries on 5 continents. With more than $5 billion in cash on hand, the company is well positioned to significantly increase market share through acquisitions. We expect to see Canopy further expand its presence across the globe and see continued growth for years to come.
HEXO: An Undervalued Opportunity
Yesterday, Riposte Capital Managing Partner Khaled Beydoun appeared on CNBC and discussed how HEXO Inc. (HEXO.TO) (HYYDF) is one of the most undervalued opportunities in the burgeoning cannabis industry.
Earlier this month, Beydoun wrote a letter to the Board of Directors and requested that the company be acquired at a significant premium, take the company private, receive an investment from Molson Coors (like Constellation’s in Canopy), or merge with a larger Canadian producer.
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