Investors who have owned stocks in the last year have generally experienced some big gains. In fact, the SPDR S&P 500 SPY total return over the last 12 months is 52.1%. But there is no question some big-name stocks performed better than others along the way.
Canopy’s Big Run: One company that has been a big winner in the last year has been Canadian cannabis producer Canopy Growth Corp CGC.
Canopy battled a difficult Canadian cannabis market throughout 2020. The biggest headline of 2020 for Canopy was the addition of former Constellation Brands, Inc. STZ CFO David Klein as CEO of Canopy. Constellation holds a 38.6% equity stake in Aurora with options to acquire up to 55.8% of the company.
Under Klein’s leadership, Canopy continues to expand its footprint. The company recently announced a $435 million buyout of Canadian cannabis producer Supreme Cannabis.
Fortunately for Canopy investors, the company was still able to generate 76.1% revenue growth in 2020 even amid the COVID-19 pandemic. In the most recent quarter, Canopy reported 23.2% revenue growth, but gross margins contracted 4.5% to 26.4%. However, Canopy investors also got some encouraging news when the company guided for positive adjusted EBITA in the second half of fiscal 2022.
At the beginning of 2020, Canopy shares were trading at around $21.50. By the beginning of March, the stock was down to $18.97 after news of the coronavirus spreading in China prompted concerns about a U.S. pandemic.
Canopy bottomed at $9 during the pandemic-driven March sell-off. Fortunately for Canopy investors, the sell-off didn’t last long.
By May, Canopy shares made it back up to $22.19, but the rally stalled at that point until the November U.S. presidential election.
A victory by Democrat Joe Biden in November and a surprise blue wave giving Democrats control of both the Senate and House sent cannabis stocks soaring on optimism that U.S. cannabis legalization may be just around the corner.
Canopy In 2021, Beyond: The stock ultimately peaked at $56.50 in February 2021 during a retail investor-fueled short squeeze before pulling back to around $28. Traders may be taking profits on Canopy’s bg run. Or they may simply see lack of progress on U.S. legalization and more lackluster growth numbers from the Canadian market as a reason to be skeptical of the stock in the near term.
Still, Canopy investors who bought one year ago and held on through the volatility have made a sizable return. In fact, $1,000 in Canopy stock bought on April 14, 2020, would be worth about $1,938 today.
Looking ahead, analysts are expecting more upside for Canopy in the next 12 months. The average price target among the 16 analysts covering the stock is $31.16, suggesting 11.8% upside from current levels.
Versión en Español en El Planteo: Esto Tendrías Hoy si Hubieras Invertido USD 1.000 en Acciones de Canopy Growth Hace un Año
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