THE Portfolio for Pot Profits
Three Cannabis Stocks for 1,000% Gains
For the past few weeks, I’ve been making the case as to why you should invest in the growing legal marijuana market.
I've traveled the country pounding the table about the potential profits from this budding industry.
I’ve talked about new legislation in U.S. states lifting restrictions on both medical and recreational use of cannabis.
I’ve investigated Canada’s recent nationwide recreational legalization.
And we’ve heard from American politicians, including President Trump himself, about lifting federal prohibition in the U.S. as well.
So today, I just want to take a little more time to really drive the point home that this is an opportunity that comes around maybe once in a decade. And I want to talk about a few of the best — and safest — investments I’ve found in the industry.
If you’ve been reading financial commentary long enough, you’ve undoubtedly heard the term “x-bagger,” with “x” being a number anywhere from 10 to infinity.
But what does that really mean?
Well, each bag is basically a 100% return on your initial investment.
10-bagger. That means for every dollar you invest, you get $10 back when you sell.
50-bagger. Obviously, then, that’s when you get $50 for every $1 you invest.
100-bagger... You’re getting the point.
Writers use these terms as ways to sound less like analysts and more like that guy next to you at the bar. They also use them to get you super excited about a stock they’re promoting.
But the thing is, those kinds of gains don’t come that often. Certainly not as often as some of these pushers would have you believe.
It’s why they use those terms to get your attention. Because gains like that just sound like some kind of fantasy — but we’re all a little susceptible to getting our greed manipulated.
But, while they don’t happen every day, those kinds of gains do come. Every decade or so, an industry gives savvy investors the opportunity to score a 50-bagger. Sometimes we even get a chance to take home $100 for every $1 we invest.
In the 1990s, internet stocks skyrocketed more than 50 times. Some came crashing down and stayed there. Some are still making investors big bucks.
In the late 2000s, bets against the housing market paid off 50-fold or more.
Just last year, Bitcoin and other cryptocurrencies exploded 50 times over and more, too.
Like I said, these kinds of gains are rare. But they do happen. And it’s investors who get in at the start — and know the right stocks to buy — who make the biggest profits.
Not When but What
Now, you already know that, at least in my humble opinion, the time to invest is now.
Well, if you’d already been investing, that would be better. But now is likely the last chance you’ll have to get in on the ground floor before the really massive 1,000%+ gains are all taken.
But I’m sure you’re still a little uncertain as to what to invest in. I mean, there are tons of companies out there.
Some trade for mere pennies. Some trade for more than $100 per share. Some will return 1,000% or higher gains. Some will crash and burn and be forgotten.
Some add value to the industry. Some are just hitching a free ride on this speeding locomotive.
So, who do you invest your money with?
Well, you’ve got several choices when it comes to the type of company and its connection to the cannabis industry.
You’ve got the companies that grow the plant. They’ve been some of the biggest gainers so far.
And there are already some large companies dominating the fields.
I would imagine that by this time, most of you have heard of Canopy Growth. It was the first pure pot-growing stock to trade on U.S. exchanges. And it’s the biggest marijuana stock in the world.
Likely you heard about Canopy, if you didn’t already know of it, when alcohol megalith Constellation Brands (NYSE: STZ) invested $245 million to buy a 9.9% stake in the company.
When a major company like Constellation starts tossing hundreds of millions into the ring, it may be time to pay attention.
But the thing I don’t like about growers as a long-term investment in cannabis is that all they do is grow marijuana.
Granted, they grow lots of it, but still, anyone can do that. They don’t really add any value to the process. It’s like investing in a tobacco farm instead of buying stock in Altria or British American Tobacco.
Don’t get me wrong. You’re sure to make some tidy short-term and medium-term gains from the growers. But I’m looking for long-term plays. And I see growers falling in favor in a mature industry.
Picks and Shovels
Another term you hear bandied about a lot in financial press is “pick and shovel” plays. It dates back to the California Gold Rush.
Back then, you needed about $200 to buy a claim of land to mine, a pick and shovel, and the rest of the supplies you’d need to start prospecting for gold.
So, you could take your $200 and head out to the fields to start the hunt. Or you could buy 10 picks and 10 shovels and sell them to hopeful newcomers.
Most of the miners who came to prospect didn’t find anything but dirt and rocks. But the miners who became shopkeepers and businessmen made companies that are still around today.
In fact, the man who headed the Central Pacific Railroad — the one that headed west from California to meet the Union Pacific coming from the east and connect the two coasts — got his start during the gold rush.
