Here’s My 2020 Outlook For Cannabis Stocks
Marijuana stocks are breaking out, right on schedule.
Stocks in the sector got ahead of the fundamentals earlier this year. One reason for that is that the impact of regulations are difficult to determine in advance. Legalization, for example, seems bullish. And it generally is — but if taxes are too high, then the illegal market will thrive alongside the legal market.
This is what happened in many parts of the country, and it is being addressed.
So as we head into 2020, I have some thoughts on how the industry will take shape. In short, I’m predicting that the legal cannabis industry is likely to flourish as concerns about safety increase.
You read that right. NPR recently explained the safety problem the industry is poised to address:
As of Dec. 17, there were 2,506 hospitalized cases of e-cigarette, or vaping, product use associated lung injury, which is now referred to as EVALI by the CDC. The incidents were reported in all 50 states, as well as the District of Columbia, Puerto Rico and U.S. Virgin Islands, since the summer.
Fifty-four deaths have been confirmed in 27 states and the District of Columbia.
The CDC’s data suggest that the outbreak might have peaked in mid-September, when reported cases were climbing by the hundreds each week. In late August there were fewer than 200 severe lung illness cases reported. But by the end of the following month, there were more than 1,000.
Investigators say black-market THC vaping cartridges are playing a central role in the spread of EVALI. They have pointed to vitamin E acetate, a thickening agent that’s used in black market vaping products, as a “chemical of concern.”
What does all this mean? Well, I think this whole situation will actually be an opportunity. In short, I think heightened awareness of risks will move some users to legal products, even if they cost more. The industry is also aggressively addressing costs to be competitive with unregulated sales.
Now Is The Time To Strike
Overall, the fundamentals are improving and will continue to do so. So are the technicals.
The reason I believe the sector bottomed on schedule is because there was a wave of tax selling. Investors who rushed into the stocks earlier this year showed losses, and many sold to realize the loss for tax purposes.
That explains the bottom pattern that can be seen in the chart below. The final wave of tax loss selling may have been completed in November.
Momentum — shown with my proprietary indicator at the bottom of the chart — is bullish. This indicates some investors are already buying back into the sector.
Action To Take
As I write this, there is a risk of additional tax selling as we close out the year. I intend to begin aggressively adding to the portfolio over at Precision Pot Trader as that risk fades.
So stay tuned as we head into the new year. I plan on covering this space in more detail as the industry evolves. And I’ll even share some tips on how to profit…
There’s no reason you and I shouldn’t be looking at this space for profits. A lot of the stigma around cannabis is fading with each passing week – especially as we learn more about the potential medical and therapeutic benefits.
That means taking positions in a few promising pot-focused companies could lead to major profits in 2020 – and beyond.
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• 1,400% on Corbus Pharmaceuticals in 2 days
• 850% on Amyris in a week
• 838% on AbbVie in 3 days
• 700% on Neptune Wellness in 2 weeks
• 380% on Tilray in 3 days
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