Call it the secret ingredient that compels a stock to move higher. It’s like an unstoppable magnetic force that pulls stocks up.
It really shouldn’t be a secret. It’s discussed in every company analysis and every Finance 101 class. It’s available for everyone to see for every publicly traded company.
And yet, investors look right past it, especially in early stage companies and industries when the stocks and numbers tend to be more volatile.
This not-so-secret, secret ingredient is sales. Or revenue, as it’s called on the balance sheet.
The more a company brings in, the more upside potential for a stock.
Here’s the deal: Marijuana companies are right now hitting the investing sweet spot where they are starting to generate significant revenue — yet stock prices are still down.
That makes NOW the time to buy.
A Proven Path to Big Profits
When we look back on 2019, I think we’ll clearly see it was one of the best buying opportunities ever in marijuana stocks. Prices are down even as legalization spreads and sales jump. Eye-popping long-term growth is in the cards, but investors aren’t focused there yet.
History shows the massive profits you can earn. Take a look at both Netflix (NASDAQ:NFLX) and Amazon (NASDAQ:AMZN) and some of the mouth-watering opportunities along their growth paths.This is the chance to buy big growth at low prices.
Now let’s look at a few marijuana stocks so you can see how they are in that same early stage sweet spot.
Acreage Holdings (OTCMKTS:ACRGF) is a big name in the cannabis industry. Its board includes three of the most connected people on the planet: former U.S. Speaker of the House John Boehner, former Massachusetts Governor and current U.S. presidential candidate William Weld, and former Prime Minister of Canada Brian Mulroney. The company is also central to perhaps the blockbuster marijuana story of the year (so far). Canopy Growth (NYSE:CGC), the biggest cannabis company on the planet, agreed to buy Acreage for $3.4 billion when marijuana becomes legal in the U.S. It was practically a flashing neon sign that U.S. legalization is coming sooner than most expect.
Still, the stock has been cut in half this year despite expectations for revenue to soar more than 3,800%, from $21.1 million in 2018 to $838 million by the end of 2021.
Remember Netflix earlier? If that doesn’t look like a buying opportunity, I don’t know what does.
Harvest Health & Recreation (OTCMKTS:HRVSF) is a lesser-known but equally dramatic example. It has the most retail licenses to open marijuana dispensaries in the U.S., and it has aspirations to be the biggest cannabis company in the world. That’s bold, but the company also has strong management, a solid cash position, and a path to profitability thanks to growing revenue.
Here again, we have a stock down 50% since April — at a time of exploding revenues … as in from $47 million in 2018 to $1.3 billion by 2022. That 2,665% growth if executed on can be bought for pennies on the dollar.
Now Is The Time
I could show you plenty more similar charts, but I think you get the point. Marijuana stocks are cheap, especially considering the explosive revenue growth that’s anticipated from the biggest players.
Last year, legal marijuana sales in the United States hit $10.4 billion, which is nearly 100% growth over the three-year period going back to 2015. This year, sales should grow nearly 24% to $12.9 billion.
Now just imagine when legal weed is opened up to the entire $21 trillion U.S. economy. We’re talking exponential growth potential in a single stroke.
Marijuana is a massive trend still in its early stages, with the U.S. waiting in the wings to become the biggest market in the world. Any time governments open a huge new market like legal marijuana, investors can win very big. The key is to own the right investments before that happens, and now is the perfect time to start.
Matthew McCall is the founder and president of Penn Financial Group, an investment advisory firm, as well as the editor of Investment Opportunities and Early Stage Investor. He has dedicated his career to getting investors into the world’s biggest, most revolutionary trends BEFORE anyone else. The power of being “first” gave Matt’s readers the chance to bank +2,438% in Stamps.com (STMP), +1,523% in Ulta Beauty (ULTA), +1,044% in Tesla (TSLA), +611% in Liquefied Natural Gas Limited (LNGLY), +324% in Bitcoin Services (BTSC), just to name a few. If you’re interested in making triple-digit gains from the world’s biggest investment trends BEFORE anyone else, click here to learn more about Matt McCall and his investments strategy today.
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