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Cabot Money Club

Cabot Stock of the Month Issue: November 10, 2022

Market Overview

The market had a nice run in October, with the Dow Jones Industrial Average gaining 14% for the month.

The economy continues to look pretty good, with manufacturing steady, construction spending up, and employment still healthy, despite a 200-basis point increase in the unemployment rate, now 3.7%.

The Federal Reserve once again boosted the Fed Funds rate by 0.75% this month, which the markets had already built in. Right now, it looks like Fed Chair Jerome Powell may target rates even higher than the 4.5-4.75% initially projected, but the rate increases might come in smaller doses.

Somewhat worrisome are the recently announced technology company layoffs and hiring slowdowns, including:

  • Upon assuming the CEO mantle of Twitter, Elon Musk immediately laid off one-half of Twitter’s employees, although it sounds like he overdid it and is planning on rehiring quite a few folks.
  • Meta announced that it has a pretty sizable layoff in the works.
  • Amazon is pausing hiring.
  • Apple has instituted a hiring freeze.

Surely, more will follow. Recession prognosticators continue to predict a U.S. recession for 2023, although some are now calling it a “growth” recession, due to the robust employment market. Last week, non-farm payrolls came in at 261,000, much higher than the 205,000 estimated. If that sector remains strong, hopefully any recession will be tepid.

Sector-wise, Energy remains the only positive sector year-to-date, although Utilities are actually up 0.75% year over year. At the bottom of the heap are Technology, Consumer Discretionary, and Communication Services stocks, down -30.41%, -34.2%, and -43.59%, respectively.

Here at Cabot, we are not yet fully committed bullish, but we are happy with the trend, and are especially pleased to see some nice growth in small- and mid-cap companies.

SPX-CSOM 11-9-22.png

Featured Recommendation

Although still volatile, market action has been encouraging in the past month, leading me to turn a sharp eye toward those many beaten-down sectors that have suffered for the past year.

One of those sectors is marijuana. Since peaking in early 2021, marijuana stocks have been on a downhill slide. The legalization of the industry is becoming more widespread, with 19 states already adopting some sort of legal cannabis usage, and five more states (Arkansas, Maryland, Missouri, North Dakota, and South Dakota) with legalization on the November ballot.

Representing some of the top marijuana companies, following is a chart of ETFMG Alternative Harvest ETF (MJ), an ETF whose top five holdings include:

  • ETFMG U.S. Alternative Harvest ETF (MJUS), 19.84% of net assets
  • Canopy Growth Corp. (WEED.TO), 10.08%
  • Tilray Inc. (TLRY.TO), 8.97%
  • SNDL Inc. Ordinary Shares (SNDL.TO), 8.70%
  • Tilray Brands Inc. (TLRY.TO), 7.56%
12-22 MJ ETF_CSOM_11-10-22.png

Curaleaf Holdings Inc. (CURLF): A “High”-light of the Cannabis Industry

As you can see, the chart has been dismal for the industry. Looking at the fundamentals, I think we may be somewhat early in getting into this sector, but I do like to buy stocks when they are downtrodden, stocks like Curaleaf Holdings Inc. (CURLF).

The company’s stats are impressive:

  • Presence in 22 states
  • Focus on highly populated states including Arizona, Florida, Illinois, Massachusetts, New Jersey, New York, and Pennsylvania
  • 136 local dispensaries
  • 29 cultivation sites
  • ≈4,400,000 square feet of cultivation capacity
  • ≈2,200 active wholesale dispensary accounts.

Naturally, I consulted our marijuana expert, Michael Brush, editor of Cabot’s SX Cannabis Advisor, who recently recommended Curaleaf. Here’s what Michael had to say about the company:

“Based in Massachusetts, Curaleaf is one of the biggest companies in the space. It has a nationwide presence in the U.S. including exposure to the growth markets of New Jersey and Illinois. It also has exposure to Europe, which will be key as legalization of recreational use there proceeds to develop next year.

