Reader Feedback: Cannabis, Workhorse and Brazil Minerals … Oh My!

Last Dance With Mary Jane?

Gooooood morning, Great Ones!

Hey, this is not a test. This is Great Stuff’s Reader Feedback!

Yes, I know it probably won’t be morning when you read this, but I can’t get Robin Williams and Good Morning Vietnam out of my head. We can thank today’s main topic and its ties to a certain family member of mine who served in those bleak jungles way back when.

Anywho … today is the day we brave the slings and arrows (and virtual paper cuts) of your emails by diving into the Great Stuff mailbag. We’ll cover a slew of your favorite topics, including cannabis (aka the devil’s lettuce), electric vehicles (EVs) and lithium mining in Brazil.

By the way … y’all ran the gamut of Robinhood reactions. Thank you for sharing your thoughts, all of you! Let’s sum up: We’re just as appalled as you are. But we’re also just as tired of talking about the whole fiasco as you are. So … on with the show!

Want to get in on the feedback action?

All you have to do is write in to GreatStuffToday@BanyanHill.com. We’ll cover anything — and I mean anything — you feel like ranting about. Just drop us a line.

Speaking of which, Brad T. … sorry for forgetting “You Got The Silver” by The Rolling Stones in last week’s silver issue. Consider my punishment served — those silverheels were uncomfortable.

Now, let’s get right to today’s action with our featured presentation. I hope you brought popcorn, just in case you get the munchies:

R.F.Y., thank you for writing in! You make an excellent point on cannabis, and I’ll get to it in just a second.

Jose … not in favor of promoting pot?

Thank you for being a Great One, for writing in … and for giving everyone out there that knows me in person a really good laugh. Not in favor of promoting pot — that’s a good one!

Joking aside, you do have a point, Jose … at least from an investing perspective. If you go back and reread some of my recent commentary on cannabis stocks in Great Stuff, there’s a definite note of caution. I can’t deny that.

The “why” stems from two critical points, one of which R.F.Y. already made:

1. Cannabis is still illegal in most of the U.S. Yes, we’re getting promises from the new Biden administration and Democrats about legalization, but I’ll believe it when it passes.
2. Hype, hype … HYPE! Like F.Y. wrote, there are so many cannabis companies and so many stocks with sky-high valuations.

So, what to do? That’s the big question, right?

If you’re a short-term trader — good luck. Valuations are ridiculous across the board on Wall Street right now, and doubly so in markets like cannabis. The best approach here is to buy the dips, sell the highs and hope you don’t get cashed out.

Stocks such as Aurora Cannabis (NYSE: ACB) and Cronos Group (Nasdaq: CRON) come to mind as potential short-term trading opportunities.

If you’re a long-term investor, the prognosis is much better. With cannabis’ legality still up in the air — at least until Democrats grow a spine — the only thing you can do here is position yourself in a cannabis company with solid prospects in the U.S. market.

Personally, I’m looking toward companies such as Canopy Growth (Nasdaq: CGC) and its deal with Constellation Brands (NYSE: STZ). This deal gives Canopy clear distribution superiority in the U.S. once pot becomes legal. That fact alone makes CGC my favorite pot stock right now.

Alternatively, there’s Tilray (Nasdaq: TLRY) after its merger with Aphria (Nasdaq: APHA). Tilray has signed numerous distribution and collaboration deals both in the U.S. and abroad. Meanwhile, Aphria is probably the only cannabis company to consistently post positive revenue and earnings growth.

The Tilray/Aphria combination is almost as good as a peanut butter, Cap’n Crunch, Nutella and banana sandwich … under the right circumstances, that is, if you get my drift.

So, Jose … I hope I’ve dispelled the myth that I don’t promote pot. And R.F.Y., I hope I gave you something to think about when it comes to investing in cannabis stocks despite this crazy pot market.

And with that, away to the rest of the inbox we fly! But first, a word from our sponsor:

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We’ve more than enough emails to send us ranting till next Thursday — stuffed to the virtual inbox brim, I tell you. So let’s not dilly-dally and dive into today’s share of the feedback fun.

Who Said Stock Speculation Was New?

Welcome, Rhonda, to the world of penny stocks. Better yet — the world of micro miners (perish the thought). It’s dangerous to go alone! Take thee these proverbs three:

• Stocks this cheap usually trade this cheap for a reason. Usually.
• Stocks this small see no volume except when they do, hence a near-10,000% moonshot.
• Stocks this volatile dangle in the news cycle breeze — they’re lottery tickets at worst and speculative at best.

So … is this the case with Brazil Minerals? Let’s take a look.

Brazil Minerals touts itself as a “miner of all gems”, if you will. But the company’s main cash stream (in theory, at least) is exploration and building a portfolio of mineral rights. However, if you’re looking for cash flows, income, growth or any of the standard reasons you’d invest in a stock, BMIX ain’t it.

This stock is essentially a lottery ticket. Brazil Minerals got government approval to search for lithium, but it has yet to find any lithium … or even begin looking on the land where it was awarded exploration permits. That’s why BMIX popped. If the company finds anything, the stock will pop more.

That could be a year or more down the road. Or it could happen sooner. Such is the life of many a penny stock miner. Until then, get ready to dangle in the volatility breeze.

So … it’s a bit worse than a lottery ticket. At least with lotto, you know when your time’s up. If you haven’t taken profits of the table yet, you might want to think about what other ways would offer you better exposure to EVs and battery tech. In fact, I’ll save you the trouble:

Click here to learn more right now!

War Horse Caught in the Stable

I really like Workhorse! Those fine folks are just across the river from me in Cincinnati, Ohio — the company’s headquarters, at least. Workhorse (Nasdaq: WKHS) occupies a unique niche in the EV market that gives it an edge — the $18 billion market for delivery vehicles and cargo vans.

Not as shiny or sexy as Tesla in most people’s eyes, but much more important in my eyes. It’s a massive target market, yes, but we can’t forget that the Detroit big boys are moving in quick on the EV sector from all angles.

That in mind, I like how Workhorse already cemented firm partnerships with industry leaders — UPS, DHL, FedEx and the U.S. Postal Service.

On the timing front…

If you’re getting in at these levels after January’s 60% run, don’t be surprised if a pullback follows. WKHS is a bit expensive right now, but what EV stock isn’t?

Workhorse should eventually grow into its valuation, but the ride will be filled with additional gains and losses while the market settles down.

Also, if you didn’t catch my drift the first time around … there’s much more action going on in the EV market than just automakers themselves. Click here to see more!

Ride the Barrel

Class … see here: the difference between traders and investors.

Stefan is an investor who was already holding a stock, went for a ride and benefited from it. Traders would’ve seen the activity (or anticipated the activity) and then tried to benefit from it.

Tremendous work, Stefan. Carry on.

Subject: Portfolio

Davidah, if someone’s charging you for Great Stuff Picks, you’re being suckered. The Great Stuff Picks portfolio is free.

Don’t believe me? Just check here for a whole list of the greatness that your fellow readers are banking.

One More Email?

Surprise. You’re in it!

If you want to know more about us, you can catch us on the web (click here) anytime, anywhere. Tomorrow, we return to our irregularly scheduled programming — markets, memes and stock-trading schemes.

Until then, you have a smorgasbord of ways to keep in touch with us. Check out our Poll of the Week right here. The golden question this week is: If you’ve avoided cannabis stocks so far … why? Let us know!

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Until next time, stay Great!

Joseph Hargett

Editor, Great Stuff