Financial Research Report

Student’s Name

Strayer University

Financial Management 534

Teacher

Date

Chelsey

My client Chelsey is young and very free spirited. At only 24 years old Chelsey owns and manages three high end second hand stores called “Second Chance”. In addition to steady income from her businesses, averaging an annual take home salary for her of $150k, Chelsey’s grandmother left her a significant amount of money when she passed and Chelsey was smart enough to invest that money into an annuity that acts as a second income to her. From that annuity Chelsey receives $5,500.00 a month. Chelsey is good at saving and almost half of the money she gets from her monthly annuity goes into her retirement account. Her stores are operating very smoothly, have a steady flow of profit, and last year her business experienced a 12% growth in profits. Chelsey does not want to open a fourth store and instead wants to put future growth back into the store and into savings. Her idea is to invest in a stock option that she believes in financially and one that fits her personality.

What Chelsey Wants

Chelsey came to me with the idea of investing in Cannabis Pharmaceuticals. As a free spirited individual, Chelsey is an advocate for the legalization for cannabis as both medicinal and recreational. As an investment consultant it is my job to keep the client happy and usher them into well researched and comprehensive investment options. That being said Chelsey has been smart and conservative with her investment strategies and it has worked in her favor. As a consultant I am hesitant to recommend one cannabis stock over another because the cannabis market as a whole is risky (Carpenter, 2018). With the politics and controversy surrounding cannabis, I would rather Chelsey stay away from a market that is in constant fluctuation and where new competitors are popping up almost daily (McGovern, 2019). Although competition is healthy for economic growth it will result in easily disrupted stocks. Take the company Trulieve for example; a cannabis stock that had its IPO in September 2018, at its open Trulieve was selling for $18 a share, less than a year later it is down 42% to $10.44 (TCNNF, 2019).

Although a risky market, many larger investors are also noticing the value and potential of the cannabis world and are making their own steps towards having a piece of the pie. Diversification is very important and is the difference between a solid investment and a crap shoot. (Winfield, 2015) Rather than researching companies whose bottom line is completely dependent on the cannabis market, I decided to look at already established companies that are investing in cannabis companies and whose investments will make a difference for their shareholders. Chelsey is excited to invest in cannabis, but she is conservative, and as predicted she shied away from the cannabis only investments when shown their erratic fluctuations.

What Chelsey Should Get

Constellation Brands (NYSE: STZ) is a fortune 500 company and they have been around since 1945. They are responsible for iconic alcohol brands, such as, Corona, Modelo, High West Whiskey, and SVEDKA Vodka. (CBinc, 2019) In May of 2019 they appointed a new President named Robert Hanson. Robert is a former board chair with seven years’ experience working with the company, Robert Hanson. During his time as a board member he made large contributor to many of their successful strategies including the purchase of 100 acres of vineyard in California for one of their winery brands. After taking the position of President, Robert laid out a menu of investment strategies that will continue to make Constellation Brands a profitable company and a profitable investment for their shareholders, including investing in the cannabis market.

Constellation Brands purchased 38% of a company called Canopy Growth (NYSE: CGC). Canopy Growth is a cannabis company that is headquartered in Canada, but branched down into North America when states began individually legalizing marijuana. In 2014 Canopy Growth became the first cannabis company to be publically traded on the NYSE. (Canopy Growth , 2018) In 2018, their stock price went up almost 115%. Year to date in 2019 their price has gone up another 72%. However with a Beta of 3.87 the risk is real with canopy growth. (CGC, 2019) Constellation Brands stock went up 5% last year and their year to date is up 12% which we can attribute to their change in ranks and investment strategies. But with a historical Beta of .86 it is a much less risky stock option. (STZ, 2019) Side by side these two companies cannot be more different, CGC is a young high growth option with competitors popping up all around them. Whereas STX is a mature and stable business that resides in a monopolistic competitive environment. (Hunt, 2017) Despite their differences, these two companies will have more overlap and have a hand in hand in one another’s profitability as Constellation Brands is working on cannabis infused beverages.

