Hiku Brands Company Ltd. DJACF

RE:RE:RE:Some investor friends were laughing at those still buying MJ

[dmalovich]

Your comments are what make the Stock Market so amazing. All Investors will always have different opinions on what the value of a stock should be (Internet bubble is a great example and the markets evenually got it right).  Markets are almost always wrong in the short term and more likely to get it right over the long term.  As for current valuations in the MJ sector, you are correct, most of the big names are spectacularly over valued. But this may because people are expecting MJ to be legalized and a market size of 5-8 billion.  Take Canopy for example. If overall MJ market is 5 billion by 2020 and they can get 20% share and even with competive net margins down to 20%, that gives them 200 million a year in net profits. Lets give a conservative 15 multiple (you have to believe the market will probably pay more for these profits especially if it looks like the market can grow bigger) and you get a market cap north of 3 billiion. That puts the stock price north of $20 bucks. With this opinion, you can argue that the stock is cheap since it is currently trading around $10 bucks. There are a few situations that would obliterate MJ sector stocks back down to reality (ie 75% to 90% declines).  First, Canada backs away from legalization and they all have to fight over the scaps of medical customers. Second, maybe the market won't be as big as people thought. Lastly, we don't know who the winners and loser are goinig to be. I am of the opinion that the market will be substantially bigger than these early estimates and there will be room for many licenced producers to succeed  I have 25 years experience investing and have alloted 10% of my portfolio to a basket of MJ stocks.  I am expecting many ups and downs, mergers, bankruptcies and of course a couple of great winners by 2025.  Maybe I'll see you on the other side of my next MJ trade. Good luck to you sir.