“Curaleaf was the industry leader in the second quarter, with revenue of $338 million from 22 states and 136 dispensaries and its European operations. Its market capitalization of $4 billion tells us investors expect a lot from the company — and its price/sales ratio of 3 is among the highest in the group. Curaleaf will benefit from progress on legalization in Germany and Europe.

“It has operations in eight European countries as well as Israel. It just completed the acquisition of a majority stake in Germany’s Four Pharma, a licensed producer and distributor of medical cannabis that has more than 10% market share in Germany.

“Investors also believe the company’s R&D will pay dividends as the industry goes more mainstream. The company recently announced the launch of Plant Precision, a curated collection of edibles and a topical gel that contain minor cannabinoids that are non-psychoactive and do not create the euphoric feeling that THC does. They are designed to target specific wellness categories for the growing numbers of Americans who say they would be more likely to use cannabis as a health solution if it came in small, controlled doses.

“Curaleaf has a healthy balance sheet – $90 million at the end of the second quarter – and good access to capital. Thus, Curaleaf may benefit as a buyer in ongoing industry consolidation. It has a good M&A track record. The company’s executive chairman has a lot of experience rolling up fragmented and distressed industries.

“Continued market developments in Illinois and New Jersey could be strong catalysts for Curaleaf, says Stifel’s Andrew Carter. Illinois will increase its store footprint by more than 2.5 times. Considerable upside exists in New Jersey as product offerings expand in the second half of this year, he says.

“Curaleaf owns cannabis assets in several European countries, giving it a foothold as legalization expands on the continent and in the U.K. Expect more signs of progress this year and in the first quarter of 2023. As I have written, progress in Germany could set off a domino effect in Europe, and even lead to a challenge of U.N. opposition to cannabis. All of this could open up lots of progress on the international front. Buy.”

The company just released its third-quarter report, posting revenues of $340 million, a 7% increase over the prior year, which maintained its position as the largest revenue generator in the industry. Curaleaf closed its acquisition of a majority stake in Four20 Pharma, and also completed the Tryke acquisition, which Curaleaf expects will further strengthen its position in Arizona, Nevada, and Utah. This was the 19th quarter of consecutive retail growth, a 7% quarter-over-quarter growth in transactions, and the company expects to increase new product revenue 75% year-over-year. Adjusted EBITDA was $84 million, up from $71 million for the third quarter of 2021.

In other news, Curaleaf announced the launch of adult-use sales at its Bordentown, New Jersey location, the company’s third location to sell adult-use cannabis in the Garden State. The company also reported that it is launching Find, a cannabis flower brand that is now available at dispensaries in Massachusetts, and due to expand to Arizona, Illinois, Maine, Missouri, New Jersey, New York, and Pennsylvania shortly.

If you’re a newbie to this industry—like me—you may be asking, “What is a flower?” Well, according to, “marijuana flower is the bud or flower on the female cannabis plant. Only female plants produce smokable buds, while male plants are ideal for pollination. Marijuana flower contains two common cannabinoids ideal for treating various health issues, THC and CBD. These cannabinoids give the flower its medicinal effects, while terpenes such as myrcene and limonene give each strain its flavor and smell.” Now we know!

Once launched, Curaleaf says Find will offer strain-specific pre-rolls and whole flower in bulk quantities.

Right now, 17 analysts have a ‘Buy’ rating on the shares of Curaleaf, with an average price target of $9.19, 71% higher than the current price. I like those odds!

Curaleaf Holdings, Inc. (CURLF)

52-Week Low/High: 4.48 – 11.37

Shares Outstanding: 619.59 million

Institutionally Owned: 0.48%

Market Capitalization: $3.735 Billion

Dividend Yield: n/a

Why Curaleaf:

#1 Revenue generator in the industry

Smart geographic and product expansions

International opportunities


About the Analyst: Michael Brush, Cabot SX Cannabis Advisor

Michael Brush is an award-winning Manhattan-based financial writer who has covered the stock market, business and economics for the New York Times, the Economist Group, MSN Money, Money magazine, and Dow Jones.

