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Tuesday, July 1, 2014

Summer Stock Picks

Summer Stock Picks

 



There are two cycles to the Beat the Market investing/swing trade year. 

Beat the Market Cycle 1 (October to May)

This is the meat of the investing season during most typical cyclical bull markets which run from October/November through to May in the US.  There is a very simple adage to follow…

“Buy in September and remember, sell in May and go away.”

It works remarkably well although I like to start the meat of the year in November as opposed to September because that time period can historically be quite volatile.  Waiting until November to make the majority of your purchases will help you avoid some major market corrections which tend to occur over that time.  November also times well with the beginning of tax loss selling season so you can get some pretty good value at this time of year.   Lastly, November is usually when the market gets direction.

The caveat to this rule is that in Canada this season usually ends around PDAC which is March/April.  Although this year crude is on a tear which has the TSX and many energy stocks breaking out at what is normally a peculiar time of year for momentum in energy.  Considering MARCH is when most commodities peak out and Canadian Stocks are commodities weighted, it is no surprise that the TSX tops out before US indexes, but the eve of WW3 and recent events this Sunday in Ukraine speak to the continued escalation of the conflict and not de-escalation in Eastern Europe.

Ukraine Conflict Continues to Escalate

Apparently some Kiev controlled ‘Right Sector’ militia gunned down an unarmed citizen controlled checkpoint in Eastern Ukraine.   This is obviously going to increase tensions considering one of the men gunned down was an unarmed 53 year old bus driver father of 2.  Several others were hit with bullets in the back fleeing the melee after the initial man was killed by an assailant.  In spite of the recent de-escalation talks in Ukraine between Russia, US, EU ad Ukraine, I feel it necessary to include this conflict in my macro analysis.  I see only lip service from both sides and Russia will protect its interests which include a major Russian population in Ukraine.

I really haven’t said much because I hate war and hope it will just go away, but it is clear that we are escalating towards a global conflict since Syria and Ukraine is the new front.  Up next is Turkey and the Kurdish movement to organize in SE Turkey.   A new power block of states is emerging including China and Russia forming a geopolitical and economic alliance that could bring the traditional Silk Road economic route back to major economic prominence.   A part of this will be the establishment of Kurdistan by the Silk Road Alliance which will help stabilize the Middle East with a progressive nation that the west has refused to help establish.

War trade to help establish a bottom in POG

I am a nervous short on POG.  I would be covering in the first few days of June, considering POG like oil, will carry a war trade.   As much as WW3 is about the establishment of trade in USD in every country the US decides to destabilize called the Petro Dollar.  Gold is going to play a major prominence in the WW3 as an assault on the USD will be part of the plan to cripple the US.  The Eastern Financial block that is emerging is cash rich, resource rich, and has slowly bought up all the world’s physical gold the last few years.   WW3 will be about establishing financial trade around the globe among money other things for Western powers because the Central Bankers have the ultimate monetary tool as long as the USD stays the Petro dollar.

Debt Monetization. 

So one way the Silk Road is going to do this is set up their own economic system and simply stop trading in USD.   Recently a bock of countries announced they would no longer be trading oil in USD so we are on that route.  The biggest thing you have to realize is that Western Powers represent a minority of the population so unless the West beats the East with its military might… the cash strapped western system will decline while the Eastern financial system backed by cash, gold, assets, above ground commodities and below ground natural resources will rise in prominence over the next century.

Like it or not… this is the beginning of the end of the USD as the Petro Dollar which in my opinion will at some point mark POG’s second leg up.   Is the Ukraine conflict the catalyst that finally puts the bottom in gold?  We are going to find out this summer.   If things truly de-escalate then I expect gold to naturally track lower in anticipation of a fall correction and washout type action.

Atypical Season

We are already shaping up to be somewhat of an atypical year which may mean the market continues to grind higher this summer with no May selloff.   In addition to markets grinding higher is the extra cold winter which has delayed spring in North America.  This could serve to be a launching pad for improving economic data the next few months as winter savers turn into summer spenders and boost retail economic spending.

Normally March/April/May is the time you want to be taking a profit on the investments you made back in October and November.    Because this year might be atypical with markets thrashing about in a directionless manner, we may go higher this summer into a serious correction this summer fall.

