June has been one roller coaster ride for cannabis stocks. First, the FDA reported that CBD be treated like a drug causing cannabis stocks to decline, then a slurry of upgrades caused some cannabis stocks to soar and now the whole industry is rebounding with overall good investor sentiment.
Honestly, no surprises for such a volatile industry. This volatility, surprising last-minute news and enormous swings are nothing new for cannabis stocks. Although one stock was particularly interesting. When the FDA reported its ‘findings’ for CBD, GW Pharmaceuticals (GWPH) seemed to explode.
From a technical standpoint, GWPH is a very interesting stock. Unlike most of the industry, GWPH is trending positively beyond any normal cannabis stock consolidation. In fact, the stock is looking more like an incredibly bullish long-term buy. Why is GW Pharmaceuticals so interesting? First of all, after the FDA’s ruling on CBD, GWPH stock jumped. Why? Because the company owns one of the only CBD products approved by the FDA for treatment of both childhood-onset forms of epilepsy. The drug itself is called Epidiolex and you’ll be hearing a lot about it in the weeks to come. Having close ties with the FDA is a really good asset to have. Although letting companies have free reign over CBD would be good for everyone, the government is still in charge of consumer safety. Federal bodies like the FDA won’t just back down from controlling weed products or CBD. It’s still going to be a tax, health and legal issue. So don’t expect the FDA to just wipe its hands clean and forgive or forget CBD products.
Another important factor is that GW Pharmaceuticals is neither a Canadian or American company. It’s located and licensed in United Kingdom. Why is important? Because the European market is an incredibly valuable future marketplace for many big producers including Canopy and Aurora. Having a stationed and licensed cannabis company in any European country makes it an incredibly valuable proposition for investors. Companies like GW Pharmaceuticals will build resistance within their governments to prevent larger cannabis companies from simply setting up shop in their markets. Depending on how Brexit plays out, the final deal with the EU might either boost GW Pharmaceuticals or restrict its access to Europe. But most likely, some type of free trade agreement will exist between EU states and United Kingdom since trade is such an incredibly valuable part of Europe. Additional, European sentiment towards pot is positive. Most European countries are fairly libral when it comes to legalization and taxation of weed. Remember, pot was legal in parts or Europe way before North America.
For investors, GW Pharmaceuticals looks like a great stock. The company itself reported better than expected sales for Epidiolex and announced recently positive results from its phase 3 study of the drug treating another rare type of epilepsy. And overall its been on a run and consolidating in a tight range upwards. It’s also a great stock to diversify away from strictly American and Canadian cannabis market. Looks like a great investment for the future of global cannabis.
Analysts seem to agree. The cannabis player stands as a ‘Strong Buy’ name among Wall Street analysts, according to TipRanks. In the last three months, GWPH has won 10 bullish ‘buy’ recommendations. With a return potential of nearly 23%, the stock’s consensus price target lands at $219.56.
To read more on the nitty gritty of what’s going on in the rising cannabis industry, click here.
Disclosure: No position.