Besides responsibilities for the Cabot SX Cannabis Advisor, he writes a regular MarketWatch column on investing, and he manages his own stock letter, called Brush Up on Stocks.

Brush is a graduate of the Columbia University Business School (Knight-Bagehot Fellowship program), and the Johns Hopkins University School of Advanced International Studies (SAIS).

He is the author of Lessons from the Front Line (published by John Wiley), a book offering investing insights based on the experiences of leading professional money managers he’s met on the job.

Brush has received several awards for excellence in journalism including the Best in Business award from the Society of American Business Editors (SABEW), the American Society of Magazine Editors’ National Magazine Award for General Excellence in New Media, and awards for excellence in local news coverage in Pennsylvania, where he started his career in journalism.

In looking to diversify our portfolio, and in light of the spreading legalization of cannabis, I decided to look at the beaten-down marijuana industry for a stock pick this month. And where else would I turn but to Michael Brush, who has recently taken the reins of Cabot’s SX Cannabis Advisor?

I was very impressed by Michael’s education and investment experience, and after our interview, I’m even more delighted that he has joined our team at Cabot. I think you’ll like his in-depth assessment of the industry. Here is our interview:

Nancy: Please tell us about the different sectors of the marijuana stock market, and your forecasts for each over the next year.

Michael: There are always plenty of ways to slice and dice a sector, including cannabis. But I would break it down into three areas: cannabis production and wholesale, retail sales, and brand development.

Over the next year production and wholesale will be challenging because of plummeting prices linked to oversupply. However, the sharp price declines, currently running at about 30% year over year, should level off at some point.

Retail sales growth should continue, as large new markets like New York and other states come online, and relatively new arrivals like New Jersey continue to develop. Those sharp wholesale price declines actually help legitimate and licensed retailers. That’s because the lower prices makes legal cannabis more attractive relative to the illicit cannabis market where prices are lower due to the absence of taxation.

Brand development is part of retail, but I break it out because it is a distinct skillset from running stores. It is also the trickiest area of cannabis. Launching successful brands is vexing in any area of retail. Think about all the money spent launching brands in apparel and food, and how many failures there are. There is no reason to think it would be any different in cannabis.

Then there is the risk that once cannabis is fully legal everywhere, brand giants like Starbucks come in, hurting the smaller players trying to do this now. But that is several years off, and probably not worth worrying about at the moment. In the interim, successful brand development will be key for many cannabis companies because it creates consumer loyalty and pricing power. Ultimately, a strong brand can even build a moat around a company, which makes it an attractive investment. This is one of the main reasons Warren Buffett invested in Coca-Cola. It’ll be no different in cannabis.

Nancy: Marijuana stocks have taken a real beating over the past year. As a group, do you think now is the time to buy. And if so, which subsectors are most attractive to you?

Michael: The short answer is “yes.” But really whether you buy the sector depends on a lot of factors such as your risk tolerance, investment objectives, and overall portfolio make-up. From a purely contrarian point of view, however, the sector looks attractive because it is so cheap and there are catalysts on the horizon. I think most investors should have at least some exposure unless you are looking to live off portfolio income.

Politicians keep telling us that banking reform will happen during the lame duck session of Congress. That means inside the start of January, so this would be over the next several weeks. This would be a huge catalyst. The reform would allow cannabis companies access to traditional financial services like banking services and credit cards.

In terms of subsectors, our portfolio offers a mix of producers, retail-facing businesses, and brand developers, often in the same company, and I think it is good to have this blend.

Another way to think about the sector is through the lens of geographic exposure. Here, companies with U.S. and European exposure seem better positioned. The U.S. market will continue to grow, and legalization in Europe will probably take a big step forward towards the end of this year and in 2023, starting with Germany. That could set off a domino effect there, which would create interest in cannabis names with exposure to Europe. This is one reason I recently added Tilray Brands (TLRY) to our portfolio. It has exposure to Europe.

In contrast, Canada is flooded with supply and cannabis has been legal there for a while, so there is less room for growth.

