Investing in cannabis stocks?

[MrRoboto]

With Canada poised to open to doors on recreational weed, is there money to be made investing in cannabis related stocks? The big daddy on the block seems to be Canopy Growth.

Anyone care to share some thoughts?

[other_evolved]

Likely higher risk (and hopefully higher reward) compared to more traditional pharma stocks. Approach it with caution and don't make it a concentrated position relative to your overall investments.

[4seriesNL]

I have been buying and selling for the last year or so.
Working in finance i can see the amount of brokerage accounts opened nov 2017 - feb 2018 is substantial; flooding the market i think.

In my opinion a lot of the smaller stocks are overpriced like: Newstrike Resources (HIP), Supreme Pharmaceuticals (SL.CN), Supreme Cannabis (SPRWF)

I mean they could definitely grow substantially with the legalization but who knows. These are the more affordable ones, so new investors tend to go for these driving the price up.

Some of the bigger ones like you mentioned Canopy Growth and even Cannimed may be a safer bet.

Gotta ride the waves! Buy low sell high

[Joekerr]

Originally Posted by MrRoboto

With Canada poised to open to doors on recreational weed, is there money to be made investing in cannabis related stocks? The big daddy on the block seems to be Canopy Growth.

Anyone care to share some thoughts?

While I'm not so certain I don't have some moral objections to it, setting that aside, I think the market is overvalued at least right now. For all stocks. I think there was money to be made initially, but frankly, if you are only starting to look at it now, then you are way late to the game.

So I wouldn't touch the stocks now.

[MrRoboto]

Originally Posted by Joekerr

While I'm not so certain I don't have some moral objections to it, setting that aside, I think the market is overvalued at least right now. For all stocks. I think there was money to be made initially, but frankly, if you are only starting to look at it now, then you are way late to the game.

So I wouldn't touch the stocks now.

I don't think it's late to join in at all. The medical market has some fairly solid forecasts but the recreational market is a complete unknown.

By the way Canopy was just listed in NY last week.

[upstatedoc]

[MrRoboto]

Originally Posted by LobB

and if smoked is more carcinogenic than tobacco,

That's completely wrong.

[tuco44]

Originally Posted by LobB

Given cannabis can cause psychosis, especially in the young, and if smoked is more carcinogenic than tobacco, I'd be investing in health providers, particularly mental health.

Proof???

Likely your opinion......

[aozer]

Originally Posted by LobB

Given cannabis can cause psychosis, especially in the young, and if smoked is more carcinogenic than tobacco, I'd be investing in health providers, particularly mental health.

Idiot

[Canuckles]

Originally Posted by MrRoboto

With Canada poised to open to doors on recreational weed, is there money to be made investing in cannabis related stocks? The big daddy on the block seems to be Canopy Growth.


Anyone care to share some thoughts?

Long story short, yes absolutely. Beware the over valuations currently in the MMJ space, however, most exhibited by some of the big Licensed Producers. There will be lots of growth to be found in the retail and distribution side of the business as well, with other opportunities in edibles and other consumables following next year (if and when they become legal).

[MrRoboto]

Originally Posted by Canuckles

Long story short, yes absolutely. Beware the over valuations currently in the MMJ space, however, most exhibited by some of the big Licensed Producers. There will be lots of growth to be found in the retail and distribution side of the business as well, with other opportunities in edibles and other consumables following next year.

Likely so, the distribution is all over the map at present. In NS it's being sold through the NSLC which is crazy.

[Joekerr]

Originally Posted by MrRoboto

I don't think it's late to join in at all. The medical market has some fairly solid forecasts but the recreational market is a complete unknown.

By the way Canopy was just listed in NY last week.

Wonderful, why do I care? It has been listed on the TSX now since July 2016. Just because it is on NY, doesn't mean savvy US investors will say, "Oh, hey, there's an overvalued stock I can now buy, I want a piece of it too - let's push up the price".

No, to me the NYSE listing doesn't change much - just broadens the market. But the underlying fundamentals don't change. And that is - is there an opportunity that this company has the ability to take advantage of and drive value, such that there is future growth in this stock.

Canopy's market cap right now is $7.4 BILLION. And that is just ONE grower.

Contrast that with estimates as to how big the recreational market is - Deloitte estimates somewhere around $8.7B, but could be significantly higher with security services thrown in, and the fact that more might try it, but these are of course estimates.

And then you have Statistics Canada estimating that Canadians spent only $5.7B in 2017 on weed.

I'm sorry, but I don't see it. One grower's market cap exceeds Stat Can's estimates for the entire population, and they are going to grow a lot more?

