Multi-year agreement with Neptune Technologies helped propel Canadian marijuana stock Canopy Growth Corporation (TSX:WEED) on Tuesday
SmallCapPower | June 20, 2018: Canopy Growth Corporation (TSX:WEED), a Canadian marijuana stock, closed Tuesday at an all-time high on the TSX as it continues its recent upsurge. Regardless of yesterday’s announcement of a multi-year agreement with Neptune Technologies & Bioressources Inc. (TSX:NEPT), Canopy Growth Corp’s stock surge started last Wednesday, the up move in it as well as other Canadian marijuana stocks appearing to be largely technical, with traders buying dips ahead of the impending recreational legalization in Canada.
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Also, likely giving Canopy Growth stock a lift was its listing on the New York Stock Exchange on May 24, 2018. As the perceived market leader, Canopy Growth should be receiving a greater share of the institutional funds allocated to this space.
Canopy Growth shares rose 4.6% yesterday to close at $42.53, surpassing the previous high of $42.07 on January 9, 2018. Intraday, the stock hit $43.65, just $0.35 short of its all-time intraday high of $44 that was also recorded on January 9, 2018. Traders would be eyeing $44 as a key near-term resistance, which if crossed, could set the stage for much higher levels, with the possibility of hitting $50 over the coming weeks. Other Canadian marijuana stocks, including Aurora Cannabis and Aphria, have also been witnessing a decent surge over the past week. Aurora moved up 4.5% yesterday while Aphria was up 4.3% over the past five days.
Shares of micro-cap Neptune Technologies shot up a whopping 32% to close at $4.26 Tuesday.
As part of the multi-year agreement, Neptune will supplement Canopy Growth Corp’s extraction, refinement, and extract product formulation capacity. The agreement significantly expands Canopy Growth Corp’s extract production capacity and solidifies its leadership position in the extracts/softgel product market. Canopy Growth is the first to introduce extract-based cannabis Softgels (Canopy’s subsidiary Spectrum Cannabis launched Cannabis Softgels on Monday) and this agreement should help it to develop a wider range of extract products.
Canopy Growth is the world’s largest and most diversified cannabis producer, offering distinct brands and curated cannabis varieties in dried, oil and Softgel capsule forms. Canopy Growth is also the most valued cannabis company in Canada with a market cap of $8.5 billion, or 122x its TTM sales of $69.8 million.
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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