Canopy Growth (NYSE:CGC) topped $50 at the start of this year only to slip after its latest quarterly earnings report. On April 12, the S&P/TSX 60 index announced it would replace Goldcorp with Canopy Growth on April 18. Cannabis investors may want to hold off buying CGC stock for at least a few days.
Funds and ETF Indexes that track the S&P/TSX 60 will buy CGC stock regardless. The surge in buying activity will artificially raise the stock price for just a few days. Those who already hold the stock at better prices might lock in profits by selling into the buying volume.
Investors should evaluate the company’s fundamentals, which are long-term positive but short-term volatile. Canopy Growth must build its medical marijuana business and manage market expectations when it reports results next month. Already, analysts at Scotia Securities cut its revenue expectations for Canopy’s FQ4.
Surge in Canopy Pending
Cannabis stocks could enjoy another bull run phase at any time. When that happens is impossible to predict. Short-sellers always take market risks in betting against stocks like Canopy. Short float for CGC is 32%. And the bears could get rewarded if the bull run does not return and Canopy in fact reports a big revenue miss in its next quarterly report.
