Come October of 2018 and Canada will become one of the few developed countries to legalize recreational marijuana for adult-use. This revolutionary move has not only sent a wave of joy in the people of the country, but has also turned into a massive business opportunity for cannabis manufacturers, who had been restricting their output to only medical use until now. Consequently, pot stocks such as Canopy Growth has seen a surge in its stock price in the last few months, as investors are trying to leverage on the potential upside that the stock can offer. The company also has a partnership whereby Constellation Brands (NYSE: STZ) has a 9.9% stake in the company.
However, the medical marijuana producer witnessed an initial sharp drop in its price after it released its fourth quarter and fiscal 2018 results. The stock plunged more than 10% to CAD 36.93 per share, as the company failed to meet the consensus expectations on both the revenue as well as earnings front. We figure that this is a market over-reaction to the earnings miss and believe that the stock has a huge upside potential with the opening up of the recreational marijuana