The only thing uglier than the October market-wide sell-off is the post-legalization pot stock flop, a sell-the-news scenario that I’ve shed light on for well over a year prior to legalization day.
While it may seem tempting to take profits on Canopy Growth (TSX:WEED)(NYSE:CGC) or any other marijuana stock, I’d encourage investors to at least keep the house’s money invested in Canopy and to nibble away at more shares should they continue to violently retreat below the $50 mark.
Now, I’m assuming that you’re an experienced investor who understands the risks associated with being a marijuana investor. So, if you’re a mere beginner who’s looking to take a sizable position in a pot stock with money that’s needed for an expense at some point over the next decade, I’d encourage you to check out my prior piece aimed at beginners, which will allow you to discover how suitable they are given your unique circumstances.
With that warning aside, let’s get back to the recent pot sell-off and why I think Canopy is the only bet I’d recommend on the dip.
Aurora Cannabis looks like a bigger bargain with its massive decline, but given the risks and the underlying fundamentals, from a risk-adjusted standpoint, Canopy remains the marijuana king that should be worthy of your investment dollars. Here are three reasons why:
Canopy has really deep pockets
First, and most importantly, Canopy has the prettiest balance sheet after Constellation Brands’s (NYSE:STZ) second helping to its shares. In an industry with “funny accounting” and severe shareholder dilution, having liquidity has the potential to separate the kings from the peasants, especially should the cannabis market continue to tumble further into the abyss.
Canopy’s enhanced financial flexibility will allow it to take advantage of timely contingent opportunities that may be on the horizon, and, best of all, the