Cannabis Stocks: Which Marijuana Companies Are Worth Watching? | Summary and Q&A

TL;DR

Consider investing in companies like Constellation Brands and CannTrust, or build your own diversified portfolio in the cannabis industry.

Key Insights

• 💯 Constellation Brands is a picks and shovels company with a strong core business and significant investments in the cannabis industry.
• 🖐️ CannTrust is a promising pure play cannabis producer with partnerships and a focus on building brands in the long-term.
• 😃 ETFs in the cannabis industry may be concentrated in bigger players with potentially unsustainable valuations.
• 🛩️ Investing in the cannabis industry should be a small part of an overall portfolio, and the approach should be based on an individual's risk tolerance and circumstances.
• 🙊 The cannabis industry is expected to have peaks and valleys, with potential catalysts like federal decriminalization in the U.S.

Transcript

Alison Southwick: Are there a couple of specific company names or stocks that you want to put out there for any listeners that want to start looking into the industry? David Kretzmann: Sure. [Within] the initial companies that we've recommended to people as buy recommendations, we have the pure plays. These are companies that generate the majority ... Read More

Questions & Answers

Q: What are picks and shovels companies in the cannabis industry?

Picks and shovels companies are companies that have a core business unrelated to cannabis but have the potential for growth in the industry. An example is Constellation Brands, which focuses on alcoholic beverages but has made significant investments in Canopy Growth.

Q: Why is Constellation Brands a promising investment in the cannabis industry?

Constellation Brands is a strong, established company with a healthy core business. They have experience in building brands and distribution in a highly regulated market, which can be transferred to cannabis. They also see the potential in the global cannabis market and are taking a long-term approach.

Q: What is CannTrust's approach to the cannabis industry?

CannTrust is a pure play cannabis producer in Canada that aims to build brands in the long-term. They have a partnership with Breakthru Beverage, a leading beverage distributor, which provides potential distribution opportunities. The company is founder-led, has a healthy balance sheet, and focuses on the end product and consumer resonance.

Q: What is the recommended approach for investing in the cannabis industry?

It is suggested to start small and consider a diversified portfolio approach. The industry is volatile and can have significant fluctuations. While ETFs can capture the overall market, building a portfolio of select players may lead to higher gains. However, it's important to thoroughly understand the companies and their valuations.

Summary & Key Takeaways

• Constellation Brands is a picks and shovels company that has a strong core business in alcoholic beverages but is aggressively entering the cannabis industry. They have a partnership with Canopy Growth and see the potential in the global cannabis market.

• CannTrust is a pure play cannabis producer in Canada with a partnership with Breakthru Beverage. They focus on building brands in the long-term and have a healthy balance sheet.

• ETFs in the cannabis industry can be highly concentrated in bigger players with frothy valuations, so it's important to understand the top holdings and consider a diversified portfolio approach.

• Invest a small part of your overall portfolio in cannabis stocks, starting with a company like Constellation Brands, and be prepared for the volatility and long-term nature of the industry.