Commodities and Gold

Time for the 2.0 Boom

I’ve been saying for years now that the first wave of cannabis stocks didn’t make a lot of sense until new products and business models evolved. Think of it as an update from a “1.0” industry to a more efficient “2.0” world.

No matter how much shareholder money the old stocks captured, they were still facing fragile commodity economics. The more plants they grew, the weaker their price power got.

After all, raw plant matter is a commodity. Every ounce is the same. You only escape that math when you develop proprietary strains, extracts and consumer products.

At least, that was the proposition that pushed stocks like Aurora Cannabis Inc. (NYSE:ACB) and Tilray Corp. (NASDAQ:TLRY) to $150 a share before they crashed to levels much closer to $7. While they started out as 1.0 leaders, the real money would flow in the leap to 2.0 products.

But I’m not buying ACB and TLRY when new companies that have been built for the 2.0 world are going public now. Unlike 1.0 companies, the goal here isn’t to flood the world with plant product. The business models are more refined.

While they’ve learned from their predecessors, they offer investors a clean slate, instead of billion-dollar baggage. Wall Street hasn’t ramped up the hype here yet.

These stocks can start roughly where ACB and TLRY are now in terms of share price. Then, in theory, they can reach the heights those old giants have already tried and failed to conquer. Their best days are ahead of them.

I’m talking about obscure companies like Green Thumb Industries Inc. (OTCMKTS:GTBIF) and GrowGeneration Corp. (NASDAQ:GRWG). Some aren’t even listed on a major exchange yet.

And some are going public even as we speak. These are the names that are coming to my IPO Edge now. They won’t all be winners, but one way or another, the math is in our favor here.

With time and patience, TLRY can theoretically rally back above $140 and give investors who buy here at $7 a 1,900% payday. But those who bought in at $140 will still only break even at that point.

If one of these 2.0 stocks on my radar rallies that same 1,900% distance, everyone wins.

Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street. The Financial Times describes Ms. Kramer as “A one-woman financial investment powerhouse” and The Economist distinguishes her as “one of the best-known investors in America”. Ms. Kramer is often quoted in publications such as the Wall Street Journal, New York Post, Bloomberg, and Reuters. She is a frequent guest commentator on CNBC, CBS, Fox News and Bloomberg, providing investment insight and economic analysis. Ms. Kramer was an analyst and investment banker at Morgan Stanley and Lehman Brothers. Ms. Kramer founded and ran a long-short hedge fund and has been chief investment officer overseeing debt and equity portfolios. Since 2010, Ms. Kramer’s financial publications have provided stock analysis and investment advice to her subscribers. Her products include GameChangers, Value Authority, High Octane Trader, Triple-Digit Trader, 2-Day Trader, IPO Edge and Inner Circle. Ms. Kramer, a Certified Fraud Examiner, has also testified as an expert in investment suitability, risk management, compliance, executive compensation, and corporate governance. Ms. Kramer received her MBA from the Wharton School at the University of Pennsylvania and her BA with honors from Wellesley College. Ms. Kramer has provided testimony regarding investment policy to the U.S. Senate and is a frequent speaker on the markets, portfolio management and securities fraud and compliance. Ms. Kramer is also the author of “Ahead of the Curve” (Simon & Schuster 2007) and “The Little Book of Big Profits from Small Stocks” (Wiley 2012).