Investor Insights:
- Since peaking in March, cannabis stocks have fallen more than 50%.
- We’ve seen this before. Facebook shares fell more than 50% in 2012.
- My team and I developed an indicator for stocks that have fallen too far.
There are tens of millions of addicts in this country.
Their addictions take many forms.
Some are hooked on nicotine. For others, it’s alcohol.
Believe it or not, some are addicted to adrenaline.
Because of this, there’s a group of stocks that will always be worth considering.
Vice stocks, sin stocks … call them what you will.
We generally define them as companies in the alcohol, tobacco, gambling and weapons industries.
Today, there’s another group to add to that list: cannabis.
Like the product itself, cannabis stocks aren’t for everyone. But they’re investment opportunities that are going to be around for a long time … and will continue to make new highs.
So if you’re looking to get exposure to this sector, now is the perfect opportunity.
Cannabis stocks are down 50%. And I know a great way to capture the best stocks when the sector rebounds.
Get Used to Cannabis — It Isn’t Going Away
Stocks trend in a given direction … until they don’t.
Take a look at this chart of the Horizons Marijuana Life Sciences Index exchange-traded fund (Toronto: HMMJ):
HMMJ Is Down More Than 50% Since March
(Source: Bloomberg)
Since peaking in March, it has fallen more than 50%. And that’s after Tuesday’s 5% up move.
The thing is, cannabis isn’t going away.
If you don’t like it, blame it on your politicians.
Their inability to balance the budget forces them to find new sources of tax revenue. Cannabis is just the latest one.
The state of Colorado began accounting for taxes on marijuana when retail sales became legal there in early 2014. Since then, it has collected $1.1 billion in revenue.
(Source: Colorado Department of Revenue)
This trend isn’t going anywhere.
And although cannabis stocks have struggled recently, they’re not going anywhere either.
Some Stocks Fall Too Far
We’ve seen this before.
Did you know Facebook shares fell more than 50% from their peak after it went public in 2012?
These things happen.
The market gets too excited about a name or industry and bids the stocks up.
Then, they fall back to reality … and lower. The result is a more reasonable entry point.
My team and I just developed an indicator that will alert us to names like these that have fallen too far.
I can’t tell you all the details of it here. But I invite you to tune in to our Profit Line Summit, which is coming up on Tuesday, October 22.
You can reserve your spot now by clicking the link here. And if you enter your phone number to get text alerts for the event, we’ll send you a free copy of my team’s new special report.
Vices Are Unavoidable — Take Advantage and Profit
We can’t avoid vices. They’re just a part of our human nature.
As you’ve seen, governments even encourage some of them. Their usage brings in extra tax revenue.
And this can lead to opportunities.
You should be on the lookout for them.
Create a list of names you want to own when the dust settles. Then get ready to buy.
Good investing,
Editor, Profit Line
P.S. I recorded a short video as a way to share my thoughts on another booming industry that many investors are overlooking:
