Here is an interesting truth about hard times like we have now. It leads to more drinking and recreational drug use to take the edge off. This is why the government considers liquor stores and marijuana dispensaries “essential” business. Now you understand the nature of my headline. “Fire” is about marijuana stocks. Whereas “ice” refers to cocktails.
So this group of stocks joins the growing list of industries that are uniquely benefiting from this evolving crisis landscape. The other groups I recently cover includes tech for work @ home, cleaning supplies, and “stock up” retail winners.
Now let’s appreciate the uniquely attractive attributes of these 4 timely stocks: Cronos Group (CRON), Canopy Growth (CGC), Diageo (DEO), and Constellation Brands (STZ).
CRON traded at $23.70 on March 5, 2019. Today, the stock goes for a measly $5.24. Though CRON has taken a beating like the rest of the pot stocks, this might be the best time to buy. Note that CRON invests in companies licensed to sell medical marijuana. As noted in this Zacks article, the Centers for Disease Control and Prevention (CDC) insists all medical marijuana patients should have at least a month’s supply of the green stuff on-hand. Though the CDC also advises against smoking marijuana during the coronavirus crisis, few people will heed the advice.
Take a look at the long line of people who patiently waited for their weed when coronavirus hit and you will agree the masses do not care whether the occasional toke slightly elevates their risk for lung damage. The likes of CRON will benefit from the societal transition to marijuana. CRON may not make it back to the year ago level any time soon. But with the growth potential for the industry we all understand why the current price is so tempting.
Canopy Growth Corporation (CGC)
When it comes to medical cannabis companies, CGC is second-to-none. CGC operates nearly a dozen fully licensed marijuana production facilities and has operations in 11 nations, spanning five continents.
It is particularly interesting to note pot shops are considered “essential” businesses in the United States and some other countries during the coronavirus pandemic. Furthermore, if the United States and other nations pivot toward marijuana legalization to help fund coronavirus economic stimulus packages, CGC stands to benefit.
Though CGC’s one-year chart is not exactly impressive, it is trading well below its 52-week high of $52.74. Take a moment to consider how many people are looking for a way to take the edge off amidst the coronavirus pandemic. Consider the fact that even more viruses are likely to be released now that the polar ice caps are melting. The end result will be a highly-stressed populace in the years to come – a worried species desperately looking for an escape. CGC will provide that escape.
As noted by TipRanks’ average analyst ratings, CGC has 54.64% upside with an average price target of $21. In other words, this might be CGC’s low point (currently trading at $13.58) for the foreseeable future. Hop on the CGC train today and it just might take you to the promised land.
DEO is steadily making its way back to the $175 level reached in early September. Though the coronavirus outbreak might lead to an organic net sales loss of $300 to $400 million in 2020, DEO is still worth investor consideration. After all, DEO is the top spirits maker in the world, holding a 27% global market share. There is plenty of room for growth considering the fact that the company produces less than 2% of the aggregate alcohol served across the world. If DEO forecasts prove true, 750 million additional consumers in burgeoning markets will have the financial wherewithal to buy its products within the next decade.
DEO executives are quick to note consumers in the United States are shifting from beer toward spirits. Furthermore, the trend in Europe is a shift away from wine toward spirits. This change in tastes bodes well for DEO as gin is the company’s top growth category, elevating more than 8% in the past year. Add in the fact that DEO whiskeys hold nearly 40% of the market and it is easy to see why investors are bullish about this stock. TipRanks reports the average analyst price target for DEO is $172.92 yet the stock is trading at $121.62. So considering adding DEO to your portfolio today, hold it for the long haul and you should come out on top.
Constellation Brands (STZ)
STZ is currently trading around $130 yet the “coronavirus low” was $105.64 on March 23. Now compare that to the $208 on February 20. It is quite possible STZ will approach its 52-week high of $214.48 by the summer. After all, businesses selling alcohol are considered “essential” during the coronavirus pandemic. Though STZ’s restaurant and bar sales will certainly decline, it is making up the shortfall on the retail side. This means STZ sales have the potential to hold steady in quarters to come.
STZ will launch a hard seltzer this spring, helping the company build momentum in this growing beverage industry niche. There are also some rumblings STZ will release a sparkling wine down the road, helping the company capture even more market share. If you are on the fence in regard to a potential STZ investment, consider the fact that TipRanks’ average analyst price target is $201.93, with 11 analysts still labeling it a Buy at this time.
Want more great investing ideas?
The Fake Rally is Over! – Why the bear is still in charge. Along with the right investment strategy to generate profits while stock prices head lower.
How to Make Money in a Bear Market – Learn more about this vital webinar with famed investor Marc Chaikin.
Reitmeister Total Return portfolio – Discover the portfolio strategy that Steve Reitmeister used to produce a +5.13% gain while the S&P 500 fell by -14.97%.
CRON shares fell $0.05 (-0.92%) in after-hours trading Thursday. Year-to-date, CRON has declined -29.34%, versus a -21.30% rise in the benchmark S&P 500 index during the same period.
About the Author: Steve Reitmeister
Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks. More...
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