Canopy Growth, Cronos Group, and Tilray have captured the imagination of growth investors. But can the blistering growth of their share prices continue, or is it time to take profits?
The marijuana king
Canada’s Canopy Growth is the largest pot company by market capitalization listed on the U.S. stock market, and for good reason. Based on its current and planned greenhouse space, it is on track to have one of the largest production capacities among Canadian cultivators. It has also broadened its brand significantly by partnering with the likes of marijuana icon Snoop Dogg to develop premium products. And beverage distributor Constellation Brands (NYSE:STZ), which had already purchased a sizable 9.9% stake in Canopy, this month doled out another $3.88 billion to raise its stake to 38%.
This partnership with Constellation is key because it should provide Canopy Growth the financial capacity to build out its production facilities even further, giving it an important edge over its competitors. In an industry on the verge of breaking out thanks to the legalization of marijuana in many U.S. states and a handful of countries, production capacity might turn out to be the most important factor in determining market share — at least initially. So, investors probably weren’t wrong when they bid up Canopy’s shares by an astonishing 338% in the last 12 months.
The downside, though, is that…
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