Constellation Brands Ups Stake In Pot Stock

Jefferies called the move "financially sensible"

Deputy Editor
May 4, 2020 at 10:24 AM
facebook twitter linkedin


The shares of pot producer Canopy Growth Corp (NYSE:CGC) are climbing higher this morning, up 4.9% to trade at $15.97 after beverage name Constellation Brands (STZ) exercised warrants to buy shares of CGC, raising its stake to 38.6%. Jefferies chimed in, saying that the move was "financially sensible," but warning that it's still too early to speculate on whether STZ will exercise its remaining warrants.  

On the charts, CGC attempted to break out of its tight consolidation pattern in the $14- $15 range last week, before losing steam at the 80-day moving average. While the equity is still looking up at the trendline, it's trading north of this aforementioned holding pattern, up over 20% in the last month. 

Analysts are split on the marijuana producer, with seven calling it a "strong buy," and nine saying "hold." Meanwhile, the consensus 12-month price target of $23.97 sits at a 53.6% premium to current levels. 

The options pits, on the other hand, have been overwhelmingly optimistic. In the past 10 days, a whopping 8.64 calls were picked up for every put at the International Securities Exchange (ISE), Cboe Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits in the top percentile of its annual range, implying that long calls haven't been more popular in the last 12 months. 

 

 

If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!

Schaeffer's Investment Research Master Portfolio Trial
 


 


 
Special Offers from Schaeffer's Trading Partners