He decided to buy picks and shovels instead of staking a claim and mining for gold. And thanks to his smart decision, he really hit pay dirt.
So, another way to invest in an industry is by investing in the companies that make the products that industry needs to survive.
There are a handful out there, mostly Canadian, that are publicly traded. However, my personal favorite, and a position in my investment advisory service The Wealth Advisory, is an American company.
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It’s Scotts Miracle-Gro (NYSE: SMG). You should remember hearing me talk about Scotts before.
It’s one of the first multinational companies to get into the cannabis industry. And thanks to a ton of acquisitions it’s made over the past few years, it’s uniquely positioned to become the main supplier of the future U.S. cannabis industry.
Scotts has been buying up companies involved with hydroponic growing and “indoor and urban gardening.”
Now, I live in a city, and I grow vegetables on my deck in the summer and inside in the winter. But trust me when I tell you I’m not the kind of “urban gardener” they’re targeting.
Scotts is looking to capture the indoor growing market. And it’s doing an amazing job.
It owns brands with products that cover the growth process from sprouting seeds to drying your final product. That includes the nation’s most popular line of hydroponic nutrients, air filters to make sure your neighbors aren’t getting a contact high from your plants, and super-bright lights to bring the power of the sun into your closet or grow room.
And now, it’s got more than 1,000 specialty retail locations spread across major legal marijuana markets in the U.S.
With all that going, Scott’s is sure to make a big splash when the U.S. legalizes cannabis and the market really heats up.
Think about some of the companies that have made investors rich over the years...
McDonald’s sells fast food some would call addictive. Starbucks sells coffee — caffeine is definitely addictive. Altria made investors millions by selling addictive tobacco products.
When people form a habit or get addicted to something, they’ll go out of their way to make sure they can keep that craving fed.
And that means ensured repeat customers. The cannabis industry will be no different.
Unfortunately, there aren’t any public companies that engage in this part of the marijuana market. Constellation Brands will probably debut a cannabis-infused drink at some point. But other than that, the other companies in this sector are still private.
But rest assured, once there are some public options out there, I’ll be back at it making sure you know where they are.
The Number One Cannabis Stock for 1,000% Gains
OK. So far, we’ve talked about three parts of the industry you can keep an eye on. And I’ve given you my favorite investments where possible for each.
But I haven’t been completely honest with you. There is another cannabis company out there that I like more than any company I’ve mentioned thus far.
It’s another pick and shovel play. But it’s purely exposed to cannabis.
It’s practically guaranteed to deliver 1,000% gains and more as the industry grows.
And its solid business plan and rock-star management team can help you rest easier knowing this is a company that’ll be around for the long haul.
Plus, it’s literally guaranteed to pay you the majority of the profit it makes as long as you’re invested.
It’s actually legally obligated to share any money it gets from cannabis-related operations. The U.S. government says it must, and so it does.
Along with Scott’s Miracle-Gro and another American cannabis stock you may have heard me mention before, it rounds out the trifecta of investments that make up my “Prolific Pot Profits Portfolio.”
I call these my “Reefer Royalty” trades for short because they pretty much pay me a little profit every time someone buys, sells, grows, talks about, or does anything else related to marijuana.
But this company has so much potential that my boss — everyone’s boss here, Brian Hicks — literally said it’s the “only pot stock” he’ll ever buy.
This guy’s made millions in the markets. And he helped found one of the most respected financial advisory companies in the world. So when he’s this gung-ho about an investment, it should tell you something about how secure and profitable it really is.
He was so enthralled by the company and excited about the prospects for profit that he insisted I let him put together a presentation on the company.
He’s recorded a video presentation as well, but it’s still in editing. As soon as that’s ready, I’ll make sure you’re the first to know.
But I can’t stress enough how critical time is right now. Every second we get closer to nationwide legalization in the U.S. And every second the chance to score 50-bagger gains from the industry gets a little smaller.
So every second you wait is cutting into your future riches. You may only lose a few thousand dollars today. Maybe just a few hundred percent this week. But with every passing minute, that lost opportunity just gets bigger and bigger.
Do yourself a favor. Do your family a favor. Do future generations a favor. And invest today so you can retire a wealthy, comfortable, and very happy person tomorrow.
To your wealth,
After graduating Cum Laude in finance and economics, Jason analyzed complex projects and budgets for the U.S. Army. Then, at Morgan Stanley, he led the assistants' team for the North American repo sales desk, responsible for hundreds of multibillion-dollar trades every day. Jason is the assistant editor for The Wealth Advisory income stock newsletter. He also contributes regularly to Wealth Daily. To learn more about Jason, click here.
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