Please note! This essay has been submitted by a student.
During the stock exchange investment project I chose to invest into several companies spanning from the US market to the Canadian market. The stocks in the US that are invested in are Apple (APPL), Google (GOOG), and Netflix (NFLX). With the new products that these companies are coming out with and with the expansion of internet in India these companies are sure to thrive and have a rise. In the Canadian market I have invested into several cannabis companies. These companies include: Canopy Growth Corporation (WEED.TO), Aphria (APH.TO), and The Green Organic Dutchman (TGOD.TO). With the legalization of cannabis in the near future the market for weed is going to climb. Much like Bitcoin there will be a bubble and a the stocks will fall; however, unlike Bitcoin, these companies have a physical product and will be able to work like a company and make money from sales. This means that weed will have the potential to climb and establish itself as a company.
The stocks that I invested in are spread out through both the Canadian and the American market; ensuring I have stocks spread across, and to help prevent big losses and the risk of investing all of the money given, into one company. In the American Market I chose to invest 24% of my cash into Google (GOOG). Google is an American technology company that specializes in Internet-related services and products, such as online advertising technologies, a search engine, hardware, and software. I wanted to invest into this company because it is a safe option. If one were to look at the stocks of Google over the past few years or even only one year there is a clear trend. Google is quite consistently growing; having little dips, but they always come back into the positives. With release of the new phone, the Google Pixel 3 coming on October 9, as Google has teased an event on that date, there will be a spike with Google. Google is also reportedly going to launch the Pixel 3 and Pixel 3 XL with an official Google Pixel Watch that runs Wear OS. This will surely boost Google’s stocks up. On top of Google’s new phone coming out very soon, they also have a lot of potential expanding into India (as well as netflix and other Internet-related services). With over 460 million internet users, India is the second largest online market, ranked only behind China. A study suggests that by 2021, there will be about 635.8 million internet users in India. Even though India has a large base of internet users, roughly only 26 percent of the Indian population had access the internet in 2015. With India being a huge potential to establish Internet-related services, Google has the opportunity to growth their business massively. But like investing into any company, there are risks. Some risks may include that there is an unexpected drop or complication with their release of their phone. For example the Samsung Galaxy Note 7 which was combusting made Samsung take a huge toll. Another risk may be that Google decides not to make an influence in India and they do not take advantage of the potential they have there for growth. I chose this company because of the new release of the Google Pixel 3, India now developing a large number of internet users and because Google is a safer stock to invest into compared to Weed.
Roughly 25% of the money invested went into Netflix shares (NFLX). Netflix is an American media services provider. The reason I chose to invest money into Netflix is because technical analysis shows that netflix may rise up to 10% and similar to with google, if Netflix expands to India they will have a lot of growth and popularity if they start early. After Netflix fell quite a bit (20%) from its highs and rebounded by close to 17%, technical analysis predicts that Netflix may rise another 10%. Many bullish traders also can see Netflix rising over 5% by mid October. Similar to Google, Netflix has the opportunity to make it big in India, however a risk I predict is that many other internet-related services are also going to try to make their stand and solidify their company in India which may end up being bad for Netflix and result them in spending a lot of money for little gain. One big risk for investing into Netflix because of the suspected growth is that the technical analysis may be wrong. After all, this is just a prediction and it is risky to put a lot of faith into a computer analysis. Overall I believe this company is quite consistent with its growth and does not show any signs of failure or large loss; this is why I chose to invest 25% into Netflix.
With almost 40% of my money going into Apple stocks, it is clear to see that Apple is a great stock to buy at the moment. With massive capital returns, a strengthening ecosystem, and increasing estimates, there are a lot of benefits that go along with investing into them. One could argue that Apple is as much a software and services business as it is a hardware company. This gives Apple’s business a very powerful edge against the other companies. Apple has four major software platforms: iOS, macOS, watchOS, and tvOS. These all provide a smoother experience across all of their devices. For example one could start writing in a document on their mac and pick up their work on their iPhone. This powerful tool makes it easy for people to pick Apple instead of a Windows-powered computer. Many similar traits are also present with the iPad and Apple Watch compared to other devices. With this logic, once people buy an Apple product they are much more likely to purchase another Apple device instead of one from Apple’s competitors because it is more beneficial. This is why Apple has a strengthening ecosystem. Back in 2012, Apple implemented a capital return program. Since 2012 Apple has delivered over $234 billion to shareholders with dividends and stock buybacks. This number is expected to rise to $300 billion by 2019. These capital returns are sure to continue to help Apple’s stock price with the addition of giving investors a steady rising flow of dividend income. On the topic of increasing estimates, analysts have raised earnings estimates for 2019 by almost 4% to $13.64 per share since the end of July. During the same time, revenue estimates have almost increased to 3% ($279.5 billion). On top of that analysts now show earnings growing by 16% in 2019 as revenue rises by over 6%. The risks, however, lie in the company’s future ability to keep their consumers while drawing in new ones in more markets. Many consumers are constantly looking for the best and newest gadgets, or products, and Apple may take a hit if a better gadget comes along. I would say there are more rewards and risks however. This is why I chose to invest 40% into Apple; for their consistency and steady growth over the years, and with the addition of the short term spike from the release of iPhone XS, XS Max, and new apple watch.
