Canopy Growth Corp stock has been trading at over $60 CAD for most of September and October, but now it’s finally coming down.
Canopy Growth is most likely going to be a leader of the cannabis sector for years to come. That is exactly why I believe that this drop in their stock price is a good buying opportunity.
Why am I saying this? Well, these weed stocks are known for having moments such as this.
As you may have noticed, the Canopy Growth stock has been trading at around $60 CAD for most of September and October.
Just 16 days ago it was trading at over $73 CAD, and then it took a dive. In the last week of October, it lost about 40% of its value.
Canopy Growth stock is very volatile
No matter what you may think, this is a rather rare opportunity for investors.
We already know that the Canopy Growth stock is very volatile. However, this particular pullback is happening due to some very real facts.
The Canopy Growth stock was grossly overvalued a few weeks ago from a forward-looking price-to-sales ratio standpoint.
On the other hand, Canopy Growth has a $5-billion CAD stack in their vault just waiting to be spent on future growth.
Their stock is destined to make more growth, simply due to the potential they have with that amount of money at hand.
Once it starts cashing out, that’s when you’ll see real growth happening.
This is a buying opportunity
This stock has been over-valued for the better part of the year. If you recall, the year started with huge growth for all weed stocks.
Around the same time as many of the coins, the Canopy Growth stock saw explosive growth in late December 2017, only to peak in January just below $42 CAD.
For the better part of the year the stock traded at around $20 CAD, and after that New Year boom it dropped significantly.
By February 1 it was trading back at $25 CAD. All throughout February, March, and April, it crawled back up, only to reach $40 CAD again in May for the first time since New Year.
Now, if you take a look at the graph again, but more close to the present, you’ll see huge growth happening right around August, which is when Constellation doubled down on their investment with Canopy Growth.
I don’t think that the Canopy Growth stock is going to keep sinking like this for much longer. There’s no way it’s going to drop well below $40 CAD any time soon.
It also won’t go back up close to $60 any time soon either. I believe that it’s going to repeat the behavior from earlier this year and crawl up to it for a while.
With the possibility of the US market opening in a few years, Canopy might have the chance to expand.
This would have an enormous impact on its stock, even more so than legalization in Canada. That is exactly why this is a good buying opportunity, in my opinion.
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