Quote:
Originally Posted by Rain Man
Y'know, I was wondering how American stock markets can trade shares in companies that participate in illegal activity. If banks can't take their money, it seems like people shouldn't be able to invest in them.
Can you buy shares of an individual marijuana company?
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"During a gold rush, don't mine for the gold. Sell the picks and shovels to the miners."
I'm long on KSHB - Kush Bottles Inc. Curious to hear other opinions on this.
Kush sells packaging products for Marijuana. All these new businesses opening up for both medical and recreational weed have to package it in very specific, approved packaging types. They are taking a two-fold approach with patents on packaging itself, but also the unique ability to add custom branding to such packaging. They are very small cap growth...technically a penny stock trading at $2.10 right now.
They have been able to use their stock to acquire companies that would have potentially competed with them. This shows these companies believe in the growth opportunities of Kush as a whole...opting to become shareholders instead of requiring large cash acquisitions. Of course, this allows Kush to use that cash for more patents, more acquisitions, inventory, and general growth.
This can be seen on their balance sheet where they've doubled their cash on hand nearly 5 times in the past 3 years (8/2013 - 8/2016). Cash from Q1 to Q2 2017 dropped a little bit, but you can see that the cash went into inventory, receivables, and some of it did go towards the acquisitions. Equity went from $9m to $43m on the balance sheet from Q1 to Q2 primarily due to acquisitions. This can be a little bit misleading because much of that equity number goes into the "Goodwill" line on the balance sheet. The point remains, they are building a big moat around themselves by acquiring all these companies.
Their income statements show they've doubled their sales/revenue numbers a little more than 3 times in 3 years, and look to be doubling again this year (if not more). Operating expenses have actually fallen as revenue has grown (based on percentage) and the company is now officially profitable.
They're pretty interesting to me, and it could be something for the more risky portion of your portfolio that could be a home run.
XXII - 22nd Century Group Inc. is another one I was interested in. I put $1k into them about a year ago and after a 64% gain I saw they started to drop so I went ahead and took my profit and got out. Their big thing is that they hold patents in low nicotine tobacco. Well, just last week the FDA announced they're going to start requiring lower nicotine counts in tobacco, and most cigarette stocks took a big hit because of that. XXII has gone up about 50% since then, and are up 168% since I bought them last year...but of course I got out too early...and didn't have much in to begin with. If only...