Canopy Growth Corp. testing support along the 50-day moving average

Jun 24th, 2016 – 1 Comment

Reports Q4 and FY 16 on June 27


About the Author

Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


Read the author's full profile.


Further Research

Read more about Marijuana.


Canopy Growth Corporation-Tweed Marijuana Inc. Renamed CGC

Hi Lou,

I’m a 640 listener and love your input.
I have a small amount of money to put into my self directed equity RRSP .
I heard you today on Kelly’s show talking about the Microsoft endeavour into marijuana tracking software.
With the pending legalization of marijuana, I think putting this money behind the movement makes sense. Do you agree?, if so, what stocks can I buy in what companies?
I’d appreciate any advice.
Happy Capitalism,

Laura

 

Hey Laura,

Thanks for the assignment. I am going to dig deep into the marijuana market and provide you with an analysis of a number of publicly traded companies that might fit your personal investor profile. The first company that I will probe the charts for Canopy Growth Corp. (CGC TSXV) which had traded as Tweed Marijuana Inc. (TWD TSXV) until September 2015 when the board approved a name and symbol change.

I examined TWD back on August 18, 2014 for Jeff who was wanted to know if the stock should be considered as part of his RRSP so he wouldn’t become a burden for his children. The shares were trading for $2.60 and had pulled back from a 52-week high of $5.10. TWD was retreating from the highs and meeting resistance along the 50-day moving average. The market capitalization at the time was $103.85 million  and it was advised to treat TWD as a high risk speculative investment.

Another inspection of the charts will determine if CGC would be suitable for your purposes.

 

 

CGC

The two-year chart depicts a stock that has retested support near $1.60 three times since the last analysis. The first test was in October of 2014 followed by a double bottom in September of 2015. The double bottom signalled a trend reversal that saw the shares hit a 52-week high of $3.69 by November of 2015. The move to the 52-week high was a spike high and was quickly followed by sell signals from the RSI and the MACD as the stock retreated to support near $2.00.

CGC caught a bounce to resistance in the $3.00 range which has held over the last six months.

 

 

 

 

 

 

CGC2

The six-month chart highlights the base that the shares built in the $2.60 range since May and the retest of resistance near $3.00. The selling that came into the stock on June 23, 2016 was all about the Brexit vote and had nothing to do with micro issues at the company. The company reported that it has received preliminary approval to move its listing to the TSX and its expected that all of the requirements will be met by September. Finally the company will report its Q4 and FY16 results on June 27. Make sure to put that on your calendar.

Since my last run at the charts CGC has increased its market capitalization to $296.5 million and reported increasing revenue. The company is still reporting losses but expects to be breaking even in 2017. You have to expect volatility with this stock and should be prepared to trade it for profit to take advantage of swings. The pot market will inevitably consolidate and I would expect that the tobacco companies will move into the sector and buy what they want.

Next time I will audit another pot stock,Mettrum Health Corp. (MT TSXV), for Ken. After that I will continue to sort through the publicly traded companies in the weed business.

 

Make it a profitable day and happy capitalism!

Categories: Marijuana
Content © Relentless Economics - Charts courtesy Stockcharts.com - Employees Entrance - Optimization Media