Weed stocks have had a great start to the year so far.
After the short attack on Aphria last month, many of the quality names were sharply sold off.
I attribute that to a few things...
One, people were deadout scared that the short report about Aphria was correct and their favorite stock - Canopy, Tilray, whatever - could also be a scam.
Two, some of these stocks were up hundreds or thousands of percent over the past few years and profit taking was inevitable. Just like crypto-cacti, neither pot plants nor stocks grow to the sky.
Three, it was Christmas and people needed cash.
And finally, the weed group really started selling off in October, just after recreational use was legalized in Canada. It was a classic sell-the-news moment and the report on Aphria only exacerbated the selling.
That selling is now overdone. The sector inflected the day after Christmas with the broader markets.
Weed stocks are already up as much as 15% in 2019 as investors take the long-term view once more, eyeing inevitable nationwide U.S. legalization after Farm Bill passage made hemp legal once again last month.
Big-population states like New York, New Jersey, and Illinois are also getting more vocal about legalization.
Indeed, new reports show the U.S. cannabis market is expected to grow to $80 billion in 2030 from $50 billion today.
All this while tobacco and beer sales continue to soften, which is exactly why dealmaking is so hot right now in the cannabis space.
It's why the maker of Corona and Modelo put $5 billion into Canopy Growth last year.
It's why Marlboro-maker Altria put $1.8 billion in Cronos last month.
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It's why Budweiser and Tilray have partnered to make weed drinks.
The list goes on, and continues to grow.
And each time one of these well-known brands or companies buys out, invests in, or partners with a weed company... people are getting rich.
Tilray is up more than 15% since it partnered with Budweiser on December 19th.
It pays to be invested in these weed companies that are the targets of investment from or partnership with big business.
For the past few weeks, we've been telling you this merger-and-acquisition trend was going to heat up...
We even gave you a list of five candidates that were prime buyout targets.
Well, I have good news and I have bad news.
Bad news is two of those companies have already been taken out or are now wearing the varsity jacket of a larger company. (Good news, I guess, if you were already invested in those two companies.)
Good news is we've updated the list and there are still five buyout candidates poised to make investors who act now a ton of money when the big boys come calling.
Investors who followed our lead made 30% in eight days when the latest target on our list was taken out.
Call it like you see it,
Nick Hodge
Nick is the founder and president of the Outsider Club, and the investment director of the thousands-strong stock advisories, Early Advantage and Wall Street's Underground Profits. He also heads Nick's Notebook, a private placement and alert service that has raised tens of millions of dollars of investment capital for resource, energy, cannabis, and medical technology companies. Co-author of two best-selling investment books, including Energy Investing for Dummies, his insights have been shared on news programs and in magazines and newspapers around the world. For more on Nick, take a look at his editor's page.