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Why You Should Buy Marijuana Stocks and Avoid Bitcoin

Bitcoin and marijuana stocks have both hit a wall in the last couple months. But the long-term outlooks for both are very different.

Marijuana Leaf Yellow

Remember when Bitcoin prices were soaring and there were stories every day about people getting rich?

Notice that those stories have faded away?

That’s because after Bitcoin peaked near the end of 2017, it dropped 63% before rebounding and now sits roughly 46% off its high.

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But there’s more to the story.

According to LendEDU, a consumer credit information website, 18% of Bitcoin buyers in December were funding their Bitcoin purchases with credit card debt. Of those, 22% did not pay their credit card balance after the purchase (implying that they couldn’t). Furthermore, 90% of Bitcoin buyers in December who had credit card debt said that they intended to pay off their debt using profits from their Bitcoin investment!

I wonder what their plans are now?

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As for marijuana stocks, there are some similarities.

The North American Marijuana Index peaked in early January and by early February, it was down 29%.

Even worse, the Canadian Marijuana Index, more weighted to the big growers, was down 46%.

But both indexes have bounced a bit, and as I write, the North American Marijuana Index is down 27% while the Canadian Marijuana Index is down 31%.

Marijuana stocks these days mostly hail from Canada. But that could soon change.

From a purely technical perspective, therefore, the charts of Bitcoin and marijuana stocks are similar, with the former simply having greater amplitude—in both directions.

From a fundamental perspective, however, the two assets couldn’t be more different. While Bitcoin is a digital entity with ethereal value, marijuana stocks represent real companies with real assets that are already enjoying spectacular growth and whose prospects for future growth remain excellent.

Canada’s Biggest Marijuana Grower

For example, the biggest company in the marijuana industry (by market capitalization) is Canopy Growth (TWMJF), which sold 2,330 kilograms of cannabis in its most recent quarter, up 87% from the year before. The average selling price was $8.30 per gram, up from $7.36 the year before, while the average cost per gram was $1.03, down from $1.70 the year before.

Those are great trends!

Additionally, Canopy’s revenues grew 123% from the prior year to $21.7 million ($1 million of which came from Germany), and earnings were a penny a share.

At the heart of Canopy is Tweed, the most recognized marijuana production brand in the world. Tweed’s growing operations are in the former Hershey Chocolate factory in Smiths Falls Ontario, where Canopy has more than 40 acres of land that includes more than 350,000 sq. ft. of greenhouse space.

And Canopy isn’t going it alone. Back in October, alcohol behemoth Constellation Brands (STZ) (parent of Corona and Modelo beer, Robert Mondavi wine and Svedka vodka, among other brands) bought 10% of Canopy for roughly $190 million, and now Constellation is sharing its marketing expertise with the company.

Additionally, Canopy announced a deal with Danish Cannabis, a leading European hemp producer, to establish a 40,000-square-meter production facility in Odense, Denmark. Plus, it signed deals with the governments of Newfoundland and Labrador, and Prince Edward Island to supply specific amounts of cannabis to markets in those provinces.

As Easy as Growing Corn?

This is a business that’s extremely easy to understand. (And I can’t say the same about Bitcoin!) With the exception of the licensing requirements, it looks as easy as growing corn! (Not that being a corn farmer is an easy way to make a living—and someday I believe much of the marijuana market will be commoditized just as the corn market is.) But today, the marijuana market is still in its early days, with Canopy and its competitors all racing to get big fast.

You Don’t Have to Be Canadian

While the early action in the marijuana sector has been in Canadian stocks (especially growers), simply because Canada is years ahead of the U.S. on legalizing the product nationally, you don’t have to be Canadian to take advantage of this trend.

In fact, back in August, I published the first issue of Cabot Marijuana investor, which included not only comprehensive profiles of my top 10 stocks but also advice on building a portfolio of them.

All the stocks I recommended are legal for you to trade, whether you live in the U.S. or Canada (as well as the scores of other countries where we have readers).

And as I write, the average gain from the stocks in the portfolio is 114%.

Admittedly, that number was higher a month ago—and to be fair, I did send readers a Special Bulletin on the day before the sector’s January peak recommending that readers take profits—but the point is that our profits have still dwarfed those of any other sector.

And Now You Have a Buying Opportunity!

The well-deserved correction in marijuana stocks is developing totally normally now, and when this correction ends, all the evidence points toward another accelerated uptrend!

So my advice to you is to buy before those stocks move back into the stratosphere.

Buy the Correction in Marijuana Stocks

But how do you know what stocks to buy?

You could buy Canopy, simply because it’s the biggest company in the business, but that’s not a very good reason.

Instead, I recommend that you get the latest issue of Cabot Marijuana Investor, get a clear look at the big picture, and then make your choices from the stocks recommended.

122 Marijuana Stocks to Choose From

My database of marijuana stocks has now expanded to 122 stocks, and I have no doubt that it will get larger. The industry is following the pattern taken by internet stocks in the 1990s—and that was certainly profitable!

But I’ve sifted through those 122 stocks and focused on the 10 best in my advisory, which not only gives complete details on the 10 stocks but also gives clear instructions on investing in the stocks, including advice on choosing the ideal entry point.

In my mind, your odds are way better in marijuana stocks than in Bitcoin—or any other cryptocurrency.

The Bottom Line

The bottom line is that the marijuana industry is in the early days of a great growth phase, and the winners will see their stocks soar in the years—even decades—ahead.

Getting in early is the best strategy, particularly if you have a trustworthy guide to help you identify the best investments.

And Cabot Marijuana Investor is the best guide you can buy to invest in these stocks.

For details, click here.

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Timothy Lutts is Chairman and Chief Investment Strategist of Cabot Wealth Network, leading a dedicated team of professionals who serve individual investors with high-quality investment advice based on time-tested Cabot systems.