Beat the Market Cycle 2 (May to October)

Typically the second part of the Beat the Market season happens when the general market sells off in May.  You don’t want to be buying too much in May because it can mean you being under water in your investment for a long time, that is why the philosophy about Summer Stock Picks changes.  If you happen to be under water on any stock… you want to be under water in the cream of the crop, so in the summer you plan out the best companies you can find. 

And when I say best companies, I don’t mean Apple, or Google or even TSLA.  Double digit returns suck!!!  I mean the cream of the crop stories.  The AAA of the group, the companies you don’t mind buying at 52 week highs or 52 week lows. 

So unless you are extremely optimistic about a company’s future like in Poet Technologies PTK.V  or are buying what you believe will be a “World Class’ company 50 years in the future like Plandai Biotechnology PLPL, you want to be at cash during this period for the most part. 

The majority of stocks I picked way back in November…  you probably should have cut the majority loose unless you are absolutely in love with the story… and in that case… the summer period is when you buy more and accumulate.  In the worst case scenario… that is all it ends up being… an accumulation period if you are wrong and your pick doesn’t take off.

So what do PTK and PLPL have in common?  Certainly not their charts!!!  PTK I might be selling to buy PLPL.  Since our last technical indication to get back in PTK.V it has nearly doubled while PLPL has dropped 50%.  Not only that but PLPL has made a definitive turn at $0.50 and looks to bounce back to $1.  The PTK.V chart on the other hand looks like it is topping out and probably one I would avoid until June.




What these two companies have in common is I feel these companies will be billion dollar market cap companies one day.   

 In PTK’s case… it could even be this year and a potential bidding war for the company once their expected prototype successfully tests on third party’s platforms.   PTK is obviously closer to realization than PLPL, but within these two stocks you should be able to trade them back and forth and now I would be heavily weighted in PLPL and very light on PTK over the next month even though I am leading with PTK in my summer stock picks category.

Do you see the psychology I am getting at when I am looking for summer stock picks? 

I am looking for ‘Balls to the Wall Buys’ that you can’t refuse in any season.  That is why if in the doggiest dog days of summer you made a bad buy in the May June July season; at least you get to buy your favorite stock even cheaper.  
 

That is when you want to average down… and about the only time.  When you pre-ejaculate with a beautiful lady, you don’t turn tail and run away.  Hell no.  You try again.  It’s a beautiful lady and you keep on trying until she kicks you to the curb or robbed you of your last dollar!

You were so attracted you couldn’t help yourself.  The same goes with the best stocks.  We all pre-ejaculate with them and buy them when we shouldn’t.  The worst case scenario in Beat the Market Summer Stock Picks… is you end up accumulating the cream of the crop stories.   It is generally these stories that will turn first if the market doesn’t go your way.

It’s all I really try and do in summer… look for the best stories.  No hard thinking.  No number crunching. Just look for a good read.


Poet Technologies PTK.V



Share Price… $2.54

Shares Out… 150M
Market Cap… $375M

So what has this stock pick flying? 


Quantum Computing. 


When the company announced a patent March 31 around quantum computing, the stock has taken off and not looked back.

I have no idea what quantum computing is, but it sounds pretty cool and POET chips will allow quantum computing to happen.  Actually I kind of do know what quantum computing is and it represents a major leap forward in technology allowing computers to theoretically break or decode any algorithm or encryption.   NSA is going to love this technology but it also means the opening up of doors to science and technology allowing computers to perform functions and test theories that man could not possibly calculate even with the aid of today’s most powerful computers.

Quantum computing is definitely a major leap forward in tech and it makes PTK that much more desirable as a stock and why the company has nearly tripled in the last month. 

Optical chips are almost here.  Finally.

PTK has a pretty certain future locking up another patent and why this stock has flown past all my expectations and tapped on the $3 door in April.    I hate telling you to buy stocks that have gone 500% in 4 months and then include it in my summer stock pick selection like PTK is going to keep on chugging along… but I cannot put any other rating on this company other than STRONG BUY.



