Canopy Falters

Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street.

The last few weeks have been good for “Big Cannabis,” so we were poised for a correction. Canopy Growth Corp. (NYSE:CGC) gave us the signal.

Nobody seriously thought the giant of the industry would make money. Profitability is still months, if not years, away.

But to make the margins work, even CGC needs to grow its way to efficiency. That’s why the revenue trend is so critical here..

And it’s why CGC faltered today. Its growth just isn’t fast enough to take shareholders where they need to be. It’s frustrating and, in a corner of the market that craves instant gratification, triggers quite a bit of selling.

We’re in the group for the long haul, but I acknowledge that gratification on names like CGC seems farther and farther away with every passing season.

That’s why I prefer Aphria Inc. (NYSE:APHA) among all the big distributors. It focuses on medicinal customers only, which means the hype around recreational markets is not a factor here.

Its growth is good. Its margins are credible. In a good quarter, the company even makes a little money. It is as stable as anything in the industry.

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