Marijuana Legalization [Investment opportunities]

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Thegipper
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Re: Marijuana Legalization [Investment opportunities]

Post by Thegipper »

I predict that a lot of people will get burnt bad investing in this sector. It's currently a speculators market. Some day that will end and the focus will be on fundamentals . I expect this will happen in late 2018 and early 2019. When fundamentals become the focus this market will crash. The market capitalization of the pot stocks is far,far larger then the size of the market. And let's be clear we are talking about a very small market . A market of 35 million isn't a big market.
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Arby
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Re: Marijuana Legalization [Investment opportunities]

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I just read a 20 page report from Beacon Securities on marijuana stocks. It was all about how the average marijuana stock was up 161% during 2017, and how various catalysts (e.g. supply contacts from LCBO or SAQ, RFP's in Manitoba and Germany, TSX listings, etc) will push the stocks higher in 2018. But there wasn't any mention of earnings or revenues or valuation metrics in the entire report. It was eerily similar to what I remember at the height of the dotcom frenzy, when financial metrics didn't matter and it was all about the next product release and how many eyeballs it would capture.
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Shakespeare
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Re: Marijuana Legalization [Investment opportunities]

Post by Shakespeare »

Marijuana captures eyeballs????? :rofl:
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Re: Marijuana Legalization [Investment opportunities]

Post by Peculiar_Investor »

Now about another way to play the frenzy, with a profitable company that has been in business for a very long time. I give you ... Better Know a Marijuana Stock: Scotts Miracle-Gro -- The Motley Fool, symbol SMG (NYSE).

Added bonus for the dividend growth investors in the crowd is SMG's historical dividend growth isn't too shabby and they occasional throw in a special dividend (2014). I've followed SMG off and on over the years and the valuation hasn't ever reached the point where the stock gave me enough margin of safety to purchase. YMMV.
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AltaRed
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Re: Marijuana Legalization [Investment opportunities]

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Food for thought http://www.canadianbusiness.com/blogs-a ... n=cb_daily
As in many stock market interactions, the industry tells a rosy story of growth and opportunity. But I would suggest a careful recall of the dot com bubble offers a somber warning. Canopy Growth Corp. is currently valued at just over $7.5 billion yet loses about 12 cents a share. At the same time, Canadian Tire Corp. has a valuation of $11.5 billion and earns $10 a share—and pays a dividend yield of 2.14 per cent. What company offers a better long-term investment?
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Re: Marijuana Legalization [Investment opportunities]

Post by deaddog »

As long as everyone continues to think it can't go any higher, that it is too risky, that the fundamentals won't support the price, it will probably continue to increase. As soon as we start getting rationalization to support the price it will be time to bail.

I might even get some agreement that one should use a stop loss. :)
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Re: Marijuana Legalization [Investment opportunities]

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I think it was David Baskin on BNN that made the point that the current valuations are ridiculous into bubble territory. He made the point that this stuff is no more difficult to grow than lettuce and therefore anticipated prices are difficult to justify. He also asked a policeman friend how closely they will be watching the six plant rule and the cop laughed and said there is no way they will have the resources to monitor whether someone had more plants in their back yard rather than six.
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Re: Marijuana Legalization [Investment opportunities]

Post by randomwalker »

Not sure hoe long this link will work

Barron's Cover

Marijuana Stocks Could Be a Buzzkill
By
Bill Alpert
March 30, 2018

https://www.barrons.com/articles/canada ... 1522421400
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Re: Marijuana Legalization [Investment opportunities]

Post by randomwalker »

Oregon's flooded recreational pot market a cautionary tale for Canada: economists
Oregon retail pot price has fallen about 50% since 2015, from $14 per gram to $7
Amy Smart · The Canadian Press · Posted: May 21, 2018

http://www.cbc.ca/news/business/oregon- ... -1.4671801


Bay Street Gone Wild: Why Marijuana Stocks are Overvalued
Scott Willis May 8, 2018Investing

https://grizzle.com/bay-street-cannabis-edition/
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Re: Marijuana Legalization [Investment opportunities]

Post by fundamental »

Looks like Rocket Fuel for Canopy

Under the deal, Constellation Brands is buying new shares at $48.60 a share,
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optionable68
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Re: Marijuana Legalization [Investment opportunities]

Post by optionable68 »

fundamental wrote: 15 Aug 2018 10:12Under the deal, Constellation Brands is buying new shares at $48.60 a share,
So, dumb question, if Constellation offered $48.60 for the deal today, why is Canopy only trading at $42 ?
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Re: Marijuana Legalization [Investment opportunities]

Post by jerzy »

My best guess is that it isn't a purchase of shares from existing shareholders. Constellation is exercising warrants at $48.60.