Nancy: What criteria do you use to evaluate stocks in this industry?

Michael: It’s really not that different from any other sector. I look for qualities like strong management, a believable business model, ability to execute and meet stated goals and guidance, valuation relative to the group and the company’s own history, and balance sheet strength, among others.

Nancy: Since many companies in this sector are fairly new, they don’t have much of a track record. Without a historical pattern, what are the most important factors that you use to value your stocks?

Michael: As you say, many of these companies lack an earnings history. As emerging and developing companies, they still report losses. For valuation in these situations, you have to look at other metrics like price to sales ratio and price to book value.

Nancy: Marijuana is legal – in some forms – in 19 states now. What states are currently considering the legalization of marijuana? And which sectors are growing? How will the results of the upcoming election change the industry?

Michael: The big one to watch is Maryland, for two reasons. First, it is a fairly large state. Many states running referenda on legalization of recreational use are pretty small. But not Maryland. It could be a $2 billion market. Not huge, but not small either. The second reason is that Maryland borders Pennsylvania. So, legalization in Maryland may pressure Pennsylvania to go the same way, especially because other states bordering Pennsylvania are going legal, meaning New York and New Jersey. The New Jersey market has gone legal, but it is still developing. New York is only just about to get started. It will be a huge market.

Nancy: Since this is still a speculative sector, what percentage of an investor’s portfolio would be the optimal exposure for marijuana stocks?

Michael: Asset allocation is an individual matter. It depends on several factors like appetite for risk, overall wealth level, age, number of dependents, and many others. So, to offer a blanket percentage to everyone would be irresponsible.

However, you can imagine how this works. Cannabis is speculative but it has big growth potential. So, investors who are younger and more risk tolerant would probably want to have a higher exposure. If you are retired or nearly so, and looking to take money out of the market for expenses soon, then exposure would be much lower.

One thing to keep in mind is that the group is highly volatile. So, for traders, it is an interesting sector. It is not unusual to have gains of 5%-10% in a day, only to see those gains fully reverse over the next few days. Talk about a trader’s paradise. Of course, the risk with trading is that you get out ahead of a sustained move up, and never get the chance to buy back cheaper. Sooner or later, that will happen.

This means it is a good idea to have part of your exposure in the multiyear category mentally, and another portion set aside for trading. That’s only for traders. There’s nothing wrong with just taking buy and hold positions to benefit from the potentially bullish developments over the next three to five years. That might even make more sense because trading can be so hard. It depends on your personality, and whether you are good at trading and have the time for it.

Speaking of volatility, if you are the type to check your account value several times a day and you get emotional about the moves, cannabis is a sector you will want to have limited exposure to. Ideally as an investor, you want to train yourself to never feel emotion about your positions, either when they go up, or down. But this goes against human nature, so it is challenging, and few people can get fully to that state of mind.

In general, doing whatever you can to reduce emotion in investing will help you since emotional decisions often lead to losses. When you are highly emotional about your positions, either you buy too much at peaks because you feel good and you want more of that feeling, or you sell at bottoms because you want to turn off the negativity. Given the volatility of the cannabis group, it is more likely to draw you into these traps, and you need to be aware of this going in.

As with just about anything in life, “know yourself” is really good advice in investing. Fortunately, the market teaches you a lot about yourself, especially if you are young and just starting out, and therefore more prone to mistakes and emotional investing. The point is that the volatility of the cannabis sector means it is better at challenging your ability to stay flat emotionally. The more you have trouble doing that, the more you should just buy these stocks for a three-to-five-year time horizon, or otherwise limit exposure to smaller amounts.

Nancy: What diversification tactics do you recommend for investors in marijuana stocks?

Michael: If you look at the typical mutual fund, position size is generally limited to 2%-3% of the overall portfolio. Sometimes it goes to 5% or higher, but this is rarer. Fund managers also try to diversify across sectors. The same holds here. Unless you are a gambler, which may likely get you into trouble in the market, those kinds of position size rules should probably apply to cannabis stocks, too, and it should be one sector among ten or more that you have exposure to. If you want to run a portfolio that only has exposure to cannabis, that’s fine with me, as long as you understand the risk this brings to your investing.

