Canadian Cannabis Index Jumps 68% in 10 Weeks

Greetings Friends,

2017 is turning out to be another great year for cannabis stocks as the sector rallies back to the all-time high on a steady stream of good news.

After falling into a bear market this spring cannabis stocks have been on a tear.

The Canadian cannabis index is up 68% in the last 10 weeks, jumping back to the all-time high. Take a look below.

Even US cannabis stocks, which have been having a tough year, are showing signs of strength. Take a look at the little bounce below.

Many individual cannabis stocks have jumped even more.

Canopy Growth Corp, (TWMJF), the largest cannabis company in the world, is up 112% in 2017 after a huge rally off the 52-week low. Shares hit a new all-time high.

Canopy has delivered huge returns in the last two years- shares are up 630% in the last 24 months. Most of my wealth-management clients own this stock and have picked up big returns.

Aphria Corp (APHQF), one of the largest cannabis companies in Canada, is up 84% in 2017.

Aphria is now up 521% in the last 24 months.

.This latest rally is being driven by a steady stream of great news coming out of the industry.

Cannabis Stocks are Being Driven by a Lot of Good News

The trigger for the big rally was Constellation Brands (STZ) announcing a $191 million investment in Canopy.

This deal is a game changer for the cannabis industry and it sent shares of canopy soaring.

It’s the first time a major alcohol company has invested directly in the cannabis industry.

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Getting big alcohol involved in cannabis is like pouring rocket fuel on growth.

It introduces billions of potential new capital into the sector. Global alcohol companies are flush with cash and looking for new sources of revenue. Cannabis acquisitions make so much sense.

I wrote about the Canopy deal last week if you want to take a closer look.

Canadian Cannabis Leader Jumps 30% in 2 Days

Since news of the Canopy deal hit the Street, there has been more good news to keep cannabis stocks rallying.

Medreleaf (LEAF), also one of Canada’s largest cannabis companies, landed a permit from Health Canada that increases its cultivation capacity by 80%.
I also noticed a few cannabis industry reports making the rounds.

The Canadian Cannabis Market Could be Twice as Big as Expected

A respected analyst released a study that predicts the Canadian cannabis market could actually be twice as large as expected based on some of the most recent and comprehensive market data ever collected.

The European Union Could be the Largest Cannabis Market in the World

I also saw a report that predicts the European Union will be the largest medical and recreational cannabis market in the world. This has huge implications for the cannabis industry. The European Union is 750 million people with an economy about the same size as the US. Simply stated, it’s a huge potential new market for the cannabis industry.

The cannabis sector is driven by news flow. And right now we are seeing a gusher of good news hitting the wire.

Here’s what I expect looking forward and how I plan on managing cannabis stocks for my clients.

This is Still the Very Beginning of the Cannabis Industry

After the big rally I am expecting cannabis stocks to take a little breather.

But I don’t expect it to last long. I expect cannabis stocks to resume the upward trend and close the year with a fresh all-time high.

Despite the big gains, this entire industry is still in the very early stages of growth and I see a number of big-time catalysts directly on the horizon.

  • California legalizes recreational cannabis in January.
  • After that, Canada legalizes recreational cannabis in the summer of 2018. That’s only eight months away.

These two markets represent billions in potential new revenue for the cannabis industry.

A little further out,  I am expecting more good news from the European Union and next fall it looks like up to 10 more US states could be voting on medical or recreational cannabis.

Big picture, I see a lot of good news down the pike.

Congrats to everyone who invested you are having a great year.

My plan is to continue holding existing cannabis shares and buy more shares on any dips and pullbacks. I see more gains ahead so I want to stay aggressive.

I hope that brings everyone up to speed on the big rally in cannabis stocks, the sector outlook and how we plan to profit.

If you have questions feel free to say hello.

mike@vodickagroup.com

I’ll be back in a few weeks with another update.

Have a great week!

Your Investment Partner,

Mike

This report is for entertainment purposes only. Every investor should consult with an investment advisor before making investment decisions. The Vodicka Group, Inc. is not a broker/dealer. We do not receive compensation for mentioning stocks. At various times, the clients, publishers and employees of Vodicka Group, Inc., may buy or sell the securities discussed for purposes of investment or trading.

Michael Vodicka owns shares of Canopy and Aphria.

ABOUT THE AUTHOR

Michael Vodicka

Michael Vodicka is the president and founder of the Vodicka Group Inc., a licensed investment advisor (Series 65) and a financial journalist.