Could This Canopy Growth (TSX:WEED) Spin-Off Be a Great Buy?

Canopy Growth is the largest marijuana company in the world by market cap. The firm dominates the Canadian market and racks up revenues that outperform that of any of its peers. Canopy Growth may be one of the better investment options for those looking to profit from the marijuana craze, but one of the firm’s subsidiaries, namely Canopy Rivers (TSXV:RIV), could be an interesting option to consider as well. 

Canopy Rivers’s business model

First, it’s important to get one thing out of the way: Canopy Rivers is a separate entity from Canopy Growth. The former of these was originally founded in 2017 with the goal to facilitate Canopy Growth’s progress within the marijuana sector by pursuing interesting investing opportunities. Last year, Rivers acquired its own stock listing, and given how different its operations are from that of its parent company, its prospects ought to be analyzed on their own merits. 

Canopy Rivers’s portfolio includes more than 18 companies, and the list is growing. What is striking about its portfolio, though, is the diversity of the companies within it. It includes firms that specialize in hemp and CBD extraction, retail distributors of cannabis products, pharmaceutical-focused companies, cannabis beauty products, cannabis-infused beverage products, and many more. 

Canopy Rivers’s business strategy has an advantage over many firms within the marijuana market since its success (or failure) isn’t tied to a specific segment of the industry. Instead, a bet on Canopy Rivers essentially allows investors to have a hand in every broad segment of the marijuana market. As the sector grows, as it is projected to do at a fast pace, Rivers could post increasingly strong revenues and earnings if the companies under its umbrella are successful. Of course, that is a big if, but the strategy is definitely enticing. 

Canopy Rivers has another advantage over similar companies in its industry: namely its partnership with Canopy Growth. Small cannabis ventures looking for funds know they will likely get much more than that with Rivers; they will also profit from a partnership, albeit not a direct one, with the largest pot company in the world. Thus, Rivers will likely continue to attract potential ventures, which is good news for the company. 

Is it a buy?

There is no denying that Canopy Rivers’s strategy carries a lot of risk. Venture capitalism is generally a high-risk, high-reward business in any industry, but in one as nascent as the marijuana sector, the risks seem even greater. Rivers could end up being a huge success provided it makes the right investments, but much less optimistic scenarios seem just as plausible at this point. In short, it may be a bit too early to pull the trigger on Canopy Rivers. 

You might be missing out on one of the biggest opportunities in Canadian investing history…

Marijuana was legalized across Canada on October 17th, and a little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.

Besides making key partnerships with Facebook and Amazon, they’ve just made a game-changing deal with the Ontario government.

One grassroots Canadian company has already begun introducing this technology to the market – which is why legendary Canadian investor Iain Butler thinks they have a leg up on Amazon in this once-in-a-generation tech race.

This is the company we think you should strongly consider having in your portfolio if you want to position yourself wisely for the coming marijuana boom.

Learn More About This TSX Stock Now

More reading

Fool contributor Prosper Bakiny has no position in any of the stocks mentioned.

Source: The Fool
Could This Canopy Growth (TSX:WEED) Spin-Off Be a Great Buy?
The Fool

The Motley Fool
Contributor at mjcanada.ca
The Motley Fool is dedicated to helping the world invest — better. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, mutual funds, and premium investing services.

In all we do, we take a different approach.

We believe – and have proven over decades – that the individual investor can beat the market.

We believe that anyone can do it, even if they don’t have a lot of time or money to devote to investing.

We believe in a long-term outlook, helping people build wealth over time.

We believe that the person best positioned to take care of your financial future is you.

And we work tirelessly on behalf of our hundreds of thousands of members who are enjoying the opportunities that come with having enough money to do the things that matter to them.

While we are headquartered in Alexandria, Va., The Motley Fool advocates for the individual investor around the globe with offices in the UK, Australia, Canada, Singapore, and Germany.

Related News