Cannabis stocks just logged their best week of the year. Shareholders are scooping up big gains. And looking forward, I see plenty more upside ahead as a flood of good news hits the industry.
If you bought shares and profited, congratulations. Many of the stocks I have covered in this newsletter have delivered big returns.
But if you missed out – don’t worry – you still have plenty of time to cash in.
The Canadian Marijuana Index is up 15% in the last five days.
The index is now up more than 50% from its 52-week low in early July.
Even US cannabis stocks, which have had a very tough year, jumped. The US Marijuana Index is up 10% in the last five days.
Many individual cannabis stocks have gained even more.
Canopy Growth Corp (TWMJF), the largest cannabis company in Canada and the world, is up more than 200% from its low this summer and more than 625% from the summer of 2016. Shares just went vertical. Take a look below.
Cannabis Stock Trades members have been profiting from this move. Cannabis Stock Trades gave Canopy a buy rating in January and added it to our members-only model portfolio.
Cannabis Stocks are Thriving on a String of Good News
This mega rally has been driven by a steady stream of good news out of the global cannabis industry.
The trigger was Canopy’s $191 million deal with Constellation Brands announced last week.
I wrote about Canopy last week if you want to take another look.
But since then there has been more good news to keep cannabis stocks rallying.
Medreleaf (LEAF), also one of Canada’s largest cannabis companies, landed a permit from Health Canada that increases its cultivation capacity by 80%.
Emblem Corp (EMC), another Canadian cannabis company, was granted a license to sell cannabis oils.
I also noticed a few cannabis industry reports making the rounds.
A respected analyst released a study that predicts the Canadian cannabis market could actually be twice as large as expected based on some of the most recent and comprehensive market data ever collected.
I also saw a report that predicts the European Union will be the largest medical and recreational cannabis market in the world. This has huge implications for the cannabis industry. The European Union is 750 million people with an economy about the same size as the US. Simply stated, it’s a huge potential new market for the cannabis industry.
I’ve said it before – the cannabis sector is driven by news flow. And right now we are seeing a gusher of good news coming out of the global cannabis industry.
These are the forces that have been giving cannabis stocks a huge boost.
Now, with many stocks trading at an all-time high, many investors are asking: “Is it too late to get in?”
This is Still the Very Beginning of the Cannabis Industry
It’s great to see cannabis stocks rallying but it does present a new challenge. It can be intimidating to buy shares trading at a fresh all-time high.
Here’s my advice: For the time being, be patient buying more shares. After this big run, I am expecting cannabis stocks to take a little breather and maybe a minor pullback.
But beyond that, I expect the rally to continue.
I see a number of big-time catalysts directly on the horizon.
California legalizes recreational cannabis in January.
After that, Canada legalizes recreational cannabis in the summer of 2018. That’s only eight months away.
These two markets represent billions in potential new revenue for the cannabis industry.
A little further out, the European Union is quickly looking like it could be the largest cannabis market in the world.
The European Union is struggling with huge budget deficits. Legalization could provide a much-needed source of revenue while also reducing spending on criminal enforcement.
Germany legalized medical cannabis this year and other European countries have followed including Greece and Poland.
I also expect the United States to be a big catalyst. Right now the US cannabis industry is being suppressed by legal constraints. I expect medical cannabis to be legalized at the federal level within the next few years. After that recreational isn’t far behind. Both of those would be big-time wins for the cannabis industry and investor.