Also, given that cannabis stocks are so volatile, it makes a lot of sense to trim a portion of a position into strength, with a plan to buy that position back when the strength cools off. If this is too much of a distraction for you, that’s fine. We all have lives beyond investing. In this case, simply owning with a three-to-five-year time horizon is a form of risk management, in that it sets you up mentally to have the patience to wait for developments to occur, and to ride out the inevitable phases of weakness. The good thing about our portfolio is that I plan to regularly make adjustments along the way, trimming some into strength and then buying back. So, you can watch what I do, to get some ideas on timing.

Nancy: What are the 3-5 most critical challenges to growth of the stocks in your portfolio right now?

Michael: On the political front, there are factions, often toward the right end of the spectrum, who simply oppose legalization under any circumstances. This is an obstacle to sector growth. However, polls consistently show that about two thirds of voters favor legalization for recreational use and bank reform that allows cannabis companies access to banking services. This is key because sooner or later politicians are likely to respond to what voters want. That does not always happen in life, but keep in mind politicians also need the tax revenue. So, not to sound cynical, but the reality is that the dynamic with cannabis is different from responding to the will of voters on issues that do not involve tax revenue. The politicians who oppose cannabis reform get cover when voters approve a referendum in their state that favors legalization.

On an industry level, oversupply putting downward pressure on prices is a challenge. However, this trend should level off at some point. Meanwhile, declining prices favor the legal providers since it helps them become more competitive against the illicit market.

Brand development is also a big challenge. It is not easy to successfully create and launch a brand. The risk for companies trying to do this now is that years down the road, if cannabis is fully legal, brand powers like Starbucks or Coca-Cola will get in the game. On the other hand, they would also be looking to buy successful brands, so their arrival in the sector would not be entirely negative for companies in the space now.

Portfolio Updates

GitLab (GTLB), after showing early promise, has fallen with the rest of the tech industry. Cabot analyst Tyler Laundon has decided to sell the shares from his portfolio in his Cabot Early Opportunities newsletter. I’m very disappointed in these shares. I still really like the company, and we may reenter at some point, but for now, I agree with Tyler. SELL

In his latest update on M/I Homes (MHO), Bruce Kaser, Chief Investment Analyst of Cabot Turnaround Letter, had this to say: “Shares have tumbled sharply from their 52-week high and now trade at their pre-pandemic price as investors worry about a possible recession, the effects of rising mortgage interest rates and higher labor and raw materials costs. While we appreciate the headwinds facing M/I Homes and its industry, we see a diversified, highly profitable, financially solid, and well-managed company whose shares trade at a sizeable discount to their liquidation value.

“The company reported a strong quarter. Earnings of $4.67/share rose 43% from the adjusted year-ago results and were 26% above the consensus estimate. Revenues rose 12% and were in line with estimates. Homes delivered (volume, essentially) fell 1% but prices rose 13%.

“M/I remains in strong financial condition, with very reasonable debt that doesn’t come due for another six years. The shares are undervalued even on a true liquidation value of $57.40/share, in which the only assets that count are cash, marketable securities and the home inventory. Theoretically, if the company was converted into cash tomorrow, this is what shareholders would get, net, after all obligations are paid. This number compares to a traditional liquidation value which counts all assets other than goodwill, or $68.75/share.”

I agree with Bruce’s assessment. The shares of MHO spiked up after the earnings report, as the company beat estimates on both the top and bottom lines. But the shares, unfortunately, retreated. They are exceptionally undervalued. BUY

QUALCOMM Incorporated (QCOM) was recently updated by Tom Hutchinson, Chief Investment Analyst of Cabot Dividend Investor, saying, “The tech sector still can’t get out of its own way. Inflation and rising interest rates persist, and tech earnings continue to be downgraded. Even though business is strong, QCOM can’t fight the gravity of a sinking sector. However, Qualcomm reports earnings today. The company had forecast earnings growth of 23% in the second half of this year. Hopefully another positive report will get the stock moving higher.”

