Investing

Auto Added by WPeMatico

Why This Little-Known Pot Stock Could Be the Next to Take Off!

Pot stocks have been on the rise again early in 2019 and it’s getting harder to find stocks with much upside left in the industry. A stock like Canopy Growth Corp  (TSX:WEED)(NYSE:CGC) that trades at more than 200 times its sales and has already risen more than 75% through just the first month of the year isn’t going to have much more room to grow. Only the most bullish of marijuana investors would have you believe that Canopy Growth can continue to have much more upside from here on out.

With the company significantly missing its sales targets last quarter, concerns over whether it will be able to live up to expectations aren’t going away anytime soon. In a few weeks, the company will release its next quarter’s results, and unless it makes up for that big miss, we could see another big correction in its share price. For now, the company has been riding the wave from news that it had secured a license to produce hemp in the State of New York and that it will be setting up its operations south of the border soon.

The problem is that in the U.S., Canopy Growth will face even more competition and may not be as strong a brand as it is in Canada. And so the growth options for the stock may be a bit over-hyped, yet again. That’s why investors looking for a good stock to invest in may be better off looking at other options instead.

Recently-listed pot stock shows lots of promise

Cresco Labs Inc. (CNSX:CL) started trading on the Canadian Securities Exchange back in December. The U.S.-based pot stock is involved in every step of the seed-to-sale process and is able to ensure a high quality product is delivered to its customers. By having 16 retail locations, Cresco is able to control every aspect of the customer experience, giving it a significant advantage over many of its peers, including Canadian cannabis companies that face significantly more restrictions.

The company already has a strong presence in the U.S. with operations in as many as eight states. And as more states move to legalize pot, the options for Cresco will only continue to grow. With the farm bill being recently passed in the U.S., it could also be a lot easier for Cresco to move hemp-based products across the country, without the need to have to actually operate in the state that it plans to sell its products in.

In its most recent quarterly results, the company generated more than US$12 million in sales, which is more than quadruple the revenue it generated just a year ago. The company was also able to generate a solid net income of more than US$3.9 million, a very impressive feat given that it didn’t have significant gains boosting its profits. In fact, Cresco had an operating gain, which is very rare for cannabis stocks.

Cresco is still flying under the radar and the stock could be a great buy for those looking to find a deal.

Have you heard about Amazon’s secretive “Project Vesta”?

Few people have… yet some of the greatest minds in the world believe this innovative technology could change the world.

Amazon doesn’t want anyone to know about this top-secret project, but there’s something even Amazon doesn’t know…

One grassroots Canadian company has already begun introducing this technology to the market – which is why legendary Canadian investor Iain Butler thinks they have a leg up on Amazon in this once-in-a-generation tech race.

But you’ll need to hurry if you want to pick up this TSX stock before its name is on everyone’s lips.

To learn more about this exciting technology and dark horse TSX stock before it’s too late, click here now.

More reading

Fool contributor David Jagielski has no position in any of the stocks mentioned.

Canopy Growth Corp (TSX:WEED): How High Could This Stock Go in 2019?

The recovery in marijuana stock prices to start 2019 caught many pundits by surprise, and investors who missed the big January rally are wondering which pot stocks might be the best buys to pick up additional gains through 2019.

Let’s take a look at Canopy Growth (TSX:WEED)(NYSE:CGC) to see if it deserves to be in your portfolio today.

Big recovery

Canopy Growth’s share price is up 75% in the past month. At the time of writing, the stock trades at $66 per share, which isn’t too far off the closing high near $74 it reached in the middle of October last year right before the launch of the Canadian recreational marijuana market.

Profit taking and the negative impact of a weak start to the sale of recreational cannabis across the country hit the entire marijuana stock industry shortly after the recreational market went live. A correction in the broader equity market compounded the downturn, and Canopy Growth lost 50% of its value before bottoming out close to $36 in late December.

Since then, the broad-based rally in the stock market has attracted bargain hunters back to the sector, and reports that cannabis supply is starting to improve has investors feeling more positive about the Canadian pot market for the rest of the year.

U.S. developments

Canopy Growth has also rallied on some significant news south of the border. Canada gets much of the marijuana spotlight, but the long-term opportunities for the industry lie in the larger markets, including the United States, Europe, and South America.

