The webinar was recorded February 18, 2021.
You can
find the slides here.
Chris Preston [00:00:05] Hello and welcome to today’s Cabot Wealth webinar, Investing in Marijuana Stocks. I’m your host, Chris Preston, Chief Analyst of the Cabot Wealth Daily advisory and Managing Editor here at Cabot Wealth Network, with me today is Tim Lutts, our Chairman and Chief Investment Strategist, as well as Chief Analyst of our Cabot Stock of the Week and of course, our Cabot Marijuana Investor advisories. Today, Tim is here to tell you about what you’re seeing from the cannabis industry right now, how it’s impacting marijuana stocks, what to expect from marijuana stocks in the coming months, and which stocks he likes best right now.
Chris Preston [00:00:37] This is an interactive webinar, which means we’ll be fielding your questions after Tim’s presentation concludes. So if you have a question, feel free to ask it at any time in the question box on your control panel. And we will try to get to as many of them as time allows once Tim wraps up. Just keep in mind that we cannot offer advice in regards to your own personal investing situation or portfolio.
Chris Preston [00:00:58] First, let me introduce Tim. As I mentioned, Tim 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. Under his leadership, Cabot advisories have been honored numerous times by Hulbert Financial Digest, Dow Jones, MarketWatch and Timer Digest as the top investment newsletters in the industry. Tim has appeared on numerous, numerous podiums as an investment expert, including Bloomberg TV and The World Money Show, led Investor’s Business Daily Discussion Groups and been interviewed by Dow Jones MarketWatch, Top stock analyst Dotcom, Voice America Dotcom, AOL Finance and numerous other business news organizations. Tim has long overseen our Cabot Stock of the Week newsletter and spotting the early stages of a hot new trend in August 2017, he launched Cabot Marijuana Investor. Bottom line, Tim knows what he’s talking about when it comes to investing and investing in marijuana stocks specifically. So I’ll let him do just that. Tim, take it away.
Tim Lutts [00:02:03] Thank you, Chris. Good afternoon, everybody. Thanks for joining us. This business, the investing advisory business, is unusual because we never see most of our customers. You might get one walk in the front door every year or so, but most of the people are just names and addresses. That changed eight years ago when we did our first in person investing conference here in Salem. And I found out that I enjoyed meeting our customers. And you get a whole new dimension to the business. So. We did that eight years in a row, but last year with covid, we didn’t do it face to face and I missed seeing some people I now consider friends. And so I just want to give a little shout out to a few of them I saw on the list today. Rod in Anchorage, Alaska. Evy in Port Clyde, Maine, John in San Antonio, the great state of Texas, Jack in Columbia, Missouri, Carol in Belmont, Massachusetts, Bob in Richfield, PA. Bruce in Flemington, New Jersey. And Ray in Winter Springs, Florida. I’m happy you’re all here.
Tim Lutts [00:03:19] Last time I did one of these webinars was last April. It was rough times, we just had the covid march sell off. We had a one month bounce in April. And of course, people thought it was just a bounce. No one knew we were going to have a whole year of bull market and no one expected that. They don’t need to know the future to be a successful investor. My topic back then was Favorite Growth Stocks for the Coming Recovery. In fact, we were already in the recovery. And I recommended these stocks, some of which will look familiar to you. Zoom right at the top, was obviously a beneficiary of the pandemic. Moderna is there as well. Old favorites, Blue-Chip, growth, like Invidia, Netflix, Apple, Tesla. And so as a whole, they’ve done very well with two small losers. So that’s history. I don’t promise the same results today, it’s different times, however, I’m using the same system, the same system we’ve used the Cabot for the past 50 years to identify great growth stocks. Good story, good numbers and strong chart.
