By Justin Spittler, editor, Casey Daily Dispatch
First it was Big Alcohol.
Now, Big Tobacco wants a piece of the marijuana market.
On Monday, Reuters reported that Altria – maker of the popular Marlboro cigarette brand – is considering buying a stake in the Canadian cannabis company Cronos Group.
An agreement hasn’t been finalized yet, so we don’t know how much of an investment Altria’s considering. But that didn’t stop investors from bidding up the stock.
• On Monday, Cronos jumped almost 38% before trading was halted…
Ultimately, it closed 11% higher than the day before.
Yesterday, Cronos’ stock jumped another 6%, despite a big market sell-off that sent the S&P 500 down over 3% on the day.
This is huge news, and not just for Cronos’ shareholders…
Altria is the largest U.S. cigarette company. It would also become the second major tobacco company after U.K.-based Imperial Brands to enter the marijuana space if this deal closes.
And that would surely encourage other tobacco companies to follow suit… which is clearly bullish for the marijuana industry.
I’ll tell you how to safely speculate on this opportunity at the end of this essay. But first, let me say something…
• None of this is surprising…
As I wrote back in April:
Major tobacco companies will do the exact same thing [as major alcohol companies]… They’ll shell out huge sums to buy up marijuana assets. And I’m not talking about years from now, either. This could happen in the coming months.
My reasoning was simple. Tobacco sales have been in terminal decline for years, while the marijuana industry is exploding.
Not only that, Big Alcohol companies have been gobbling up marijuana assets left and right.
Take Constellation Brands. Constellation is the third-largest U.S. beer company and owner of the popular Corona brand.
In August, it announced that it would invest $4 billion in Canopy Growth Corporation, the world’s biggest cannabis company. In exchange, Constellation received a 38% stake in the cannabis giant… making it the biggest legal cannabis deal in history – by far.
Of course, that wasn’t the first time that Constellation invested in Canopy. In October 2017, it paid $191 million for a 10% stake in Canopy.
And Constellation isn’t the only Big Alcohol company getting on board…
Molson Coors has also made inroads in the industry when it entered a joint venture with The Hydropothecary Corporation, another Canadian cannabis company, back in August.
Then, there’s Heineken, which owns Lagunitas. It recently started selling a cannabis-infused drink in California.
In short, major alcohol companies are turning into marijuana companies before our eyes. And Big Tobacco is now doing the same. But these won’t be the only industries that “go green.”
• Big Food wants a piece of the action, too…
In September, Coca-Cola (KO) said it was “closely watching” the growth of the cannabidiol (CBD) market. CBD is a compound in marijuana. It doesn’t get people stoned like THC (another compound in marijuana) does. But it does offer many health benefits, such as treating anxiety and depression.
In other words, Coca-Cola suggested that it could soon enter the marijuana space.
The same is true for PepsiCo (PEP), Coca-Cola’s biggest competitor. In October, its CEO told analysts on an earnings call that “it’s fair to say we look at everything” when the topic of cannabis came up.
• In short, the big picture for legal marijuana is as bright as ever…
But it’s easy to lose sight of that right now.
After all, marijuana stocks have been getting hammered. The North American Marijuana Index, which tracks 34 of the largest U.S. and Canadian marijuana stocks, has fallen 34% since its peak in October.
That’s nearly 20 times more than the S&P 500’s decline over the same period.
Drawdowns like this are never fun. But this is exactly what the market needs.
Marijuana stocks are coming off a truly explosive rally. From January 2016 to January 2018, the North American Marijuana Index surged 740%. Many individual marijuana stocks returned even more.
After a run like that, it’s natural that these stocks come back down to earth.
• But I wouldn’t bet that the market stays down for long…
Marijuana legalization isn’t just sweeping across North America… It’s sweeping the world. And Big Alcohol, Big Tobacco, and Big Food all have their sights on the market.
This tells me that a lot more money is going to flow into marijuana stocks in the years to come.
Still, speculating on marijuana stocks is risky… But you can stack the odds in your favor by following these three guidelines:
Do your own research. Companies like Altria, Constellation, and Coca-Cola aren’t going to invest millions or billions of dollars in low-quality projects. They’re going to buy the best of the best.
You’ll want to do the same. So be sure to look under the hood of any potential marijuana investment. Study its business model inside and out, get to know the management teams, and analyze financials.
Investors who put in this extra work have the best chance at buying potential takeover targets. And that’s one of the only ways to make 20%, 30%, or even 40% on a stock in one day.
