Martha Joins Cannabis Craze

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Energy & Resources Digest
 
Martha Stewart Joins the Cannabis Craze
Matthew Carr, Emerging Trends Strategist, The Oxford Club
 
You Already KNOW Marijuana Is Going to Be Huge in 2019
 
Orange Marijuana Leaf
 
If you thought the marijuana market was making people rich last year... just wait! It's only going to get bigger. Make sure you get the analysis on the next FOUR stocks set to pop!
 
Editor's Note: In 2018, Matthew delivered the most triple-digit gains at The Oxford Club.

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- Rebecca Barshop, Managing Editor



Canopy Growth Corp. (NYSE: CGC) snagged a whale last week by signing the legendary television host Martha Stewart as an advisor.

The two are creating a line of CBD products for animals.

Of course, Canopy is already partnered with Stewart's pal Snoop Dogg for the "Leafs by Snoop" brand. So having the legendary television host come on board wasn't a huge surprise. Though the announcement did trigger a pop in Canopy shares.

This is just the latest evidence of how prevalent CBD products are going to be. We're going to be drowning in them soon. And each week here we cover the retailers jumping into the fray.

And that's not the only CBD story we have to talk about today. Because when I say CBD is now in everything... I mean it.

When people think of Valentine's Day, they typically think of chocolates, love poems, roses and fancy dinners.

The National Retail Federation estimated that Americans spent $20.7 billion on Valentine's Day gifts this year. On average, buying jewelry and spending an evening out cost $58.06 per person.

But there's a surging demand for pot products for lovers.

And companies are waking up to this.

MedMen Enterprises (OTC: MMNFF) offered CBD-infused chocolate recipes for Valentine's Day, while 1906, Binske and Coda Signature all sold their own chocolates. For those intimate moments, CBD- and THC-infused sensual lubes were sold by Foria and others.

Cannabis point-of-sale software firm Flowhub showed that Valentine's Day spending on cannabis popped. Pulling retail sales data from Alaska, Colorado and Oregon, the company found consumers spent an average of $52.98 on cannabis products for Valentine's Day.

That's nearly as much as people spent on jewelry and dining out combined!

According to Flowhub, edibles sales increased 20%. But gummies saw the biggest surge, up 43%.

Of course, this growing trend plays into our No. 1 pot stock to watch this week!

Making the Grade

Beyond chocolate and lube, Americans love debt.

In fact, it's a serious problem in this country.

And it can be a major problem among companies... especially small ones that are trying to fuel growth.

Who could forget the dot-com bubble or the financial crisis?

In this week's "Making the Grade," my team and I looked at total debt-to-equity in the cannabis space. Most of it was horrifying.

Here are the top 10 cannabis stocks carrying a hefty debt load...
 
Chart - Top 10 Cannabis Stocks Ranked by Highest Debt-to-Equity
 
At the top of the list is Curaleaf Holdings (OTC: CURLF) at more than 100% debt-to-equity. The company has been fueling growth with acquisitions.

Leafbuyer Technologies (OTC: LBUY) and Wildflower Brands (OTC: WLDFF) are up there as well.

These high debt-to-equity ratios don't mean these companies aren't buys. In fact, one of these companies is in our Top 5 Pot Stocks to Watch. It just means they likely carry higher risk as they're taking on debt to expand.

Investors have to bank that the returns outweigh that debt load.
 
The BIG Deal

Trump... America's No. 1 tech company... 50,000 American jobs... $10 billion...

And ONE $3 stock trading under a secret name. Hear the amazing story here.
 
Top 5 Pot Stocks to Watch

1) Flowr Corporation (OTC: FLWPF) has hired Canadian chef Ryan Reed to develop a signature line of edibles. Reed has won Iron Chef and Chopped. The company expects consumers to be able to purchase these in the fourth quarter of 2019, when Canada legalizes edibles nationwide.

Jefferies also started covering the cannabis industry. Flowr is rated a "Buy" by the Wall Street firm, with a price target of CA$5.70.

We also can't overlook that Flowr submitted its 40-F to list on the Nasdaq at the beginning of February.

2) Invictus MD Strategies (OTC: IVITF) announced its wholly owned subsidiary, Acreage Pharms, completed testing on two batches of cannabis oil. The company is working to finalize its application with Health Canada to allow for the sale of bottled cannabis oil and resin.

Invictus also has famously signed Kiss frontman Gene Simmons as its chief evangelist officer.

The company has three production facilities in Canada. But back in January the company announced it was looking to get into the U.S. CBD market with a joint venture it created with CannAmerica (OTC: CNNXF) and CBDistribution.

3) Harvest One Cannabis (OTC: HRVOF) reported that second quarter fiscal year 2019 revenue increased 123% sequentially. Revenue came in at $3.7 million with gross margins of 53%, which is in line with what most major Canadian producers are earning.

The company's expansion plans at its Duncan and Lucky Lake facilities are underway. And Harvest One expects to be producing 20,000 kilograms annually by the end of this year.

4) Valens GroWorks (OTC: VGWCF) is the world's largest third-party extraction services company. Last week, it agreed to provide hemp and cannabis extraction services for Tilray (Nasdaq: TLRY). We've covered Tilray's jump into the U.S. CBD market.

Valens is also providing extraction services for our No. 3 pot stock to watch, Harvest One. And a couple weeks ago, the company reported it had expanded its extraction capacity to 240,000 kilograms.

5) Curaleaf Holdings (OTC: CURLF) is becoming an even larger U.S. vertically integrated company. It announced last week it was acquiring Eureka Investment Partners for $30.5 million. This gives Curaleaf access to the California wholesale market through a 110,000-square-foot greenhouse that can produce 50,000 pounds per year.

In the fourth quarter, Eureka produced 2,500 pounds of flower. And it sold pre-rolls under the brand Monterey Kush.

Over the past month, Flowr, Valens and Curaleaf shares have outpaced the Horizons Marijuana Life Sciences ETF (OTC: HMLSF)...
 
Chart - Top 5 Pot Stocks vs. Horizons Marijuana ETF
 
Invictus and Harvest One have lagged. But we can see the big pops both stocks saw on their recent announcements.

There were some big jumps - and some big pullbacks - from pot stocks last week. But many cannabis companies are up 30%, 50% and even 80% or more year to date. This is the point where we'll likely see some wobbling.

But for investors looking for a sector not exposed to trade wars or tariffs - cannabis is it!

Good investing,

Matthew
 
 
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