Tim Lutts [00:04:45] Paul Goodwin was a retired analyst, used to be here at Cabot, coined the acronym SNAC: Story Numbers and Chart. Me, I think the chart’s most important so I’d like to do it CANS except that says Chart And Numbers Story, not quite as grammatically correct. Anyway, you get the idea. Today, marijuana stocks meet all these criteria easily. Charts are strong. The story is huge as usage shifts from illegal to legal and the medical community is finally going to be able to do legal research on the drug and see what else it can do. So the strategy I have, which I’ve been working on since launching this service four years ago, was to develop a portfolio with core winners. We all know that if you had held big winners like Microsoft, Amazon, Apple, Google over the past 10, 20 years, 30 years, you’d have done very well. Many of us have owned them. Most of us have not held them the whole time. I remember when Microsoft came public in eighty six, just as I was starting this business, if you’d bought a thousand dollars of Microsoft in eighty six, it would be worth one point six million today. So one of my goals is to own the future leaders of this industry and see what they’re worth in five, 10, 20, 30 years. On a consumer side, that’s like the Anheuser-Busche and McDonald’s, also great long term investments. Now, one of the problems with this approach is sometimes what you think will be the winner won’t be the winner. Remember, America Online, BlackBerry, Iomega, Netscape. They all used to be king of the Hill. Now they’re toast - or almost. So short term, the strategy is to listen to those stocks and if the stock acts wrong, you have to listen to it and and give up on your previous convictions. For example. Well, let’s look at the track record.
Tim Lutts [00:07:16] Let me go back to that first, back to listening to stocks. Many years ago at the Old Country Opinion Forum in Vermont. A successful investor who was a speaker claimed he could get results just as good by ignoring the news totally. I think he’s right. As humans in this culture, we have a huge bias toward news. When we meet someone, we say “What’s new?” Contrarily, many, many people are not fluent in the language of charts. But charts tell all. Especialy, stock charts. They reflect everything known and everything expected by all the investors who care about any stock. So instead of reading news and opinion and projections, it’s generally more profitable to just read charts.
Tim Lutts [00:08:08] The track record since we started in August 2017, interesting few things here. The first four months were terrific, just rocket shot until the year end of the twenty seventeen. One hundred twenty one percent, but the index beat me, that was just crazy stuff. Next year was rougher. I eeked out a prophet, the index did not do so well. Twenty nineteen was worse. I lost a little, the index lost worse. In twenty twenty it was horrible in the middle with March and April there, but ended up pretty darn good for my readers. So what’s interesting here? The total cumulative change at the bottom is a huge difference there. Now we’ve all we all know the concept of compound growth. Eighth wonder of the world according to Einstein. Compound growth is how profits add on profits. No one talks about compound losses. If you have that to back losses as they did here in the index. It really, really hurts. So one of my key focuses is avoiding losses. Now, I don’t recommend anyone build their entire portfolio of marijuana stocks. That’s not good risk management. When the trend is strong, the sector can fly. Some bull markets, you should hold at least a few when trend is against you, hold fewer and hold cash. Core holdings. Go through the cycles. What transient positions own more on the way up and less on the way down. That’s the strategy. Sometimes cash.
Tim Lutts [00:10:05] All right, let’s talk about legalization. In Canada, marijuana is legal nationally, has been since October 2018. In the US, of course, it’s still illegal federally. We have had some major legalization events. Early 2014 Colorado went legal. The sector, of course, was very young there, the stocks are very low priced and very penny stocks, you might say, but it was a huge spike there when it went legal, and then after that, they start to come right back down again, right after legalization happened. 2018 we had a California peak similar. And late 2018, the Canada peak, and interestingly, those peaks came not on the vote, but on the actual opening of legal sales. So something to keep in mind.
Tim Lutts [00:11:05] Last November marijuana was on the ballot in five states. All of whom approved it. Four for recreational and Mississippi for medical. Arizona opened in January 2021 pretty fast, the stocks did not top out. I didn’t recommend selling. The charts were fine. I don’t suspect Mississippi, Montana and North Dakota would move the needle either. New Jersey is the big dog here, New Jersey, there’s no date for opening yet, but it has a potential to bring a peak, we’ll see something keep in mind.
Tim Lutts [00:11:44] Let’s talk about institutional investors. Institutions like to be risk averse, like liquidity. So what they’re buying today is the Canadian stocks, because these stocks trade on the New York exchange and the Nasdaq, they’re liquid. It’s safe. Canopy is the biggest, most famous of all, let’s talk about that later, we’ll talk about it here in fact. Canopy has doubled in the first weeks of this year. Put in revenues last week, no earnings yet. They said earnings are coming. The stock the sector peaked the very next day, last Wednesday. Since then, Canopy’s down 32 percent. But still, that’s a good run and it may not be over. Canopy is very well known, very high profile. And in part because institutions like leading stocks, they’re safe to own. And some institutions are thinking that when the U.S. goes legal nationally, the Canadians being on the major exchanges might be able to buy U.S. Companies faster and quicker. And that’s one reason to own Canadians today, but not so sure about that. The Canadian market has already flattened out. The growth is not as fast as in the U.S. Anymore. There’s a bit of oversaturation because they opened up the whole country at once and so prices are falling. Fundamentally, it’s not as attractive to me as the U.S.