In the Canadian Market I put in 95% of the money given into shares. A large percentage of the money given has been invested into Canopy Growth Corporation totalling at 40%. This company sells cannabis products for medical and recreational purposes, like this quote from their website states, “Our vision is to be the number one cannabis company in the world. From product and process innovation to market execution and everything in between, we are driven by a passion for leadership, a commitment to drive the industry forward, and above all else, providing medical and recreational cannabis consumers the best possible experience.” With Canada now legalizing cannabis on October 17th this year, this should result in billions of dollars flowing into the legal Canadian weed industry. Aurora is expected to lead the field in term of peak production potential, but Canopy Growth is expected to be number 2 in terms of annual production with over 500,000Kg of yield per year. Canopy Growth would be working on 5.6mill square feet capacity (2.4 mill licensed so far). Canopy Growth might be “one of the most scalable infrastructures in the entire cannabis industry,” and is one of the most recognizable brands throughout Canada. Since most pot stocks are only now building their brand Canopy Growth has a huge lead in their brand. This company has been engaging consumers for years which gave them the benefit of a larger customer base early. On top of having a large customer base in the early game, Canopy Growth also offers the intelligent ability to sell their products online as well as physical stores. It is also expanded to nearly a dozen countries and over five continents. However investing into cannabis has risks as well such as a steady decline. Over the past few months the growth of Canopy Growth has been massive and with many people starting to sell their stocks it will burst the bubble that is the weed industry much like Bitcoin. The benefits of investing in these companies are clear, they have short term money growth potential as well as long term growth. I want to invest in this company because it is predicted to be the 2nd leading stock in the weed industry and in the long run investing in this stock shows huge potential, even after the bubble pop which will happen inevitably.
I also invested 30% into Aphria Inc. Aphria is a company dedicated to medical marijuana and cannabis oil. They promise 100% greenhouse grown products that are safe and consistent. They also promise to go beyond normal industry standards to ensure patients receive clean and safe medical cannabis products from them. I invested in their shares because much like the previous company I mentioned, they have a promising future. On top of Aphria promising potential, I also wanted to invest my money into several weed companies opposed to only one. Aphria Inc has high chances to land itself in the number 3 spot in terms of peak annual production behind Canopy Growth and Aurora. However, it is not the company’s 255,000Kg of production or “extensive international infrastructure” that stands out from the other companies. It is the company’s focus on alternative products. On June 6th, Aphria also announced to the public its intent to build an extraction center in Ontario which is estimated to produce 25,000Kg of cannabis concentrates and fractionated distillates per year (once at full capacity). Benefits include distinction from other cannabis companies because their alternative products are expected to offer higher margins (even with a smaller consumer pool compared to others). Risks of investing into weed companies can range from political shifts to the stocks crashing. Since the growth of these types of companies are skyrocketing there will be a point where many will sell their shares and many will follow suit resulting in a huge loss. However unlikely, it is possible that the political opinion on cannabis can shift. In conclusion I invested into Aphria because of their alternative products that will make them stand out as a company in the crowded cannabis industry.
I invested 25% of my money into The Green Organic Dutchman. TGOD, expected to be the fourth largest producer of cannabis when at peak capacity and productivity. Earlier this year they were one of the largest initial public offerings. The Green Organic Dutchman main purpose is to produce medical marijuana for its consumers. The company suggests that they will be able to produce and deliver 195,000Kg per year. I picked this company because of how this company focuses on alternative products to stand out from the competition. TGOD announced in June that they were to construct a 287,245 square foot facility on its 724 acre property; completely dedicated to beverage and edible production. The company’s focus on these marijuana beverages is very promising. Several beverage companies have been focusing and interested in joining in on the cannabis growth trend by entering the marijuana market. For example, HEXO Corp has formed a joint venture with Molson Coors Brewing. With TGOD already wanting to expand its products to beverages they would be able to make a great partner with brand-name beverage companies and grow their brand. This is a huge benefit to investing into this company. Like all of the cannabis related brands, they all ooze potential for growth and to become a well known brand. However; investing into weed with all of these companies has many risks. One possible risk is dilution. With the popularity for cannabis related companies grows considerably, companies may have to ramp up operations to catch up with the popular demand. This can include building larger facilities, employing new workers to go along with the new facilities, or supplying the new facilities with new equipment. All of these needed features require a lot of money. When a company can’t afford to growth their operations to keep up with demand they may have to raise money by issuing additional shares to the public. This is a risk for already existing shareholders, because their ownership percentage will drop as the amount of new shares are created. Another risk is that rules and regulations regarding distribution and sale of cannabis still may change. By investing into these companies you trust that their future distribution is a success. These risks are applicable for all of the weed companies I invested into. In conclusion, I invested 25% into this company because they have a solid business plan ahead of them and have potential to partner up with other beverage companies. During the stock exchange investment project I chose to invest a large amount of the money given to me into the Canadian and into the American Market.
I invested 25% into The Green Organic Dutchman, 30% into Aphria Inc, 40% into Canopy Growth Corporation, totalling at 95% into the Canadian market. In the American market I invested 24% into Google, 25% into Netflix, and 40% into Apple. Investing into several different companies is a smart strategic strategy to prevent big loss. For example if I invested into only one company, and it took a hit it would cause a large loss. Investing into the market can have a lot of benefits along with many risks; this can include loss of money but with the reward of huge growth and easy money. Investing in the stock market has a lot of high risk high reward scenarios.
In conclusion I invested in many of these companies based on short-term growth, long term growth, as well as safer options, or companies that have constant consistent growth.