After being cold carded for months now, the weed posse ain’t happy, and a few are asking what they should do?
They want to know who will final table in 2018? .. and who’s been felted? (Yes, it’s a word thanks to Phil Laak, pictured.)
Hold ’em or fold ’em? – That’s your decision, but we thought we’d try to count the cards as best we can and provide an ASX weed update, something we haven’t done for a while.
So without further ado, let’s shuffle up and deal.
PS: Here’s a guide to poker terms if you’re not familiar with the game.
Who’s headed towards heads-up play?
The much-anticipated legalisation of rec weed in Canada is nearing reality, yet Aussie pot stocks have failed to punch through in recent months.
Chalk it up to good old sector rotation – many seem to have moved weed profits across to mining stocks.
The weed story hasn’t finished playing out, and we can expect another bump towards the end of the year if past patterns play out again.
So far this year we’ve seen the flop and turn. All eyes are now on the river card which has yet to be revealed.
Here are the ASX pot stocks we like heading into the back-end of 2018.
Just as in poker, strong starting hands are likely to improve whereas weak ones rarely do.
The stocks we’ve selected are trading nearer to their highs than their lows.
One of the easiest ways to ensure you are on the right side of the market is to buy stocks in an uptrend.
If you don’t have time to trawl through the charts and commentary below, here’s our suggested starting hand for the remainder of 2018
AC8 ♠ BOD ♥ BOT ♣ CAN ♦ EXL
We’ve also thrown in a few outsiders which have caught our eye: CP1 and ZLD
Right there you have the board and a few hole cards. We suggest you make the best 5-card hand you can but don’t go ‘all-in’ on any one name.
- AusCann Holdings Ltd (AC8.ASX)
Canopy Growth Corp have backed this Aussie upstart to take out a big pot, holding over 10% of the float making them the largest shareholder in AusCann. AC8 also received a fair amount of airtime in the recent Four Corners documentary “Green Rush: The race to riches for Australia’s new marijuana moguls”
Although denied access to Nevil Schoenmakers seed bank despite handing him a wad of shares, the company has managed an impressive 1-year return of close to 300% and is sitting on a a market cap of AUD 197 million.
Since the spike to $1.85 on January 9th 2018, AC8 has faded a little. As we go to press the stock is off 5%+ intraday and nearing an important support level ($1.25).
Above: AusCann Managing Director Elaine Darby discusses the groups recent results
- Bod Australia Ltd (BDA.ASX)
Killer chart, BOD Australia’s CEO Jo Patterson must be doing something right.
It appears the non-cannabis related products are currently underpinning the companies growth and strong share price performance. We gave them a mention back in January 2018 and the price hasn’t moved much since then but don’t count them out.
This has been a sweet ride for anyone who picked up the stock last year and held on.
Jo has shown that like Annie Duke, she can sit at the table with the big boys and hold her own. If the share price is anything to go by, investors like the cards she’s holding.
- Botanix Pharmaceuticals Ltd (BOT.ASX)
It’s appropriate that BOT are targetting an acne treatment with their latest clinical trial (BTX 1503) given that it seems the winners of the WSOP are getting younger every year.
Peter Eastgate won the 2008 WSOP aged 22 only to lose the ‘youngest winner’ title the following year when Joe Cada, then aged 21, took down the main prize.
Great chart, with a textbook uptrend of higher highs and higher lows.
With pocket queens, investors are sitting pretty and having survived the ennui of 2017 find their chip stack has grown considerably. The ride isn’t over yet, and we expect BOT will go deep in this tournament.
Here’s the link to their most recent investor presentation:
With institutional support from Canada’s Aurora Cannabis (ACB.T), CAN have been the star performer within the sector since listing on May 4th 2017.
The company was recently profiled on the ABC’s Four Corners documentary “Green Rush: The race to riches for Australia’s new marijuana moguls” where we got a glimpse of CAN’s grow room.
Given the discrepancy between the CAN share price and those of its peers, it seems a ‘takeover premium’ has been built into the price.
Is ACB swallowing up CAN a fait accompli?
Not so according to Aurora, who clarified the issue recently:
EDMONTON, April 30, 2018 /CNW/ – Aurora Cannabis Inc. (“Aurora” or the “Company”) (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) today responds to speculation published in the Australian Financial Review in regard to a potential takeover by the Company of Cann Group Limited (“Cann”), in which Aurora holds a 22.9% ownership interest.
Aurora wishes to advise that while it has had preliminary discussions with Cann in relation to a potential transaction, no offer has been submitted, and there is no certainty that any formal offer or transaction will eventuate. The Company will update the market in the event of any material developments.
You wouldn’t want to bet against them but aces don’t always hold up. Some shine has been taken off the share price in recent months with the stock now sitting roughly 30% of its all-time high (ATH)
As the top 20 shareholders control 60% of the stock, the fate of minority shareholders is at the whim of these rounders.
The stock needs to hold the $2.50 level. The trend is now looking much weaker than it was at the beginning of the year and the major concern here is that the stock may have entered a distribution phase.