As Canopy Growth receives vaping device patent, should you buy CGC shares?

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on Aug 31, 2021
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  • Canopy Growth shares on Tuesday soared more than 4% after receiving a patent for a vaping device.
  • The vaping device features an identifier and a processor to determine an operational setting.
  • Uses can adjust settings for temperature, time duration, and dosage, among other options.

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On Tuesday, Canopy Growth Corp (NYSE:CGC) shares surged more than 4% after the company announced securing a patent for a personal vaping device. The device’s operational settings are customizable based on historical vape device usage, prescription information, location, and payload information, among others factors.

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As a result, users can adjust settings for temperature, time duration, dosage, and security, to match the specific information of the user. And with the increasing regulation of cannabis products, Canopy Growth could turn the device into a significant cash flow generator, boosting its growth potential.

Evaluating Canopy Growth’s growth prospects

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Canopy Growth’s long-term future depends on the potential growth of the cannabis market. The company is well-poised to benefit from the legalization of cannabis products with its vaping device. 

In the company’s most recent quarterly results announced on 5th August, Canopy Growth’s top line grew by 23% to C$136.21 million from the same quarter a year ago. Net cannabis revenue came in at C$93 million, up 17%, while other consumer products revenue grew 39%. 

Its adjusted fiscal Q1 gross margin of 21% was a significant improvement from the 7% reported last year. Therefore, the company is already demonstrating solid organic growth, making the stock attractive to growth investors.

Source – TradingView

Can the CGC stock’s current rebound continue?

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Although Canopy Growth shares appear to be trading under intense bearish pressure, the stock recently bounced back to avoid crossing to oversold conditions in the 14-day RSI.

Moreover, the Canopy Growth shares trade several levels below this year’s highs, reached when the stock spiked in February. Therefore, investors can target extended short-term gains at approximately $19.46 or higher at $21.77.

On the other hand, if CGC shares continue to trend downwards, the stock could find solid support at $15.67 or lower at $13.70.

Bottom line: Why buy Canopy Growth’s shares now?

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In summary, Canopy Growth shares trade at $17.59 as of this writing, which is several levels below the current 52-week high of $56.50, reached in February. Moreover, the company’s growth potential looks exciting after posting impressive top line and gross margin improvements in the most recent quarterly results.

Therefore, with CGC shares trading several levels off the overbought conditions, the current bull-run seems poised to continue to the foreseeable future.

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