Tim Lutts [00:13:24] Institutions are also buying the totally legal U.S. peripheral stocks - Turning Point Brands is an old company in Kentucky, main product is chewing tobacco, they also sell tobacco leaves and cigars. They bought zigzag rolling papers, they sell vapes and they sell CBD, all of which is totally legal. We’ve had a good run with that, and it still looks good. There is a very small dividend. Innovative Industrial Properties is the REIT, real estate investment trust nationally for many, many marijuana companies. As a REIT, the tax implications are unusual, so before you buy it, make sure you understand that clearly. It yields 2.3 percent. We’ve had a great run of that still on some. And GrowGeneration, bought most recently of these three, has done spectacularly. It’s a national hydroponic garden supply store, so like Home Depot, but for commercial growers, they’re only located so far, in states where marijuana is legal. Grown by acquisition, totally legal, great future. Now, someday, these three may become laggards. When institutions move to the real marijuana companies. But we’ll see about that. We’ll just watch the charts.
Tim Lutts [00:15:00] What they don’t own yet these leading US companies. Ranked here by quarterly revenue. Curaleaf, Green Thumb, Cresco Labs, Trulieve and TerrAscend. TerrAscend, you’ll notice, is sort of in a different class. It’s not really among those four leaders, but it’s - it’s growing faster. We can rank them by growth rate, Cresco on top. This is all year over year based on the most recent quarter, they have not released fourth quarter 2020 yet, but that’s coming soon. We’ll get new numbers pretty soon. Curaleaf, TerrAscend, Green Thumb truly is a slow one here. But it’s not because they’ve been actually profitable for years - Trulieve, while everyone else in this list focused on growing nationally in multiple states all at once spread their dollars all around, Trulieve focused on California. They’re really focused and they turn profitable quickly and they have great trend there, so so some of us just like that.
Tim Lutts [00:16:10] You can look at these by strength. I’m going to run through the charts, here. These are weekly charts. Here’s Cresco. They’re all familiar, from the March bottom 2020 to the recent top. Cresco, being one of the more high profile, has a top that has only recently been exceeded. Curaleaf has pulled far away from that peak. Green Thumb even better. TerrAscend is the smaller one, but that’s a great run over the past year. Trulieve has the most of all above its old peak. Profitability matters in Wall Street, and that’s one reason I like Trulieve. Just go back and look at them again. Look, for example, at the height above their moving average, 50 day, 50 week moving average here. Potential, of course, for stocks to pull back to that moving average any time in a correction bear market. We’ll go backwards now - Trulieve, TerrAscend, Green Thumb, Curaleaf, Cresco. They’re all strong in different ways. I like them all.
Tim Lutts [00:17:32] And then there’s way to look at stocks called valuation. Here in the Cabot stable, we have lots of experts in valuation. Generally, that works for big ole companies, marijuana stocks, not so much. Still, you can look at price to sales ratio as one metric, and by that metric, Cresco comes on top, it’s the cheapest, so-called cheapest, I would say least expensive - different way to put it. So that covers buying. Buyings easy, investors bucks can buy easily, but they have no idea when to sell many cases.
Tim Lutts [00:18:18] So let’s talk about selling. It’s tempting knowing that these have the potential to be great long term winners. Someone recently said, which one can I buy to give to my grandchildren? That’s their intent, obviously, but there’s no certainty. Remember AOL, Blockbuster, BlackBerry, Blockbuster, etc., even the good stocks, there’s no certainty, so. Cutting losses short is the most important rule of all. Taking partial profits at tops is also handy, useful in this sector. And it all comes from watching the charts.
Tim Lutts [00:18:59] MedMen was a great brand early in this sector’s life, retail, stores, classy, modeled on Apple stores. The sector peaked in October, twenty eighteen MedMen was trading at seven dollars a share. A year later, the revenue is still growing it was down to seven - I’m sorry - down to one dollar a share. Last November. You get 10 cents. And now you’re looking at charts, you can never. You would never own a stock that long, by looking at the chart you would have sold somewhere down here, you’d never hold beyond that, but some people don’t know when to quit. Sometimes you get lucky. Now, MedMen recently started talking to banks about unlocking shareholder value, which is code for looking for an acquirer. So in five days, the stock bounced up briefly to the high of a dollar forty seven. But it came right back down now it’s at 40 cents. That’s like trying to catch the game [..]. You’re your odds of success are much higher in sync with a major trend.
