Top Pot Stock!

RoboStreet – November 15, 2018

The One Pot Stock with Low Hype and Big Prospects

Since the mid-term elections and the full legalization of weed in Canada, shortages have persisted, as producers try to widen their capacity to make more weed. Additionally, what’s to come in the U.S. for the cannabis movement is looking more bullish as more states legalize and hopes increase for friendlier tax and banking laws to the cannabis industry stateside.

There is at least one mainstream company would make a move into the marijuana industry, Constellation Brands, and more Fortune 500 companies are exploring strategic partnerships. Three more states could legalize in one way or another by mid-2019 and six more nations could also legalize medical marijuana next year.

The U.S. cannabis retail market could reach as high as $24.3 billion in 2022, up from the estimated $7.4 billion to $9.3 billion expected for this year. Michigan, which voted to legalize recreational marijuana after this month’s midterm elections, could become the second-biggest market after California in years to come, with sales potentially reaching $1.7 billion.

While the trend toward recreational marijuana use is very real, the avenue by which it will be rolled out in the U.S. will follow the likely approval of legal purchase of weed for medicinal purposes first by remaining states considering deregulation. The vast majority of states allow for limited use of medical marijuana under certain circumstances. Some medical marijuana laws are broader than others, with types of medical conditions that allow for treatment varying from state to state. Louisiana, West Virginia and a few other states allow only for cannabis-infused products, such as oils or pills.

Other states have passed narrow laws allowing residents to possess cannabis only if they suffer from select and rare medical illnesses. Currently, 19 states allow for the purchase of pot for medicinal purposes while 7 states have extended use to recreational purposes. The road to legalization of weed is clearly laid out and politicians are much more inclined to approve medical weed over recreational weed so as to not make waves with large elements of their voter bases. This is a well-defined ‘walk before we run’ strategy that makes good and rational sense.

With the understanding that medical weed is going to be at the forefront of the marijuana movement, there is one company that has an early lead in the U.S. medical marijuana market that just so happens to trade as an American Depository Receipt.

GW Pharmaceuticals PLC ADR (GWPH- NASDAQ) is a fledgling biopharmaceutical company focused on discovering, developing and commercializing novel therapeutics from its proprietary cannabinoid product platform in a broad range of disease areas.The company trades on the Nasdaq and has a long investor history to its credit with a market cap that is an impressive $3.4 billion.

For the better part of a decade, the company has targeted its business solely at FDA-approved treatments for medicinal marijuana. This seal of approval brings a certain “street cred’ to the stock for investors of all viewpoints on the divisive issue of legal versus illegal pot use. The company is much like a rising biotech company with lots of money going into research at the expense of earnings.

But that may all change in the next couple of years when considering the forecasted rate of top line growth. Revenues for GW Pharmaceuticals are expected to come in around $15 million for 2018 and then skyrocket by 830% to over $140 million for 2019 based on what industry analysts see as a major breakthrough in clinical testing for various treatments that have hindered doctors prescribing it and insurance companies covering its cost to patients.

In the past, prohibition made conducting large-scale clinical trials of marijuana difficult, but it’s getting easier to study marijuana now that pro-cannabis laws are being passed and therefore a new wave of FDA approved studies is likely to follow.

GW, along with its U.S. subsidiary Greenwich Biosciences, has received U.S. FDA approval for EPIDIOLEX (cannabidiol) oral solution for the treatment of seizures associated with Lennox-Gastaut syndrome (LGS) or Dravet syndrome in patients two years of age or older. The Company has submitted a regulatory application in Europe for the adjunctive therapy of seizures associated with LGS and Dravet syndrome. The company continues to evaluate EPIDIOLEX in additional rare epilepsy conditions and currently has ongoing clinical trials in tuberous sclerosis complex (TSC).

GW commercialized the world’s first plant-derived cannabinoid prescription drug, Sativex(R) (nabiximols), which is approved for the treatment of spasticity due to multiple sclerosis in numerous countries outside the United States and for which the company is now planning a U.S. Phase 3 trial. The Company has a deep pipeline of additional cannabinoid product candidates which includes compounds in Phase 1 and Phase 2 trials for epilepsy, glioblastoma, autism spectrum disorder, and schizophrenia.

The great strides GW is making on the pharmaceutical front are many, with several strategic partnerships formed that hold great promise for new therapies to be launched.The company has license and development agreements with Otsuka Pharmaceutical Co. Ltd.; Almirall S.A.; Bayer HealthCare AG; Ipsen Biopharm Ltd; and Neopharm Group. Based out of Cambridge, U.K. it primarily operates in Europe, the United States, Canada, and Asia.

Wall Street has taken a keen interest in the future of GW as six research firms now cover the company and the stock. Most notably, on September 28, 2018 Morgan Stanley raised their target price to $240. The stock currently trades at $135, implying upside stock appreciation potential of 78% over the next year, which would be a fantastic gain within a mature bull market.

My AI-powered Tradespoon Seasonal Chart screener is also “high” on the near-term prospects of GW Pharmaceuticals. While the stock is trading around $130, there is good potential for the stock to trade up to $171-$185 depending on the investing landscape. The market has run into some selling pressure as the dollar and bond yields have risen, making for a choppier investing landscape. To this point, having a technically-driven AI platform that can discern when to buy shares in GWPH is crucial for executing a high-quality purchase – to which subscribers to RoboInvestor will be privy to when that time to pull the trigger comes.