Canopy Growth (NYSE: CGC) has already made some investors quite rich. Since the company's initial public offering in 2014, canopy stock has skyrocketed around 1,380%. Along the way, Canopy Growth became the world's largest marijuana business in terms of market cap.
But will Canopy Growth make investors who buy the stock now wealthy, too? Could it be a millionaire-maker stock?
That being said, a stock that performs well can certainly make an investor much more than when they bought the stock. Growth to make investors who buy shares now rich ̵
However, for Canopy Growth to be a millionaire – maker stock for most investors is a number order. And we're talking about a Mount Everest child or number.
The key factor in our initial questions is just how much Canopy Growth can grow. These growth prospects depend on several important variables.
One important variable is whether or not the U.S. marijuana legalizes at the federal level. Currently, the U.S. represents around 85% of the worldwide legal marijuana market. Even as marijuana markets expand in other countries, the U.S. is likely to generate at least three-quarters of total global marijuana sales for years to come.
Another critical variable is how quickly legal marijuana markets dispose of the illicit black market for marijuana. Some executives of marijuana companies like to talk about a global marijuana market of $ 150 billion or more. However, this figure is largely made up of illegal marijuana sales. Even when marijuana is legalized, the black market can still thrive – something California found out last year.
Then there is the level that cannabis can disrupt other markets. Canopy Growth CEO Bruce Linton thinks cannabis could affect other markets that are worth $ 500 billion annually. He has suggested that cannabis products could capture significant share from the beverages, pharmaceuticals and tobacco markets.
Note that so far we have only the market opportunity at a macro level. Another make-or-break variable is how can Canopy Growth can capitalize on the opportunities it has.
It may seem reasonable to believe that Canopy Growth will, if it is now, be a major player in that market.
Different investors will disagree on how good Canopy's prospects are, though. Let's look at the viewpoint of one investor – Constellation Brands (NYSE: STZ) . The big alcoholic beverage company invested around $ 190 million in Canopy in 2017 and followed up with another $ 4 billion investment last year.
What kind of prospects did Constellation see for Canopy Growth? The distributor of Corona and Modelo estimates that the global cannabis market would top $ 230 billion within the next 15 years. Constellation projected that Canopy would be able to capture between 30% and 40% of the Canadian market and between 5% and 15% of the market in the U.S. and the rest of the world
If we use the midpoints of Constellation's estimated market share and its projections for the global cannabis market, Canopy Growth could generate close to $ 26 billion in annual revenue in the future. $ 100 trillion
The million-dollar question
But can Canopy Growth be a millionaire-maker stock? Not for most investors. The problem, though, is that a market cap of $ 100 billion or even $ 200 billion isn't enough.
Let's say you bought $ 10,000 worth of Canopy Growth stock. To make you a millionaire, that investment would have to grow a hundredfold. This means that Canopy would have to increase its market cap from close to $ 17 billion today to around $ 1.7 trillion. Just FYI, there are any stocks on the market today that even crack the $ 1 trillion mark.
Maybe someone who bought $ 200,000 or so of Canopy Growth could be able to turn that initial investment into $ 1 million or more over a long period. But if you have money to invest in one stock, you're probably already a millionaire.
So the answer to the million-dollar question for Canopy Growth is a resounding "no." However, if the company can get anywhere close to achieving the potential that constitutes it, the stock will make current investors a lot easier down the road. But if you are really looking to become a marijuana millionaire, you will need to find another stock that has even more room than Canopy Growth does. Fool.insertScript ('facebook-jssdk', '// connect .facebook.net / en_US / sdk.js # xfbml = 1 & version = v2.3 ', true);
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