Does Canopy Growth Look Attractive in May?

Canopy Growth’s valuation

Canopy Growth (WEED) (CGC) is one of the few stocks that has traded at premium valuation multiples compared to its peers like Aurora Cannabis (ACB), Aphria (APHA), and HEXO (HEXO). The company’s strong position in the industry and its partnership with Constellation Brands isn’t like any other company in the industry.

Does Canopy Growth Look Attractive in May?

Forward multiples

Canopy Growth has commanded a premium valuation multiple. As of May 21, the stock was trading at a forward EV-to-sales multiple of 21.7x, which was close to the higher multiple in the previous period—as you can see in the above chart. The peer median was trading at 6.9x. Aurora Cannabis, Aphria, and HEXO were trading at 14.9x, 2.9x, and 5.5x, respectively.

In the above chart, the overall industry peers were trading close to the historically lower multiples—in contrast to Canopy Growth, which has maintained its gains for most of this year. Canopy Growth’s recent announcement about Acreage Holdings (ACRGF) gave the valuations a boost earlier this month. However, acquiring Acreage Holdings depends on cannabis legalization at the federal level in the United States.