Every month I get asked to start a newsletter covering marijuana stocks.
I always say no.
I mean, I get it – this will be the fastest growing sector in 2019 – possibly in the whole world.
One of The Big Catalysts will likely come from the US – it’s The Big Dog in this market and it will almost certainly legalize marijuana federally sometime in 2019. We just saw bipartisan support for this with Congress passing the Farm Bill which legalized hemp and the status of CBD (Cannabidiol).
Not only is there an existing large market waiting to be filled, now medical research can begin in earnest to find even more positive benefits to cannabis products.
The investor opportunity is incredible – and I think we’re barely into the second inning of this ball game.
The problem I see – that has kept me out of this sector – is that these public company marijuana stocks are all story and no substance. Most of them I wouldn’t touch with a ten-foot pole.
I really try to be an investor – fundamentals and intrinsic business value matter to me.
In fact, there’s only ONE marijuana stock I’ve ever found that has a near bullet proof business model and is executing its plan.
This company allows me to get exposure to the hyperbolic growth that the marijuana sector has in front of it (which nobody disputes) – but also ticks all of the fundamental boxes that every value investor like me would love.
To let you know how different this company is… it is the only stock in the marijuana space I’m willing to own right now.
This company fulfills all my criteria as a value focused investor:
1. Top notch management – the BEST
2. Management owns a lot of stock, and takes almost no salary
3. No debt/net cash – one of the best balance sheets in the sector
4. Cash flow positive and growing fast – cash flow could increase 6-10x in 2019
5. Has a realistic, traditional valuation relative to its growth rate
And as a bonus, it’s business has nothing to do with the US – just yet. So I can still cross the border!
At first I was intrigued, but then I got excited. How could a marijuana stock tick all the boxes?
What Everyone Else In The Sector Is Missing
Cash Flow, Cash Flow, Cash Flow!!!
There is a lot of hype around the marijuana sector.
There should be… because fortunes will be made from the growth that this sector will experience in the coming decade.
This sector has been full of hype, but at the end of the day, what matters is always the same… CASH FLOW.
Don’t let anyone fool you. It is a growing cash flow stream that drives the biggest stock market winners. It doesn’t matter if we are talking about insurance companies, oil producers or technology companies.
The marijuana sector doesn’t have that yet. That lack of cash generating businesses is what is keeping all of the respectable (and BIG) institutional money on the sidelines. And without that institutional money – the upside in these stocks is limited.
Institutional capital does want exposure to the huge opportunity that is marijuana. But the institutions can’t buy stocks based on hype. The institutions need to buy stocks based on financial performance… based on cash generating ability.
There are tens of billions of institutional dollars just waiting to buy marijuana stocks. That money is just waiting for cash generating companies to develop.
This is exactly why this one company, my only marijuana stock, should have a huge 2019.
In the next 12 months I believe that institutional investors will become big buyers of select marijuana stocks.
Why? Cash flow… rapidly growing cash flow.
The marijuana stock I own is already generating free cash flow. Over the next 12 months the company has a clear sight to increasing that cash flow tenfold – that’s 1000%.
There are no hoops to jump through, no wishful thinking here. The company has already made the up-front investments to generate this cash flow ramp and now just needs to carry out a simple business plan – one that has no impediments in front of it, except time.
With every quarterly filing in 2019, I expect the institutional money to see not just growing cash flow, but at a scale that makes sense for Big Money. I’m talking $10 million to possibly $90 million. Everyone has been looking for a free cash flow generating marijuana stock.
And this company is it…
This Company Has Credibility From Top To Bottom
The most important factor in any company is management. When I tell you about management, you’ll ask yourself – how did I not know about this company?
Every single door in the marijuana industry – and in the Tier 1 banks – is open to this CEO.
Everybody wants to be part of his empire, because his name and company brand bring respect and money.
That’s the kind of guy with whom I want to invest. His relationships open doors in ways that no other company can compete with.
And every time the company achieves a milestone, its shares will get rewarded.
This management group put $5 million of their own money into the shares of this company. The CEO gets paid the grand sum of $1/yr. One dollar – because he owns stock!
The company was structured this way on purpose: they keep G&A costs VERY low so that the company (read:shareholders) can benefit from as much cash flow as possible.
It’s Financially this company is also built upon quality… it’s got a pristine balance sheet. It has a pristine income statement. Who else in this sector already has positive cash flow and will grow 10x in 2019?
As the market learns the names of these key relationships and the opportunities that they are laying the groundwork for… it will be a game-changer for this stock.
What Valuation Does 5 to 10-fold Growth In Cash Flow Gets You….
As 2019 unfolds, I expect investors to be drawn to this low-risk, high growth company.
What I’m talking about here is a cash flowing, rapidly growing, debt free, cash rich, marijuana stock with a trusted management team and high quality recognizable partners.
Can you see where that is going to attract some attention?
As the cash flow ramps up in 2019 this company is going to stand out to institutional investors like a 500 carat diamond sitting on top of a field full of jet black coal.
DON’T MISS MY NEXT EMAIL!!!
If a company like this happens to interest you – do not miss my next e-mail.
In that e-mail I’ll direct you where I’ve positioned myself ahead of the institutional money that I expect to pour into this stock in 2019.
I will provide for you the name and the ticker of this company – the only marijuana stock that I’m interested in owning. A company that is all quality and ready to see cash flow explode higher in 2019.
What I’ll tell you specifically in that e-mail is:
1 – Specific details of the core business and how it will see cash flow ramp up 5-10x over the course of 2019
2 – The key relationships that is going to turn this already cash flowing business into a huge player in both the American and international marijuana market
3 – How I arrive at my valuation targets that show this stock being a multi-bagger within 18 months
Everything I’ll tell you – you will be able to verify for yourself through this company’s financial filings.
I’m sure that this company is by a wide margin the must lucrative way to play what is going to be a huge 2019 for the marijuana industry.
Keith Schaefer
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