Update: QCOM beat on both revenues and earnings, posting revenues of $11.396 billion and EPS of $3.13. compared with $9.336 billion and $2.55 in the prior-year quarter. The great report was due to increased sales in handsets, internet of technology, and automotive. However, the stock fell sharply as the company said that “fiscal Q1 2023 results would likely point to a low double-digit percentage decline in revenue.”

These shares are also very undervalued, but Tom changed his recommendation to Hold, and let’s do the same for now.

In its latest earnings report, MP Materials Corp. (MP) saw its quarterly earnings rise 20%, to $0.36 per share, beating the estimate of $0.30, and the $0.27 from a year ago. Revenues came in at $124.45 million, also beating estimates, and higher than last year’s $99.75 million.

The shares have gained a bit of ground, but are still discounted. BUY

You’ll recall that we held on to Devon Energy (DVN), and I’m glad we did! For its third quarter, Devon earned $2.18 per share (up 102% from a year ago!), beating analysts’ estimates by 2.4%. Revenues of $5.4 million also beat estimates (by 10.6%), and were up 56.7% from a year ago. Production for both oil and natural gas rose, but it was the price increase that lifted the top and bottom lines.

The company declared a dividend of $1.35 per share, up 61% from last year.

The shares are up about 7%, not counting the dividend. Continue to Buy.

Bruce Kaser also updated our newest recommendation, Citigroup Inc. (C), saying, “Citi reported adjusted earnings of $1.50/share, down 39% from a year ago and about 3% above the consensus estimate. Revenues excluding divestitures fell 1% and were fractionally below the consensus estimate. Overall, a reasonable quarter for Citigroup with a moderately encouraging outlook as the bank maintained its full-year revenue and expense guidance. The Citigroup turnaround remains a slog, measured in years rather than quarters, but appears likely to be successful. Citi shares offer a 4.5% dividend yield and considerable upside potential (>100%) for patient investors. The valuation, at a discounted 54% of tangible book value, compared to well over 100% for its major peers, supports our upside case.”

The shift in interest rates and to higher interest-earning assets is improving the bank’s net interest income, which was up 18% over last year. The shares of City are up about 12% since our recommendation, but are still very undervalued. BUY

Stock of the Month Portfolio
Price on
Div Freq.Gain/
Loss %
RatingRisk Tolerance
Citigroup, Inc.C10/14/2243.6145.61N/AN/A4.59%BuyM
Curaleaf Holdings Inc.CURLFNEW--5.79------BuyA
Devon Energy CorporationDVN9/16/2267.270.11N/AN/A4.34%BuyA
GitLab Inc.GTLB4/13/22----------%SoldA
Invesco Dow Jones Industrial Average Dividend ETFDJD5/13/2244.4143.29N/AN/A-2.51%BuyC
M/I Homes, Inc.MHO6/10/2243.7540.4N/AN/A-7.66%BuyA
MP Materials Corp.MP8/12/2237.8331.34N/AN/A-17.16%BuyA
QUALCOMM Incorporated (QCOM)QCOM7/15/22143.76111.93N/AN/A-22.14%HoldM

*Aggressive (A), Moderate (M), Conservative (C)

ETF Strategies

In our ETF portfolio, both iShares US Energy (IYE) and AGFiQ US Market Neutral Anti-Beta fund (BTAL) are still going strong.

But due to the market’s continued volatility, I’m going to make a couple of changes to our portfolio this month.

First, I think emerging markets are not going to recover anytime soon, so let’s SELL our position in iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB). In addition, the M&A marketplace is not expected to be a barn-burner next year, so let’s also SELL Renaissance IPO ETF (IPO). We’ll look at a re-entry point sometime next year.

