Companies such as Canopy Growth, Cronos Group and GreenStar Biosciences Corp. (CSE: GSTR) bring huge profits to cannabis investors and prove the potential of the sector
The cannabis sector is rife with opportunity for investors who know where to look. By looking at the long term growth that companies like Canopy Growth, Cronos Group and GreenStar Biosciences Corp. (CSE: GSTR) have achieved we can get a glimpse into the potential of industry.
The world’s largest stock of Cannabis by market capitalization had an impressive run, beating Aurora Cannabis on the return theme. Investors with the hunch to invest in Canopy Growth in early 2016 and cling to the trip would have seen a total return of close to 3.500%.
Canopy Growth offers a number of advantages that have caused Wall Street and investors to turn to this action. To begin with, it has more cash and cash equivalents at its disposal than any other marijuana reserve. It ended its third fiscal quarter (December 31, 2018) with an impressive $3.67 billion in cash and short-term investments that the company plans to use for complementary acquisitions, branding and product development, as well as boosting a variety of markets, including the United States.
Where did Canopy get its cash treasure? Constellation Brands (Grupo Modelo), the agreement gave Constellation a 37% stake in Canopy’s capital stock, as well as guarantees to Constellation that can be exercised later to increase its stake by up to 56%. Investors are therefore excited about Constellation’s buying potential, as well as the company that offers its marketing, branding and product development expertise to Canopy Growth.
This is also a company with impressive production potential. Although Aurora Cannabis is the clear No. 1, Canopy Growth is sitting comfortably in second place, with more than 4.4 million square feet of its 5.6 million square feet of growing space already authorized by Health Canada. Assuming Canopy produces around the industry average of 100 grams per square foot, more than 500,000 kilos is a real possibility.
Among the most popular Cannabis values, none would have offered a stronger return for investors since early 2016 than the Cronos Group.
Investing $1,000 in Cronos would produce close to $72,000 today, assuming it was maintained through major changes in the company’s share price.
The biggest catalyst for Cronos Group is the $1.8 billion capital investment it received from tobacco giant Altria. Altria’s investment gave it an undiluted 45% stake in the company, with the option to exercise warranties it also received to increase its ownership to 55%.it also opens the door for the duo to work on pre-rolled products and/or vape.
More importantly, this agreement provides Cronos Group with the capital necessary to increase production capacity, diversify its product portfolio, develop its brands, make complementary acquisitions and enter international markets.
Investors are also satisfied with Cronos Group’s up to $100 million agreement with Ginko Bioworks, in exchange for its substantial investment, Cronos will gain access to Ginkgo’s patented microorganism development platform. This platform can create yeast strains that will produce cannabinoids targeted on a commercial scale; and presumably at a lower cost than traditional extraction techniques.
GreenStar Biosciences Corp.
This young company might be David to the Goliath’s above but GreenStar Biosciences Corp. (CSE: GSTR) represents a very interesting offer for investors.
GreenStar Biosciences is a Vancouver-based company that specializes in selecting the most promising cannabis companies in the market and helping them grow. Their management team has a lot of experience in the Canadian marijauna sector and knows all the do’s and don’ts. They are building a diverse portfolio of companies that touches on every aspect on cannabis production, from seed, packaging, transportation, to distribution.
One of them is their Washington state-based partner company Cowlitz. Cowlitz is already a locally recognised cannabis producer and processor that found their niche in the market. Cowlitz has become a local market leader, recording a revenue of $14.6 million at the end of last year (2018), and continuously brings a quarterly revenue of $4 million and growing.
GreenStar’s capacity of recognising the most innovative and promising players in the market, will soon make them one of the key players in the cannabis sector. With their expertise and smart investing strategy, GreenStar Biosciences allows investors to access top cannabis companies in North America with a single stock and minimal risk.