Cannabis Stocks are at the very top of our whiteboard. We believe the cannabis investment theme represents the single best emerging and new investing opportunity in the stock market today for those with a 1 to 3 to 5 to 10 year investing horizon.
I’ve been investing for over 30 years and what I can say with absolute certainty is that about once a decade a new investment theme emerges that offers investors the opportunity to increase their net worth in a significant way. I’m referring to paradigmatic shifts in investor perception of an industry not small advances in cyclical businesses.
I entered the professional stock market investment world in 1993 at the dawn of the investing super cycle in a new theme called the internet. At the time people still used a letter opener for their mail instead of a small furry rodent. The established investing community believed in making investments in companies with real names not titles as silly as Yahoo and Google and Amazon. I don’t need to tell you how powerful that investment theme was and still is 25 years later. The next game changing theme in which I was a witness and active participant was the mapping of the human genome. Remember that fascinating process at the turn of the century? We identified one of the biggest beneficiary of this watershed event and invested in the company at a split adjusted price of $3.50. Today 20 years later the stock trades at over $300. The name of the company is Illumina (ILMN) and that my friends is how you build wealth.
Today I’m starting a Blog post that I will continuously update designed to monitor the Marijuana investment super cycle unfolding right before our eyes. I will post news stories about companies that we believe have merit, regulatory stories that impact the theme and general Cannabis information to educate the investor.
Please do not use this Blog post to blindly invest all your capital in this generational investing opportunity today. The process of identifying the best Marijuana investments will take time and hard work. You must do your own work and invest according to your risk tolerance.
When I first came across the great investing opportunity Yahoo (YHOO) in 1993 the stock was trading at $30/share. Listen closely now, three months later the stock was trading at $15. Did that mean the internet was a bad investment idea? Should I have given up on YHOO because it dropped 50%? Of course you know the answers. Remember this anecdote as you begin your research on the Cannabis investment opportunity. I thoroughly expect extreme volatility at the beginning of this incredible investment cycle. Use the weakness to build positions and never stop doing the fundamental work to unsure you own the biggest beneficiaries of the Cannabis Marijuana Hemp super investment cycle.
Should you wish for more guidance on the what and when feel free to contact me and I will share information we have gathered from management contact and other tried and true fundamental tools we have used over the decades to increase net worth in a meaningful way for ourselves and our partners.
- They are the only legal marijuana company that consistently makes money.
- Since the state began allowing sales of smokeable marijuana this past July Trulieve has sold more bud than every other company operating in Florida combined. 25,610 OZ
- On a currency adjusted basis, Trulieve pulled more revenue in Florida during Q2 than Canopy Growth $CGC pulled out of all of Canada.
- TRUL 8.9 price to earnings ratio isn’t just the best in the sector, it’s the only in the sector. They’re the only company with earnings.
8/12/19 – What is New: Earnings release this week for 4 important players: Charlotte’s Web (CWEB) 8/14 before the stock market open, Tilray (TLRY) 8/13 after market, Canopy Growth (CGC) & Trulelive (TRUL) 8/14 after market.
Why it Matters: We have recently received a Risk On buy signal for Cannabis ETF MJ from our ARMR Report algorithms. This means the reward from here is worth the risk we are taking. (See note from 8/6 below) No doubt the reaction to the earnings news this week will reveals whether or not this entry signal is a profitable one. Remember, we always use stop losses on all new entries and follow the asset higher with raised stops along the way. Managing risk is as important as capturing gains.
8/8/19 – What is New: Cronos Group (CRON) releases Earnings above street expectations but stock price declines 3.8% at close.
What it Means: Investors are struggling with the valuation as compared to rivals. In our opinion, the street is wrong to compare CRON to other growers. Company has stated repeatedly they do not wish to be growers and are in fact sourcing supply on the wholesale market as I write this. CRON business model places them at the top of the value chain not at the bottom with growers. Over time the company will deserve a higher valuation due to the higher Gross Margins of a Consumer Packaged Goods company vs simply growing. See recent video for more information
8/6 What is New: ARMR Report calls a new Risk On entry point for the Cannabis ETF MJ. This signal occurs right above the August 2018 price on the day Constellation Brands (STZ) invested $4 billion into Canopy Growth (CGC)
What it Means: After a terrible 3 months for the Cannabis stocks the smoke may be clearing. Our Algorithm designed for MJ is suggesting the reward vs risk at this stage is very attractive. Probability of higher prices turns in the investors favor.