Canopy Growth recently received a licence to process and produce hemp in New York State. The company intends to invest US$100-150 million in facilities that will focus on large-scale hemp extraction and product manufacturing. The news comes after the passage of the U.S. Farm Bill that will allow industrial hemp production.

The news is viewed as one more step toward the possible legalization of marijuana at the federal level in the United States, and Canopy Growth is viewed as a potential leader in the U.S. market for both medical and recreational cannabis opportunities.

Size matters

At the time of writing, Canopy Growth has a market capitalization of more than $20 billion. This gives the company the financial firepower to make acquisitions as the market consolidates, and invest the hundreds of millions of dollars needed to scale up production capacity to supply the growing medical marijuana markets in Europe and South America.

How much upside?

All of the marijuana stocks appear expensive, especially after the big rally in the past few weeks. If you buy today, it would probably be wise to keep the position small, as we could see another round of profit taking in the next few weeks.

That said, Canopy Growth could move much higher before the next pullback, and a run toward $100 per share wouldn’t be a surprise on another wave of frantic buying. If you want to get exposure to the cannabis sector and are willing to ride out ongoing volatility, Canopy Growth should be one of the long-term winners in the industry.

Other disruptor opportunities also deserve to be on your radar today.

This Stock Could Be Like Buying Netflix for $1.87

If you’ve ever had to spend any time on the phone with your cable company…you won’t be surprised to hear that Canadians are abandoning cable in droves.

And it’s setting up an enormous opportunity for investors smart enough to act now.

And today is your chance to find out all about this remarkable moment in media history… Because some investors believe one tiny company is poised to profit no matter who wins.

Could this stock be the next Netflix? Click here to Learn More

More reading

Fool contributor Andrew Walker has no position in any stock mentioned.

3 Marijuana Stocks to Watch in February

Index funds

February is going to be a big month for the marijuana industry. With Canopy Growth Corp  (TSX:WEED)(NYSE:CGC) expected to release earnings on February 14 and Aurora Cannabis Inc set to do the same on February 11, there’s a lot of news to keep up with. But there’s more than just earnings to look out for. Between Aphria Inc’s (TSX:APHA)(NYSE:APHA) hostile takeover drama and a new round of acquisition mania, there’s enough going on in this industry to keep investors’ hands full for 28 days. The following are just three marijuana stocks worth watching in the busy weeks ahead.

Canopy Growth Corp (TSX:WEED)(NYSE:CGC)

Despite having recently been eclipsed by Aurora on revenue, Canopy is still the #1 marijuana stock by market cap. Its most recent earnings report was widely regarded as a disappointment, with 33% revenue growth and a $330 million loss. On February 14, Canopy is expected to release earnings that cover the period ended December 31. These will show whether revenues from legal cannabis were enough to counteract this company’s slowing growth and mounting losses.

CannTrust Holdings (TSX:TRST)

CannTrust Holdings is another pot stock worth watching in February. CannTrust stood out in 2018 for its steady operating profits when few marijuana companies were able to achieve the same. Whereas other cannabis companies pursued growth at great cost, CannTrust kept things lean and mean. The big question is which strategy will win out in the end. We may get a hint on that front this month, as the company should be releasing an earnings report for the quarter ended December 31 in the next few weeks (based on the date of its previous report).

Aphria Inc (TSX:APHA)(NYSE:APHA)

Last but not least, we have Aphria. Aphria is currently the target of a hostile takeover bid by Green Growth Brands, which is offering less than Aphria’s average 30-day share price. Because management has rejected the bid, Green Growth is going direct to Aphria shareholders. The bid is a long shot because of its low offer of 1.5 Green Growth shares per Aphria share, which would represent a loss for any Aphria shareholder who bought in January. However, many long-term Aphria shareholders purchased at lower prices, so they may be persuaded to sell.

Bottom line

Between legalization, volatile stock prices, and Canopy’s $5 billion deal, the pot industry’s 2018 will be a hard act to follow. But so far, 2019 is holding its own rather well. We’ve already witnessed a rally that has taken Canopy shares north of $65 — approaching their 2018 highs. And with earnings on the horizon, who knows what’s next. The big question is whether cannabis producers will become cash flow positive after running up enormous expenses last year. If the news is good, we may witness a new rally in cannabis stocks that eclipses even what we saw last summer.