Plandai Biotechnology PLPL



Share Price… $0.635

Shares Out… $125M
Market Cap… $71M



The marijuana boom is as over is a fast as it started.  NOT!!!  But the stocks have come back to the prices they were pre-pot boom.  Well most of them anyway.  This gives an excellent second chance for stragglers and investors caught unaware and it has also allowed me to review the sector and the companies that I want going forward.  Undeniably PLPL after surging to $2.50 and back to $0.50 has me drooling all over this company.    Unlike the rest of the companies with suspect management and pump and dump credentials, PLPL stands out above the rest as a premiere POT stock.

If you notice I have made major renovations to my Beat the Market Mock Portfolio so you might want to check out who I dropped and who I maintained and who I added to the list among Pot Stocks.

If I were to pick slam dunk billion dollar pot stocks I would pick Medbox MDBX, GW Pharma GWPH, Plandia Biotechnology PLPL and Tweed Marijuana TWD.V.  

Why Plandai Biotechnology?
  • Has a history with Diego Pellicer with branding power and instant recognisability
  • Has management with Jamen Shively with investment connections including Microsoft
  • Has recognizable products and formulas.
  • Recognizes international importance as legalization of cannabis is a global issue setting up shop on the horn of Africa.

Why not Plandai? Is what you should be asking yourself.

This is a company that is beyond reproach and has already put in place the necessary arrangements to succeed on a global scale.




Tweed Marijuana Inc. TWD.V



Share Price… $3.15
Shares Out… 35M
Market Cap… $110M



Is Tweed Marijuana Inc. going
to be the best Canadian Marijuana company?


Probably not, but they are the first legitimate story in Canada.


Looking at Tweed has got my thinking and evaluating marijuana companies at a different level from investing and looking at the industry, where it’s going, and what MMJ patients’ need.  Bottom line is in Canada there really are none when it comes to real medical opportunities as only MMPR can sell and they can only sell cannabis which I don’t consider medicine for the majority of MMJ applications.  For me Tweed is a recreation stock under the guise of a medical program.  Is weed medicine?  It is.  But when compared to concentrated products you get from marijuana like cannabis oil and tinctures and waxes.  There is no comparison.  And then there is one of the keys to Cannabinoid Therapy, that many diseases, including mine theoretically require massive doses of cannabinoids.  Something I am still not on and just barely getting by on a minimal dose.  For myself, I could take 5 to 10 grams of Cannabis Oil a day and live a great healthy life and never have a problem with HIV.   One of my theories is that maybe just maybe if I take enough cannabinoids, I might even kill HIV like some people are doing with cancer once they get on massive doses of up to 5 grams of oil per day.

So speaking as a MMJ user who is still massively underserved bit being on a proper treatment of a minimum of 5 grams of oil per day… The vast medical needs of patients are not being met with the old or new programs.    Especially when there is product that most people would benefit a lot more form taking orally than smoking a joint…. It frustrates me and makes me angry that everyone is scrambling to sell pot to the public and lost in whole thing is Medical Marijuana and the science behind it.

Cannabis Oil is a product at I would drop vaping shatter in a heartbeat to use.  But I can’t get it and the amount 5 to 10 grams orally is ten to 20 time the amount I currently use and is beyond anything I could ever reasonably afford until after prohibition.   I am mad.  You got a bunch of filthy greedy dirt bags populating this industry that don’t have care about the patient or don’t even understand cannabinoid therapy, the endocannabinoid system, or even know how to make products from cannabis for MMJ patients.

They just want to sell Canadians POT.  And it pisses me off even more when I see LOSERS AND DEADBEATS POPULATE THIS SPACE.   People are going after the cash grab while ignoring patients.

 I am designing a plan to develop a company that develops key concentrated cannabinoid products for people with HIV, cancer, and diabetes.  That is it.  I don’t want to sell pot.  I want to help people get their lives back like cannabis has done for me.  I have two products; Cannabis Oil (HIV and Cancer) and a unique diabetic Massive Dose Cannabinoid Therapy product I have designed for my JV partner with type 2 diabetes.   Is Cannabis Oil unique?  Nope.  But Cannabis Oil will be the number one cannabis product aside from raw marijuana and the first movers will take over this niche market.  First movers like myself who are using my status to take advantage of an injunction to get a 18 month head start on everyone else when it comes to making Cannabis Oil in Canada are going to establish a supplay chain in Canada that will hard to supplant.

No one else is doing Cannabis Oil... so why not me?

