I’ve been recommending marijuana investments since 2014. That’s five years now. Many of my early recommendations have soared hundreds, even thousands of percent.
I’ve gotten to know many of the most important players in the industry. I’ve also personally invested in private marijuana deals that have produced some stunning success.
A colleague of mine even refers to me as “The Original Marijuana Stock Bull.”
I’m flattered to be considered one of the earliest and most plugged-in marijuana investors. But at no time in the past five years have I seen the level of marketing related to marijuana investments that we’re seeing now. It seems that everyone is starting to call themselves a marijuana expert. Guys who were defense industry analysts a month ago are now pounding the table on marijuana.
I guess it’s better late than never?
Interest in sectors and asset classes ebbs and flows, and because the marijuana industry has been flying so high in recent months, we were overdue for a short-term correction.
We’re seeing that now. But don’t make the same mistake a lot of people are making. Don’t sell your holdings because some idiot tells you “the marijuana bubble has popped.”
Instead, focus on the long-term picture. And in this case, the long-term picture of the marijuana industry has never been more promising.
That brings me to my pick in the Best Stocks for 2019 contest.
Charlotte’s Web (OTCMKTS:CWBHF) isn’t your typical marijuana company. It focuses on a niche sector within the larger industry –cannabidiol, also known as CBD. According to Brightfield Group, the hemp-derived CBD market is poised to increase from $591 million in 2018 to $22 billion by 2022. That is nearly 40x growth in four years!
Charlotte’s Web is the early leader in this booming, up-and-coming industry. It produces and distributes CBD wellness products, including everything from tinctures to topicals to capsules, both online and in stores. And as a result, it has become the world’s leading CBD brand by market share.
The company has been a pioneer in the industry since being founded in 2013. Its brand became well known after a CNN documentary aired based on the life of a little girl named Charlotte Figi. Charlotte suffered from up to 300 grand mal seizures per week, but she found treatment — and almost a cure — in cannabis oil. The brothers who manufactured the strain went on to found Charlotte’s Web.
If you’re interested in reading more about Charlotte’s story, check out my initial recommendation here.
Nothing Can Stop Charlotte’s Growth Trajectory
Through the first quarter of 2019, Charlotte’s Web rallied an unbelievable 80%. It continued to a high of $25.25 on April 4 — a gain of 127%! — before getting caught up in the broad volatility we talked about earlier.
To add insult to injury, the company also got hit by a few other negative headwinds. Still, neither impacts its long-term potential one iota.
The first was insider selling. While it’s not something we ever want to see, it can happen for understandable and legitimate reasons, especially after a company goes public. Early investors want to lock in profits as a smart financial decision that has nothing to do with their belief in the business.
The second news event was the FDA’s hearing on possible regulations for the exploding CBD industry. I’ll be honest. I am not usually a fan of regulations. But in this case, more government oversight will benefit both the industry — which includes Charlotte’s Web — and consumers alike. There are too many bad players in the CBD space that sell junk. Regulations should eliminate the bad players and allow best-in-breed companies to gain more market share. Charlotte’s Web already has the largest share of the U.S. CBD market, and that should only grow in the coming years.
Back in March, the company’s products were available in 3,680 retail locations. Today, that number has exploded to 6,000! Here’s how I know that expansion will continue…
In April, Charlotte’s Web announced a new CEO in a move that tells me a good bit about where this company is headed. And I like what I see. Adrienne Elsner, a former senior executive of the U.S. snacks division of Kellogg, took charge on May 15.
The selection of Elsner means that Charlotte’s Web will be focused on branding and shelf space in the coming years. Both are very important for the whole industry, and especially for the leading U.S. CBD company. Even though a lot of people who know about CBD have heard of Charlotte’s Web, the average American likely still conjures up memories of the great children’s book.
Branding is a big deal as cannabis goes mainstream. One company has yet to emerge as the McDonald’s or Coca-Cola of marijuana. Companies that establish their brands early set themselves up to be huge winners.
Charlotte’s Web has as good a chance as any to be that first major label. With an experienced consumer brand executive like Elsner at the helm, the odds just get better.
Don’t Miss Out on CWBHF
As of June 28, Charlotte’s Web is up just 32% year-to-date, so it has given up a lot of its early profits. But that’s perfectly okay. Not only does this stock have massive potential in the months and years ahead… the weakness is creating a HUGE buying opportunity.
Revenue for 2018 came in at $69.5 million, and analysts believe the next three years will bring in revenue of $164 million, $352 million, and $469 million. That would be impressive growth, and we can still buy in at attractive prices.
In 2018, Charlotte’s Web produced 675,000 pounds of hemp on 300 acres of planted land. The company only had 70 acres of planted land in 2017 and 45 acres in 2016. This year, Charlotte’s Web planted 862 acres of hemp — an increase of 187%. This ability to expand is key to keeping up with demand.
There is no question that Charlotte’s Web remains my top pick to profit from the CBD market over the long term. The industry leader has a first-mover advantage, and I expect it to continue taking market share as more government regulations force the small, unethical businesses to close their doors for good.
Still to come in 2019, I look for the company to announce a major distribution partner ––possibly Walmart — and apply to make the jump to a major U.S. stock exchange. Both are very attainable in the months ahead.
In fact, Charlotte’s Web has officially made the jump to the Toronto Stock Exchange (TSX) and is now trading under the ticker “CWEB.” The upgrade from the Canadian Stock Exchange (CSE) is being news, and it will help attract big institutional money. But the even bigger news will come once the stock makes it onto the New York Stock Exchange (NYSE) or NASDAQ.
Based on its current market cap of $578 million, Charlotte’s Web is undervalued versus its peers… which adds to the already big upside potential. This is an opportunity we do not want to miss out on.
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.