Canadian pot producer Canopy Growth ( CGC ) rallied with other Canadian marijuana stocks, on a report that the House planned to vote next week on the federal decriminalization bill known as the MORE Act.Does that mean you should buy CGC stock now?
X Marijuana decriminalization would be another barrier to fall on the path to U.S.legalization.But whether Canadian producers would be allowed to compete in a fully legal U.S.— and whether they’d be able to go up against the nation’s more established rivals — is unclear.
Canada’s cannabis industry is also still losing money, following competition and over-expansion.Canopy lost 22 cents per share during its most recent quarterly results, in line with estimates, according to FactSet.Sales of $110.9 million beat expectations for $107.2 million.
But analysts who follow CGC stock attributed the results to stronger-than-expected sales in Canopy’s BioSteel sports nutrition segment — which they said benefited from expanded distribution in grocery stores.Overall revenue fell 8%.
Global cannabis net sales slid 20%.
Lower weed prices hit margins during the quarter.So did higher shipping and warehousing costs, amid the ongoing supply-chain crunch.
However, the company said performance among its high-potency bud remained strong.
CGC stock jumped 15% on the news anyway.Some analysts urged caution.
“While the headline may drive the stock higher, the fundamental performance suggests a continued fundamental deterioration with no consistent evidence validating the company’s strategy or execution,” Stifel analyst Andrew Carter said in a note.
U.S.
Strategy Along with its Canadian business, Canopy currently sells CBD products and vaporizers in the U.S.— from better-living guru Martha Stewart, Storz & Bickel and others — via its Shop Canopy website.BioSteel sports nutrition drinks and other products are sold on BioSteel’s website.
But Canopy Growth’s retail market share across four larger Canadian provinces stood at 6% between December and February, according to Stifel, continuing a gradual downtrend over recent months.
The company has pushed back its profitability targets and faced executive and board-member departures.
Carter, in a separate note, said he believed the leadership shakeup pointed to “an organization in disarray.” He said Constellation Brands ( STZ ), the beverage company that has invested billions in Canopy and controls its board, was “an impediment” to necessary changes, adding that he felt it had misread the cannabis industry and consumers.
Canopy Growth stock and other marijuana stocks fell last year as hopes soured for broader cannabis reform in the U.S.
Canopy has an agreement in place to buy U.S.
peer Acreage Holdings once pot is federally legalized in the nation.Recently, Canopy also entered into an agreement that will allow it to buy U.S.
edibles maker Wana Brands once federal laws in the U.S.permit.
CGC Stock Fundamental Analysis CGC stock has a market cap of around $3.4 billion, according to MarketSmith.
(©Stéphane Bidouze/stock.adobe.com) The EPS Rating of Canopy Growth stock, a measure of profit growth on a scale of 1 to 99, is 52.Earnings growth is a hallmark of top stocks.Like other big marijuana stocks, Canopy has lost money after over-investing in expansion and production.
Wall Street still expects Canopy Growth to put up a per-share profit by the end of its current fiscal year, which concludes at the end of March, according to FactSet.But it expects losses to continue in the fiscal year after that.The stock also has a not-great SMR Rating of D.
CGC stock has a Composite Rating of 26 out of a best-possible 99, according to MarketSmith .
Investor’s Business Daily research shows the biggest stock winners typically have Composite Ratings in the 90s.
CGC Stock Technicals IBD advises investors to buy stocks only after they set up in proper bases and rise above certain resistance levels, called buy points .But for Canopy, no such base pattern has formed, meaning no new buy point is in play.
Shares soared as high as 56.50 last year, amid 2021’s meme-stocks frenzy.But they have since wiped away those gains.CGC has regained support at its 50-day line.The stock is well below its 200-day line.
Canopy’s relative strength line , which compares its stock performance with that of the S&P 500, has moved higher in recent days.The stock’s Accumulation/Distribution grade of A indicates a solid amount of buying by institutional investors.But broader trends point to a lengthy decline for the stock overall..