This is all I am going to say for now on this, but I leave you with a couple calculations why everyone is going gaga for marijuana….

From a study of 77 illegal grow ops in the Netherlands; a typical indoor growing system will yield 0.1 pounds per harvest per square foot.  Assuming four harvests in a year, you are looking at (4) 1,000 pound crops from every 10,000 feet of growing space.  Can you see why you should be GAGA over Tweed and why the first mover status is huge?

170,000 sq. ft is a massive facility which should be able to produce 68,000 pounds of cannabis a year which is $150M selling cannabis at $10 per gram.  That is an average indoor illegal grow op and not a massive commercial grow-op where the company can take advantage of significant economies of scale to maximize yields and reduce costs.  68,000 lbs. of cannabis times 454 grams times averaging selling price of $10 per gram…   $308.72M revenue per year once fully operational.   What are the operating costs you say?

Maybe $100 per pound.

And again, I would fully expect TWEED to blow this number out of the water when it comes to production once they have fully utilized their capacity.

Even at wholesale prices of $1600 per pound… TWEED would do $110 with gross margins exceeding 80% to 90%.    These huge gaps in profit are why prices will drop as legalization happens and competition enters the market.  There is no way the prices will stay that high.

But until we have full legalization, Tweed has a licence to sell direct making them unique in the Canadian public company landscape.   Tweed is not the only company who has or will have massive Canadian operations.  Bedrocan plans on ipo’ing in Canada soon; Cen Biotech and Medican are also building massive marijuana grow op facilities as well.



Fission Uranium FCU.V



Share Price… $1.40
Shares Out… 332.4M
Market Cap… $465M



Fission has been a good pick.  The SP hasn’t done anything lately, but the company has done so many spinoff your cost base on Fission should be negative or near negative over the last few years.   The big problem with Fission in spite of having the greatest discovery in the Athabasca Basin; is that the shares outstanding has tripled over the last year.  This is where most of the growth in the company has come from being valued at nearly half a billion market cap.  That being said, Patterson Lake is undeniably shaping up to be the greatest discovery anywhere in Saskatchewan. 

How big is big?  Well let’s look at the meat of the zone from 495E to 1080E.   If you can do math and understand mapping, that is about 600 meter strike length of the main zone which 150 meters to its widest to about 75 meters at its thinnest.    The biggest significance of this winter’s drill program is two holes that extend the PLs to the east another 500 to 600 meters.   There is big time potential to extend continuity to the east which will make PLS a true monster.

Let’s do a little math.  Let’s say 100m average width by 100m of the mineralized zone plus  times 600 meters in strike length times a 2.5 density and just in the meat of the PLS zone you have 15 million tonnes of open pit high grade uranium grading 2 to 5 percent.

Just with in this small zone which looks like it is expanding significantly to the east.  Another 600 meters of similar resource to the east will bring PLS to 30 million tonne high grade deposit which is INSANE.

Just to give you an idea… 30Mt @ 5% U3O8 is 3 BILLION POUNDS of uranium.   Not that I think PLS is 30Mt @ 5% U3O8.

That is the upside of PLS.  So when you think of HAT being a relatively small resource and much deeper than PLS and the size of PLS will potentially dwarf Roughrider… Undoubtedly I believe a buyout of PLS will be in the billions and not hundreds of millions like Hathor.

My initial target for a PLS resource is 5Mt to 10Mt @ 2% to 3%.   They announced these massive intervals but most of the resource grades are lower outside of the flashy high grade lengths.   If I had time to throw all of PLS drill info into excel I could come up with a better number, but that is a project for the summer.  Dumping PLS results into excel and analysing them.  



At any rate…

 FCU is a solid buy despite of the massive shares outstanding as I believe this deposit is a one of kind and will yield a massive open pit uranium mine.  I cannot see this ever NOT getting the go ahead as this mine will be the lowest cost producer in the industry once in operation.  Uranium sells off in March so May/June could be an opportunistic time to buy FCU as uranium is increasingly starting to come back into favor in spite of all the bad press.

FCU remains my top pick.   The coming fall correction will be an excellent time to review uranium stocks in earnest, but for now, Fission is a top story transcending any specific sector.    I will never ever be able to let go of materials completely as the gains are always breathtaking… I am always game for a world class discovery.

