The presidential election is right around the corner and cannabis stocks are poised to benefit from this event as market sentiment improves with the opening of new state markets.
This November, a record number of states (at least nine) will have some type of cannabis initiative on the ballot. California, Arizona, Nevada, Massachusetts and Maine will vote on recreational cannabis, while Florida, Arkansas, and North Dakota vote on medical cannabis.
The legal cannabis movement has created unprecedented opportunities for investors and this growth cycle will mint more millionaires than the tech boom. Investors looking for a new growth field need to take advantage of the cannabis sector as there will not be another growth opportunity like it for decades to come.
We are releasing our Technical420 Top Three, which highlights our favorite three stocks levered to the legal cannabis industry. These ideas are stocks that we consider to be a long-term investment and encourage you to conduct thorough due diligence on these ideas.
Aurora Cannabis (ACB) (ACBFF)
Throughout 2016, we have continued to recommend Aurora Cannabis (ACB) (ACBFF) as the Street continued to undervalue the company’s stock. Aurora’s Canadian symbol, ACB, and its United States symbol, ACBFF, have rallied more than 100% since late July and we continue to hold onto the shares in our mock portfolio.
Last week, Aurora announced the construction of a 600,000 sq. ft. greenhouse in Alberta that is expected to be operational by the summer of 2017. Once the facility is completed it will have an estimated annual production capacity of over 70,000 kg of cannabis.
We spoke with Senior Vice President Cam Battley at The MoneyShow San Francisco last week and left the conversation even more favorable on Aurora’s future. To listen to Cam’s presentation, click here!
Kush Bottles (KSHB)
Kush Bottles rallied more than 10% last week as daily trading volume and liquidity improved significantly. This improvement was evidenced by a more than 20% jump in average weekly volume when compared to average monthly volume. KSHB is trading at $1.65 and the shares are up more than 21% in the last month. Although KSHB has rallied nicely over the last few months, the shares are down more than 40% from its high on July 6th.
In early July Kush Bottles saw the price of its stock trade around the $3 level after it reported that revenue grew by 94% during the third quarter. Following this move, market sentiment turned negative and the combination of weak volume, poor liquidity, and a wide spread caused the shares to fall to the $1.20 to $1.40 range.
We are favorable on Kush Bottles’ focus on providing exit bag products that are in compliance with regulations. Last week, it launched its newest product in its line of compliant packaging solutions called the Kush N Slide child resistant exit bag, which can be customized to meet the branding needs of its customers.
Kush Bottles is also the exclusive distributor of The Satchel, a premier child resistant cloth bag developed by American Cannabis Company (AMMJ). The company offers several child resistant and non-child resistant exit bag solutions, all of which are fully customizable, allowing Kush Bottles’ customers the opportunity to creatively market and brand themselves. We find this aspect of its offering to be extremely important as companies compete to become a recognized brand amongst consumers.
We recently recommended KSHB at $1.36 and we remain favorable on Kush Bottles at current levels as we continue to view the company as one of the top long-term investments in the cannabis industry.
GW Pharmaceuticals (GWPH)
GW Pharmaceuticals has been trading in the low-to-mid-to-high $80s since August 10th and we continue to monitor the shares for a bottom as we plan to add to our position in GWPH.
GW started last week off strong as the shares traded as high as $87.87 on Wednesday before ending the week at $81.63. GWPH broke below the $80 level on Thursday and we continue to patiently watch the shares for a bottom.
We continue to believe that GW will be one of the greatest beneficiaries from the legalization of medical cannabis and the shares are a perfect vehicle for anyone who wants to enter the legal medical cannabis sector but is still hesitant to do so.
Over the last quarter, we watched the shares trade from the low $90s to the low $80s just to go back to the high $80s before falling back down. GWPH has traded like a fish out of water recently – just flapping around the low and high $80s. We see further upside to current levels but we are cautiously monitoring the shares before adding to our position as we expect market volatility to increase in the near term.