Is it Time to Get High on Pot Stocks?
Let’s start with two facts; first of all, I grew up in the 70’s and second, I grew up in Northern California Based on those things alone, I'd guess that I have been around pot more than many other people. Additionally, I’ve studied the benefits of CBD for a long period of time, and have been fascinated by the recent discoveries. The purpose of this article is not to sell you on whether you should support Marijuana because whether you are for it or against it, you must be living in a cave if you are not aware of the tremendously growing support that the Cannabis industry is garnering around the world. Even if I wanted to see you on it, I don’t have to because as you can see from the chart below, that is happening without my help at an incredible pace!
This support makes sense when you trade the billions upon billions of dollars spent fighting it for the $3 billion+ in tax collection by allowing it. If you want to wipe out the student debt problem, or reduce the deficit then this is a big step toward accomplishing those items.
Almost the only argument I have heard against it is that it is a gateway drug. C’mon! If someone is going to use drugs, they are going to use drugs. I know countless people that use Marijuana in various forms and for various reasons (many of them for sad medical reasons), and not one of them have moved onto hard drugs. To me it's analogous with saying beer is a gateway drink to alcoholism. Anyway... I am selling. Sorry. :-O
Now, the question is whether you will let your bias get in the way of your investment criteria. I will admit, if I do not believe in something or someone, I will not invest in the company. However, I am a big believer in the Cannabis industry, and I predict that in the years to come studies will prove it to be far safer for the body than alcohol. You don’t wake up with a hangover, people don’t get violent and engage in bar fights. Heck, maybe you curl up on the couch, watch Netflix and eat Cheetos and cookies, but you will not become an alcoholic, and it is non-addictive. If all of this is true (let me remind you that I grew up in the 70’s and in Northern California), and I will tell you it is true. Then Marijuana will become a growth industry bigger than any of us can even begin to imagine. We are looking at the birth of an industry that will become the size of the alcohol market.
Major companies are investing. In fact; Martha Stewart is now partnering with Snoop Dog in the creation of new products, pet companies are producing CBD products, and Constellation Brands, the Fortune 500 company that makes Corona and Modelo now owns 9.9% of a Cannabis company called Canopy Growth. You must see where this is going!
They now have their own index just like the tech stocks do! Here is a look at the North American Marijuana Index chart
Of course all this discussion leads to a stock recommendation. While I like a few POT stocks, we are predominately options traders and hold our positions for a short enough time that we do not always do detailed analysis as we do with out weekly stock picks. I do like Canopy Growth Company, symbol (CGC). However, I have not done enough research to recommend them, but I plan on doing this in the weeks to come for my readers. I do have a recommendation to pass along from my all-time favorite economist Harry Dent. I subscribe to a few of Harry’s publications and I find his insights refreshing and thoughtful above most (if not all) others that I read. In fact, I jacked these two charts from Harry. Thank you, Harry! Harry’s recommendation is brilliant in that he is recommending a company that supplies the Marijuana Industry with packaging and other vital products. In fact, this company pushed through legislation that requires Cannabis products be packaged in child proof bottles, and of course sell these bottles. The company has a good deal of intellectual property, they make vaporizer products, offer marketing and web services, and provide ecommerce solutions. The company is Kush Supply Company, or KushCo. They trade under the symbol KSHB, and the stock currently trades at $5.75. Harry suggests buying it up to $6.50. He also points out that since they’ve used their stock for acquisitions, and that as the sellers of these companies liquidate the stock they accepted for the sale of their companies it will hold the price of the stock down for awhile. So, don’t expect the stock to skyrocket. Think of this as a longer-term play. You should also know, their rapid growth is also holding back profitability, however this is to be expected at this time and their access to cash is excellent. Pending no major shifts in the broader markets, or the overall acceptance of the industry itself, this sounds like a good play. I plan on buying some myself.
To learn more about what we are doing over at University of Options you can email me directly at [email protected] or check out our website at www.universityofoptions.com Have a great day, and I hope to connect with you!