Haven’t seen too many in the Gold sector… but here is one from the Uranium sector.


3D Pioneer Systems DPSM



Share Price $0.60
Shares Out… 75.4M
Market Cap… 445.8M




DPSM is an early pick.  Despite the rest of the 3D space continuing to consolidate, DPSM has shown some life so we will continue to go with it through the summer.


If it goes back to $0.40…YAY!  Buy more.

That is the attitude you have with the summer stock picks, you are buying stocks you think have the best stories and 3D Pioneer Systems is a company I believe is on track to making major market penetration in roads in the consumer 3D printing market.

Since the recommendation, the company announced the build of ‘Appaloza’ which is a proprietary e-Commerce Cloud Marketplace and 3D Printing application.   It will allow customers and designers a place to store, edit, buy, and sell original 3D designs.   The site so far is not much more than a homepage, but the concept for consumer 3D printing is amazing and what I think is a big part of making 3D Printing a reality in the home.  Bringing in the everyday developer to designs 3D prints like an APP developer for apple store of android would.  It is brilliant because you are offloading everything to do with product offering and selection.  If someone wants it, they will design it, upload load it and print it and sell reprints to others.

http://www.appaloza.com/





Christopher Skidmore



Beat the Market top stocks

Sunday, April 20, 2014

The $0.60 Penny Stock Rule

The $0.60 Penny Stock Rule

I see a lot of patterns in the market to identify trades.  Some of these patterns I NEVER hear anyone talking about.

The one rule that I see appearing over and over again that no one talks about is the $0.60 penny stock rule.   It is very simple.   $0.60 to $0.70 for any stock is a MASSIVE WALL of resistance.  I don’t know why.  I don’t make the rules.  I just point them out.   So how does this rule work? 

This is how I think it works.  Psychologically an investor will go way out on the risk curve for leverage. Why?  Simply because most will buy based on the fact that small movements produce big gains and at $0.60 the leverage that a ‘penny stock’ offers is lost.  So why is this important?  Simple.  For a penny stock to move up and approach $1… psychologically the investment must be seen as more legitimate by the investor and a ‘sure bet’ vs. a riskier stock bought sub $0.30.   This psychological tug of war between risk and reward plays out huge in this area.

So how do you trade it or know when confirmation happens? 

Well nothing is certain in life... but generally $0.60 to $0.70 acts as any normal support resistance band.   $0.60 is an ultimate wall for many stocks to get past and if it does generally you like to see price action move quickly to $0.70.   Those stocks usually have very strong momentum and the breakout can happen all within a few hours.  When ARU first announced results the company pushed past this mark easily and you knew to jump in.  (Well at the time I didn’t know, but after watching stock after stock perform the same way) you get a good idea.  ARU was the first ticker to really jump on my screen like that but not the last.   NOT-V did a textbook run as well and broke through another key penny land support resistance channel at $0.30 to $0.40.  HAT-V did the SAME thing when they announced acquiring Roughrider initially and ran all the way to $1.50 within weeks.  As you probably know the history with all three stocks if you at all have followed my blogs over the years… ALL WENT ON EPIC multi-dollar runs.

Usually the companies will make their way to $1 at least for a trade.  Sometimes the company doesn’t have that firepower and huge volume days and the signal isn’t as easy.   What tends to happen is it hits a second resistance at $0.70 and tries to forma base at $0.60 using it as support.  If the SP cannot hold $0.60 support, the SP will fall back significantly for a better entry point.  In both cases the stocks are moving and following a trendline which you can use in conjunction with horizontal support to pick the best entry points.   Examples of this are OPL-V back in December failing to maintain $0.60 and now KLH-V failing to maintain $0.60.  OPL-V is trying to maintain $0.60 and this mark may or may not hold… but even if it doesn’t… the base it’s built under $0.60 is looking like a good entry point.   The time of year is not the best so you have to be cautious opening up any bullish trades in March.



Another point to remember is I only use these bands as a BUY signal for momentum.  They do act as support for beaten up stocks like WRN and LIM but are not as accurate at predicting continuation in price action.    You do not want to own any stock that breaks support at $1 as they move well below that mark.