Tim Lutts [00:20:26] So let’s talk about price. Higher is safer, higher is attractive to institutions. When I started this service back in 2017, there were only very few trading about ten dollars on my first 10 stocks, only two were above ten dollars. Today, I own 11 stocks and only one is priced under ten dollars, so the sector has grown up. There are still many, many, many that are still penny stocks, many of which will disappear. They’re tempting, but they’re not smart. It’s volatile, even the big ones, so there’s no reason to go down there in the penny stocks to think you’re going to get lucky, odds are better in the higher priced ones. The institutions will be as well.
Tim Lutts [00:21:14] Let’s talk about market timing. I mentioned the January 2018 top when California came legal. One day before that top, nine of my 10 stocks had hit new highs within one week. It was a hot time, sort of like recent days. I recommended taking partial profits. In October 2018, the exact day of the top, I went from 10 percent cash to 28 percent to 38 percent cash by taking partial profits in all the 6 Canadian stocks in the portfolio. In part, I was lucky, but mainly I was watching the charts. And just last Wednesday, the day after Canopy released that quarterly report, the charts told me it was time to lighten up again. Why? Well sentiment is very bullish. Good news is out. Canadian stocks in particular spiked on that news sort of, and many leaving behind [..] tops. My stocks had done super. Charts look parabolic, so I recommend that I recommended taking partial profits in most stocks. Went from fully invested to 42 percent cash now we’re forty four percent cash because the stocks have come down a little more. I’m not confident this is a major top. There’s been no legalization event here. Arizona was not a big deal. Then again, it was also a big top in late 2016 early 17 with no legalization event there either. So you don’t need a legalization event to have a top. But a legalization event increases the odds of a top. Right now, I’m taking it day by day, almost half in cash. Still holding positions of the industry leaders, if they move down, I’ll sell more. Right now they’re there are down today. It’s been a week. There’s no real strength yet. No real falling apart either. So it’s interesting, if they move back up I’ll get back, jump on this time of stocks.
Tim Lutts [00:23:38] So conclusion long term, this is a great sector to invest in. Marijuana legalization is changing the world. Short term, I think downside potential still exceeds upside potential, but I will tell you when to buy again.
Tim Lutts [00:23:57] Lastly, when I was reviewing the marketing for this webinar, I noticed that I was promising three stocks to buy now. That’s kind of bad timing on the marketers part. Anyway, if I were to buy three today, I would look at the one stock that has broken out to a new high since last week. That’s Innovative Industrial. It’s IIPR. Innovative Industrial Property. Hit a new high and what’s holding up best to the real marijuana companies are Green Thumb, that’s GTBIF. And Trulieve, TCNNF. So, I’d watch them carefully to see if they can keep holding up and if so that’s the best place to put money when the sector starts up again. And that’s it for me.
Chris Preston [00:24:53] Thanks, Tim. I’ll give you a few minutes to catch your breath and we’ll get to everyone’s questions. See, we’ve got a few rolling in. First, just a bit of housekeeping, if you like. We’ve heard from Tim so far today and are interested in signing up for his Cabot Marijuana Investor advisory, we have a special offer reserved exclusively for listeners of today’s webinar. And what you get in return is monthly issues emailed directly to you with great stock ideas and market insight, special bulletins alerting you to sudden market changes and ways to take action, 24-7 online access to our exclusive Cabot Marijuana Investor library and analyst archives and direct private access to Chief Analyst Tim Lutts for answers to your investing questions. Today’s special attendee offer to Cabot Marijuana Investor will be emailed directly to you, so watch your email inbox, you should receive the offer shortly.
Chris Preston [00:25:49] Now let’s get on to the questions. To start, people - some people started asking questions early on, so I’ll start at the beginning. Ken had a question before you revealed some of your stocks, Tim, Ken asked about Aphria and Tilray - you mentioned Aphria, but I know Tilray used to be part of your portfolio. Is that - what? Do you have an opinion on that now?