Annotated Bibliography Canopy Growth . (2018). Retrieved from Canopy Growth Company Page About Us: https://www.canopygrowth.com/about/ Canopy Growth's website contains information about its company. It includes news and media reports, about their company as well as the industry as a whole. The company shares information on their innovations, and how they plan to grow and steps they are taking with their endeavors. Biographies and success stories from their leadership teams and most importantly the site shows us investor information. The investor information includes the company’s financial statements and shares information. The financial statements that they share date back 3 years but they do have downloadable zip links going back 10 years if requested. As a potential investor these statements are crucial and will often deter or convince someone to purchase their options. The financial statements available on canopy growths company website date back to 2015. Although these statements are available through yahoo finance, the organization and depth of the reports available on the site is more comprehensive. Carpenter, D. (2018, 10 17). Forbes Magazine. Retrieved from Forbes: https://www.forbes.com/sites/davidcarpenter/2018/10/17/picking-hot-marijuana-stocks-and-the-5-ways-to-choose-winners/#61cedec07291 Forbes Magazine is a financial magazine that provides its readers with strategic insight into businesses and finances. Forbes has for centuries dedicated itself to the validity and authenticity of valuable business information that is most privy for investors and chief operators. Forbes investigates powerful people and examines their successes and fails. They also publish very accredited financial reporters and business executives to write for them. Publicizing business information and packaging themselves as an acclaimed resource for technology, finances, and business information, Forbes is an industry giant. The article that is cited within this paper pertains to marijuana stocks and how to spot the differences between cannabis companies. Author David Carpenter has been a Forbes economist since 2011 and writes in depth analysis on various competitng businesses. In addition to his years of work with reporting cannabis affairs, David Carpenter sits on the board of directors for Forbes, so maintaining the magazines integrity is of upmost importance. CBinc. (2019). Constellation Brands. Retrieved from CBrands: About Us: https://www.cbrands.com/story Constellation Brands company website provides information on the company and access to financial reports. The financial reports that it allows users to search go back seven years and also show investment strategies and goals for the following year. The website also provides biographies on the companies chief staff. Messages from their chief operators that promote their specific insights on the company. Also, company objectives for the future. Seeing the companies modus operando is very important for investors. Knowing what a company is doing and plans on doing next is what investors use to predict the forth comings of the company. All of this information is invaluable to anyone seeking to invest. CGC. (2019, May 6). Retrieved from Yahoo Finance: https://finance.yahoo.com/quote/CGC/ Yahoo Finance is a database that allows users to retrieve financial documentation and stock information on any company publically traded. Hunt, S. D. (2017). The Theory of Monopolistic Competition, Marketing's Intellectual History, and the Product Differentiation Versus Market Segmentation Controversy. Journal of MacroEconomics, 73-84. In Hunt's article she examines Monopolistic Competition and how companies competing within individual markets are most successful when highlighting their diversifications within a completely segmented market. Using airlines and cereal companies as examples, Hunt explores theories that will directly correlate to the growing cannabis market. McGovern, B. (2018, September 11). Cannabis: Investing News. Retrieved from Investing News: https://investingnews.com/daily/cannabis-investing/us-pot-market-worth-2028-barclays/ Investing News is daily market watch site that tracks real time stock prices as well as offers investagative journalism about companies, staffing, and financial strategies of publically traded businesses. Bryan McGovern has been an investagive rerporter for Investing News since 2015 and focuses primarily on canabis stocks and competeting companies. STZ. (2019, Ma 6). Retrieved from Yahoo Finance: https://finance.yahoo.com/quote/STZ?p=STZ&.tsrc=fin-srch Referencing financial information from Yahoo Finance for Constellation Brands. Winfield, C. (2015, July 23). Time Magazine. Retrieved from Warren Buffett: Best Investment Advice: http://time.com/3968806/warren-buffett-investment-advice/ Time Magazine is an American weekly news publication that currently holds the world’s largest circulation for any news publication. Time focuses on capturing events and people in power as true as they can.