Here’s Why Canopy Growth Corp. Is the Only Cannabis Stock You’ll Ever Want to Own

Here’s why Canopy Growth Corp. (TSX:WEED) is a better bet than other marijuana stocks for long-term investors.

| More on:

Canopy Growth Corp. (TSX:WEED), in my opinion, is the best marijuana stock to own over the long haul, mostly due to management’s abilities in forming numerous important relationships early in the game, while still being able to ramp up production efforts, promote branding, and think many years ahead.

Canopy’s largest competitors, Aurora Cannabis Inc. (TSX:ACB) and Aphria Inc. (TSX:APH), have reported impeccable efficiency results thus far, which make for a more compelling option for near-term investors, but I think investors should stick with Canopy if they’re in it for the long term.

Why Canopy will continue to lead the pack after legalization day

As the marijuana industry matures over the next five years, I believe Canopy will be head and shoulders above its peers thanks to its aggressive spending habits early in the game, which will likely give it a larger edge in the long term.

Take the numerous partnerships that Canopy has made with various international firms; these are initiatives that won’t pay off overnight, but it’s important to note that Canopy is laying a foundation for massive growth over the extremely long term, as marijuana eventually becomes less taboo across the globe.

Near-term uncertainty for long-term dominance? Sounds like a fair trade

Sure, Canopy doesn’t have the best efficiency results right now, and profitability has lagged most of its peers, but this isn’t going to be the case forever. Canopy CEO Bruce Linton has stated on numerous occasions in televised interviews on BNN that he expects the company to get into the green in the latter part of 2018.

Mr. Linton’s commentary on Canopy’s near-term forecast was rather vague, however, as he claimed there were still a tonne of uncertainties that’d most likely make near-term forecasts nothing more than a shot in the dark.

Mr. Linton could have fueled more euphoria by making bolder claims to exacerbate investor euphoria, but he appears to be more concerned about the long-term fundamentals of the business and igniting growth instead of focusing on near-term stock performance, as the general public shifts their focus towards legalization day and the best-geared stocks to own for the near term.

A management team that’s focused on winning over the long term

While profitability matters, even before nationwide legalization, I think the best strategy would be to sacrifice near-term performance to leverage every opportunity available early to maximize growth once the recreational cannabis market is in full force.

It’s definitely an extremely aggressive strategy, but then again, the entire marijuana industry is high risk anyways, so if you truly believe in the emergence of pot stocks, you’re best off going for a full measure rather than a half measure, since all marijuana stocks will crumble in the event of a catastrophic industry-wide development.

Bottom line

Fellow Fool contributor Chris MacDonald recently highlighted in his piece that Bruce Linton deserves to be the CEO of the year. Aside from the stock’s outstanding ~87% return over the past year, Linton seems to possess many traits that could make him the face of the marijuana industry over the long haul.

I was skeptical over Canopy’s sub-par numbers compared to its peers at first, but after a series of very impressive deals, it’s apparent that Linton and company are capable of pulling bunnies out of hats on a consistent basis. Just consider the Constellation Brands, Inc. deal, which I think is a huge vote of confidence from a well-respected blue-chip name that likely sees Canopy’s management as something special.

When considering any investment, management is key. In a nascent industry like cannabis, the importance of management is exponentially more important. With Canopy, you’re getting a management team that I believe is more than capable, and I believe investors will eventually reap the rewards over the long term, as Canopy increases the gap between itself and its competitors.

Stay hungry. Stay Foolish.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joey Frenette has no position in any of the stocks mentioned.

More on Investing

GettyImages-1352607170 (1)
Tech Stocks

Why Shopify Stock Is Skyrocketing Today

Shopify published its Q3 report this morning, and it gave investors plenty to be excited about.

Read more »

Hand Protecting Senior Couple
Dividend Stocks

3 Blue-Chip Stocks So Safe Canadians Can Hold Them Until They Die

Canadian National Railway (TSX:CNR) is a stock worth owning for life.

Read more »

stock research, analyze data
Dividend Stocks

14.7% Dividend Yield? Buy Up This Passive-Income Stock in Bulk!

That dividend yield is high, but it still comes with some strong reasons to consider the stock outside of a…

Read more »

calculate and analyze stock
Stock Market

Chewy vs. Pet Valu: Which Growth Stock Is a Better Buy?

Chewy and Pet Valu are two beaten-down pet stocks that trade at a reasonable valuation in November 2024.

Read more »

Forklift in a warehouse
Investing

Canadian Industrial Stocks to Buy Now

Canadian industrial stocks offer a comprehensive variety of safety, dividend, and growth combinations. This ensures that all kinds of investors…

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Tuesday, November 12

Sliding metals prices amid a strengthening U.S. dollar could continue to weigh on TSX mining stocks today.

Read more »

rising arrow with flames
Investing

2 TSX Stocks With Market-Beating Potential

Fairfax Financial Holdings (TSX:FFH) stock has been soaring of late but remains cheap from a valuation perspective.

Read more »

Canadian Dollars bills
Dividend Stocks

1 Dividend Stock That Could Create $5,000 in Tax-Free Passive Income in 10 Years

Here's why Fortis (TSX:FTS) certainly looks like a top dividend stock with outsized total return upside worth buying right now.

Read more »