One final point…  This $0.60 cent mark can be used as a sell signal too.  If you own a penny stock from $0.20 or $0.30…  a stock that does not even break $0.60 moving up that significantly or trade a couple of days above… WILL MATERIALLY FALL BACK OFF $0.60. 

Is this type of price action time and time again.

From now on… just call me 60 cent.     

Friday, April 4, 2014

5 Canadian Cannabis Companies

Is the party in Cannabis stocks over?


A couple investors seem to think the run in cannabis stocks is over.    I am here to tell you the Cannabis run is just getting started.  If the run was done… would TWEED be IPO’ing in Canada?

NO.

Certainly the cannabis group of stocks is the most volatile I have ever seen in my 9 short years on the stock scene.  This has been magnified in Canada with companies like Abattis and Enertopia literally bouncing up and down like a yo-yo moving double digit percentages every day because of the legal battle between MMAR and the government.   No one knows what to do, and the emotional tug of war is being played out right in the SPs of the companies.  Great for a trader, not so much an investor trying to get a toe hold in this sector.

By no means is the cannabis party over. 

The massive surges in the SPs of many stocks and subsequent daily swings in SP is a great metaphor for the battle for legalization.  It is happening, the stocks are surging, but the pessimism and worry are still there because of 40 years of Drug War propaganda and the simple fact it is still illegal.  The stocks are still on an upward track.  Clearly if they were going to crash back down US companies like CBIS and ENDO would be back down at $0.02 a share.   ENDO is trading 50% below its share price of last April.

The fact the USA still has not reclassified cannabis is holding this industry back.  The biggest thing that can happen for cannabis is for the USA to reclassify the drug so business can take the ball and run with it.  This is far and away the single factor holding research cannabis back, not allowing companies to research cannabis.  Even getting drugs from GWPH approved because it is still considered cannabis is a nightmare process in the USA.

Nevertheless, the cannabis movement marches forward in spite of the ‘Establishment’s’ unwillingness to let the cannabis issue go.    Even the Establishment is breaking apart on this issue.  George Soros, Bill Gates and now Jimmy Pattison all quietly pushing this industry forward and on the corporate side of now have giants like Phillip Morris incubating this industry.

You can pretty much declare the war one, it is only a matter of time and the smart money knows this.

So to answer the pessimist’s question.  No, it ain’t over… the cannabis party is just getting started.


Recreation vs. Medical Marijuana

Companies do not have to differentiate yet, but the industry is developing at lightning speed and companies need to have a grasp on where this industry is going.  One of the biggest things I can’t stress enough is that the recreational and medical markets will separate at some point.  Right now the two are one and the same and most companies do not need to differentiate at the moment, but as this industry develops most companies will need to pick a field to focus on.
Both markets are extremely lucrative and there are obvious synergies but, the two businesses will require two completely different business plans and most companies will not have the resources to follow successfully execute in both markets.   In addition, what a medical user needs may not be what a recreational user want and vice versa.  A medical user will can consume ten times as much as rec user requiring different pricing models.   

Recreational markets will rely heavily on traditional business practices such as product branding, corporate acquisition, deciding the right mix of low cost mass production vs. product niches and developing products based on consumer enjoyment.  In the recreational market you will eventually buy pre-rolled low THC cigarettes for the same price as a pack of smokes and you will have concentrates as high as 99% THC and everything in between.

A large part of the industry will follow a model similar to a craft brewery model while other companies will go after the lowcost pre-rolled cigarette market.   I am sure that is Benson and Hedges plan… to eventually replace a majority of their tobacco fields with cannabis fields.  Raw weed will eventually be dirt cheap and sold like cigarettes.   If you grow it outdoors, it is even cheaper to produce than tobacco because of the enormous yields cannabis can produce outdoors.   Many people will prefer a slight coffee like buzz a 5% to 10% cannabis cigarette will produce than getting fully stoned on a 20% THC joint.   

Medical cannabis companies will be developing products based on physical need and will have a specific array and dose of cannabinoids tailored to a specific condition.   The medical market will be focusing on developing medicines from raw weed that are 10 to 100 times more effective than raw weed.  Cannabis Oil is the first of many products that medical marijuana companies will produce.  These products are not intended to get you high and PLPL is developing technology to turn the high off.

 What I predict from my own experience as a medical user…
within 5 years raw weed will be relegated to the recreational market.