7/31/19 Fun Fact: Beer stocks after the end of Prohibition returned 20% / yr for a decade for investors almost double the Stock Market returns during same decade.
Stocks Related: CGC CRON ACB OGI TLRY CWEB.ca TRUL.ca MJ YOLO
What it Means: CWEB hands down is the strongest CBD retailer in the space. This is a simple CPG investment idea with no marijuana legality issues. Company has strong management and has now doubled the retail reach from 4000 stores Jan 1 to 8000 stores July 29th.
3/28/19 What is New: House Financial Services Committee votes to advance Safe Banking Act to full House vote
What it Means: US based Cannabis companies stand to gain tremendously from a SAFE banking act. Stock prices rise when institutions like mutual funds, pension plans, 401Ks, endowments, ETFs, etc build positions in an investment theme. Until the banking situation is resolved these big buyers are precluded from investing in the space. While this vote out of committee is only the 1st step it is never the less an important step.
Cannabis could soon be eradicated from Schedule I of the federal Controlled Substances Act, after bill H.R. 420 was put in front of lawmakers in the U.S. House of Representatives.
The “420 bill” would regulate the plant like alcohol – a stark contrast to cannabis’s current Schedule I listing, which puts it alongside dangerous and addictive drugs like heroin.
State and local excise tax collections on retail adult-use cannabis sales surpassed $1 billion in 2018 — a 57 percent increase over 2017 levels, according to data compiled by the Institute on Taxation and Economic Policy.
Annual excise tax revenues on adult-use cannabis sales ($1.04 billion) rivaled those for all forms of alcohol $(1.16 billion), the group reported. State-specific sales taxes on retail cannabis purchases also yielded an addition $300 million in revenue in 2018.
Proponents of ending the federal ban on marijuana have picked up a powerful ally.
The National Cannabis Roundtable will be spearheaded by former House Speaker John Boehner, R-Ohio, who already is involved in the marijuana business as a member of the board of advisors of Acreage Holdings, one of the nation’s largest cannabis cultivation, retail and real estate companies.
Since marijuana is federally illegal, banks haven’t been able to work with cannabis companies — but a law that could change that is hitting committee this month
For the first time since 2011, the Democrats have the majority in the House of Representatives, and it appears that reforming federal marijuana laws is one of their highest priorities. While 33 states so far have legalized medical and/or recreational use, cannabis remains federally prohibited, further complicating the implementation and regulation of the nation’s growing legal marijuana industry. On Wednesday, Congressional Democrats announced a scheduled hearing focused on the challenges legal marijuana businesses face in obtaining bank accounts because many financial instiutitions fear they’ll be found in violation of federal money laundering and drug laws.
It’s long been argued by prohibitionists that cannabis is a “gateway drug” that leads people to experiment with harder drugs like cocaine, heroin and prescription pills. However, in the last decade we’ve seen more and more evidence that this is far from the truth. In fact, we have learned that instead of leading to the use of harder drugs, cannabis may help people reduce their use and reliance on other substances.
Yet another study has emerged that suggests that we should be looking closer at the the “exit drug” theory. A team of researchers from Canada and the United States surveyed over 2,000 federally registered medical cannabis patients in Canada, where the plant has been legal for medical purposes for almost twenty years. The survey asked patients about their use of both cannabis and numerous other substances.
- Wall Street’s top cannabis analyst issues her 2019 outlook for the industry, updating clients on her U.S. outlook and the key players in 2019.
- “We expect continued growth in newly established U.S. states, and more robust growth in Canada as more supply comes online,” Cowen’s Vivien Azer writes.
- Azer says that the adult use market got off to a rocky start thanks to a rushed retail framework, but says planned expansion should ease concerns.
- The U.S. market opportunity is valued at around $40 billion to $50 billion and expected to grow to $80 billion by 2030 assuming legalization, Azer adds.
- The Royal Bank of Canada’s investment banking arm is moving into the marijuana industry.
- “We’re going to be selective in our approach, frankly, but within the bank we’ve established a policy that we’re comfortable with,” RBC Capital Markets head Doug McGregor told Bloomberg in a Tuesday interview.