Make volatility your friend. Volatility is back in a big way. And that’s not likely going to change anytime soon. So instead of fighting volatility, use it to your advantage.
Specifically, consider picking up shares of quality projects when the broad market sells off. This will help you get the best prices possible.
Treat marijuana stocks as a speculation. Regular readers are probably tired of me saying this. But it bears repeating. Only bet money you can afford to lose. Use stop losses to limit your downside. And take profits when they come your way. Investors who take these measures will set themselves up for big gains without exposing themselves to crippling losses.
Delray Beach, FL
December 5, 2018
P.S. Unfortunately, most people can’t tell the difference between a world-class marijuana company and a crappy one. That’s where Crisis Investing editor Nick Giambruno can help. He has a portfolio of 11 quality names. One is up 353%… another is up 208%… and another is up 99% since his recommendation. All of them have massive upside ahead.
To access these names and learn how you can get all of Nick’s in-depth research on the marijuana industry, go here.
By Marco Wutzer, senior analyst, Disruptive Profits
The shake-out in the crypto market continues. The market’s total value is just under $126 billion as of writing – an 85% discount from its high in January. But contrary to general investor sentiment, I am very excited about this.
Take a look at the chart below, for example. While bitcoin – the leading indicator for the crypto market – has plunged 80% since December 2017, crypto-related job openings have gone up 137%.
Quality companies are also developing their technologies, forming strategic partnerships, and integrating themselves into the Blockchain Ecosystem. (I told you about the Blockchain Ecosystem in this Dispatch.)
Let me give you some examples…
One of the functions at the core of our financial system is moneylending. In fact, the global credit market is more than twice the size of the global equity market. Now, some of this moneylending is moving onto the blockchain.
For example, earlier this year, Credit Suisse and ING started using decentralized technology to swap assets.
As ING put it, this is just one way in which the “blockchain can make financial services faster, easier and more efficient.” ING’s head of Wholesale Banking Innovation even said decentralized technologies “could make the entire financial system more resilient.”
Beyond financial services, companies are working on everything from blockchain-based social media applications… to video games… to healthcare services.
Take IBM and Walmart, for example. In December 2017, they announced they’d partnered in China to create a blockchain project to monitor food safety.
In April 2018, Chile’s national energy commission announced it would start using blockchain technology to certify the country’s energy usage data.
And since June 2018, the U.S. Department of Homeland Security has been using blockchain technology to store data captured by security cameras.
These are just some examples of the many uses for blockchain technology. In fact, research firm WinterGreen Research estimates the market for blockchain products and services will grow to more than $60 billion in 2024 – an 8,400% increase from last year’s $706 million.
I think that’s conservative… Once the crypto market turns bullish again and surpasses its old high of over $800 billion, I’m confident the Blockchain Ecosystem will grow into trillions of dollars in value.
So if you’re worried about cryptos’ next big downturn… or losing sleep over your crypto portfolio, remember: The Blockchain Ecosystem is just getting started.
I hope you can see why I’m excited about the current crypto winter. Only a strong bear market offers us opportunities to buy the future at a bargain.
— Marco Wutzer
Justin’s note: If you’ve been wanting to get into cryptos, now’s your chance… Until midnight tonight, you can claim access to Marco’s Disruptive Profits advisory for only $199. Plus, you won’t just get Marco’s latest 300-bagger research…
For a limited time, you can “sample” every newsletter published by Casey Research, Bonner & Partners, and Palm Beach Research Group – all for $199. It’s all part of a historic announcement that legendary newsletter publishers Doug Casey, Bill Bonner, and Mark Ford made last week. If you missed the broadcast, don’t worry.
You can watch the replay and get all the details right here. But hurry… We’re taking this offer down at midnight.
Today, high praise for Doug Casey and his essay on the single wisest thing you can do with your money…
Today’s Dispatch was right on the “money”!
Wow, Doug! Well-articulated advice. I’m sending it to anyone I think will listen.
And another reader responds to Doug’s latest interview on the future of privacy…
Use of Alexa et al. NO NO NO NO. Bad enough that I have only a cell phone for communication. However, I also know that the phone, my iPad, laptop, and probably my TV are also all listening. Not to mention all my financial accounts and transactions. I, too, feel as though we have already gone well past what 1984 ever thought of, and am not happy about it, but am at a loss as to what – short of physical uprising by a large group of us – can really be done.
As always, if you have any questions or suggestions for the Dispatch, send them to us at [email protected].