Electric Cars and Legalized Marijuana — Major Signs of Growth
Yesterday, Volkswagen and Ford announced they’ll be forming a global alliance that will focus on developing commercial vans and pickups.
More interesting to us, the announcement pointed toward the joint-development of battery-powered and autonomous vehicles and services.
Regular Digest readers know we believe self-driving cars — aka “autonomous vehicles” (AVs) — represent one of the biggest, most disruptive investment opportunities of the next 20 years. This innovation will transform huge portions of our economy and create trillion-dollar ripple effects. The news from Volkswagen and Ford confirms this transformation has already begun.
Given the intense competition in the auto industry, what’s behind this partnership? As The Wall Street Journal reports, “By joining forces, the companies aim to spread the cost and risk of the extensive investment needed to develop the next generation of autonomous and electric vehicles.”
***Partnerships may also be critical given the new threat facing traditional car makers … big tech
While it’s old news that car companies have been facing pressure from governments to develop electric vehicles that meet tougher pollution standards, “tech” is a new challenge — and a formidable one at that.
As you’re likely aware, newcomers such as Waymo (a subsidiary of Google) and Uber are changing the game. Whether by offering temporary use of an auto through smartphone apps, or by creating entire new industries (self-driving technology), big tech is forcing traditional auto manufacturers to develop their own platforms for ridesharing and self-driving cars just to keep up. After all, given that 95% of a vehicle’s life is spent parked, “ride on demand” technology and self-driving cars may lead consumers to rethink the need for traditional car ownership in coming years.
Of course, innovation isn’t easy. This makes partnerships such as the one between Volkswagen and Ford a logical strategy. A senior analyst from car shopping website, Edmunds, puts it this way …
Automakers aren’t just competing with each other anymore, they’re under intense pressure from well-funded tech companies who are eager to get in on the future of mobility … the key to success will be if Ford and VW can help each other fend off the upstarts and become leading forces in electric and autonomous vehicle technology.
***While this shift is challenging for auto producers, it’s creating huge investment opportunities
In Monday’s Digest, Matt McCall (analyst, former co-host of an investing show on Fox Business, and editor of Investment Opportunities), described the opportunity:
The car as we know it is on the verge of a transformative change not seen since it was invented. In fact, the whole transportation sector is now poised for its version of 2.0.
I’m not exaggerating when I say this will lead to trillions of dollars in money sloshing around in the coming decades.
As evidence of this, last week Bloomberg reported on the growth of electric cars. It pegs annual sales of electric cars at 2.2 million in 2019. By 2036, that number will skyrocket to 49.3 million. That’s growth of over 2,100%.
As you can see, the electric/self-driving trend is just getting started. For more from Matt on what’s ahead, click here.
***Meanwhile, one of Matt’s favorite marijuana investments is back in the news
In last Friday’s Digest, we reported how Piper Jaffray’s initiation of coverage of cannabis producers led to a 13% one-day gain for Canopy Growth (CGC).
Canopy is one of the stocks Matt has recommended in his Marijuana Boom portfolio. Regular Digest readers know that we believe legal marijuana is one of the biggest investment opportunities of this generation. Matt has been positioning his readers to profit from this trend.
The good news keeps coming for Canopy and Matt’s subscribers. On Monday, shares popped another 11% after the company was granted a license by New York State to process and produce hemp.
As The Wall Street Journal reports, hemp demand is growing due to a surge for cannabidiol (CBD). Sales of products containing CBD and other types of hemp will reach $2.6 billion in 2022.
Matt has been tracking hemp and CBD usage for years. From his late summer update to subscribers …
CBD oil is set to experience a huge boom over the next decade, and yet most investors — even those familiar with legal marijuana stocks — know practically nothing about it.
We reached out to Matt yesterday for his take on Canopy and the hemp/CBD market in general. Here’s what he told us …
The Canopy move was another signal that the hemp/CBD market will be huge in the U.S. and beyond. It is why we have been positioning our subscribers into the top hemp plays in anticipation of the Farm Bill.
Canopy’s gains continued yesterday morning (up another 4%) before profit-takers stepped in at the end of the session. At the time of this writing, Canopy is up 43% since Matt’s recommendation and is above his buy-up-to price. To read about the other marijuana stocks Matt likes that are still actionable, click here.
***The bullish marijuana news continues out of New York
Yesterday, New York Governor Andrew Cuomo released new details about his marijuana plan. Not surprisingly, it includes significant proposed taxes for legalized marijuana sales.
Marijuana sold by wholesalers to retailers would be taxed at 22%, with 20% going to the state and 2% to the county in which the retailer is located.
As The Wall Street Journal reports, “New York is bowing to pressure from its neighbors on marijuana policy.”
This pressure is coming from neighboring Vermont and Massachusetts, where marijuana is now fully legal (both medicinal and recreational). It’s also coming from New Jersey and Rhode Island, where Governors Murphy and Raimondo, respectfully, are calling for recreational marijuana legalization.
If this sounds familiar, it’s because you might have read something very similar from Matt. From his August special report to subscribers …
Each year, more states join the movement, and each time that occurs it puts pressure on a neighboring state to consider legalization. (Think about the potential tax dollars that would go across state lines.)
As to taxes, according to CNBC last month, the New York City Comptroller’s office said New York could “reap as much $436 million annually in new tax revenue from legal marijuana sales.”
With money like this at stake, expect to see more state legalizations in 2019 and beyond.
We’ll keep you up to speed here in the Digest. Or you can subscribe to Matt’s Investment Opportunities newsletter to stay on top of both the electric car and legalized marijuana trends.
Have a good evening,