hey YouTube I'm Jimmy in this video I'm gonna go through the 3 cannabis stocks I
think are pretty interesting for 2019 now 2018 was a pretty interesting year
for cannabis in general because a lot of stocks went public
Canada made it legal so it's been a pretty chaotic ride now one of the
reasons a lot of companies are listing like crazy on different exchanges both
in the United States and in Canada is that marijuana is gradually getting more
legal like I mentioned in Canada but it's also getting gradually more legal
in the United States different states I think 30 or so have legalized it at
the medical level and then there's a handful that have legalized at the
recreational level and then just recently I know president Trump signed a
farm bill that had the legalization of hemp in there so the theory is that it's
gradually getting to be more likely that marijuana will be legal at some point in
the United States and if that happens cannabis stocks and the cannabis
industry is going to get larger and larger and as they get larger we're
going to get more efficient as they get more efficient it's going to become more
and more interesting for investors so now our question is what cannabis stocks
do we think are the best and how much do we think that we can realistically
profit from them so I created this heat map and this shows different marijuana
stocks that are available in either the United States or Canada the size of the
box shows how big the market cap is the bigger the box to bigger the
market cap so first let me start with the problem that I was having when I was
doing my research let's take this largest one for example WEED.CN
that's the ticker for Canopy Growth that trades in Canada now I want to
point out that this is by no means all the marijuana stocks frankly they're
just the stocks that I had I could find enough information to do a decent amount
of research on so if you know of any other good ones that I don't mention
here or that aren't on this board by all means put them in the comments
below so canopy growth has done about 94 million dollars in revenue in the past
four quarters but they have a market cap right now of about 18 billion dollars
which means that if we were to buy it right here we would be paying more than
a hundred times sales to put that in
perspective if we were to buy coca-cola right now we would pay about six times
sales if we buy Netflix we'll pay about ten times sales if we buy Amazon four
time sales and canopy growth isn't an outlier in this market tilray
trades at about 200 times sales Arora cannabis trades at about 85 times sales
so I bring this out just so we're all on the same page we're not going to find
any value stocks in the cannabis market that being said I still think that
there's a fortune to be made assuming we can play it correctly so for me the
question that I was asking myself is is there still profit here and how can we
go about achieving a reasonable profit for the risk we're taking and investing
in something that's trading so much further above sales or revenue or
whatever you want to call it okay so now we know the risks of investing in stocks
like this when this market eventually gets priced like the rest of the market
does many of these stocks are gonna fall by like 90 percent of what they're
currently priced at that being said I do think that if we can identify the
companies that are most likely to thrive for many years because at the end of the
day it's only gonna be a handful of these companies that dominate the
marijuana market and much like the tech bubble back in the early 2000s well you
get stocks like Amazon or Google to rise out of what happened there and look at
what those the companies are doing today so a few of these companies are likely
to do very well but most of them aren't going to so the time I spent researching
these marijuana stocks well I was looking for that a handful of companies
that I thought would be leaders for many years and ideally what would happen is
they're likely to get bought out by one of the major players in a similar
industry a lot like the alcoholic beverage company constellation brands
that bought a piece of canopy growth so with that in mind let's take a quick
look at three companies that I think will emerge from this whole mania and do
well in the long haul and then at the end I got a few sort of runner-ups
so our first one which i think is the most obvious one is canopy growth
ticker symbol WEED that's in Canada in the U.S. it's CGC so
this is actually where I started my research because I wanted to know what
would lead Constellation Brands to pump millions of dollars multi billions of
dollars multiple times into this company right now they own about 37 or 38
percent of canopy growth and went the last round of financing constellation
bought the option to buy more shares and if they were to exercise that option
they would end up with a controlling stake of canopy growth
now when constellation announced the second round of financing going to
canopy growth the stock jumped like 30 percent so that's what we're after and I
think that this could happen to a few of the key players and the reason I went
with canopy first is frankly they're a bit safer having constellation behind
them as likely to put a floor under what could happen to them from a negative
standpoint they're likely not to fall nearly as badly as everybody else
because they have so much money behind them and this brings us to company
number two with this one we're gonna go with a slightly smaller company and that
company is OrganiGram ticker symbol OGI they trade in Canada so OrganiGram
only did about 12 million dollars in revenue over the past 12 months but
that's expected to jump drastically over the next couple of years now OrganiGram
is a producer of dried cannabis and cannabis oil products and one of the
things that struck me about this company is that over the past few years they've
won a ton of awards for the quality of their products plus OrganiGram has
already gathered the necessary financing to drastically increase the size of
their production bringing their production to more than 110,000
kilograms per year by the end of 2019 so what we end up with is a high-quality
producer that can make a ton of product for me this makes a lot of sense for a
company like constellation brands or perhaps one of their competitors to get
behind them and invest in that type of company because if I'm a giant brand
like constellation well I don't need the product I don't need the distribution
I've already got that what I do need is I need a high quality product and I need
a lot of it so when I put my distribution network behind it you the
manufacturer can produce a ton of the product we need now this brings us to
our third company Aphria ticker symbol APHA now this is an interesting
one because Aphria got slammed coming into 2019 and one of the key reasons is
that an analyst did a research report and it turned out that the company was
buying assets from management at extraordinarily inflated prices and once
the report came out while Aphria stock dove down about 50% well since then the
CEO and one of the co-founders have announced that they're stepping down now
fundamentally this doesn't change the fact that Aphria is still a pretty good
business in fact just recently Green Growth Brands announced that they're
going for an acquisition of Aphria so it's possible that that goes through and
if it does go through out I would expect for it to be finalized at a premium to
the current price of about 7 bucks a share now I could have easily added
Aurora stock to this list or even TilRay right but unfortunately TilRay of their
shares outstanding it's like 37 percent or some crazy high
number like that of those shares outstanding are held by short sellers
and for me that made me nervous one or two things could happen maybe a short
squeeze comes and the stock pops because they get driven out but on the other
side it makes me nervous that there are so many investors that are willing to
put their money on the line that they feel that the company is that overvalued
so I thought it was best to stay out of it on the flip side Aurora on the other
hand I thought had a ton of potential and I actually had it at number 3 in my
list but then when Aphria took a nosedive at the end of the month that
just looked like a better value as much as you can have a value in this space so
I left a Aurora off the list so this list was a list of four instead of a
list of three well then Aurora definitely would have made the list if
it was a list of five probably where to gone with MedMen as the fifth company
that being said what do you think of these companies are these the types of
companies that you would add to your portfolio let me know what you think in
the comments below are there any companies that I left off
the list that you think will be a leader many years
from now let me know if you haven't done so already hit the thumbs up don't
forget to hit subscribe and thanks so much for sticking with me to the end of
the video and I'll see in the next video thanks