Marijuana Millionaire Portfolio editor Sean Brodrick’s top cannabis stock picks includes one that pays a dividend
SmallCapPower | October 18, 2019: At the MoneyShow Toronto 2019, Sean Brodrick, editor of Marijuana Millionaire Portfolio, discussed what he believes are the cannabis investing trends for 2019 and beyond and reveals some of his top cannabis stock picks. He started off by asserting that a “Green Wave,” or a big marijuana stock bull market, is coming but cannabis stocks are currently in a bear market (near 2018 lows).
He argues that there has been a seasonality to cannabis stocks (the sector has historically performed best from September to January), so investors would have done well if they bought these stocks when the weather started getting cold in North America.
Potential upcoming cannabis stock catalysts include:
- All major U.S. Democratic Party Presidential candidates are calling for federal cannabis legalization in the United States
- S. states love the tax revenue from cannabis sales
- Cannabis 2.0 (legalization of edibles and oils) has arrived in Canada
Potential upcoming threats to a cannabis sector rally include:
- Vaping illness crisis is dragging down some cannabis stocks, especially extraction companies
- Self dealing within the industry (management issuing too much stock)
- Governance issues, such as what happened with CannTrust Holdings Inc. (TSX:TRST)
Here are Sean Brodrick’s cannabis stock picks:
- Organigram Holdings Inc. (NASDAQ:OGI) (TSX:OGI) – Organigram is growing its capacity and the Company is expected to reach 113,000 kilos of cannabis per year by the end of 2019. As well, its costs should drop from C$1.28 per gram to C$0.74 fairly quickly. The Company is moving into hemp/CBD in a big way. Organigram is invested in Hyasynth Biologicals for next generation THC from yeast. Sean Brodrick expects Organigram to announce a partnership with a brand-name beverage company within the next 12 months.
- Planet 13 Holdings Inc. (CSE:PLTH) (OTCQX:PLNHF) – The Company has its Superstore in Las Vegas and is now expanding into Santa Ana, California. Planet 13’s Las Vegas Superstore’s layout is designed to drive margins. Foot traffic and revenue are growing. Since opening in November, the Superstore’s average daily visitor count has more than doubled. Sean Brodrick expects Planet 13 Holdings to earn $0.11 per share in 2020.
- Charlotte’s Web Holdings, Inc. (CSE:CWEB) (OTCQX:CWBHF) – Focused on the hemp-based Cannabidiol (CBD) market, Charlotte’s Web is the biggest hemp brand by market share, with its products being sold in more than 7,000 retail locations in the United States. eCommerce sales spiked 32% and total revenue jumped 45% year over year in its second quarter. The Company is profitable and faces far less regulatory uncertainty than cannabis companies.
- Trulieve Cannabis Corp. (CSE:TRUL) (OTCQX:TCNNF) – Trulieve is the dominant cannabis company in Florida, which has a robust, medical cannabis program and will see recreational cannabis on the ballot in 2020. The Company has 31 stores in Florida and is on track for 44 by the end of 2019 and is actively building out a presence in three other states. Trulieve has been consistently profitable – it should earn $0.72 a share in 2020. Its sales should also quadruple from 2018 to 2020. Based on a price-to-sales multiple, Trulieve is one of the cheapest cannabis stocks.
- Innovative Industrial Properties, Inc. (NYSE:IIPR) – Innovative Industrial is a cannabis-focused Real Estate Investment Trust (REIT). The Company buys lands and buildings that will be used to grow and/or process medical marijuana in the United States. It has 29 leased properties spanning 12 states. IIPR’s Q2 revenue grew 155% year over year, while Adjusted funds from operations increased 176%. The Company pays a dividend. The biggest threat to its investors is periodic share issuances.
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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