By Matt McCallMay 09, 2019
Canadian stocks have gotten more love from Wall Street these past seven months than probably the last 17 years.
All because the Great White North (as it’s often called) transformed itself into the Great Green North.
Canada was the very first major country to fully legalize marijuana on all levels. That move had been in the works for years. When it finally happened in October 2018, it made a lot of people a lot of money.
Just look at Canopy Growth (CGC) and the fact that it’s now worth $16 billion. It’s the largest marijuana company in the world. (And the next four largest are Canadian as well.)
Canopy Growth has made some investors a lifetime of profits – and it’s only been public since April 2014. It took two years to begin its parabolic rise, but that’s not unusual. And since then, it’s been one of the best performers in the United States and Canada. The chart below tells the tale.
From that humble beginning at $20 million, Canopy is now worth nearly 300 times that… creating billions in wealth for its shareholders. But that’s just one company. Many more Canadian pot stocks have grown from less than $100 million microcaps to valuations well above $1 billion.
Until marijuana is legalized in the United States – which I anticipate happening sooner than later – U.S. pot stocks will remain in the earlier part of that chart. They face major limitations on their businesses. These limitations result in the stocks trading at a major discount to their Canadian peers.
Let me show you just how discounted U.S. stocks still are. In the chart below, four Canadian and six U.S. pot stocks are ranked according to their forward price-to-sales (PS) ratios. (In other words, we’re using expected future sales to compare the stocks’ valuations.)
As you can see, the PS ratio has a huge range from 102.6 to 0.3. The top four are all Canadian companies, with the lowest PS of 23.49 belonging to Tilray (TLRY). The bottom six are all U.S. stocks, and they are trading between 0.3 and 8.6.
So even the most expensive U.S. stock – Cresco Labs (CRLBF) – trades at one-third the value of a “cheap” Canadian stock like Tilray. In general, U.S. stocks are valued at just one-tenth of their Canadian peers.
This is absolutely crazy to me. And I absolutely love it because it’s a huge opportunity.
The California marijuana market alone is bigger than all of Canada… and it’s growing. If and when U.S. legalization occurs, the U.S. will immediately become the largest market in the world. In fact, it will be bigger than the rest of the world combined.
As we have talked about over the last few days, I expect federal legalization very soon. But even aside from that game-changing development, the gap in valuations will lessen in the next 18 months. That’s why U.S. marijuana stocks are one of the best buying opportunities in the entire market right now.
At Investment Opportunities, we were able to ride Canadian stocks like Canopy Growth much of the way higher, which I’m quite proud of. But a lot of the most attractive Canadian pot stocks have just gotten too expensive to buy today.
However… many attractive U.S. stocks are both undervalued and still in “penny stock” territory.
Penny stocks often get a bad rap. But they are actually critical to the global marketplace. The world NEEDS tiny companies — just as much as bigger ones. They’re the job creators. The innovators.
And as an investor, if you’re looking for the next Netflix or Apple, this is where you’ll find it.
You just want to be VERY choosy about which ones you buy.
I use strict guidelines to pick penny stocks — and I tell you all about them in my latest presentation.
When I used my five-step evaluation process on the marijuana market, I identified four stocks that are worth buying now.
During my presentation, you’ll have the opportunity to secure a free copy of America’s Top 4 Marijuana Moonshot Stocks… I’ll even give you a fifth bonus name just for fun.
P.S. I don’t think it’s a stretch to assume that the next wave of marijuana wealth could be explosive.
I want you to see for yourself what is truly at stake for investors who get in BEFORE America legalizes nationally.
I want you to understand why it’s critical to invest now… before the announcement of the national legalization of marijuana!
Marijuana’s next wave of wealth is approaching much quicker than you think. Stay tuned to MoneyWire. And if you want more information now, please click here.
Note: This is Part 4 of a series on the opportunity presented by the upcoming legalization of marijuana in the United States. Click here to read Part 5 now.
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