3 Sectors To Consider When Building Your Green Portfolio

Biotech

The biotech sector will be one of the greatest beneficiaries of the legal cannabis movement and we expect this market to see incremental growth over the next decade. The cannabis industry is at a turning point and after spending several years researching cannabis and developing products, companies are beginning to realize the fruits of their efforts.

The cannabis-biotech opportunity is comprised of some of the best capitalized and most mature public companies and we have identified three firms for investors to monitor.

GW Pharmaceuticals (GWPH) is changing the landscape of the biotech industry and the company already sells a cannabis-derived treatment for multiple sclerosis in 27 countries. Shares of GW have come off its July lows and is trading near $113 after falling below $96 earlier this month. GW is an industry leader and the company has several catalysts occurring in the second half of this year. The company owns the most advanced pipeline of cannabis product candidates and several of these are in late stages of FDA clinical trials (Phase II and III). We are favorable on GW and view the firm as one that investors need to watch as it continues to execute on its pipeline and create value for shareholders.

Zynerba (ZYNE) is focused on developing and commercializing transdermal synthetic cannabinoid treatments. The company has several catalysts set to occur in the second half of 2017 and we are favorable on the long-term outlook. In late June, Zynerba initiated its ZYN001 Phase 1 clinical program to study the patent-protected, pro-drug of tetrahydrocannabinol (THC) delivered via a transdermal patch. A Phase 2 program for ZYN001 in fibromyalgia and neuropathic pain is planned to start in the second half of 2017. In the coming months, the company is expected to report data for its Phase 2 clinical trial in adult patients with refractory epilepsy and for its Phase 2 clinical trial in patients with osteoarthritis of the knee.

Insys Therapeutics (INSY) has rallied off its lows from last week and we are cautiously monitoring how the shares trade from here. Last week, health insurer Anthem Inc. (ANTM) filed a lawsuit against the biotech firm, alleging that Insys was fraudulently reimbursed for overprescribing its opioid painkiller Subsys. While the new CEO Saeed Motahari said, the firm has been working to improve its compliance practices and was focused on resolving a Justice Department probe related to this scheme, this situation can get ugly. While we are favorable on Insys’ synthetic cannabinoid treatment, Syndros which received preliminary approval from the Drug Enforcement Administration in 2016, we are cautious on the near-term outlook and will keep you updated.

Ancillary

Although the United States marijuana market is attractive, companies that touch the actual plant are under the microscope.

Although recent studies have shown that marijuana has medical benefits, it is still illegal at the Federal level and the new White House administration has not made the situation any easier.

Banks have been closing marijuana accounts left and right, and companies that touch the plant are having trouble depositing their cash. When it comes to publicly traded marijuana companies based in the United States, we prefer companies that do not touch the plant and have highlighted three ancillary companies that investors should be watching.

GrowGeneration: Expect to See Continued Growth

GrowGeneration Corp. (GRWG) is one of the largest specialty retail hydroponic and organic gardening stores in the United States. The company has 13 locations in Colorado, California, Washington and Nevada, and sells to commercial and home cannabis growers.

The company is utilizing a growth strategy focused on both organic and inorganic initiatives. We are favorable on this strategy and the recent execution and will monitor how these initiatives benefited the top- and bottom-line. In late May, GrowGeneration acquired Seattle Hydro Spot to serve as a retail and warehouse location that services a growing number of both commercial and home growers in the Northwest market. Seattle Hydro Spot was previously working with 50 of the approximately 2,000 commercial growers in the Northwest.

Management expects Washington state to be one of the fastest growing markets over next few years and believes this acquisition makes them a leader in the Northwest region. We are favorable on GrowGeneration due to its recent execution, its footprint of hydroponic stores, and its growth opportunity based on its geographic diversity.

MassRoots: Improves Platform and Completes Acquisition

MassRoots (MSRT) has come off its July lows after the company completed the acquisition of Odava for $1.75 million in an essentially all-stock transaction (paid $35,000 in cash). Odava was founded in 2016 to provide dispensaries with compliant point-of-sale and inventory management software for cannabis dispensaries and growers. Odava’s system is priced on a per-transaction basis.

Odava has a product for both the retail and the cultivation market. The retail product is a point-of-sale solution that tracks the sale of both recreational and medical marijuana according to the laws in Oregon, Alaska, and Colorado (plans to enter California). The cultivation product is an inventory tracking system that provides compliance, bank and retail integration among other capabilities.

MassRoots continues to focus on improving and refining its product to be in-line with what the market needs and we are favorable on the Odava acquisition. The company has been executing on cost cutting initiatives and we continue to remain favorable on the long-term outlook.

Kush Bottles: Executing on All Cylinders

Kush Bottles (KSHB) markets and sells packaging products and solutions to clients in the medical and recreational cannabis industry. The company has continued to execute and recently added two new distribution partners in Hawaii and Puerto Rico.

