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Joseph Cotton: Everyone knows the country is ‘going to pot’ — and the good news is you can profit from it

As everyone knows, the country is going to pot. But the good news is that you can profit from it.

Pot stocks, which used to be mostly made up of hyped, penny stocks and scams have become mainstream….with a vengeance. The impetus behind the huge resurgence in pot stocks has been the legalization of recreational and medicinal marijuana in an ever-growing list of states, and also the recent legalization of hemp in the Farm Bill passed in December 2018.

Processed hemp produces oil, known as cannabidiol (CBD), which possesses the same, apparently amazing health benefits of CBD in marijuana, but without THC, the psychoactive ingredient in marijuana that makes you high. CBD is the new rage across the country, and companies are gearing up to meet the huge demand for the product, whether infused in beer and soft drinks, or in pet foods, or muffins. As a result of this huge demand for cannabis and CBD, companies like Constellation Brands (Corona Beer) and Altria Group (Marlboro Cigarettes) recently made huge Billion Dollar Investments in some of the most promising “Pot” companies below.

In November 2018, Constellation Brands made a 4 Billion investment in Canopy Growth Corp (Stock Symbol -CGC), in exchange for 37% of the company. CGC is a Cadillac in the industry, with a 16 + Billion Market Capitalization. The company engages in the growing, possession and sale of medical cannabis in Canada.

Even Martha Stewart is getting into the act, as she is now a consultant for Canopy Growth- advising them on the creation of a new line of CBD products. Incredible!

Canopy Growth (CGC) is a highly volatile, and speculative stock. We gave it a Buy Rating at $45.72 on Sept 4, 2018, and also at $33.56 on November 26th, and then again at $38.25 on January 14, 2019. The well respected Jefferies brokerage house gave it a “Hold” Rating on February 25, 2019, with a $64.00 target price. The stock closed on 3/5/19 at $47.88.

On February 21, Cronos Group (Stock Symbol- CRON) agreed to let Altria Group buy 45% of their outstanding stock for 1.79 Billion, and the right to buy an additional 10% for another 1.04 Billion. The company is a globally diversified and vertically integrated cannabis company and sells recreational and medical cannabis and oils.

The Cronos Group (CRON) is also a highly volatile and speculative stock. We gave it Buy Rating at $8.81 on November 26, 2018, and it has more than doubled in 3 months. Today, Cowen & Co., a well respected, old line, brokerage house started it with a “Market Perform” Rating and a $29 price target. The stock closed at $23.70 on 3/5/19.

We like to Buy Low and Sell High…and try not to get too greedy.

A low priced pot stock we like, Green Organic Dutchman (Symbol –TGODF) produces and sells farm-grown and pharma-grade organic cannabis in Canada to licensed producers or licensed dealers. Jefferies came out with a Buy Rating on it on February 25, with a price target of $4.56, and Seaport Global gave the stock a Buy Rating on February 21st. We gave it a Buy Rating on February 25, 2019, at $2.81 and we bought the stock at $2.84 the same day.

This is a very volatile and speculative stock. It is coming out of a Head & Shoulders reversal pattern and it had a good increase in volume as it broke thru the trend line to the upside. It closed at $3.33 on 3/5/19.

We believe that Pot stocks are going to move substantially higher, both in the short and long term.

Nothing I have said in this article is to be construed in any way as investment advice. For investment advice, consult a Registered Investment Advisor or a Certified Financial Planner. Our stock picks are based on the technical analysis of stock trends. Our website is www.cottonstocks.net and our email is cottonstocks@hotmail.com

NKY’s Joseph W Cotton is publisher of the market newsletter, Cotton’s Technically Speaking. He is a graduate of Xavier University, a former bank manager and credit analyst, and a registered investment representative. Contact him at cottonstocks@hotmail.com

The stock charts: A red asterisk marks Cotton’s “Buy Rating.”

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