Tim Lutts [00:26:16] Well, Aphria is buying Tilray that’s well known. Tilray is the most volatile of the Canadians. It’s high profile. It was at three hundred a couple of years ago, which was totally crazy. So the new company will be called Tilray and if I owned it right here, I would hold some of it, but I would not be overexposed to it because it is high profile and the good news is out. I actually think the US is more attractive for us at this, looking for the year ahead.
Chris Preston [00:27:04] OK, we’ve got a couple of questions about ETFs, one in particular about MJ. Do you have any are there any ETFs that you like in particular right now?
Tim Lutts [00:27:18] I don’t have any preferences. ETFs is going to make life easier for you. But it’s going to be the index, basically, and I’m beating the index so far. So MJ’s a good one, if that’s the way you want to go.
Chris Preston [00:27:38] OK. Here’s a sort of a broad question from Kumar says he is a Cabot Prime Pro member, which means he owns all of Cabot’s Newsletters, he says, with so many newsletter’s, how should one allocate capital to the marijuana portfolio? I guess that that’s sort of to bring it to make it more universal. How much should you devote to marijuana stocks in your portfolio.
Tim Lutts [00:28:06] Back when I started this almost four years ago, I said 10 percent tops because it was truly wild and wooly penny stocks. Now for an aggressive investor, I would say, when the trends are positive go to 30 to 50 percent. It’s really a personal - some people cannot tolerate that much concentration. It is high. Some people have no problem with it at all if the trends are with with them. So it really depends on the investor himself and how much how well he sleeps at night.
Chris Preston [00:28:47] OK, let’s see, how much does the Robinhood slash Reddit factor, does that worry you, the action? I know marijuana stocks have gotten in the crosshairs there a little bit. Is that something that worries you in terms of a top?
Tim Lutts [00:29:08] My first thought on Robin Hood is I’m happy to see them making investing more accessible to individual investors. I like that. And I hope that the high profile stuff like GameStop is tip of the iceberg and below it, there are far number, far more sensible investors who are doing the right thing instead of chasing, chasing dreams in the sky. That’s about Robinhood. As far as marijuana stocks, I think, getting - democratizing investing is great. I would be leery of charts that go to the moon, look at GameStop, obviously, look at Tilray, look at what that did last week. That’s not sensible trading. So. OK, Robinhood will grow up in time. They all do. There was a time when Charles Schwab was the new kid on the block and now they’re now they’re old. So I’m happy to see it in general.
Chris Preston [00:30:21] OK. Question from Brian. For new money, where would you set stops on your portfolio recommendation? So I guess is there a percentage that you would recommend on new buys?
Tim Lutts [00:30:38] Again, that’s a personal decision. Mike Cintolo tends to be quite close with his stops. I tend to be a little looser. And let me talk about mental stops versus real stops. With a real stop, the risk is that if your broker triggers it after the stock has fallen out of bed and gapped way down, you might sell at a price far lower than you expected. Of course you could go even lower, but with mental stops, you’re asking you’re giving yourself a little more responsibility to judge when a stock is worth keeping or not. I prefer mental stops generally and make the call myself. But the people who are busy maybe would want to simplify things, that doesn’t answer your question between 10 percent and 30 percent, that’s the range. Just just consider what you would what would not feel good to lose.
Chris Preston [00:31:44] OK, so a question from Jennifer. So what is your time frame for these stocks and their growth potential?
Tim Lutts [00:31:54] Oh, that’s a good question. Sky’s the limit. Truly, no one knows where this is going. Marijuana was illegal for many decades. And now it’s legal again, finally, and and this is going to go farther than most people, most people understand. That’s that’s one of the truisms of investing trends go further than you tend to expect. And so decades, tens of billions of dollars, this is going to the moon and some of these companies will do very, very, very well. So I’m happy to be on the early side of it.
Chris Preston [00:32:39] Here’s a very simple question from this just initials, G.J., US or Canadian cannabis stocks right now?
Tim Lutts [00:32:49] Yeah, the Canadians did pop this year because they were the most held down last year. But that pop, I think, is over, and I think fundamentally I prefer the US. Yeah, and that’s it - the US. I would also just also say Canopy is the most famous name, is also pretty high profile. I prefer when possible, to buy the less famous stock because it’s less inflated if we go back to the Canopy chart, Canopy took a long time to get back to its old peak. Whereas the younger, fresher names like Trulieve were out in record high territory, much quicker than Canopy was.
Chris Preston [00:33:46] OK, question from John, what inning would you say we are in the marijuana stock run?
Tim Lutts [00:33:54] Oh - second inning. There will be cycles, obviously, so watch the charts, watch the news, and in particular my strongest thought, which I’ve said several times there is, you want to be there before the institutions, before we go legal nationally. And no one knows when that is. I have no I’m not even going to guess whether it’s this year or two years or three years down the road, I don’t know. But you want to be there before the institutions, before it becomes popular, truly popular.
Chris Preston [00:34:31] OK, question from Arthur, what are the two largest catalysts for upside and downside in the industry?
Tim Lutts [00:34:39] Good question. There are always surprises. Earnings are coming out next few weeks. They’ll be very interesting to see if the growth is slowing down a bit or who’s turning profitable. If some people if some companies report surprise earnings, that would be great. And I would expect more surprises to be on the up on the positive side going forward, fundamental medical progress, legal progress. We do expect. We do expect. So on the negative side. No one’s died, I think that’s one of the everlasting positives about marijuana, unlike opioids. No one’s died. But if I were going to guess for a big negative. My brain doesn’t work that way, I guess I just watch the charts.
Chris Preston [00:35:56] Yeah, I guess in terms of the stocks themselves that you mention of the legal, anytime there’s a big legalization, it seems like that’s when things start to head downwards right?
Tim Lutts [00:36:08] Yep, so far.
Chris Preston [00:36:11] So far, yeah. Question from Ken, it gets back to something, we a question we had earlier, I own Aphria. Not sure I’m happy with the pending merger with Tilray. What does your research show? Is the merger a positive or negative for you?
Tim Lutts [00:36:25] Good question. And I would say look at the chart. The chart is positive. To me, so I think fundamentally it’s going to be fine, the company together will just do fine. I think as an investment, it’s already one of the more overexposed along with Canopy. So I think I wouldn’t be a buyer of Aphria here. I think I would search for the lesser the less famous that have good charts. By the way, I do watch a database of roughly one hundred and forty marijuana stocks, most of which are, as I said, penny stocks or one or two dollar stocks. So I’m always looking for the next up and coming ones. Most recent was TerrAscend that’s done well. But right now, the ones I gave you were my favorites.
Chris Preston [00:37:25] It’s a question from Brian. Are you monitoring short interest, and if so, are there any trends?
Tim Lutts [00:37:32] No, I don’t get that deep into the weeds. I have nothing to add there. I watch the press charts every day.
Chris Preston [00:37:42] OK, let’s see a question from Lou. Tim, I’m curious, what was it about this industry that first got your attention? And are you seeing more institutional buying in this industry?
Tim Lutts [00:37:56] What caught my attention was the stock charts very clearly for several months they were strong and I started writing about it and getting comfortable with the potential. It was nervous, obviously, everyone’s nervous getting to something like this. Brand new. It was the charts all the way. Second part of the question was?
Chris Preston [00:38:20] Let’s see, it was are you seeing more institutional buying in this industry?
Tim Lutts [00:38:27] Well, yes, absolutely. What we’re seeing both of the. We’re seeing a lot of institutions get in behind the scenes, so there’s plenty of cash they’re rolling in still, which is good because these companies have cash to use now, there’s no problem with cash running out. Someday, that may change as competition ramps up. But right now the money is flowing, even though we’re not legally yet in the US. So I expect more cash to come in as that gets closer.
Chris Preston [00:39:06] OK, lots of questions rolling in now -
Tim Lutts [00:39:09] They say somewhere there’s going to be a shift as US goes nationally legal, Canada should become less popular after that.
Chris Preston [00:39:22] Question from George, what about sales in Europe, did these help US stocks or Canadian stocks?
Tim Lutts [00:39:30] In general, Yes, most of the European sales are Canadian companies. Canopy, Tilray is very big in Europe. I don’t break it out. But yes, the European market is - they’re consumers and it’s still early, obviously very early. There’s some growing going on in Israel and other places. But the big companies are these in Canada or the US.
Chris Preston [00:40:01] OK, let’s see. Lots of questions. OK, question from different George. TCNNF, Trulieve, which you mentioned earlier, fundamentally with revenues, its growth rate expansion and balance sheet is very strong. What’s your view on this particular stock? I guess you already mentioned earlier that you’re - that’s one of the ones you’re most bullish on.
