Canopy Growth Stock Continues Hot Streak Ahead of Earnings

Canada-based marijuana concern Canopy Growth Corp (NYSE:CGC) is trading higher today, up 1.3% at $43.31, right ahead of the firm's fiscal fourth-quarter earnings release after the close today. The weed stock is higher after shareholders approved the company's acquisition of Acreage Holdings yesterday evening.

Canopy has only one other earnings report to its name, and the next-day return for the stock was 3.1%. The options market is pricing in a much bigger swing of 11.2% for tomorrow's trading, and speculators appear to be positioning for another post-earnings upside move.

So far today, 18,000 calls have crossed the tape, two times the average intraday amount. Most of the activity is surrounding the June 45 and weekly 6/28 50-strike calls. Those buying to open these calls expect major upside for the equity by the time these contracts expire.

CGC has seen an impressive run on the charts lately, too. The stock is eyeing its fourth consecutive win, and vying for its first close atop its 30-day moving average -- which has served as a recent ceiling -- for the first time in over a month. The stock's $44 region, however, is still serving as pervasive pressure for the stock, squelching CGC's last two rallies. Despite this, the equity has still managed a 61.1% year-to-date gain. 

Should tonight's earnings results prove favorable, upgrades from the brokerage bunch could be in the cards. While the majority of the 14 analysts consider Canopy a "buy" or better, four have slapped the pot stock with a tepid "hold." The consensus 12-month target price of $56.19, however, is at a roughly 30% premium to the stock's current perch. 

An unwinding of shorts could push the stock higher, too. Short interest shot up 12.6% in the last two reporting periods. The record 30.71 million shares sold short represents a whopping 15% of the stock's available float. At CGC's average pace of trading, it would take over a week to cover all these pessimistic positions.