You might be missing out on one of the biggest opportunities in Canadian investing history…

Marijuana was legalized across Canada on October 17th, and a little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.

Besides making key partnerships with Facebook and Amazon, they’ve just made a game-changing deal with the Ontario government.

One grassroots Canadian company has already begun introducing this technology to the market – which is why legendary Canadian investor Iain Butler thinks they have a leg up on Amazon in this once-in-a-generation tech race.

This is the company we think you should strongly consider having in your portfolio if you want to position yourself wisely for the coming marijuana boom.

Learn More About This TSX Stock Now

More reading

Fool contributor Andrew Button has no position in any of the stocks mentioned.

Millennials: This Easy 3-Step Plan Could Make You a Millionaire in 20 Years

A traditional working life is often longer than 40 years, starting in your early 2os and lasting until age 65. Who wants to spend that long chained to a desk?

It doesn’t have to be this way. A group of savings junkies has discovered a way you can stop working in half (or less, if you’re truly hardcore) the normal time. It’s quite possible. Thousands of people are living the dream, retired from the normal nine-to-five grind at an age young enough that they can truly enjoy their time off.

Sound good? Of course it does. Here’s how you can get there in 20 years.

Save a tonne

Unless you’re expecting an inheritance from Great-Aunt Hortense, you’re going to have to save a lot to make your early retirement dreams come true.

The math roughly works like this: if you can save 50% of your income and get a 5% return over time, then you should have enough to retire in about 20 years. This also assumes you can keep your living expenses the same once you stop working for good. Many folks spend more in their golden years because they need to fill the time with something.

Saving 50% of your income is no easy task. Folks making a middle-class wage in an expensive city might find it impossible, but don’t stress just yet. You might be able to pick up extra income by getting a promotion, working extra shifts, or starting a side business. Expenses can be slashed to the bone by downsizing either to a smaller house or completely different city and by getting rid of your car.

One word of advice before you start down this path: in theory, your wage can increase forever. After a certain point, it’s impossible to cut more expenses. I’d focus on the top line.

Take advantage of TFSAs and RRSPs

An RRSP is a powerful savings tool for the average Canadian. It’s all the better for the early retiree.

Say an early retiree started putting cash away in a RRSP at age 22. They’re now 45 and retired, and that account has grown to a sizable sum.

If there were little or no other income, an early retiree could take money from that RRSP and pay very little tax. Combine that with a portfolio with plenty of dividends, and we’re looking at a way to make up to $50,000 per year tax free.

And remember, withdrawals from TFSAs can always be done tax free.

Pick great stocks

We’ve already established an early retiree can stop work in about 20 years if they get a 5% return on their investments. But what if they do much better?

Say you’re able to get a 10% return on your money, which is about in line with historical averages. All you’ll need to do is put away $17,000 annually to end up a millionaire in 20 years. That $1 million could then easily spin off $40,000 annually in dividends, which is enough to live comfortably in many cities.

So, which stocks should you invest in to generate those kinds of returns?

National Bank of Canada (TSX:NA) is one. Canada’s sixth-largest bank is still a behemoth in its own right with a market cap of more than $20 billion. The bank is still somewhat focused on Eastern Canada, which means it has plenty of opportunity to grow both westward and internationally.

It has quietly put up some eye-popping returns over the last 20 years, with shares up 12.86% annually if dividends were reinvested. That’s enough to turn a $10,000 investment back in 1999 into one worth just over $112,000 today.

Empire Company (TSX:EMP.A), the parent company of Sobeys, Safeway, and various other grocery banners, is another great long-term buy-and-hold stock. Although the 2014 acquisition of Safeway was jeered at the time — critics thought Empire paid too much — the company has done a nice job turning things around after the Safeway era got off to a rocky start. Management streamlined operations and cut unnecessary costs, and it’s been working. Recent results have beaten expectations, and Empire’s stock is flirting with a five-year high.

Empire has been another great long-term performer, with shares up 10.23% annually over the last 20 years, including reinvested dividends. That’s enough to turn a $10,000 investment into one worth $64,386.

Trudeau Investing $230m in Canada’s “Top Priority”

Justin Trudeau just shocked Canadian investors to the core by revealing one of the government’s most exciting new investments.

This brand-new supercluster initiative is the first of 5 massive tech collaborations expected to bring up to $50 BILLION to Canada’s economy over the next 10 years.