Tim Lutts [00:40:26] Yeah, I will mention, you mentioned Trulieve, great fundamentals. Over a year ago, it was a there was a [..] of a short sellers attack, and it wasn’t the only marijuana stock, it also happened to others before that. So going back to surprises, those have been the surprises that have hurt temporarily. Short sellers put out these so-called research attacking companies and drive the stock down temporarily. Trulieve has come right back very well, but that was a short term negative surprise. Fundamentally, as I said, it stands out because the CEO is actually a woman, which is unusual and good. And she’s done a great job actually creating revenues and earnings, which is unusual and and the projections of growth is there. So so far, Canada, I’m sorry, so far, Florida is only medical. Recreational or adult use will come. And the expectations are that truly we’ll get a good chunk of that too. The company is also expanding into other states, California, Massachusetts, Connecticut. So they’re well managed.
Chris Preston [00:41:42] OK, we’ll do two or three more questions. Let’s see a question from Sy, who has strong cash flows to invest for their growth going forward?
Tim Lutts [00:41:57] I’m sorry, I don’t look at that closely. I’d say cash is not a problem for anyone right now because institutions are dumping money in to all these leaders. Absolutely. I see headlines every day who’s got new deals. So money is flowing in. It’s not from revenue. It’s not from selling product necessarily. On that on that basis, maybe. Trulieve is the cash flow leader.
Chris Preston [00:42:29] OK, let’s see this one we had earlier, you mentioned Robin earlier, Tim, Robinhood being a good thing, allowing new investors into the fold. Jake mentioned, says that as a young investor who is just getting started, what would be your three best tips on starting a successful portfolio?
Tim Lutts [00:42:49] Read a lot. Take it slow, read some more and cut losses short.
Chris Preston [00:43:03] OK, let’s see, do one or two more here. Let’s see, a question from Arthur, What industries are impacted the most by legalization in the US, breweries, bars, medical, restaurants, sports?
Tim Lutts [00:43:23] That’s good. There’s already some negative effect on alcohol companies. It’s definitely a negative effect on the - although hard to measure, they say its negative effect on the other illicit drug businesses which are not measured officially. So going forward, I think the one most at risk is the alcohol industry, and that’s one reason Constellation Brands owns a big chunk of Canopy. And they are the biggest seller of of cannabis drinks in Canada already, so it’s not huge, but it’s a good start. Otherwise, the pharmaceutical industry is also at risk because as it becomes more accepted as a pharmaceutical for some purposes. You’d expect companies to actually companies like the drug companies to get on board as well. I’m sure that’ll happen eventually.
Chris Preston [00:44:41] And I’ll give you the last question to Ed, Ed asks, How important is the North American marijuana index in making buy or sell decisions?
Tim Lutts [00:44:53] To me, it’s not. I’m watching individual stock charts, that’s what Mike does above all, he watches indexes, obviously, he’s got some nice market timing tools. I tried to use the index to make a market timing tool, but haven’t really nailed down something useful yet. So far, it’s been most useful for looking at peaks real blowoff peaks. As we’ve seen each top so far. Bottoms are tougher ones have been flat or rounded harder to identify. These will evolve, of course, as the industry grows up. Right now, the index is mainly just a benchmark for me. I will note I was a little disturbed last week when the whole sector blew off and peaked Wednesday. The next day index website was down. There was no chart there at all. That went on for more than a day, but they fixed it somehow. So I’m happy to see that. If it happens again, I’m going to look around for an alternative benchmark. But mostly, I look at the charts, I can’t say that often enough.
Chris Preston [00:46:07] OK, well, thanks, everyone, for all the all the great questions and thank you, Tim, for all the marijuana stock knowledge. If you don’t mind advancing to the next slide, I just wanted to tell people about our next webinar, which is next month, which is March 18th, also at two o’clock Eastern. It’s also a Thursday. It’s titled The Dividend Solution - How Dividend Stocks Have Replaced the Bond Market. That’s hosted by our dividend investing expert, Tom Hutchinson. So come back next month for that presentation again, Thursday, March 18th at two o’clock Eastern. That does it for us, for Tim Lutts and the entire Cabot Wealth Network team. I’m Chris Preston, and we’ll see you next time.