The year of the pandemic, 2020 has been a complete writeoff for many, although some cannabis producers have provided something for investors to be happy about heading into year-end, with the stock prices of many of Canada’s best-known cannabis producers having doubled in the past few months.
The most well-known Canadian cannabis producer, Canopy Growth Corp. (TSX:WEED)(NYSE:CGC) currently has a prominent market share in Canada, and is often the first choice for cannabis investors due to its integrated business model and the leadership this company provides the sector broadly.
Shares of Canopy have outperformed the broader TSX index since its addition to the Toronto Stock Exchange by a wide margin, and early investors have been handsomely rewarding for sticking it out with this highly volatile growth name. As more growth investors enter the fray due largely to a "TINA" (there is no alternative) move toward risk assets, I expect to see stocks like Canopy Growth Corp. continue to outperform as long as monetary and fiscal stimulus measures remain robust and the economy continues to provide a positive environment for consumer discretionary purchases.
For investors seeking high-growth (albeit high-risk) options in the Canadian stock market today, cannabis stocks seem to have once again regained their status as core holdings in this environment. While these stocks do still exhibit signs of extreme overvaluation in my books, the broader market seems to want to grant a pass for the time being on hopes that cannabis consumption growth picks up in the medium to long-term.
Invest wisely, my friends.
