written by reader Marijuana investment

By timv, April 9, 2018

I have $25K to throw at any investment and wonder if pot stock(s) are the answer?
If so, which and if not why and what’s the better investment choice?
Thanks,
Tim V

This is a discussion topic or guest posting submitted by a Stock Gumshoe reader. The content has not been edited or reviewed by Stock Gumshoe, and any opinions expressed are those of the author alone.

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alansd
alansd
2 years ago

I wouldn’t 5000 each into 5 solid socks with positive charts and good steady growth.dont throw your money at any tin I thought thought and study first

marora2017
2 years ago

Check out CBWTF-cannabis royalty company. You can read more on it and see if its right for you.

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Travis Johnson, Stock Gumshoe

I’d say you need some sense of the foreseeable financials to make it an “investment” — right now most pot stocks are a speculation, because it’s completely unclear how big the market will be and what the market structure will be or whether there will be any strong brands that emerge with compelling margins or competitive advantages.

At its heart, marijuana is a commodity — and all of the marijuana stocks are trading at valuations that assume the market will either be many multiples larger in the near future… or that pricing will be high and there won’t be price competition. That all worries me when it comes to investing, but if you want to speculate then the pot stocks have certainly had their share of boom and bust periods over the past five years, so one might be fortunate with the buy high/sell higher trade.

The only thing that strikes me as fairly rational in marijuana is buying stocks that have a strong consumer brand (and I have little confidence in brand quality or staying power just yet, probably because I’m not a participant as a consumer), or companies that provide a service to the marijuana companies. The only one I own currently is IIPR, a REIT which acts as a financier for medical marijuana companies by doing sale/leaseback transactions for their growing facilities.

That’s my cautious take, at least. I know a great many readers are enthusiastic about pot stocks, I just can’t personally get my head around the valuations of most of them.

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roberthebel
roberthebel
2 years ago

Hey Travis
I have several early as well as , since the last vote newer priced holdings which I plain on selling all of them off including iipr as soon as they all do there normal hype peak and fall back to reality pot stock prices shortly after this last big vote which obviously won’t be worth as much as a share of Apple , I see you have them in your portfolio do you plan on selling off as well once the word legal becomes attached to the whole pot bananza ? I’m more concerned exited iipr at the correct time before legit business and banks will take over and eliminate companies like them leasing or selling Realestate as well as IAnthus and Other holding companies. I have them towards the earliest exits what is your opinion?
Thanks
Rob h

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Travis Johnson, Stock Gumshoe
Reply to  roberthebel

No plan yet, but full federal legalization is the biggest risk to IIPR’s growth. For now it’s OK, because they have long-term leases at a 15% cap rate (plus inflation), particularly if they commit more capital to those deals quickly, but they probably can’t keep signing new 15% deals if marijuana gets normalized in the US — the risk gives them that big reward.

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