When I tell people that marijuana stocks may be one of the best investment opportunities of their lifetimes, I think their minds usually go to the more dramatic story of “legal weed” — like the “cannabis cafés” popping up everywhere from West Hollywood to Alaska.
However, I’ve long thought that its non-psychoactive cousin, cannabidiol (CBD), could be the real growth opportunity.
But don’t take my word for it. CVS Health Corp (NYSE:CVS) and Walgreens Boots Alliance (NASDAQ: WBA) apparently see the same thing.
In the last week, both CVS and Walgreens have announced that they will start selling CBD in several different states. (Specifically, the topical creams, etc., for pain relief.) We’re talking about huge pharmacy brands; CVS stores in particular are ubiquitous in major U.S. cities — and now that it’s operating Target (NYSE:TGT) pharmacies, that goes for the suburbs, too.
So for CBD companies like the one we’ll look at in a minute, access to these massive distribution networks is a big deal. According to the Brightfield Group, we can expect hemp-derived CBD sales at chained retailers to go from zero in 2018 to $13.9 billion in 2022. That’ll be about two-thirds of an overall $22 billion market.
But maybe an even bigger deal is that CVS was the first “big box” retailer to jump on the bandwagon.
CVS is increasingly conservative with its offerings when it comes to pain meds. Most folks can’t get more than seven days’ worth of opioids. And even each day’s dose is limited, depending on the strength of what’s prescribed.
So, the fact that CVS is selling CBD really underscores what I’ve been saying all along:
CBD is one of the most beneficial compounds you can get, without the nasty side effects of drugs. It’s now a part of my normal health and wellness activities — I take it every night before I go to bed. Over the years, I have turned friends, family, and colleagues on to the benefits of CBD and seen positive changes in their lives as well.
I know people who suffer from chronic pain. And, of course, the standard treatment is opioids. The biggest reason for that is simple — the power of global pharmaceutical conglomerates. Unfortunately, we now see the tragic consequences every day.
We are now losing 130 people a day to opioids in the United States, according to the CDC. And many turn from pills to heroin, causing those overdose rates to skyrocket.
How many people overdose on non-synthetic CBD? Zero. There aren’t even any major side effects.
With the recently passed 2018 U.S. Farm Bill that legalized industrial hemp, I expect we’ll start to see the research and education we need to have CBD largely replace opioids across the country.
The impact of that would be enormous. In 2016, the U.S. opioid market was valued at $23 billion. I expect a large amount of that to shift to alternatives in the next few years, most notably CBD, so we’re talking about billions of dollars.
And it’s also interesting to note that CVS is far and away the leading pharmacy when it comes to prescription revenues. It brings in almost as much as its next two competitors — Walgreens and Cigna (NYSE:CI)/Express Scripts — combined.
So, CVS could be an especially key player in the growth story of medical marijuana, in addition to the Curaleaf (OTCMKTS: CURLF) branded topical CBD the company will now be selling.
When major retailers get involved in formerly “niche” products, the sky is usually the limit.
Impact on Cannabis Stocks
From an investment perspective, the sales projections — and the opportunity to steal market share from Big Pharma opioids — make marijuana stocks a compelling growth story. And, specifically, CBD stocks.
Curaleaf took off on the CVS partnership news, by as much as 49%.
Charlotte’s Web Holdings (OTCMKTS:CWBHF) did well, too… and it’s a pure play on hemp-CBD. It’s also my pick for InvestorPlace’s Best Stocks for 2019 contest.
In researching CBD stocks when few others were, Charlotte’s Web stood out as the clear leader. It’s set to grow more than 100% annually over the next five years, as it’s uniquely qualified to benefit from the trends I just laid out.
The company gets its name from a little girl named Charlotte who was suffering almost constant grand mal seizures, but saw them largely disappear after trying CBD oil. (I’ve covered Charlotte’s story before, and you really ought to check it out. It’s truly amazing.)
These days, Charlotte’s Web is a $1.8 billion company by market cap, and its quarterly revenue trends are powerful:
As I mentioned when I named Charlotte’s Web as my Best Stock pick, the company is really ramping up its production… so in the future, when CVS or one of its peers is looking for CBD, they’ll come calling on Charlotte’s Web.
Wall Street is starting to catch on, driving the stock more than 68% higher since I recommended it in Investment Opportunities just six months ago. I’m glad to have spotted it early.
And throughout my career, I’ve found that investing in the early innings is key.
If you’d known how to play Visa (NYSE:V) a few years ago, as my readers did, you’d have seen it go from $17 to $150.
Same thing with Ulta Beauty (NASDAQ:ULTA), which went from $60 to over $300 for us.
Now, marijuana and CBD stocks are one of the key areas I’m turning to for early-stage profits.
I certainly don’t just buy any old IPO. I want to see that the company can make money first. Plus, it’s crucial to get the timing right.
That’s what I designed my Cannabis Cash Calendar system to do for marijuana IPOs. And our first play is seeing 120% gains in less than four months!
On April 4th — next Thursday — I am planning to release my next Cannabis Cash Calendar recommendation. You can get exclusive access to it as soon as it’s released to my Investment Opportunities readers. Click here to learn more about this opportunity and how to get on the list to be notified.
Maybe you don’t know much more about marijuana stocks than what I’ve said here. That’s fine. Even if you’ve never even bought a stock before, you’ll want to check this out. I’d say take a small stake…and you could potentially see that multiply over the next 12 months. Click here to learn more about this incredible story.
Matthew McCall is the founder and president of Penn Financial Group, an investment advisory firm, as well as the editor of Investment Opportunities and Early Stage Investor. He has dedicated his career to getting investors into the world’s biggest, most revolutionary trends BEFORE anyone else. The power of being “first” gave Matt’s readers the chance to bank +2,438% in Stamps.com (STMP), +1,523% in Ulta Beauty (ULTA), +1,044% in Tesla (TSLA), +611% in Liquefied Natural Gas Limited (LNGLY), +324% in Bitcoin Services (BTSC), just to name a few. If you’re interested in making triple-digit gains from the world’s biggest investment trends BEFORE anyone else, click here to learn more about Matt McCall and his investments strategy today.