Click here to learn more about this technology and how you could profit from it!

More reading

Fool contributor Nelson Smith has no position in any of the stocks mentioned.

This Bank Could Make You Very Rich

Two hands holding champagne glasses toasting each other with Paris in the background

One of the only things that most investors seem to remember about Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) is that it was the Canadian bank that got hit hardest by the 2008 financial crisis.

While there’s no question that management got caught with its pants down during the downturn, struggling to rebound as quickly as many of CIBC’s Canadian banking peers did, it’s worth noting that the bank has made major fundamental improvements to its underlying business such that it won’t be that “ticking time bomb” of a bank to blow up come the next economic downturn.

The most remarkable thing about CIBC is that the stock has never returned to its historical average valuation that was commanded prior to the 2007-08 crash, despite being a much better bank today compared to a decade ago. Have a look at the chart above and you’ll see that CIBC used to command a P/E that hovered around the 12 range. After the recession, a P/E of 10 turned into the new normal, with single-digit P/E multiples not being out of the ordinary on broader market pullbacks.

Indeed, the 65% plunge that took nearly a decade to fully recover from left a bad taste in the mouth of investors, especially when you consider how much better CIBC’s peers were at weathering the storm that crippled many U.S. banks that also exhibited sub-par risk-management policies.

CIBC isn’t today’s best-run Canadian bank by any means, but I think it’s the best bank for your buck given the perennial discount that’s been slapped on shares in spite of the efforts made by CEO Vic Dodig and his team. While still a bank that’s overexposed to the domestic market, CIBC is going all out with its new U.S. business PrivateBancorp (since renamed to CIBC Bank USA).

Moreover, CIBC has shuffled its corporate governance to adopt better internal processes so the bank won’t have a repeat of the disaster that was 2007-08. Operational efficiencies have been accomplished, but investors clearly remain skeptical because of the bank’s alarmingly high exposure to domestic mortgages, which have experienced more muted growth in recent quarters.

CIBC still has a heck of a lot of uninsured mortgages in its loan book, but this unattractive metric, when combined with the bank’s cringe-worthy history of dealing with crises, has produced massive value for investors who seek the greatest risk/reward trade-off.

Sure, you’re taking on a bit more risk with CIBC and its sub-optimal book of domestic retail loans, but when you consider the price you’re paying (8.8 times next year’s expected earnings), the probability of a Canadian housing downturn and its implications on CIBC are likely already factored into the stock. Perhaps the discount and worries over a possible housing flop are exaggerated in the case of CIBC.

From a longer-term perspective, CIBC is positioned to improve the quality of its earnings with its U.S. venture. And with more stringent Canadian mortgage regulations, CIBC’s mortgage growth has lagged all Big Six peers in recent quarters.

It appears that CIBC is putting a cap on its “single source of failure” with its less-aggressive mortgage growth numbers of late. Add CIBC’s operational improvements and enhanced customer perception into the equation, and I think CIBC is due for significant multiple compression over the next decade and beyond.

Foolish takeaway on CIBC

Sure, CIBC will still get smacked hard come the next recession, but don’t expect a repeat of 2007-08, because the bank is way more robust than it was back in the mid-2000s.

When you look at how banks have improved themselves over the last decade, I think CIBC ought to be at or near the top of the list. Moving forward, I expect Dodig and company to create substantial value for shareholders, and that’s with or without recessions thrown into the mix.

CIBC is the cheapest Canadian bank stock, and given the promising forward-looking growth runway in place, I think it’s ridiculous that the name is cheaper than the regional banks.

Stay hungry. Stay Foolish.

You might be missing out on one of the biggest opportunities in Canadian investing history…

Marijuana was legalized across Canada on October 17th, and a little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.

Besides making key partnerships with Facebook and Amazon, they’ve just made a game-changing deal with the Ontario government.

One grassroots Canadian company has already begun introducing this technology to the market – which is why legendary Canadian investor Iain Butler thinks they have a leg up on Amazon in this once-in-a-generation tech race.

This is the company we think you should strongly consider having in your portfolio if you want to position yourself wisely for the coming marijuana boom.

Learn More About This TSX Stock Now

More reading

Fool contributor Joey Frenette owns shares of CANADIAN IMPERIAL BANK OF COMMERCE.