The top five holdings in this ETF are: Aphria Inc (APHA.TO, 9.09%), Canopy Growth Corp (WEED.TO, 7.73%), GW Pharmaceuticals PLC ADR (GWPH.L, 7.62%), GrowGeneration Corp (GRWG, 6.90%), and Tilray Inc (TLRY.TO).
ETFMG Alternative Harvest ETF (MJ)
From Cabot Wealth
I’m extremely bullish on the entire marijuana sector in 2021. And the best way to gain access to that sector is via the ETFMG Alternative Harvest ETF.
Marijuana stocks peaked way back in January 2018. They then spent the better part of two years nose-diving. The North American Marijuana Index lost roughly 85% of its value during those two years, as this six-year chart shows.
Notice the recovery since the March 2020 bottom? Marijuana stocks have nearly tripled in the last nine months. And while many other growth sectors have risen fast since the February/March 2020 coronavirus market crash, cannabis stocks are advancing faster than most—and yet are still trading at less than half their peak values from three years ago.
Did momentum in the cannabis sector slow down during these last three years? No! Retail sales of medical and recreational cannabis in the U.S. are expected to top $15 billion in 2020 (results not out yet), which would be a 40% improvement from 2019 and a 50% improvement from 2018. In the next four years, legal marijuana sales in the U.S. are expected to triple. And those estimates came before Arizona, Montana, New Jersey, and South Dakota all voted to legalize marijuana in November.
In other words, momentum in the legal marijuana industry never waned in the last three years. Now, it’s clearly accelerating. And as the pandemic and accompanying social distancing and lockdowns rage on, people will be consuming more cannabis products in the coming year, not less. All of that bodes well for marijuana stocks.
I could give you one or two cannabis stocks with good charts and call it a day. But why not buy an ETF that tracks the price of all the best marijuana stocks?
With marijuana ETFs, you take on less risk than if you try and pick one or two marijuana stocks. Because the industry is still in its adolescence, individual companies can be unpredictable and, as a result, volatile. If you pick the wrong cannabis stock, it can do damage to your portfolio. However, by picking a basket of marijuana stocks, at a time when the group as a whole is priced nearly 60% below its peak from three years ago despite the prospect of tripling sales by 2024, you’re betting on the marijuana sector as a whole, not just one stock.
And the Alternative Harvest ETF—the first marijuana ETF in the U.S., and the largest—gives you the safest, most reliable access to this exploding industry. It’s up 59% since the March 2020 bottom, and 27% in the two months since the election—and yet was still down in 2020.
I’m betting it won’t be down again in 2021. Having cooled off a bit in the last month on the heels of a major run-up in November, this a great entry point into what I believe will be the hottest industry this year—and beyond.
Chris Preston, cabotwealth.com, 978-745-5532, January 4, 2021