This Stealth Stock Just Cornered its Industry
There’s a company quietly cornering one of the most lucrative parts of the cannabis market. It’s become the go-to provider for everything cannabis growers need to raise their crops.
And so far this year, it’s returned over 80% for investors while the S&P 500 is up a paltry 16% and other cannabis companies are struggling to maintain profitability.
Since it bottomed out last December, I’ve been urging the members of my investing community to add shares. In fact, I’ve been so adamant about this investment that I’ve made it one of my top 10 picks for short-term gains the past two months as well.
It’s given us about 10% every single month this year. And it just jumped another 10% literally overnight after management announced blockbuster quarterly results.
It’s No Miracle This Keeps Growing
I know I’m being very cryptic in my description. But I’ve got to build up a little mystery. Because this isn’t the kind of company you’d expect to be raking in profits from cannabis.
It’s Scotts Miracle-Gro. And it’s one of the best-performing cannabis investments this year.
While the major producers — Canopy, Aphria, and Aurora — are up, they’re barely keeping pace with the stock market.
But despite the ups and downs of the cannabis industry, Scotts has remained on a steady trajectory all year. And its trend is obvious:
It’s beaten the performance of the S&P 500 five times over. And we’ve still got four and a half months left in the year.
But there’s something you should really take notice of in those charts. And it’s not just how much better an investment in SMG would have treated you than any of the major cannabis growers.
It’s the simple fact that while the market’s been going through one of its worst weeks, Scotts had one of its best.
And that’s exactly what you want your stocks to do. When you invest in solid companies with seasoned management and growing revenues, you get profits that beat the heck out of the rest of the stock market.
So how do you find those rock-star investments? You look. You look really hard at every suggestion that comes across your desk.
Research Is Everything
Members of my investing community, The Wealth Advisory, already know I’ll spend months researching an industry before I’ll even start looking at the stocks in it.
And once I zero in on a trend I see growing or an industry that looks profitable, I’ll spend even longer looking into the companies before making any calls.
That’s how I found Scotts so early. And that’s why my investors have been raking in those profits all year.
It didn’t take a whole lot of research to see that cannabis was going to be a major industry. It’s been legal for medical use in California for well over a decade. And the tax revenues were amazing.
Plus, there was the fact that every single survey showed that an overwhelming majority of Americans supported some form of legalization. And most of them admitted they’d try it if it became legal.
The writing was on the wall.
But we’ve got a strategy at TWA. And a strategy is worth exactly nothing if you don’t stick to it.
So we couldn’t just go throwing our money at a bunch of companies and hoping some would work out. That’s how you gamble — it’s not how you invest.
Sure, you know you’re not going to have all winners. But you also don’t want to have to rely on one big winner to pull up your average.
You want to have big wins, small wins, and small losses. And you want the two formers to outnumber the one latter.
So you’ve got to do a lot of homework to find those home runs and sort them out from the sacrifice flies.
And that’s exactly what I started doing once I made the decision that we were going to become cannabis investors. I looked into the major growers. I looked into the tiny processing companies. I looked everywhere to find the absolute best cannabis investments for our strategy.
And the thing that really stuck with me was how tied most of the companies were to the price of cannabis. That may sound like Captain Obvious territory there. But it’s something a lot of cannabis investors overlook.
You Can’t Sell What We Won’t Buy
You’ll hear them talk about full capacity and how much cannabis some company will be able to grow once a new greenhouse is completed.
But you’ll almost never hear them talk about how much cannabis that company can actually sell...
Take Oregon, for example. Here’s a state where recreational cannabis is legal. It’s also a state that put zero restrictions on the number of producers that could operate there.
So Oregon started off with more cannabis growers than nearly any other place on Earth. It doesn’t have that many now, though. They’ve sold off to larger companies or just gone bankrupt.
And that’s because their value was entirely determined by how much they could make selling their cannabis. And when you’ve got a massive supply and a not-that-massive demand, prices plummet.
That’s exactly what happened in Oregon. The retail price for a gram of cannabis dropped from around $20 to about $5. And growers stopped making money.
So you can’t just look at how much they can make. You’ve got to look at the addressable market — how many people they can sell it to. And you must look at the competition. If there’s too much, it might be better to wait it out on the sidelines.
But what I saw in Scotts was completely different. Here was a company that’s already dominating the lawn and garden market. It had the experience to be a major player in cannabis if it made the right moves.
And boy, did it make all the right moves...
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Moves Like Jagger
I watched as Scotts branched out into the cannabis industry with its formation of Hawthorne Gardens and the purchase of General Hydroponics — the lead nutrient supplier for cannabis growers in the U.S.
