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RoboStreeet – February 21, 2019
Near Term Market Headwinds A Likely Scenario
The S&P 500 is working on a nine-week rally and is butting up against its next big technical overhead test at 2,800. Positive momentum surrounding the US/China trade talks, a fairly dovish set of minutes from the most recent FOMC meeting and the notion that the domestic economy is on good footing continues to feed investor optimism as the first quarter progresses. Strong Q4 results from Wal-Mart also dispelled the soft December retail sales data.
For our RoboInvestor subscribers, we are continuing to take profits and selling into market strength in recent trades with Whirlpool (WHR), Consumer Discretionary Select SPDR ETF (XLY)and the iShares MSCI Emerging Markets ETF (EEM).We’re getting some excellent upside movement in the VanEk Vectors Gold Miners ETF (GDX) and are also waiting on earnings from Square Inc. (SQ)due out February 27 to breath some fresh life back into this name.
At this point, stock selection is at a premium and investors should not chase the market at this level until overhead S&P resistance at 2,800 is broken on volume, accompanied with a strong advance/decline line. The tariff situation is not yet a done deal and the Brexit situation is still very fluid and could turn into a hard exit. So, there is some inherent risk that could easily trigger a sell off to 2,650 on any negative headline.
I’ve been covering the cannabis stocks the past few months with intrigue and amusement. While every stock in the sector is richly valued, the allure of the long-term secular trend for nation-wide legalization of medical and recreational marijuana has a big hold on stock speculators seeking potential 5 to 10 baggers. Because barriers to entry are low, first to market companies are considerably best positioned to profit from.
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.
One company that has made some big strides in the medicinal side of the pot space is GW Pharmaceuticals (GWPH).The company was founded in the UK and dates its beginnings back to early 2012. Today, shares of GWPH are traded on the Nasdaq as American Depository Receipts (ADRs) with average daily volume of around 400,000 while sporting a market capitalization of $4.7 billion.
GWPH is the only company to date to have an FDA-approved cannabidiol (CBD) drug on the market. The FDA approved its cannabinoid derivedEpidiolex – a treatment for epilepsy – has been very well received by the medical community and large insurers are now providing coverage for Epidiolex as has Medicaid. The company is rapidly developing other cannabinoid prescription medicines using botanical extracts for commercialization in 2019.
Sales for GWPH are forecast to soar this year by 865%, from $12.7 million in 2018 to $124.3 million for 2019. The company will still lose money as it invests in heavily for expansion, but it does hold the most promise in the sector for more FDA approved CBD treatments and therapies. If the strong sales growth can translate into solid earnings growth, the stock could be a big winner.
My Tradespoon AI platform has gathered enough data from GWPH to initiate coverage and currently the system likes what it sees, scoring GWPH with an “A” rating with predicted near-term resistance up around $160. But the stock trades all over the place and if not managed correctly can prove to be an expensive lesson is pot stock investing.
My recommendation for getting involved with GW Pharmaceuticals and the rest of the cannabis stocks is to become a RoboInvestor subscriber and look for my lead on which pot stocks to buy and when to buy and sell them. The sector is fraught with volatility, like managing through a minefield. There are excellent opportunities in the pot space, but the risk/reward ratio is quite high. Join RoboInvestor and learn how to invest smarter every day. Just because a new investment proposition like legalized weed sounds like a pot of gold at the end of the rainbow, letting me lead you there is the first step to take.
*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.
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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