So the simple example is if I own 100 shares for $1 and you exercise your warrants for 100 shares at $2, the company is worth $3, but my 100 shares are only worth $1.50

Also possible the market is hesitant that Canopy is worth $48.60 per share, whereas Constellation obviously thinks they are getting value for their money. Time will tell!
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Re: Marijuana Legalization [Investment opportunities]

Post by fundamental »

Looks like the market price made the adjustment
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Re: Marijuana Legalization [Investment opportunities]

Post by biker »

I know little
about this product. How many people would 4 plants in the backyard service (average user).
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Re: Marijuana Legalization [Investment opportunities]

Post by Just a Guy »

I heard one analyst who mentioned that organic, live lettuce sells for about the same price as pot will. More people consume lettuce than pot, yet no one is trading in lettuce. In fact the idea seems rather ridiculous, but everyone wants pot stocks.
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optionable68
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Re: Marijuana Legalization [Investment opportunities]

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Looks like this sector has gone out of control
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Re: Marijuana Legalization [Investment opportunities]

Post by randomwalker »

I'm just wondering if a company like Canopy is selling weed at about $8.50 a gram and the government in Ontario for example now seems to be selling at on average about $10 a gram taxes included (not to mention the cost of packaging and handling) is the government of Ontario making money, breaking even or losing money at these price points? Will this be profitable to the point where those interested in becoming legal private retailers will even want to apply for a license.


Ontario Cannabis Store
https://ocs.ca/collections/all-cannabis-products
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Koogie
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Re: Marijuana Legalization [Investment opportunities]

Post by Koogie »

Never mind that, what is the mark up on an official government sanctioned bong ? :lol:

https://ocs.ca/collections/bongs
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Re: Marijuana Legalization [Investment opportunities]

Post by nisser »

optionable68 wrote: 23 Sep 2018 16:44 Looks like this sector has gone out of control
Just a matter of time before investors get burnt here.

Market cap of Tilray = 14 billion

To sell an equivalent amount of pot (i.e. P/S of 1), every single living person in Canada would have to consume 350g+ of pot per year. It's just comical.
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Re: Marijuana Legalization [Investment opportunities]

Post by izzy »

nisser wrote: 17 Oct 2018 17:28
optionable68 wrote: 23 Sep 2018 16:44 Looks like this sector has gone out of control
Just a matter of time before investors get burnt here.

Market cap of Tilray = 14 billion

To sell an equivalent amount of pot (i.e. P/S of 1), every single living person in Canada would have to consume 350g+ of pot per year. It's just comical.
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Re: Marijuana Legalization [Investment opportunities]

Post by Hammerer »

nisser wrote: 17 Oct 2018 17:28
optionable68 wrote: 23 Sep 2018 16:44 Looks like this sector has gone out of control
Just a matter of time before investors get burnt here.

Market cap of Tilray = 14 billion

To sell an equivalent amount of pot (i.e. P/S of 1), every single living person in Canada would have to consume 350g+ of pot per year. It's just comical.
$14b/30m = $466.

Of course:
  • Tilray is one company
  • not every living person will be consuming
  • the provincial monopolies will hammer the LPs down on price
  • The biggest consumers will continue with their existing suppliers because the savings will be worth it
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Re: Marijuana Legalization [Investment opportunities]

Post by fundamental »

Reality seems to have set in for this sector
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Re: Marijuana Legalization [Investment opportunities]

Post by randomwalker »

fundamental wrote: 24 Oct 2018 15:11 Reality seems to have set in for this sector

Cronos tumbles as pot producer's prices, margins decline
Kristine Owram, Bloomberg News

"The fifth-biggest Canadian pot company said its average selling price in the quarter fell to $7.32 from $8.01 a year earlier. Although the third quarter was over before Canada legalized recreational pot on Oct. 17, the lower price was the result of initial sales to the provinces ahead of legalization and the company’s decision to cover the $1 per gram excise tax for medical patients..."

https://www.bnnbloomberg.ca/cronos-grou ... -1.1167374
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Re: Marijuana Legalization [Investment opportunities]

Post by Dark Bear »

I was surprised to see the story of a Canadian man receiving a lifetime ban from the US for Cannabis investing. The man and others faced scrutiny at the border for going to a Cannabis convention in Vegas.

I heard an expert say on the TV that if one goes to the US you mention no to anything Cannabis, even investing. He said saying no, no matter the truth holds much less risk.

https://business.financialpost.com/cann ... -at-border
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Re: Marijuana Legalization [Investment opportunities]

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