Aurora Cannabis Is Smokin’ — and So Is Your Great Stuff Portfolio
It’s Time to Buy the Dip
Did you panic yesterday?
I hope you didn’t panic. You’ll miss out on the rebound if you did.
Can’t you see all the green in the market today?
Let’s look at some numbers, shall we? (Why are there so many questions today? Are we being tested?)
Yesterday, the S&P 500 Index fell more than 2%. It was disturbing, to say the least: tariffs, currency manipulation, market uncertainty … mass hysteria!
But I’m here to tell you there’s something else afoot … a market rebound.
Since the beginning of 2009, the S&P 500 (aka “the market”) has dropped more than 2% on a Monday 20 times. Following those manic Mondays, the market bounced back 0.75% on average the following day.
In the following week, the S&P 500 added about 2.1% on average, and was positive 75% of the time. If we extend that out to one month, the market is positive 95% of the time with nearly a 6% gain.
At the one-year point, we’re looking at a gain of 18.7% with a near 100% certainty of a positive market.
How’s that for optimism?
I’ll be the first person to tell you that past performance doesn’t guarantee future returns. (*Your results may vary. See Trump tweets for details.)
This data also comes from the raging bull market of the past 10 years. Many analysts believe the bull is exhausted at this point.
But I’m a glass-half-full kind of guy. The market wants to go up, and investors want to make more money.
If you’ve put your cash in solid companies with long-term prospects (and not speculative positions on companies posting heavy losses), your investments will rise — period.
Yesterday, the market handed you an opportunity in the form of cheap stocks.
Take that opportunity and run with it.
Good: Take-Two — Nothing but Net
If you’re still feeling down today, I have a couple of stocks that are real pick-me-ups.
The maker of some of the most-played games on the market — including the NBA 2K series, Grand Theft Auto and Red Dead Redemption — sailed past consensus estimates.
Earnings came in at $0.41 per share on revenue of $540.5 million. Bookings rose 46% on the quarter, driven by the NBA 2K series.
Take-Two also lifted its fiscal 2020 outlook above expectations.
TTWO shares are up roughly 8% on the news.
Better: Shake It to the Left, Shake It to the Right
Shake Shack Inc. (NYSE: SHAK) just reported earnings with all of its might (“hippy hippy” not included).
The sultan of shakes and burgers beat Wall Street’s earnings estimates by $0.04 per share and blew past revenue expectations.
Shake Shack also posted 3.6% growth in same-store sales, versus the consensus view of just 2% growth.
What’s more, riding strong digital and delivery growth, Shake Shack guided full-year growth at the high end of its prior estimate of 1% to 2%.
That delivery growth is expected to come from a new partnership with Grubhub Inc. (NYSE: GRUB).
SHAK shares are up nearly 13% as a result.
Best: Why You Need Great Stuff
Congratulations, Great Stuff readers! Your Insulet Corp. (Nasdaq: PODD) position is up big today.
PODD shares have surged more than 18% following last night’s quarterly report. The company reported sales growth of 43% on the quarter, with Omnipod sales surging 51% globally — that’s a 26% increase in the U.S. and a whopping 120% spike in international revenue.
If you followed my recommendation on Friday, you’re sitting on a gain of more than 16% in just two days!
You’re free to take profits if you want, but this company is in for bigger and brighter sales. To the moon, Alice!
This is why you read Great Stuff. Tell your friends.
Heck, tell me! Did you hit a big gain on PODD? Let me know by writing in to GreatStuffToday@banyanhill.com.
We blame them for ruining everything from consumerism to hotels to napkins.
Even though I’m a grumpy old man, I’m OK with all that. They can ruin whatever they want. Millennials will make lots of money for me in the next decade.
— Michael Carr, Editor of Peak Velocity Trader
I just love Michael Carr’s wit. Don’t you?
The man is on to something big with millennials. Specifically, there are roughly 92 million people in the millennial generation. That’s right … 92 million.
That’s bigger than the baby boomers at their peak (about 77 million).
As Michael pointed out in yesterday’s article “Millennials Ruin Everything — Except for Bull Markets,” this new cohort is set to usher in a new demographic tidal wave. One that could bring about the next Roaring ’20s.
But why just read about it? Next month, Michael will talk about how millennials will affect your investments at this year’s Total Wealth Symposium. I hope I’ll see you there!
Great Stuff Picks: Light It Up
I’ve shied away from recommending cannabis stocks in Great Stuff so far.
Given the full-scale retreat in the cannabis market, you can probably understand why.
But that changes today.
Aurora Cannabis Inc. (NYSE: ACB) has been my favorite in the sector for quite some time.
Why? Because Aurora hasn’t rushed out and spent gobs of cash to dive into the uncertain U.S. market. It hasn’t sidled up to a major alcohol or pharmaceutical company to make a deal.
Aurora has played it smart. It has no outside baggage or influence to deal with.
In so doing, Aurora has become the biggest potential producer of cannabis in the world. Management has lowballed the company’s production capacity at “over 500,000 kilograms” annually. Actual production capacity is likely considerably higher.
Furthermore, no other cannabis company has the same international reach. Currently, Aurora sells its products in 24 countries, far more than any of its competitors.
By discounting these key differences in favor of competitors’ big-name deals with Constellation Brands, Altria Group or Molson Coors, investors are doing themselves a great disservice.
In fact, short sellers are getting squeezed even as we speak. According to S3 Partners, short interest on cannabis stocks has soared 78% this year.
The biggest losers in this group? Those that shorted Aurora. S3 reports ACB short sellers face losses of more than $274 million.
And those losses are set to climb even higher, as Aurora just proved with today’s Street-beating fourth-quarter earnings report.
Once these short sellers have had enough pain, they’ll start to buy back their positions … and that’s when Aurora stock will skyrocket.
So, here’s what we have: long-term growth prospects, a company with an exceedingly smart management team and the potential for sharp short-term gains.
The bottom line: Buy ACB.
Once again, don’t forget that you can view all the back issues of Great Stuff on the web!
And, if you’re in the mood, drop me a line at GreatStuffToday@banyanhill.com. I love hearing reader feedback.
Until next time, good trading!
Great Stuff Managing Editor, Banyan Hill Publishing