At this point in time, marijuana companies do not have to differentiate between the medical and recreational markets, but faster than you can read this newsletter the industry is already changing.



Abattis Bioceuticals Corp.  $1.86



ATT:CNX; ATTBF:OTC

Shares Outstanding… 47.6M
Market Cap… $88.5M 



Abattis remains a top pick out on the West Coast in the Medical Marijuana scene.   I have ATT/ATTBF firmly entrenched in the MMJ sector and expect Abattis to follow a track similar to PLPL.  Yes I have said PLPL is a top recreation pick, but PLPL is one of the few companies that I think will transcend both recreation and medical cannabis.   Abattis has methodically developed a plan of attack and is now executing on that plan.

  • Received their controlled substances licence which allows them to develop extracts, concentrates and oils from the cannabis they grow.  
  • Expanded into the US markets developing strategic alliances with companies like Transbyte ERBB
  • Owns arguably the top one of the top vegetable concentration technologies which can be readily applied to cannabis. 
  • Own Vertical Designs, a patented vertical growing technology they plan on licencing to other growers.   Vertical Designs growing technology maximizes space and light efficiencies allowing for the greatest yields of indoor hydroponics systems.
Abattis has emerged as the market leader out west and is entrenching themselves as one of the top medical cannabis companies in North America, let alone Canada.



Tweed Marijuana Inc. $2.55

TWD:TSXV

Shares Out… 33.5M
Market Cap… $88.8M



Tweed IPO’d today at $0.89.  I say $0.89 because that is what the price the insiders paid.  Nobody buying on market will ever see those prices.  GMP opened Tweed at $4.60 which has been promptly sold down to $2.50 which seems like a decent entry point for this much anticipated stock.   Typical of finance guys… they open the stock high and clean out all the retail who bought in the morning, this tactic really irks me.  Yeah, it’s playing the game… but they are playing against players that have no idea it’s a game or that they are even playing and are losing 50% of the shirt in 15 minutes. 

But what do you expect… finance guys love picking the pockets of the guys they are supposed to be serving.   It happens time and time again and with a reputation like GMP… are you surprised?

At any rate, I have Tweed pegged as recreation stock.  They are basically born out of a network of compassion clubs back east and they spent most of their money buying MMAR strains from different patients in Ontario which I can accept as a good practice.  Tweed has 80 strains of cannabis so yes they are a medical marijuana company, but clearly their focus is going to be selling dope to the masses.  They have a retail production/distribution strategy that matches compassion clubs with no clear plan on developing MMJ products or putting millions into R & D to bring the industry forward.   So I have them clearly pegged as a recreational player.   GMP is going up against the likes of Phillip Morris… it’s a good thing they are early movers in Canada.  They are going to need the head start.

I expect, Tweed to fully grow into its valuation.   I believe Tweed will sell a lot of pot at very high prices to start padding the bottom line, but this industry will get very cutthroat within 5 years so I wonder how they will react to all out legalization with Trudeau.  Expect a lot from the income statement and balance sheet of this company being Canada’s largest marijuana dealer.

At least expect a lot out of the top line from Tweed.   We are not re-inventing the wheel here… no one should beat Tweed in mass pot sales.  Not in the first few years anyway.  The ones with the money will be the winners in the end because if they fail… they just buy their way out of trouble.

 Tweed.  Abattis.  Plandai.  All have major financial backing.



Enertopia Corp.  $0.60 


TOP:CNX; ENRT:OTC

Shares Out… 84.2M
Market Cap… $50.5M



Enertopia is another BC licenced producer which I value highly.

Clearly what is happening in Canadian medical marijuana is you are seeing former MMAR members come together and morph into MMPR licenced producers.  This is obviously the most ethical way of bringing together the two programs while the courts sort out the individual rights of the patient.   ENRT is a collaboration of MMAR growers including partially owned ‘The World of Marihuana Productions Ltd.’ and ‘The Green Canvas Ltd.’   The injunction affects these former MMAR growers the least and it actually allows for a smoother transition for these growers upgrading their facilities while allowing a legal avenue to sell their pot immediately.   Another ethical investing bonus is that many medical marijuana patients will have an easy time accepting the transition of MMAR grower/Compassion Club retail outlet to MMPR producer/distributor like Enertopia.