Kush Bottles recently reported third quarter earnings and recorded more than 100% revenue growth when compared to the prior year’s period. This growth was the result of organic and inorganic growth initiative’s, specifically the acquisition of CMP Wellness, a California-based distributor of vaporizers, cartridges and accessories, as well as the acquisition of the Roll-Uh-Bowl.com online distribution platform. Going forward, the company is focused on leveraging cross-selling opportunities and increasing market share through these acquisitions.

We are favorable on Kush Bottles and consider it to be one of the top ancillary cannabis investment opportunities. The company is levered to an emerging global cannabis market and expect to see continued growth as it penetrates new markets and capitalizes on new opportunities.

Licensed Producers

Canadian licensed medical marijuana producers have raised more than $1 billion ahead of the opening of the proposed legal recreational market (expected by July 2018).

Some of the larger producers have used the funds for acquisitions and for entering new international markets, while most have used them to increase production capacity to capitalize on an expected increase in demand when the recreational market opens.

Over the last week, Canadian licensed medical marijuana producers have rallied off its July lows and we are keeping a close eye on this turnaround.

We highlighted three of the leading Canadian licensed medical marijuana producers below and have provided a short explanation on why we think they are positioned for success.

Canopy Growth (WEED.TO) (TWMJF) is the largest and most diverse licensed Canadian medical marijuana producer. The company was the first publicly traded licensed Canadian medical marijuana producer and is also levered to emerging international medical marijuana markets (Australia, Brazil, Chile, and Germany). With more than 58,000 registered Canadian patients on its online store, Canopy possesses some of the most attractive growth prospects and we expect the company to continue to be a leader for years to come.

Aurora Cannabis Inc. (ACB.V) (ACBFF) has been executing flawlessly and is one of the world’s leading marijuana producers. From Australia to Germany, this Canadian licensed producer has significantly increased its market share and is levered to new legal cannabis markets across the globe. Aurora has a very strong balance sheet and has more than 16,000 registered patients in Canada. We are favorable on the company’s focus on increasing capacity, its leverage to legal international cannabis markets and view it as a company investors need to watch.

Aphria (APH.TO) (APHQF) is well positioned to capitalize on the current medical cannabis sector as well as the proposed legal recreational market, expected to be implemented by July 2018. The company should record significant revenue growth over the next year after Health Canada approved its Part II expansion in May, which increased the amount of medical cannabis Aphria can produce. The company recently reported strong fourth quarter earnings and its seventh consecutive quarter of positive earnings before interest, tax, depreciation and amortization (EBITDA). Aphria is levered to several significant growth trends and the shares are up more than 20% in the last week.

Important Investor Disclosures

This report was authored by and is property of Technical420. All information and data relied upon in drafting this report is publicly available. The author believes and considers its sources to be reliable, but does not guarantee the accuracy or completeness of any information contained in this report. Any and all information, data, analyses and opinions are provided for informational purposes only and is not intended, in any manner, as investment advice. Any projections or other information generated by Technical420 regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. None of the material contained in this report is intended as a solution or offer to sell or purchase a specific stock or any other investment. This report is not directed to, or intended for distribution or use by, any person or entity that is a citizen, resident or located in any municipality, state, country or other jurisdiction where the distribution, publication, availability, or use of this report is contrary to any governing law or regulation. The securities discussed in this report may not be eligible for purchase and/or sale in certain jurisdictions or by particular individuals. It is important that you check any and all governing laws and/or regulations that may be applicable in your jurisdiction. Investing in securities of issuers organized outside of the United States, including ADRs, entail certain risks. The securities of non-United States issuers may not be registered with, nor be subject to the reporting requirements of the United States Securities and Exchange Commission. Please contact a Financial Advisor for professional advice regarding any and all securities investments. This report is intended for informational purposes only

Important Investor Disclosures

This report was authored by and is property of Technical420. All information and data relied upon in drafting this report is publicly available. The author believes and considers its sources to be reliable, but does not guarantee the accuracy or completeness of any information contained in this report. Any and all information, data, analyses and opinions are provided for informational purposes only and is not intended, in any manner, as investment advice. Any projections or other information generated by Technical420 regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. None of the material contained in this report is intended as a solution or offer to sell or purchase a specific stock or any other investment. This report is not directed to, or intended for distribution or use by, any person or entity that is a citizen, resident or located in any municipality, state, country or other jurisdiction where the distribution, publication, availability, or use of this report is contrary to any governing law or regulation. The securities discussed in this report may not be eligible for purchase and/or sale in certain jurisdictions or by particular individuals. It is important that you check any and all governing laws and/or regulations that may be applicable in your jurisdiction. Investing in securities of issuers organized outside of the United States, including ADRs, entail certain risks. The securities of non-United States issuers may not be registered with, nor be subject to the reporting requirements of the United States Securities and Exchange Commission. Please contact a Financial Advisor for professional advice regarding any and all securities investments. This report is intended for informational purposes only

Source: Technical 420