- RBC joins the Bank of Montreal in initiating coverage and actively pursuing deals in the marijuana industry.
rcmTAKE: One of the main reasons Pot stocks continue to suffer in the midst of overwhelmingly great new is the lack of institutional investment into this theme. These Cannabis stocks are primarily owned by retail investors and short-term traders. In a general Bear market, which the stock market is in currently, the lack of institutional ownership adds to extreme volatility and close to zero long term support. The RBC move into the investment banking opportunity will lead other major investment banks to join. As the big banks enter the space so will analyst coverage leading to institutional ownership. The best investment opportunities for individual investors in history coincides with the beginning of a tidal wave of institutional accumulation. Investors that own a theme during this period can build their next fortune.
rcmTAKE: Altria for Juul is actually a Marijuana story not a Tobacco story. $MO puts $1.8 Bil into $CRON to develop Cannabis IP that will go into Juul vaping IP. Smart move.
Stocks To Watch
3/28/19 What is New: CBD Stocks Awarded High-Quality Seal by the US Hemp Authority
What it Means: CBD industry is expected to grow to $22 billion over the next three years. CWEB is the leader and advises the US Hemp Authority. Standardization of CBD is key to growth and will keep out the fake products.
Added on 1/17/19: Charlette’s Web (CWEB)
rcmTake: This is the best positioned CDB retail company for growth in the here and now. Great IP making a superior product and one of the original pioneers. Now company is gearing up to go from cottage industry to mainstream with solid management team.
Up coming catalysts:
New CEO announcement to go along with new Coca-Cola executive
Listing shares in the USA on NASD
Big retail partnerships.
1/11/19 — Tilray Inc. (TLRY) shares surged Friday after its biggest stakeholder said it would hold onto shares of the Canadian cannabis company until at least the second half of the year.
Privateer Holdings, a a Seattle-based private equity group that limits its investments to the cannabis industry that owns an estimated 76% of Tilary’s outstanding shares, said it has a strong belief in Tilray’s long-term global growth strategy and its “pioneering role” in shaping the future of the legal marijuana market.
“We do not have plans to register, sell or distribute the shares Privateer holds in Tilray during the first half of 2019,” Privateer managing partner Michael Blue said in a statement. “When we decide to distribute shares, we will do so in an orderly and deliberate manner to maximize tax-efficiency considerations for Privateer investors, while also taking into consideration potential impacts on Tilray’s public float. And we will do it in a way that reflects our long-term confidence in Tilray’s business model and management team.”
New Age Beverage (NBEV)
EDMONTON, Jan. 8, 2019 – Aurora Cannabis Inc. (“Aurora” or the “Company”) (TSX: ACB) (NYSE: ACB) (Frankfurt: 21P; WKN: A1C4WM) today provided an expected revenue range for the second quarter of the Company’s Fiscal 2019 (“Q2 2019”), the period ended December 31, 2018. Full results will be published on Monday, February 11, 2019 pre-market, followed by a conference call later that day, details for which can be found at the end of this release.
Based on preliminary (unaudited) results, the Company anticipates revenues for Q2 2019 of between $50 million and $55 million (net of excise taxes), compared to $11.7 million for the same quarter in the prior year, and compared to $29.7 million for the previous quarter ended September 30, 2018 (“Q1 2019”). The results reflect an anticipated revenue growth rate in excess of 327% compared to Q2 2018 and in excess of 68% compared to Q1 2019.
ARMR Report: This is not a preferred company to own on our whiteboard. However, this news is worth paying attention to because of the reaction to come. During this Bear Market any and all positive news about Pot stocks has been met with aggressive selling. So, we will watch this cannabis stock to see the reaction.
12/28/18 Co. says unsolicited proposal by Green Growth Brands significantly undervalues the company (5.57 )
Based on the 20-day volume weighted average price of GGB shares and the expressed exchange ratio of 1.5714 common shares of GGB for each Aphria share, the proposed bid would be approximately 23% below the Company’s average share price over the same period. Aphria shareholders should be aware that the value of GGB’s per-share offer is based on a hypothetical valuation of its own shares, with no relation to the current price.
- GGB’s management presented the offer to Aphria the morning of December 27, 2018, and immediately went public with its proposal, less than six hours later and after the market closed on the same day. The Board believes that GGB is attempting to acquire the company through a highly conditional offer at a significant discount to its current and future value.
- Irwin Simon, Chair, said, “While we appreciate GGB’s interest in the value we have created at Aphria and our significant growth prospects, their proposal falls short of rewarding our shareholders for participating in such a transaction. Further, the proposed offer is quite risky given GGB’s condition to complete a brokered financing at a price that is more than double the recent average of their share price, as a key term to the proposal…The Board has determined that the GGB proposal, as it currently stands, significantly undervalues the company.”
- The Aphria Board of Directors has established an independent committee of directors to consider this proposal and any formal offer received.