ENRT has put together a strong management team including bringing on Cannabis Science’s Dr. Melamede to the advisory board.  The company is a little weak on the finance side with a $2.75M private placement still open after almost a month.  On the bright side… the company has exercised several warrants bringing in a good chunk of change into the till over the last month.   So if you want a private placement and are late to the party… ENRT is a good second tier play behind Abattis and Tweed in Canada.

That being said… they overspent on Stuart Gray.  $5k a month for social media?

Are you kidding me?   Maybe I should start up my promotions company again.  At $5k he better be working the phones.   I wouldn’t pay more than $2,500 a month for my own social media service.  That is what I value an SEO at anyway.



Next Gen Metals $0.36



N:CNX; NXTTF:OTC

Shares Out… 22.4M
Market Cap… $8.1M
 


Next Gen Metals is a company I will give a shot.  Harry Barr is what I call a try hard.   He is somewhat honest although the money that backs him isn’t always and is typical VSE style money.  So ye be warned about Next Gen.  It doesn’t mean that Harry Barr won’t succeed.

Again… cannabis is an established industry and is low risk as long as you have the money and have a plan which Harry Barr and has both.

Next Gen is angling to be the marijuana venture capitalist on the West Coast.    If Jimmy had any semblance of family… this is what I would be doing right now; but we all do our own thing and he is the only one with the money in the family so without him nothing on a large scale gets done.

So I present to you…  Harry Barr, Vancouver cannabis entrepreneur/venture capitalist.

Coming back to reality… I really like the plan Harry has set forth at Next Gen so I am on board.   They have set up a conference series in Canada called the ‘Green Rush Conferences’.  There is a US conference that is similar that completely sells out all the time and is in extremely high demand.  It is not as investment oriented though so Green Rush as very good market niche with developing a format similar to Cambridge.   Once Trudeau legalizes cannabis in Canada, this conference will be in every major Canadian city for the next decade just like Cambridge was and still is.  Not only that, because Harry is a first mover, Green Rush will gain international popularity as an investment oriented cannabis conference.

What a great idea for a Venture Capitalist, eh?

Create the tradeshows and attract the top Cannabis talent across the country so you have your pick of the litter to invest in.  Next Gen is the Canadian version of Mentor Capital MNTR.  They have a slightly different approach with the tradeshow/VC model; but in the end, basically a great way to get broad exposure to the industry.   I expect really good things out of Next Gen as the industry makes its way towards outright legalization in the 2 to 3 years.




Affinor Resources $0.385

AFI:CNX

Shares Out… 35.4M
Market Cap…  $13.6M


Affinor Resources is the little engine that could.  I can’t help myself and have ignored every other Canadian story in the 5th spot except for AFI.  So what differentiates AFI from the mountain of other companies that have announced intentions to pursue the cannabis industry but have not announced anything concrete?

One thing.  Nick Brusatore.

Nick is a mad scientist hands down.  He is cowboy who is gung ho.  He is probably one of the best pot growers this side of the Rockies.   All of Abattis growing technology and growing operations were the responsibility of Nick.  ATTBF had the pick of the litter and they went with Nick and bought out his Vertical Growing technology for 6M shares.   The recent surge in pot stocks has made Nick an overnight marijuana millionaire.  With getting pushed out at Abattis, he has decided he wants his own little marijuana company and bought 10% of AFI on the open market.

That is what differentiates AFI from the rest.  Nick Brusatore. They got a freaking gung ho mad scientist overnight marijuana millionaire hanging on the bid of AFI.  Do I think he is done at 10%?  No.

If the folk at AFI can manage to keep a leash on Nick, AFI could become quite the sleeper pick.   Nick is what I refer to as ‘human capital’ and is my human capital pick of the bunch.  I am buying AFI simply based on Nick Brusatore.  He is a little wet behind the ears when it comes to investing and business, but that is what the folks at AFI are for… to guide him along in this area.

I would certainly get behind Nick Brusatore before I would ever get behind ‘Scott Walters’ or ‘Dean Laidlow’.  Who are these people?  I don’t know.  But I do know Nick, and I do know he is a great ‘talent’ to have on the team, even if he did muscle his way on board.



Christopher Skidmore