The cannabis sector is stuck in a pretty brutal bear market. The sector is down about 50% from the 52-week high, logging six consecutive losing months. That kind of a losing streak is testing the most committed cannabis investors. Even true believers are asking if it’s time to throw in the towel.
However, according to Warren Buffett, this is the best time to be buying.
One of Buffett’s most famous quotes on investing – ‘be greedy when others are fearful and fearful when others are greedy.’
Today, I am going to explain how Buffett’s advice helped me bag an 86% gain in four months with a promising young cannabis stock. I also see that same opportunity repeating itself in the next eight weeks.
Charlotte’s Web Holdings (CSE: CWEB, OTC: CWBHF) is an early industry leader in the high-growth CBD market. Shares of CWEB trade on the Canadian Stock Exchange and in over-the-counter (OTC) markets in the US.
CWEB has an impressive portfolio of branded CBD products that generate big-time revenue. CWEB is on pace to break $100 million in sales in 2019, making it one of the highest revenue cannabis companies in the world.
Despite the impressive resume, back in December of 2018, CWEB was struggling on the chart. Shares were down 40% from the 52-week high.
At the time, the entire cannabis sector was down – a lot like it is now.
The cannabis sector fund Alternative Harvest (NYSE: MJ) was down 40% from the 52-week high.
At the time, I saw a lot of fear and pessimism swirling around cannabis stocks. The usual enthusiasm had given way to fear. I knew this was an important signal. It told me after a string of losses, CWEB was overdue for a bounce.
I sent out a trade signal to CST members on January 8, alerting them of the opportunity in CWEB.
Here’s what I said:
Charlotte’s Web (CSE: CWEB): Adding $400 in Shares to CST Portfolio
January 8, 2019
CWEB and the entire cannabis sector proceeded to see a huge bounce early in 2019.
On April 4, I sent out a trade signal alerting members that we were closing this trade in our model portfolio after shares hit a series of new all-time highs.
In 16 weeks, CST members that followed along with the model portfolio landed an 86% gain.
Charlotte’s Web (OTC: CWBHF) Time to Take Some Profit
April 4, 2019
Today, I see this same cycle repeating itself.
CWEB is down 50% from the 52-week high as the entire cannabis sector has fallen back into a bear market.
The string of losses has crushed sentiment. I have never seen more pessimism in the cannabis sector.
Once again, just like last December, that tells me CWEB is due for a big bounce.
#1 – Sentiment is bearish right now. Investors are discouraged.
#2 – Shares are close to being the most oversold ever. The last time the relative strength index was this oversold, shares doubled in 8 weeks.
#3 – CWEB has a history of rallying hard off this $15 level.
So while some investors think about throwing in the towel – this looks like another Warren Buffett situation.
The bearish sentiment tells me that shares are overdue for a bounce.
That’s why we have an open trade on CWEB in the model portfolio.
I expect CWEB to bounce anywhere from 50% to 100% by the end of 2019.
I also believe that we’ll see other cannabis stocks rally too. That’s why we have been busy sending out new model portfolio trade alerts.
Right now, the Cannabis Stock Trades model portfolio has 19 open buy alerts on some of the most promising cannabis stocks in the sector.
Ten of those are long-term trade signals, stocks we expect to hold for more than twelve months. Nine of those are short-term trade signals, stocks we expect to hold for two to twelve weeks.
Our model portfolio is up 35% since January 3, 2017.
That is better than the S&P 500’s 29% price gain and much better than the broader cannabis sector. The cannabis sector fund, Alternative Harvest (NYSE: MJ), has fallen 32% in the same time.
Looking forward, we will be revealing two new trades in the next week – telling our members exactly which stocks we are adding and removing from our model portfolio – and why we think shares will prosper.
If you want updates on CWEB and other cannabis stocks, sign up for a 2-week free trial to access our member-only analysis.
Disclosure: Author Michael Vodicka owns shares of Charlotte’s Web (CWEB) at the time of writing.
About the Author & Cannabis Stock Trades
Michael Vodicka is an equity analyst with more than 20 years of experience in trading and investing. His research has been featured in some of the industry’s most respected publications. He has been investing and leading investors in the cannabis sector since 2013.
Mr. Vodicka brings his expertise and guidance to the members of Cannabis Stock Trades.
Join Cannabis Stock Trades for Mr. Vodicka’s exclusive analysis, trade alerts, and model portfolio.