Further, its not like everyone is going to switch to legal sources either - sometimes because Canada is rural, and there likely won't be a legal shop in all communities, so reduce the market for all these areas. Then factor in the fact that everyone who gets a license will be contributing to a race to the bottom where they will overproduce to try to get as much market as possible, but that is just going to oversupply, which drops prices. And drops profit.

I think you really need to think this all the way through. At best, a gamble.

[Canuckles]

Originally Posted by MrRoboto

Likely so, the distribution is all over the map at present. In NS it's being sold through the NSLC which is crazy.

Yes it is, expect some dysfunction. Take Ontario for example, the first batch of stores (14 or fewer) are supposed to supply the entirety of the province (approx 14 Million) once rec goes legal. I fail to see, in the short term, how it's going to stem the illegal market.

To date we've focused on provinces open to privatized sales, but have a storefront in Halifax though.

[MrRoboto]

Originally Posted by Joekerr

Wonderful, why do I care? It has been listed on the TSX now since July 2016. Just because it is on NY, doesn't mean savvy US investors will say, "Oh, hey, there's an overvalued stock I can now buy, I want a piece of it too - let's push up the price".

No, to me the NYSE listing doesn't change much - just broadens the market. But the underlying fundamentals don't change. And that is - is there an opportunity that this company has the ability to take advantage of and drive value, such that there is future growth in this stock.

Canopy's market cap right now is $7.4 BILLION. And that is just ONE grower.

Contrast that with estimates as to how big the recreational market is - Deloitte estimates somewhere around $8.7B, but could be significantly higher with security services thrown in, and the fact that more might try it, but these are of course estimates.

And then you have Statistics Canada estimating that Canadians spent only $5.7B in 2017 on weed.

I'm sorry, but I don't see it. One grower's market cap exceeds Stat Can's estimates for the entire population, and they are going to grow a lot more?

Further, its not like everyone is going to switch to legal sources either - sometimes because Canada is rural, and there likely won't be a legal shop in all communities, so reduce the market for all these areas. Then factor in the fact that everyone who gets a license will be contributing to a race to the bottom where they will overproduce to try to get as much market as possible, but that is just going to oversupply, which drops prices. And drops profit.

I think you really need to think this all the way through. At best, a gamble.

Time will tell I suppose. Deloitte estimates the total market will be $22.6B.

[Joekerr]

Originally Posted by MrRoboto

Time will tell I suppose. Deloitte estimates the total market will be $22.6B.

That's with all ancillary services, such as providing security, as I referenced. I'm not so sure Canopy provides said ancillary services. And you are talking about investing in Canopy / grower stocks.

These ancillary services are most likely to be provided by other companies - growers are going to focus on growing and getting market share in that space (I would think).

[MrRoboto]

Originally Posted by Joekerr

That's with all ancillary services, such as providing security, as I referenced. I'm not so sure Canopy provides said ancillary services. And you are talking about investing in Canopy / grower stocks.

These ancillary services are most likely to be provided by other companies - growers are going to focus on growing and getting market share in that space (I would think).

Perhaps...Canopy is no stranger to acquisitions. Lots of unknowns.

[Canuckles]

Originally Posted by MrRoboto

Perhaps...Canopy is no stranger to acquisitions. Lots of unknowns.

Not just Canopy, Aurora as well.

[Joekerr]

Originally Posted by MrRoboto

Perhaps...Canopy is no stranger to acquisitions. Lots of unknowns.

All I'm saying is be careful. I don't think there is explosive growth here any more. I think there was...back in 2016...but not now.

Maybe time will prove me wrong, you're right about that. We shall see. I'm not touching it, and I told my advisor not to touch it either (which he said RBC never will anyways at this point).

[Canuckles]

Originally Posted by Joekerr

All I'm saying is be careful. I don't think there is explosive growth here any more. I think there was...back in 2016...but not now.

Maybe time will prove me wrong, you're right about that. We shall see. I'm not touching it, and I told my advisor not to touch it either (which he said RBC never will anyways at this point).

Can confirm, Royal has declined to be our bank on several ventures.

[Sea-Tac]

Dave...

Dave's not here.

Dave...

[PR3CI5N]

The federal government needs to downgrade marijuana from a class 1 drug before I consider any investment in the cannabis industry. I'm big on medical marijuana and CBD so hopefully the FDA hops on board sooner than later.

[MrRoboto]

Originally Posted by PR3CI5N

The federal government needs to downgrade marijuana from a class 1 drug before I consider any investment in the cannabis industry. I'm big on medical marijuana and CBD so hopefully the FDA hops on board sooner than later.

I'm talking more about Canada here where recreational use will be legal in the next few months.