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30 Dec

Only 1 Marijuana Stock Worth Holding

by

With 20 states accepting medical marijuana as therapy for various diseases and conditions, along with two states legalizing marijuana for recreational use (Washington and Colorado), investors have asked me for my take on the trend toward the legitimacy of marijuana in America—but more specifically, whether there’s any money to be made now investing in the green bud.

As I see it, the trend toward legalizing marijuana to aid patients with the sickness that comes with chemotherapy, reduce pressure in the eye in glaucoma patients, relieve arthritis, as well as ameliorate patient suffering from other diseases and conditions, has gained considerable legislative momentum following four decades of ignorance and suppression.

In fact, for the first time in 44 years of Gallup polling, Americans greatly favor legalizing marijuana—58% in favor of 39% against, the herb, up from 12% and 84%, respectively, in 1969.

It stands to reason, then, that some time during the remainder of this decade, most, if not all states will accept marijuana as a legal substance, as public awareness increases as to marijuana’s medicinal properties and relatively mild side-effects.

How the 20, or so, publicly-traded companies fair during the coming years is very much too early to access.  No doubt, when the public tide overwhelms the the politico prohibitionists, stiff competition will flood into the space, including big pharma and tobacco companies, whose muscle will aggressively seek a piece of an estimated $100 billion market.

Last year, the ‘marijuana industry’ reported $1.7 billion of sales, an amount too small for mega multinationals to aggressively hijack in earnest the industry’s potential large market.

The One I’m Going To Buy Soon

In the meantime, of the approximately 20 ‘marijuana stocks’, only one stock caught my eye as worthy of your attention and, possibly, your capital.

And that stock is Growlife (OTCQB: PHOT), a manufacturer and supplier of branded grow equipment and supplies to the indoor and outdoor urban gardener.

Growlife (OTCQB: PHOT) 

  • Market Cap: $94.46 million
  • Revenue (annual): $3.61 million
  • Forward P/E (fye Dec. 31, 2014): N/A
  • PEG Ratio (5- year expected): N/A
  • Quarterly Revenue Growth (y-o-y): 176%
  • Quarterly Earnings Growth (y-o-y): N/A

I like the stock because of the company’s old and classic “pick and shovel” business model that should be immune to much of the risks inherent in a new and volatile industry, with a slew of players—including large existing predators who wait patiently in the wings ready to takeover the marijuana market with their enormous economies-of-scale operations, lab facilities and capital.

In addition, Growlife has decent revenue, which is expected to reach nearly $4 million for fiscal 2013.  Many of the other so-called ‘marijuana’ stocks—mentioned somewhat favorably by other analysts—have little or no revenue e.g., MediSwipe (OTCPK: MWIPD), are operated by questionable management Medical Marijuana (OTCPK: MJNA) and/or worked a business plan that has a longer runways to profitability Cannabis Science (OTCPK: CBIS).

Growlife markets its proprietary product lines, Stealth Grow and Phototron, to retail customers at the company’s brick-and-mortar locations (California, Colorado, Massachusetts, Maine and New Hampshire) in addition to its three on-line retailers Greners.com, 58Hydro.com and StealthGrow.com.

Together with Growlife Hydroponics brick-and-mortar locations and on-line business, the company offers approximately 3,000 products, including grow lights, nutrients, hydroponic equipment, CO2 generators, room-cooling systems, timers, meters, books and other products essential to successfully growing marijuana.

The company’s quarter-over-quarter growth soared in fiscal 2013, rising to $1.3 million for the third quarter, from $475,870 reported for the third quarter of 2012.

For the nine months ending Sept. 30, 2013, revenue jumped to $2.25 million, from posted revenue of $516,286 for the first three months of 2012.

The company cited strategic acquisitions, product expansion and business alliances for the rapid revenue rise.

So far this year, Growlife has generated no earnings due to legal/consulting costs associated with aggressive acquisitions and capital raises.

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5 Comments

  1. michael

    PHOT has access to 40M in capital, Former yahoo/Microsoft
    Exec President looking to make a good impression, about to
    announce their first set of Gift Partners, Acquisitions, and
    new Growlife Products set to be released.
    January 1st, the whole Sector is about to get some MOJO, and
    PHOT’s two Colorado Store Fronts are about to see triple
    Revenue sales for 2014$$$

    I’d say PHOT is a Strong Buy!

    Not if, but when, PHOT announces it’s inked several,
    lucrative, Gift partners and, not or, announces a new
    Revenue generating, profitable Acquisition, what do you
    think will happen to the pps?

    That scenario is not wishful thinking.
    1.3M has been set aside to accomplish just that, and
    if I am reading PHOT’s Hunt correctly in his recent
    interview, both scenarios will unfold very shortly!

    Reply
  2. Rick Lale

    Dont overlook terra tech corp. TRTC . They are a sleeping giant in the marijuana sector with massive revenue even without marijuana. They are just now completing a massive 5 acre greenhouse that can do 2 million dollars per acre annually and they have products in iver 500 retail stores across the country. Worth a solid look. PHOT is also a winner, CBIS, PLPE and a nice stock that is benefiting from TRTC edible garden brand “living produce” is FWM , fairway markets in New York.

    Reply
  3. michael

    I think the Author meant Marijuana stocks, not
    a lettuce stock.

    Reply
  4. Shawn Green

    PHOT is a solid company . Stealth Grow products are considered the cream of the crop in thew Hydroponic Industry. (I have a good friend who owns a Hydro store)

    They have solid experienced management. This could be a huge winner for all of us.

    Reply
  5. Patrick

    Better hope for a turnaround here, because PHOT has plummeted since the CO legalization. If I were you guys, I’d take a look at AFAI.

    Reply

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