Next, I’d like to add the 5-Star rated Vanguard U.S. Momentum Factor ETF (VFMO) to our portfolio. The fund invests primarily in U.S. common stocks with the potential to generate higher returns relative to the broad U.S. equity market by investing in stocks with strong recent performance as determined by the advisor. The fund’s expense ratio is 0.13%. The portfolio will include a diverse mix of companies representing many different market sectors and industry groups. Currently, the fund’s top five industries are: Healthcare (20.36% of assets), Energy (20.10%), Financials (12.61%), Industrials (12.59%) and Consumer Defensive (10.93%). The fund should be considered Moderate.

Its top 10 holdings are:

Top 10 Holdings (11.76% of Total Assets)
NameSymbol% Assets
UnitedHealth Group IncUNH1.47%
AbbVie IncABBV1.21%
Deere & CoDE1.18%
Capital One Financial CorpCOF1.15%
PNC Financial Services Group IncPNC1.15%
Johnson Controls International PLCJCI1.14%
HCA Healthcare IncHCA1.12%
Exxon Mobil CorpXOM1.06%
Pfizer IncPFE1.06%


I also want to add the iShares U.S. Healthcare ETF (IYH). The underlying index measures the performance of the healthcare sector of the U.S. equity market. The fund is non-diversified. The expense ratio is 0.390%. The fund should be considered Moderate.

The top holdings in this 5-Star rated fund are:

Top 10 Holdings (54.64% of Total Assets)
NameSymbol% Assets
UnitedHealth Group IncUNH10.08%
Johnson & JohnsonJNJ9.18%
Eli Lilly and CoLLY5.81%
Pfizer IncPFE5.28%
AbbVie IncABBV5.06%
Merck & Co IncMRK4.65%
Thermo Fisher Scientific IncTMO4.24%
Danaher CorpDHR3.57%
Abbott LaboratoriesABT3.54%
Bristol-Myers Squibb CoBMY3.23%


As for the rest of our portfolio, I like the direction I’m seeing in iShares Core S&P 500 ETF (IVV), iShares Global Financials ETF (IXG), Global X Lithium & Battery Tech ETF (LIT), ALPS Medical Breakthroughs ETF (SBIO), First Trust Water ETF (FIW), First Trust North American Energy Infrastructure Fund (EMLP), and Invesco Dow Jones Industrial Average Dividend ETF (DJD), which remain Buys.

These are the definitions I am using for Risk Preference:

As a conservative investor, you are less willing to accept market swings and significant changes in the value of your portfolio in the short- or long-term. Capital preservation is your primary goal, and you may plan on using the principal from your investments in the near-term, preferably as a steady income stream. The average level of return you expect to see is 5%-10%, annually.

As a moderate investor, you seek longer-term investment gains. You are comfortable with some swings in your portfolio’s performance, but generally seek to invest in more conservative stocks that build wealth over a substantial period of time. The average level of return you expect to see is 10%-25% annually.

As an aggressive investor, you primarily seek capital appreciation and are open to more risk. Swings in the market, whether short term or long term do not impact your investment decisions and you have confidence that volatility is necessary to achieve the high return-on-investment you are looking for. You typically expect a 25%+ return, annually, though you do not need your principal investment immediately.

I’ll update our suggested portfolio recommendations in a new alert, which I’ll post sometime next week. Stay tuned!

