We’re not even out of the first month of 2019 yet, and already, the number of mergers and acquisitions in the fast-moving cannabis sector is breaking new ground.
So far this year, there have been 10 mergers and acquisitions of cannabis firms, compared to two during the same timeframe last year, according to Viridian Capital Advisors. Not surprisingly, the average size of these deals is growing – from $9.3 million last year to $25.2 million thus far in 2019.
Expect that to rise in the coming months, dramatically…
Until Jan. 7, most investors had never heard of a small biopharmaceutical firm based out of Stamford, Ct.
But they certainly paid attention to Loxo Oncology Inc. (Nasdaq:LOXO) and its medicines for patients with genetically defined cancers after its stock jumped more than 66% that day.
Of course, within minutes, the average retail investor was locked out of the action.
That’s because shares of this once-obscure biotech leader leapt on news of an $8 billion buyout from Eli Lily & Co. (NYSE:LLY). See, the biopharma giant is shelling out the money to gain access to Loxo’s cutting-edge cancer treatment.
As important as the news is for life sciences investors, in all candor I probably wouldn’t be bringing it to your attention if this was just a one-off.
That’s because this was the third major biotech takeover in just a few weeks’ time.
And when I say major… the total price tag for all three deals… was a cool $83 billion.
Talk about a sector on fire with mergers and acquisitions.
Which leads me to the theme at hand…
Finding a good way to profit from of all of this M&A activity in the life sciences sector… without getting blindsided by these eye-popping deals, like we saw with the Loxo Oncology takeover.
So today, I’m going to let you in on how to profit from takeovers in the space, with an investment that has already rallied nearly 21% from its recent low…
Whenever I want to know what’s happening in the legal cannabis market, I don’t have to go very far.
After all, I live in the hills near Oakland, Calif., which has served as the epicenter for the legal marijuana industry since 1996, when California approved medical use.
This place is all about legal cannabis.
There’s even a district downtown known as Oaksterdam, which is lined with several legal cannabis retail outlets, not to mention a patient co-op and a marijuana school. Plus, nationally known cannabis industry research firm, the Arcview Group, is based there as well.
So I’m happy to report that, on a visit to a couple of stores last week to talk to sales folks and get their take on how things are going, I got a very upbeat report. Data is not yet available, but retailers say sales are up sharply.
And, like me, they’re expecting a great 2019.
After a rocky start to its recreational market in 2018, that California comeback is one of the reasons why I think we will see a very robust year for the industry nationwide.
As you’re well aware by now, I’m a pot stock enthusiast, and think investments in the right cannabis companies represent some of the best opportunities on the market right now.
That’s because… when laws pass, stocks soar.
In the past few years, we’ve watched 33 states and Washington D.C. greenlight medical and/or recreational cannabis. That means that most Americans are living in states with some form of legal marijuana.
We’ve just endured one of the toughest Decembers for stocks in decades.
But at the end of the day, what we have on our hands is a “Massive Disconnect.”
Let me explain. Just before Christmas, the tech-centric Nasdaq entered bear market terrain, defined as a 20% drop from a recent high.
If all you did was look at the headlines, you’d think economic growth and corporate earnings had just dropped off a cliff.
But nothing could be further from the truth. Fact is, third-quarter earnings were strong across the board, especially for high-margin tech leaders.
Plus, the economy remains in overall great shape. We have one of the best job markets in nearly five decades with consumer confidence near 20-year highs.
But fears about trade tensions, higher interest rates, and slower economic growth put stocks into a fast tailspin. In other words, it’s been fear and not fundamentals that caused the decline for stocks in every sector of the economy.
Now, the good news is that stocks are beaten down, and due for a rebound.
That just leaves deciding on which stocks are the right ones to choose in this type of market.
And that’s why I’m here today.
I’m going to reveal three oversold tech leaders that are due to rally and hand investors big gains in the year ahead… And can potentially give you your best shot at capitalizing on this volatile environment.
It’s not every day I get to sit down with my good friend William Patalon III to chat about my passion: tech stocks.
So I jumped at the chance to talk with the Executive Editor of Money Morning to lay out my thesis for why tech stocks are headed for a huge rebound.
Now, you may be thinking the opposite if you’ve been tuning into the talking heads on cable, who’ve been talking like the sky is falling.
Sure, tech stocks took a tough turn toward the end of the 2018.
As measured by the iShares Expanded Tech Sector ETF (NYSE Arca:IGM), tech stocks ended the year down just under 1%. (Though they still beat the heck out the S&P 500, which was down 7.6% for 2018.)
But as I mentioned on New Year’s Day here, it’s far too premature to worry about the massive disconnect between fright-inducing headlines and rock-solid economic fundamentals. Those fundamentals are particularly bullish for high-margin tech leaders seeing solid earnings in the third quarter.
In this wide-ranging interview, I spell out exactly what’s been impacting tech stocks lately – despite those fundamentals.
Plus, I reveal my top investment strategy for 2019.
The first item on my agenda today is to wish you a happy and healthy New Year!
I hope you’re looking forward to the year ahead like I am, because I expect we’ll see plenty of exciting tech investing opportunities, despite the choppy market conditions toward the end of 2018.
For many, the end of the year marks a great time to make resolutions that improve our lives. So with that in mind, I’d like you to consider creating your own Investment Action Plan for 2019.
It’s something my wife and I have done for more than a decade now, and it’s proved valuable as a way to update and clarify our investment priorities, which can get lost in the shuffle during the busy year.
See, each New Year’s Eve, my wife and I sit down, prepare ourselves for a “financial reset,” and spend some quality time together discussing our accomplishments over the prior year. We savor our investment successes – and reflect on the failures that taught us valuable lessons.
Before we wrap up the proceedings and head out to a nice dinner, we set up a new action plan that we’ll review again come this time next year.
What started out as our fun little ritual has turned into a positive financial habit – the sort that can help you attain your financial goals no matter what the market throws your way.
And it’s why today I’m going to show you how to set up your own Investment Action Plan for 2019.