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Buzz on the Bullboards: NEW Cannabis Rally?


Stockhouse Editorial
0 Comments| August 23, 2018

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In last week’s edition of Buzz on the Bullboards, we covered (among other things) perhaps the single biggest piece of news on the cannabis sector to date in 2018: the massive (CAD$5 billion) strategic investment by Constellation Brands Inc (NYSE: STZ) in Canopy Growth Corp. (TSX: WEED, NYSE: CGC, Forum), announced on August 15, 2018.

At that time, WEED was trading slightly above $40/share, substantially below the effective price of $48.60 that STZ was paying for its large stake. But what a difference a week can make!

BuzzAug23_WEED-(1).png

(click to enlarge)

Today, Canopy Growth closed at $54.30. Its current share price is now more than 10% above the Constellation Brands strategic investment. STZ shareholders now likely thinking that the maker of Corona Beer got a good deal on this $5 billion investment.

And WEED is not alone in terms of heating up on this news. Aurora Cannabis Inc (TSX: ACB, OTCQB: ACBFF, Forum) closed at $5.33 on August 14th. On August 15th, ACB closed at $6.54 – more than 20% higher. Today, Aurora closed at $8.03. That’s roughly a 50% move on news that didn’t even directly concern the company, although some of the gain may also be attributed to a recent spin-off announcement by ACB.

Newly-listed Hill Street Beverage Company Inc. (TSX: V.BEER, OTCQB: HSEEF, Forum) popped by more than 50% on the day of the Constellation/Canopy news. As its symbol implies, BEER is also positioning itself for the cannabis-infused beverage market – planning to infuse cannabis into its award-winning line-up of non-alcohol beers and wines.

BuzzAug23_BEER.png

(click to enlarge)

However, in the lower volume of summer, the vast majority of cannabis stocks have not moved significantly on this news. Is the sector about to start moving after Labour Day, duplicating last year’s spectacular rally following the first investment by Constellation Brands in WEED? Or, are only a minority of companies being perceived by the market as “winners” on this news?

This leads directly to the new Investor Pulse Poll just added to the Stockhouse homepage. This week’s question:

Constellation Brands (maker of Corona Beer) just announced a $5 billion investment in Canopy Growth Corporation. This is Constellation’s second strategic investment in WEED, and its first investment ($245 million) is seen as the catalyst for the spectacular rally in cannabis stocks at the end of 2017. What will be the impact of this new deal?

Share your opinions in this multiple-choice poll and we will be publishing the results in two week’s time. Now for the results from our last Poll:

Click to enlarge

What’s interesting here is that we put this Poll up immediately after the Elon Musk post on Twitter, before further information released by Musk added additional substance to this shocking announcement. And in the days since, we’ve seen steady movement by Stockhouse investors away from the conclusion that Musk “is crazy”.

Elsewhere on Stockhouse, we decided to show our daily Bullboard leaders on this edition of Buzz for a change of pace – as we used to do. Not surprisingly, cannabis stocks top the list given the big, recent moves by some sector leaders.

Click to enlarge

Newstrike Brands Ltd (TSX: V.HIP, OTCQB: NWKRF, Forum) and Aphria Inc (TSX: APH, OTCQB: APHQF, Forum) are two other cannabis stocks that have both seen solid gains since the August 15th deal between Constellation/Canopy. However, both of these companies have also recently announced cannabis supply agreements with the Ontario Provincial government, so their advance may also be a combination of factors.

Behind the cannabis companies is a junior gold mining company that is also having a very good month: Aben Resources Ltd. (TSX: V.ABN, OTCQB: ABNAF, Forum). We noted the jump in this company’s share price following excellent maiden drill results, and the “buzz” continues on the ABN Bullboard.

Summer is winding down, but cannabis is heating up. It should be an exciting Fall for Stockhouse investors.

FULL DISCLOSURE: Hill Street Beverage Company Inc. and Newstrike Brands Ltd. are paid clients of Stockhouse Publishing.



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