GRWG Long Term Hold and a Play Into Earnings
Updated
Huge beat last earnings. Slow run up and then a spike after. I expect earnings to be priced in a bit here and we get a better run up leading in. I think we have to take profits prior to earnings though if the market prices in a beat or at least solid earnings. Earnings 11/16/2020
I'll be buying the dip again after we find a bottom after following earnings.
Some industry factors to consider.
There are major flaws in the business models of many cannabis sector stocks. Most are trying to be the cannabis supplier for the recreational, medicinal and CBD industries.
- recreational you have to compete with the black market and local growers. And you have to wait and pray for more state adoption. 11 states allow for recreational use.
- medicinal breakthroughs have been mostly speculative. Seems slow at best. 33 states allow for medicinal
- CBD usage I think its safe to compare to lower level Vitamin usage. When I see CBD energy drinks and CBD shots marketed at your local gas station, I start thinking that CBD is a fad kind of thing that may not go anywhere. Only 3 states do not allow CBD.
In addition, as states open up their cannabis laws, I believe more legal competition for the supply will open up as well. In Florida, which would be a giant boost in the recreational demand, I know for a fact that the legislative supporters of legalization are pretty adamant about keeping that supply in state as much as legally possible. A lot full supply chain to to retail market business models out there with major money backing it.
This doesn't bode well for may stocks in this sector. However, there is a growing demand for people growing their own cannabis, as well as, there own organic gardening. People are home more and gardening hobbies are picking up. States also support grow your own more than they support buying it at a weed store. 17 states support growing your own, while 11 states support recreational use. They have a solid business model to supply this industry as wholesale distributers as well as 18 retail locations and growing. Well positioned to support the hydroponic and organic gardening demand.
I think there is long term and short term value here.
I'll be buying the dip again after we find a bottom after following earnings.
Some industry factors to consider.
There are major flaws in the business models of many cannabis sector stocks. Most are trying to be the cannabis supplier for the recreational, medicinal and CBD industries.
- recreational you have to compete with the black market and local growers. And you have to wait and pray for more state adoption. 11 states allow for recreational use.
- medicinal breakthroughs have been mostly speculative. Seems slow at best. 33 states allow for medicinal
- CBD usage I think its safe to compare to lower level Vitamin usage. When I see CBD energy drinks and CBD shots marketed at your local gas station, I start thinking that CBD is a fad kind of thing that may not go anywhere. Only 3 states do not allow CBD.
In addition, as states open up their cannabis laws, I believe more legal competition for the supply will open up as well. In Florida, which would be a giant boost in the recreational demand, I know for a fact that the legislative supporters of legalization are pretty adamant about keeping that supply in state as much as legally possible. A lot full supply chain to to retail market business models out there with major money backing it.
This doesn't bode well for may stocks in this sector. However, there is a growing demand for people growing their own cannabis, as well as, there own organic gardening. People are home more and gardening hobbies are picking up. States also support grow your own more than they support buying it at a weed store. 17 states support growing your own, while 11 states support recreational use. They have a solid business model to supply this industry as wholesale distributers as well as 18 retail locations and growing. Well positioned to support the hydroponic and organic gardening demand.
I think there is long term and short term value here.
Note
Turned out to be a solid play. Market volatility gave us 3 good run ups. Expect the same on next earnings. Their business model appears to work very well in the current environment and we should expect continued success in this emerging market. This is the only "weed" stock that I plan to hold and trade long term. As I stated, most weed stocks have a supply/demand problem that will always be there in my opinion. GRWG does not have this problem. They are very profitable already and extremely focused on growth.
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