Alert: Best Pot Stock To Buy On Dip!

June 27, 2019
By Vlad Karpel

RoboStreet – June 27, 2019 

Cannabis Sector Sorting Winners From Losers

Within every new industry, where the makings of a fundamentally bullish secular trend are being shaped, there will be some bumps, hiccups, and potholes along the way, that call into question the integrity of the long-term investment theme. Such is currently the case for the nascent cannabis sector, where the promise of fortune is high, but actual results from recently reported financial progress have been lacking expectations. 

There are some amazingly heady numbers surrounding the potential size of the addressable markets for both medicinal and recreational marijuana. According to a recently released report by Grand View Research, the global legal marijuana market size is expected to reach $66.3 billion by the end of 2025. It is forecasted to expand at a Compounded Annual Growth Rate (CAGR) of 23.9% for the next five years. 

The medical marijuana community is targeting a wide range of illnesses and chronic conditions – a big one being pain management. There is great hope that cannabis will help treat cancer, Parkinson’s disease, Alzheimer’s disease, neurological disorders, and arthritis – all of which affect the lives of hundreds of millions of people worldwide. 

But this revelation about cannabis is nothing new. Zion Market Research points out that “In ancient times, marijuana or cannabis was used as a medicine. The herb was prescribed for treating various medical conditions, such as asthma, birth labor, cough, migraine, insomnia, menstrual cramps, and withdrawal symptoms from opiate use. But, in the early twentieth century, marijuana was removed from the list of registered medicines in the U.S. and was made illegal all over the world.”

 “I’m investing my own money in each and every stock as my AI platform identifies.”

And remember we’re not talking about day-trading here.  I’m looking for 50-100% gains inside of the next 3 months, so my weekly updates are timely enough for you to act.

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On the surface, this sounds enormously promising where a fortune can be made if invested in the right stocks that will produce and bring to market the pot-based therapies that prove to be effective in attacking these diseases and conditions with measurable levels of success. This line of thinking is probably the most important underpinning of what brings credibility and legitimacy to the cannabis revolution – the healing properties. 

As to the recreational proposition, the debate surrounding the pros and cons of legalization is very divisive. The case for legalizing is being spun a number of ways, but at the root of it seems to be the political agenda of finding a lucrative source of tax revenue to offset swelling state budget deficits. 

Illinois alone is expected to have a $3.2 billion deficit in 2020 to add to its total debt of $215 billion. Other states with high-risk short-term debt exposure include New Jersey, New York, California, Massachusetts, and Maryland. States use lotteries, gambling, tobacco, and alcohol for generating tax revenue and it seems weed will simply fall into the same sin tax category as the path of legalization moves from the current 12 states to the majority of states in due time. 

At present, the cannabis sector is gradually selling off, and why shouldn’t it? Some of the leading stocks are trading between 100-300 times sales. This makes the valuations of the dot com stocks of the late 1990’s look conservative. So, it shouldn’t be surprising that some air is coming out of the pot stocks after the euphoric rise when they went public during the past two years. 

This past week, one of the leading names in the sector, Canopy Growth (CGC) saw its shares slide by 11% after the company released its fiscal 2019 results showing gross margin erosion. No one argues about the robust sales growth, but the costs of bringing their products to market are higher than expected, and some analysts are concerned this is an industry-wide issue that needs to be addressed. 

The top holding in the only publicly traded pot ETF – the ETFMG Alternative Harvest ETF (MJ) is GW Pharmaceuticals PLC ADR (GWPH) of which I’ve highlighted several times over the past year. The company has the only FDA-approved cannabis-based drug on the market, Epidiolex that targets the Tuberous Sclerosis Complex market for treating epilepsy and a variety of seizures. 

The company is expected to seeking approval for Epidiolex in Europe in 2019 that will price the drug at about 70% of its US price of $32,500 per year. The drug has real market traction that no other cannabis company can boast of. In its latest quarterly report released on May 6, GW Pharmaceuticals posted revenues of $39.2 million of which Epidiolex contributed $33.5 million. Earnings came in at a loss of $1.68 per share versus estimates of a loss of $2.53 per share – a big beat on the bottom line and a clear path to profitability in the making. 

Shares of GWPH soared to a new all-time high on the earnings report, hitting $196 on euphoric volume. Since then, the stock has settled back and trades today at $165, which is a significant pullback and is right back to its pre-earnings price level. The stock’s 200-day moving average sits at $150 and whether it gets there is hard to say. I think much depends on the strength of the broader market since there is a lot of speculative money invested in the pot stocks. 

There is not sufficient historical data for measuring and analyzing most of the pot stocks within my Tradespoon AI platform, except GW Pharmaceuticals, where my Stock Forecast Toolbox gives the stock a bullish reading. With Model Grade of “A” and a potential price target of $297, this might be the single best pot stock to buy on the dip the sector is undergoing.  

There are some genuine catalysts in the form of potential drug approvals in Europe and expanded approvals by the FDA and the prospect of achieving profitability. However, the buying GWPH at the right time is what makes for a good trade and a good investment. Buying it at $165 versus $150 is a big price spread and is why having AI tools at work to know when to pull the trigger on this stock and other cannabis stocks is essential to maximizing capital gains. 

Most investors would agree that the market, in general, is getting more-narrow and more difficult to trade. My stock advisory service RoboInvestor takes the difficulty out of the investment process through the use of AI to make the stock and ETF selection process a high-probability proposition where emotions and guesswork are filtered out. My AI model is producing winning trades 94.20% of the time for the RoboInvestor Portfolio since we launched it in April 2018. 

If winning the stock market 94% of the time is as exciting to you as it is to me and my team at Tradespoon, then don’t wait another minute and sign up today to join as a subscriber and change for the better your portfolio’s performance right away. Take action and boost your return with RoboInvestor

I look forward to welcoming you on board!  

 “I’m investing my own money in each and every stock as my AI platform identifies.”

And remember we’re not talking about day-trading here.  I’m looking for 50-100% gains inside of the next 3 months, so my weekly updates are timely enough for you to act.

Click Here – To See Where I Put My RoboInvestor Money

*Please note: RoboStreet is part of your free subscription service. It is not included in any paid Tradespoon subscription service. Vlad Karpel only trades his own personal money in paid subscription services.  If you are a paid subscriber, please review your Premium Member Picks, ActiveTrader, MonthlyTrader, or RoboInvestor recommendations. If you are interested in receiving Vlad’s personal picks, please click here.

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