Opioid Disaster Points to Cannabis


That was quick. The squall that hit the Aussie market earlier this week seems to have blown over already.

US stocks are now catching a bid again and settling everyone down.

It was only on Tuesday I mentioned turning this selloff to your advantage and picking up some shares you want to own at a better price.

I know many stocks I follow were bought back up.

Here’s one example from a company called Phoslock Environmental Technologies [ASX:PET]

Source: Optuma

Does this mean this stock is guaranteed to go higher? Not at all. There are no guarantees in the market.

But it does suggest the ASX remains in an overall bull market…

Take advantage of dips when they present — for now. 

I’m not saying this is easy. Your emotions can often work against you because it feels ‘wrong’ to buy when the headlines seem so troublesome.  

There’s still time to pick up good stocks. Go here before the market starts trending higher again.

Where to stake our bearings right now? There still looks to be a lot of opportunity in the cannabis sector.

You could do very well casting your eye over the names that trade here.

Let’s take a look at recent announcements to see what’s been happening.

Price spikes possible for one reason

Charlotte’s Web Holdings [TSX:CWEB] is a name I’ve mentioned in the past.

This stock trades in Canada — and not Australia.

But it’s an important business to follow. It operates in the CBD sector and sells hemp-based supplements.

On 29 July, it announced that America’s largest grocery retailer is going to start stocking its products in 22 states.

The stock has rallied about 30% since this announcement came out.

Why is this important?

It shows the lift you can get from a good announcement. Look at the scale of America. Any expansion has the potential to be huge.

These kinds of announcements and deals can keep coming in the cannabis sector because there’s so much growth possible.

That’s just part of the opportunity in front of the cannabis stocks — many of which trade in Australia.

Althea Group Holdings [ASX:AGH] is another stock to keep an eye on.

The company pointed out this week that Australian medicinal prescriptions were at their highest rate ever in July.

It’s early days yet…but it’s a very positive sign for the industry.

I keep wondering if cannabis is going to get a lift from the carnage happening around opioids currently. 

Drug distributor shares in the US are coming under big pressure because of the lawsuits coming up for the industry.

You can think of tobacco in the 1990s to get some idea of the scale here.

An alliance of states are demanding US$45 billion in compensation because of the wave of addiction and death that has swept America. 

It’s not clear whether this wave of lawsuits would end with this, either.

Cannabis looks better than opioids in the wake of this

Cannabis pain treatments are under heavy development right now — and are moving through trials and testing.

We can’t be sure that major market success is going to happen…but we do know the payoff is huge if it works. That’s a bet worth taking, in my view.

One of the stocks on my recommended buy list has a well-developed angle into pain treatment. It’s a perfect example of a stock to buy on a market dip, too.

Why? The outcome of the business relates to how successful its pain treatment is for patients and the potential hospital uptake around that.

It has nothing to do with China, Donald Trump or the Reserve Bank…or the usual ‘macro’ spiels we hear for each market wobble.   

But you do have to know what’s going on inside the company to make a judgement call like that.

It’s also another example of another business that could become ripe for a takeover offer.

There are so many big North American stocks in this industry.

That makes some of the smaller Aussie players look ripe for the picking, now that a lot of the early business work has been done.

You might be surprised how many Aussie cannabis stocks either have partnerships with North American firms or deals in place that could enable them to monetise the American market.

We have a window of opportunity here. I suggest you take advantage of it while it remains open.

Best wishes,

Callum Newman Signature

Callum Newman,
Editor, Profit Watch