LOS ANGELES, CA / ACCESSWIRE / April 19, 2016 / Axelrodnews.com, a leading investment newsletter that covers stocks for both long and short opportunities, today reported research highlights on the marijuana industry focusing on five hot companies: PNPL, GWPH, MSRT, MYDX and BXNG.
Companies in the cannabis industry have been outperforming the major indices in recent weeks, providing sector leadership. We believe the catalysts for this week's report are three-fold:
1) April 20, or "4/20," which is commonly used as a synonym for marijuana in the $6 billion legal cannabis industry, is expected to inspire major announcements from certain companies within this space.
2) On Sunday, April 17, Pennsylvania Governor Tom Wolf signed a bill legalizing medical marijuana, making the state the 24th in the country to authorize a comprehensive medical marijuana program. Analysts project the legal US cannabis industry will experience explosive growth from $6.7 billion in 2016 to at least $22 billion in 2020.
Others estimate that the industry could reach $30 billion one year sooner in 2019. That level of growth – for legal cannabis in just one country - is outpacing other high-growth markets worldwide, including home automation, which is expected to be worth more than $21 billion globally by 2020. If legal cannabis can surpass that number in the US alone, its global potential is phenomenal.
Axelrodnews.com Investment Newsletter Opinions
It has been an exciting few weeks for cannabis stocks as we lead up to the highly-anticipated "4/20" date. Breakouts in the cannabis sector are nothing new, particularly as new details are revealed, so investors shouldn't wait to investigate the industry's most promising firms. Below are five stocks you should take a look at immediately for trading ideas or prevent losses:
THE OVERVALUED CANNABIS STOCKS
AXELRODNEWS.COM OPINION: SHORT PNPL
1) Pineapple Express, Inc. (PNPL) $22.00: After basing in an $8 to $10 trading range in late February and March, this provider of various consulting and support services to legal cannabis businesses has broken out and tripled to $23.95 after its announcement that adult entertainment legend Larry Flint invested $100,000 into the company. The stock has already pulled back 20% looking for support around the $20 level.
Our analysts at axelrodnews.com, however, believe "PNPL" is grossly overvalued and unfortunately for its shareholders will experience one of the most dramatic stock declines of the year. PNPL currently boasts a market capitalization of over $1 billion, which is quite impressive for a company with no revenues or a sustainable or tangible business model strategy. Further, PNPL is currently trading on the Pink Sheets; it is not a fully-reporting company which means, as an investor, we have no real idea of the state of the company's financials nor if insiders are or have already liquidated their entire positions. We believe the stock's run-up is primarily due to market makers being caught short at lower levels and having to cover due to "buy-ins" in its extremely low float. A highly profitable axelrodnews.com 2015 Long Recommendation that generated our subscribers a ROI of 254%, "PNPL" is a Feature Short as of today.
AXELRODNEWS.COM OPINION: SHORT GWPH
2) GW Pharma PLC (Nasdaq:GWPH) $83.74: This stock has doubled in the past six weeks since announcing positive Phase III data for its cannabis-derived epilepsy medicine. However, we see its market value of nearly $2 billion as overvalued and ripe for a near-term crash. The Rosen Law Firm issued a news release just yesterday on it lawsuit against GWPH that alleges: Defendants issued materially false and misleading statements to investors and/or failed to disclose that GWPH: (1) Lacked effective internal financial controls; (2) Lacked effective controls over completeness and valuation of clinical trial accruals; and (3) as a result, Defendants' statements about GWPH's business, operations, and prospects were false and misleading and/or lacked a reasonable basis at all relevant times.
Several other law firms have announced similar lawsuits. CNBC's Jim Cramer of Mad Money April 12 wrote, "GW Pharma is kind of played out because the good news came out already." Shareholder litigation is a major distraction for management as is trying to justify a market valuation of over $2 billion for a company that lost nearly $84 million on just $34 million in revenues over the past 12 months.
THE UNDERVALUED CANNABIS STOCKS
AXELRODNEWS.COM OPINION: BUY BXNG
3) Bang Holdings Corporation (OTC:BXNG) $2.50: We've dug deep to introduce this undiscovered digital advertising company that went public just last month. It provides content and a vast influencer-based marketing network to the legal cannabis industry. Cannabis companies are currently prohibited from advertising on Google (Nasdaq:GOOG), Yahoo (Nasdaq:YHOO) and Facebook (NYSE:FB). Bang fills this massive gap with its national social media-based network that connects the cannabis industry with cannabis enthusiasts.
Bang Digital Media's network has scale and a first-mover advantage. It reaches 659,929 engaged marijuana enthusiasts and has generated more than 150 million content views, while its network of marijuana-friendly social influencers reach an additional 10 million potential customers. Bang Holdings Corp. won't stay undiscovered for much longer, as the media is already starting to focus on this upcoming industry star with a highly pedigreed management team (see www.bangholdings.com/press for more information). Last month, Bang retained a top tier investor relations firm which usually signals a company with a pipeline of positive news stacking up that it wants ensure is well told to a larger audience. Our proprietary risk/reward methodology is extremely favorable with little downside, and indicates Bang could explode upward in the days and weeks ahead particularly when considering the stock's low-float and high insider ownership.
AXELRODNEWS.COM OPINION: BUY MYDX
4) MyDx, Inc (MYDX) $0.43: This below-the-radar tech company has successfully commercialized a revolutionary, handheld multi-use portable analyzer that connects with a smartphone app via Bluetooth to provide affordable and accurate real-time chemical analysis. Its first sensor to market is CannaDX, which enables cannabis consumers, growers and dispensaries to analyze more than 20 chemical components of cannabis. MyDx allows consumers to track their personal medicinal effect, growers to adjust growing conditions or dispensaries to ensure the potency of products sold. This is hugely important to the entire global cannabis market versus sending samples out to expensive commercial labs and waiting for days.
MYDX launched CannaDX in late 2015 and this month announced a major national distribution deal -- valued at over $4 million -- to over 1,000 retailers of top quality hydroponic growing equipment. Sequential quarterly unit sales are in a steep upward climb and our channel checks indicate it is barely able to keep up with demand. Our research indicates MYDX must triple its manufacturing capacity before summer in order to keep up with demand. It also plans to launch other sensors for food, air and water that integrate into the analyzer which retails at just $699. Please visit the company's website at www.cdxlife.com for additional information.
After the market raced ahead of the company one year ago, MyDx is well off its 2015 high of $3. We believe it is poised for an immediate and sustainable lift off beginning this week with "4/20."
NEUTRAL RATED CANNABIS STOCK - SHORT WATCHLIST
5) MassRoots, Inc. (MSRT) $1.49: This stock has more than doubled off its $0.67 bottom. The company provides social media technology platforms for cannabis consumers and businesses, and is actively promoting its participation in the Denver Annual 420 Rally later this week which we see as a catalyst for a near term bump.
Chatter is cheap, and its business model is weak. Monetizing a social media network is difficult if not impossible without massive scale (unless it was designed from the ground up as a digital advertising network with compelling original content like its better positioned cousin BXNG). MSRT's execution is mediocre at best, cash burn is high, and cash balance low. Our analysts have been keeping an eye on this company for months, but with last month's emergence of BXNG, MSRT is badly outclassed by BXNG's superior business model, management, market position and critical mass. There is room for only one big winner that will own this space, and BXNG holds all the cards. We are placing this stock on our Short Watch List. MSRT shareholders should consider exiting on strength and repositioning any profits into undervalued BXNG.
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