The Republicans won the presidency, but marijuana may have been an even bigger winner on election day.
Voters in Massachusetts, California, Maine and Nevada approved ballot initiatives to legalize marijuana for adult recreational use. Twenty-eight states have approved medical marijuana. These states account for more than half the nation's population.
To be sure, the drug remains banned at the federal level, and advocates of marijuana normalization are wary of President-elect Donald Trump's choice for U.S. attorney general, the extremely conservative U.S. Senator Jeff Sessions (R., Ala.). If confirmed, Sessions may prove a roadblock for the marijuana industry. A vocal opponent of marijuana legalization, Sessions once said he thought the Ku Klux Klan "was OK until I found out they smoked pot." (Sessions' views on civil rights have also come under scrutiny.)
Nonetheless, as marijuana gets legalized in an increasing number of states, the profitable tailwinds for so-called "canna-business" should hold sway -- even with Sessions in office.
The time is ripe to invest in marijuana stocks, before the pot industry matures and the stocks of its major players get too expensive. One marijuana stock stands out from the pack: GW Pharmaceuticals (GWPH) . This company is a major beneficiary of today's "green rush" and enjoys the wherewithal to prosper over the long haul. The company's shares rose more than 2% in Monday trading.
As marijuana evolves from a countercultural act of rebellion to mainstream capitalism, a wide variety of entrepreneurs are seizing the opportunity, not only by growing and selling pot but by creating branded edibles, tourist junkets, vaping parlors, paraphernalia, shops, seeds, fertilizers, cook books and trade shows.
However, most of these companies are small, thinly capitalized and highly risky. They're starting with great fanfare but will soon fail amid the inevitable shake out and consolidation of a young industry.
GW Pharmaceuticals is a different type of marijuana business, however, and should outlast the industry's ups and downs. Based in the U.K., GW Pharmaceuticals discovers, develops, and markets cannabinoid prescription medicines. That means that it might continue to sell its products even if there is a pushback against recreational marijuana use. The company's chief product is Sativex, an oromucosal spray for the treatment of multiple sclerosis, cancer pain and neuropathic pain.
The company is scheduled to report earnings on Dec. 6. The average analyst estimate is for GW Pharmaceuticals to report an adjusted loss of $1.68 per share, compared with a loss of 85 cents per share in the same period a year ago. But as the company plows considerable research and development into future growth, it should overcome this speed bump and reward patient investors.
With a market cap of $2.88 billion, GW Pharmaceuticals is one of the very cannabis companies that isn't a penny stock. It's poised to be a growth stock winner in 2017 and beyond.
The company also has successfully launched several stock offerings to strengthen its balance sheet and finance its broadening portfolio of marijuana-based medicines.
As a result of its robust R&D, the company has other promising cannabinoid products in various early- and mid-stage clinical trials for the treatment of several diseases and mental disorders, including diabetes and schizophrenia. The company expects to release results from those trials within the coming year. Any successes would trigger a breakout for the stock.
At the same time, major tech companies are developing the infrastructure necessary for canna-businesses to expand. Microsoft is marketing software that tracks plants from seed to dispensary and helps state governments monitor all aspects of the plant's growth to ensure compliance with regulations and tax laws. Oracle also has developed a tracking system for marijuana that's already in use among state governments.
Shares of GW Pharmaceuticals now trade at about $121.57. The average 12-month price target from analysts is $146, which suggests the stock can gain about 20% over the next year.
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