I saw it scoop up lighting companies and companies that sold air filters and cooling fans. I saw it getting ready to supply the whole industry.
I searched for competition. But there were only smaller private companies. None of them could compete with Scotts’ marketing might or its expansive reach. And none of them offered the kind of product selection Scotts did. It had become a one-stop-shop for cannabis supplies.
So I looked at the addressable market. Did everyone really need this stuff to grow plants?
And I found out that not only do they need it, but Scotts was the only company that could provide everything they need to take a plant from seed to sale.
So I recommended my members take a position in the company. And every time a dip came, I begged them to add more shares.
Now, Scotts is showing major growth from Hawthorne and proving it will be the same dominant force in the cannabis industry that it’s become in our backyards and gardens.
And other investors are jumping in for the win and sending the share price ever upward.
But the thing with Scotts is that those investors aren't jumping into a bubble. I can see the company doubling again in the next year and hitting $200 a share thanks to its steady growth and flawless execution.
So I’m still recommending members of The Wealth Advisory add shares. But I’m not as adamant about adding Scotts now that it’s doubled in 2019 as I am about one of our newest investments that also provides services to the cannabis industry.
And that’s because while Scotts easily has the potential to score us another 100% or 200% profit, this company is poised to deliver 1,000% or more.
If You’re Gonna Dig, You Need a Shovel
You already know how much I love pick and shovel plays. But in case you don’t, let me explain a little why...
Back in the days of the California Gold Rush, hundreds of thousands of miners flooded the streams and valleys hoping to strike it rich.
But a handful of entrepreneurs decided the gold wasn’t really hiding in the hillsides. It was walking around the camps and towns that sprung up around the mines.
So they set up shops. They set up hotels. They set up saloons and brothels. And they sold the things miners wanted to buy.
A mining pan that cost less than a quarter in 1849 went for $8 by 1851. By then, even shovels cost a minor fortune — nearly $1,200 in 2019 terms.
So while miners may have dug up all the gold, it was the folks selling them supplies that really had the Midas touch. And that’s the origin of the pick and shovel play. The companies that supported the industry were the real moneymakers.
And that stands true today as well. Scotts isn’t a grower. It doesn’t sell cannabis. It doesn’t even process it. What it does is support the industry. And it does that by selling the picks and shovels of cannabis growing.
But it’s not the only company making big bucks providing the resources cannabis growers need. In fact, members of The Wealth Advisory already banked 500% gains on another company that supports the industry.
Like Scotts, it doesn’t grow, process, or sell cannabis of any kind. But it provides the land and the money those companies must have to exist.
And now we’ve zeroed in on another operation that’s inextricably intertwined with legal cannabis. But it’s got even more profit potential than any we’ve come across before.
I’ve Got a Golden Ticket Shovel
I expect at least another 100–200% from Scotts in the coming years. And as long as the cannabis industry grows, I see the financing company growing, too.
But neither has the kind of potential to deliver life-changing gains like this unknown and unappreciated stock. The other two companies are already pretty massive. And it takes a really big move to get from $100 to $200.
But this company is still small. It’s still flying under the radar of most investors. And because it’s so small, it can double practically overnight.
In fact, just a month ago, I was begging the members of my investing community to buy shares. The stock had dropped a bunch, and it was looking extremely tantalizing.
Less than a week after I implored members to add shares, the stock had doubled. After a month, it was up nearly 300%.
That’s four times your money in about 30 days. A thousand is now worth $4,000. Ten grand turned into $40,000.
Most people don’t make that much in a year, but you could have made it in one month. And all thanks to one stock.
But it’s still very cheap. It’s trading under a dollar even after that massive one-month run. But it’s creeping higher every day. And it’s getting close to that point where it’s going to really take off.
And when that happens, the 300% gain my investors saw last month is going to look like pennies. Because we’re going to be looking at a 1,000% gain... or more.
And I want you along for the ride. We’re up a lot at The Wealth Advisory thanks to my diligent research. But there’s still so much more to come.
I’m so convinced this is the kind of company you can build your retirement on that my partner and I put together a whole report to detail the opportunity for you.
It will outline exactly what this company does, why it’s so important to the industry, and how it’s going to make early investors rich beyond their wildest dreams.
But you need to act fast. Word is getting out. And that 300% run is proof more investors are getting on board for the really big profits.
Every day, shares get a little more expensive. And every penny added to the price is cutting into your potential gain.
When these shares really take off, there’s no way anyone will be able to react fast enough to catch the rally. Only the early investors will get to celebrate. Only those investors who took my advice will walk away with the kinds of profits that really change your life.
So join us today, and start checking out the new yachts and vacation properties you’ll buy with your winnings 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 founder of Main Street Ventures and an 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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