Canopy Growth Stock: This Pot Pick Could Hit $15 Sooner Than You Think

Canopy Growth (NASDAQ:CGC) is a premier Canadian cannabis company. Granted, Canopy Growth isn’t in perfect financial condition. That’s likely true for every canna-business. Canopy Growth stock can rise as the company improves.

I’m not suggesting that 2024 will be bubble-icious like 2018 was. Canopy Growth’s shareholders should be cautious and avoid price chasing and over-investing. Canopy Growth’s recent results show progress in closing the profitability gap.

Canopy Growth: Don’t Expect Too Much

When I said, “closing the profitability gap,” I hinted that Canopy Growth isn’t currently a profitable company. However, Canopy Growth is narrowing its losses.

Again, this isn’t 2018 and Canopy Growth won’t hit $500 soon. On the other hand, $15 is possible and realistic.

It’s all about improvement, not perfection. In the third quarter of fiscal 2024 (which ended on Dec. 31, 2023), Canopy Growth reported a net loss of 216.797 million CAD, versus a net loss of 264.376 million CAD in the year-earlier quarter.

Then, in fiscal 2024’s fourth quarter (which ended March 31, 2024), Canopy Growth’s net loss narrowed even further to 92.337 million CAD. I’m not concluding that Canopy Growth will be income-positive tomorrow or next week, but there’s certainly a positive trend going on here.

Canopy Growth’s Growing Cash Pile

How did Canopy Growth manage to narrow its profitability gap? The company increased its net revenue by 7% year over year in Q4 of FY2024, but that’s not the full story.

As CEO David Klein explained, Canopy Growth also “delivered dramatic reductions in expenses, cash burn, and debt over the past year.” Klein noted that the company has “no material debt maturing until 2026.”

Moreover, Canopy Growth has a decent-sized capital runway. More specifically, the company grew its position of cash and cash equivalents from 142.745 million CAD in the prior quarter to $170,300 million CAD in Q4 of FY2024.

Don’t get the wrong idea. Canopy Growth, and cannabis producers generally, are risk-fraught businesses.

Yet, Canopy Growth has a growing cash pile and no debt that the company has to pay down immediately. These factors de-risk the company and the stock, to a certain extent.

Canopy Growth Stock: Stay Small and Aim for $15

Going forward, look for Canopy Growth to continue growing its revenue while reducing its cash-burn rate. Plus, hopefully Canopy Growth won’t unexpectedly incur new debt.

A company’s market capitalization and share price can increase quickly if that company achieves profitability. I’m not saying that Canopy Growth is guaranteed to be income-positive, but it’s a possibility to consider.

With that objective in mind, Canopy Growth stock could grow like a pot plant in 2024 and 2025. The stock has pierced above $15 in the past 12 months, so that’s a realistic price target. Just don’t over-invest in Canopy Growth shares, since cannabis stocks are potentially high-reward but are also high-risk.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.