Current ETF Portfolio

CompanySymbolRisk Tolerance*RecommendationDate
Price on
Loss %
First Trust North American Energy Infrastructure FundEMLPCBuy9/16/2227.7426.65-3.93%
First Trust Water ETFFIWMBuy9/16/2276.7477.81.38%
Global X Lithium & Battery Tech ETFLITABuy9/16/2272.29570.79-2.08%
iShares Core S&P 500IVVMBuy2/8/22452.82380.78-15.91%
iShares US EnergyIYECBuy2/8/2236.1748.8835.14%
iShares Global FinancialIXGCBuy2/8/2284.7868.13-19.64%
iShares TIPS BondTIPMSold2/8/22------
iShares 10-20 Yr Treasury BondTLHCSold2/8/22------
iShares Core US Treasury BondGOVTCHold2/8/2225.664.26-83.40%
iShares J.P. Morgan USD Emerging Markets BondEMBMSell2/8/22103.9680.43-22.63%
Invesco Dow Jones Industrial Average Dividend ETFDJDCBuy4/8/2246.3543.28-6.62%
AGFiQ US Market Neutral Anti-Beta fundBTALABuy4/26/2219.8621.246.95%
ALPS Medical Breakthroughs ETFSBIOABuy6/27/2228.4429.353.20%
Renaissance IPO ETFIPOASell7/8/2232.3125.38-21.45%
Vanguard U.S. Momentum Factor ETFVFMOMBuyNEW--119.07--
US Healthcare Ishares ETFIYHMBuyNEW--274.48--

*Aggressive (A), Moderate (M), Conservative (C)

The Grass is Getting Greener—in the U.S. and Around the World

Since medical marijuana was first legalized in California in 1996, followed by recreational use legalizations in Washington and Colorado in 2012, the industry has exploded. You have only to look at the companies on the following website to see the rapid pace of revenue growth—across several sectors.

The COVID-19 pandemic negatively affected expansion, as lockdowns spread across the country. But the industry responded with social media and e-commerce platforms, which boosted their marketing efforts.

North America is the largest cannabis market so far, with the U.S. number one in sales. And as the graph below shows, the market has no intention of slowing down.

12-22 Projected US MJ Market_CSOM_11-10-22.jpeg

There are several reasons for this incredible growth:

Rising acceptance of marijuana for medical uses, especially in the over-50 age group. This generation is using cannabis for Alzheimer’s disease, anorexia, HIV-AIDS, glaucoma, cancer, arthritis, epilepsy, nausea, pain, cachexia, Crohn’s disease, migraines, multiple sclerosis, spasticity, and wasting syndrome. according to the U.S. Government Accountability Office.

But cannabis usage is accelerating across all age groups, as you can see in the chart below. Right now, according to Gallup, 14% of all U.S. adults use CBD.

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Sales tax revenues. The Marijuana Policy Project reports that state cannabis sales tax revenue rose 34% from 2020, to more than $3.7 Billion. But by March 2022, states had collected $11.2 billion from recreational sales alone.

Job growth. As of January of this year, according to Leafly’s jobs report, 428,059 full-time equivalent jobs are now supported by legal cannabis. And those numbers are growing quickly! Last year, 280 jobs were created each day in the industry.

And globally, the opportunity is enormous. Fortune Business Insights predicts that the global cannabis market will grow to $197.74 billion in 2028, a CAGR of 32.04%. The U.S. is expected to account for 73% of sales.

Australia, Canada, Chile, Colombia, Germany, Greece, Israel, Italy, the Netherlands, Peru, Poland, Portugal, and Uruguay have legalized the usage of cannabis for medicinal purposes.

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In the U.S., according to, medicinal cannabis is also now legal in 37 states plus Washington, D.C., including Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Hawaii, Illinois, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Utah, Vermont, Virginia, Washington, and West Virginia.

Marijuana flowers are the top selling products, followed closely by concentrates, which contain high levels (40%-80%) of THC (Tetrahydrocannabinol), the psychotropic ingredient in marijuana. Concentrates can be vaporized, turned into medical balms, or made into edibles.

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While marijuana stocks are depressed, sales are growing. And that creates a nice entry point for us with Curaleaf.

Obviously, investing in marijuana stocks is speculative, so please don’t go overboard in obtaining a position in the company. Go slow, and make this Aggressive stock no more than 2% of your total portfolio holdings.

The next Cabot Money Club Stock of the Month issue will be published on December 15, 2022.

Nancy Zambell has spent 30 years educating and helping individual investors navigate the minefields of the financial industry. She has created and/or written numerous investment publications, including UnDiscovered Stocks, UnTapped Opportunities, and Nancy Zambell’s Buried Treasures under $10. Nancy has worked with for many years as an editor and interviewer for their on-site video studios.