Many pot stocks out there right now might not be what you think they are… and going in blindly could have devastating consequences.
Avoid these 2 pot stocks at all costs…
#2: Cronos Group (CRON) may not be a household name for most investors, but this Canadian business is one of the largest marijuana companies in the world. It first made headlines in February 2018 when it became the first marijuana stock to list on the NASDAQ, and by August it had attracted some big money.
That deal with Agroidea SAS — a leading agricultural service provider in Colombia — allowed CRON to expand into South America. The partnership will manufacture and export cannabis-based medicinal and consumer products for South America and the rest of the world.
Since then the stock has had a good, solid rally, but it is time to open your eyes and look at the numbers. The few marijuana stocks that have been able to make the jump to a major U.S. stock exchange have enjoyed the benefits of trading alongside Google (GOOGL), Apple (AAPL) and the like. The problem with Cronos is very specific — valuation.
The $4.7 billion Canadian company does not have the sales to back up the valuation. After reporting sales of $15.7 million in 2018, Wall Street is expecting the company to generate revenue of $40.1 million and $140 million in 2019 and 2020, respectively. That is impressive growth, but on a price-to-sales measurement, the stock trades at 117.2 times 2019 sales and 33.5 times 2020 projections. Any way you look at it, the stock is one of the most expensive in the entire industry.
#1: Tilray (TLRY) produces medical cannabis for research and public consumption. Most importantly, it was the first “pure play” marijuana company to IPO on an American exchange — and ultimately the poster child of a mini bubble. In August/September 2018, the stock rallied from $21.50 to $300 in six weeks. Since that time, the stock has lost 78% of its value… and it’s still overvalued.
The $3.7 billion company is one of the largest in the world, but the numbers do not support the valuation. Even if the company can reach analysts’ sales target for 2019, the stock is one of the most expensive of the big names. Sales are expected to increase to $185 million this year and that still has TLRY trading at a whopping 20 times forward sales.
Add in the fact that Tilray has been on a buying spree the last year and is likely in need of more cash — and things look dire in the near term. Another capital raise for the company will continue to dilute shareholders… and eventually the combination of interest payments and cost of goods sold will eat into sales. Avoid Tilray until the underlying valuation is cut in half, at which point the stock could have been cut in half, too.
Bottom line: While these companies still might be great plays and have gains left in them, there are much better plays in the booming cannabis industry right now.
Leading cannabis industry insider, Matt McCall, who some have dubbed the “Nostradamus of pot stocks,” says there’s one simple pot-stock buying blueprint EVERYONE should be following right now…
He would know. He’s been following this industry since the beginning. Matt’s on a first name basis with many of the business owners, CEOs and majority shareholders in the industry. He started his own early-stage equity firm, where he’s helped entrepreneurs in the pot industry secure start-up capital to start future billion-dollar businesses.
He’s also made more than 1,500 appearances on channels like CNN, Fox Business, and Bloomberg TV — when they want to know what’s going on in the markets.
In fact, just look at what some of the folks who are following Matt’s cannabis stock research have to say…
Doug W. from Panama City, FL says:
“I purchased two of your pot recommendations. Together, I’m up about $6,000-7,000 in under 2 months. Usually, I’m a ‘buy and hold’ mutual fund investor… so, not too shabby!”
Jeff L. says:
“I’ve more than tripled my money on your marijuana recommendations. Your analysis is great. I would recommend this to anyone.”
Andy W. told me:
“Obviously the marijuana stocks have done very well… which I’m happy about. I’ve made more than $3,000 so far.”
Mr. McCall has just finished putting together a free online presentation detailing his #1 way to make a fortune in the marijuana industry right now.
Matt’s even letting folks view it free of charge, right here.
In fact, Matt strongly recommends you circle September 17th on your calendar right away…
Bottom line: This could be the most important day this year in the pot industry and very few people are prepared for it…