Canopy Growth Stock Is the Best Coronavirus Cannabis Play CCG Stock Has Downside Protection
Canopy also has a major potential catalyst in its back pocket if the share price continues to fall. Constellation Brands took a 38% stake in Canopy for about $4 billion back in August 2018. Since that time, CGC stock is down more than 70%. But Constellation has replaced the Canopy CEO with its own former CFO. Klein is now making bold moves to improve the company’s financial situation.
I believe there is a distinct possibility Klein was assigned to the position of Canopy CEO to get the company’s financial ducks in a row in preparation for a potential Constellation buyout. If Constellation loved taking a 38% stake for $4 billion, it could theoretically get the other 62% of the company today at a price in the $3.5 billion range.
The further CGC stock falls during this downturn, the more appealing a buyout will look to Constellation. In that sense, CGC stock has a downside protection that other cannabis stocks do not have.
Canopy has a market share lead in Canada and potentially in the U.S. It has a strong balance sheet and improving fundamentals. And it has a financial backer with deep pockets that could potentially buy out the stock at some point. While most of the cannabis group is reeling, CGC stock still looks like a solid long-term investment.
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