Tuesday, 2 October 2018

NU: The Next Cannabis-Related Play To Watch For A Large Spike

Since re-focusing on the Canadian market in August, most of our picks have been on a tear, resulting in tremendous gains for our readers:
  • In our write up on August 14, Buying Cheap Cannabis Warrant Plays In Preparation For Fall Pop, we called KALY.wt at $0.03 and HIP.WT.A at $0.12. KALY.wt closed today at $0.07 for a 133% gain and HIP.WT.A closed at $0.27 for a 125% gain.
  • In our write up on September 4th, we picked KBEV at $0.35. It is $0.64 now for an 83% gain
  • In our write up on September 5th, we picked CHH at $0.355. CHH closed at $0.40, for a 13% gain
  • The next day, we picked a cryptocurrency stock NETC at $0.10. NETC closed at $0.185, for an 85% gain.
  • Not everything can go right. Our pick of IGX on September 20th has dropped from $2.35 to $1.60 as Tilray pulled back significantly after its first bubble-like run up. The SIC area play PIVT has dropped along with SIC crashing, from $0.155 to $0.125 since August 3rd and another area play to GBR, BTU has dropped from $0.08 to $0.04 since our trade alert on August 27th
No one will be perfect on the stock market, but as you can see our track record has been very good overall, taking advantage of the cannabis bull market that is turning into a cannabis bubble - but also managing to pick a cryptocurrency stock that has nearly doubled while most other cryptocurrency stocks are still in the gutter. We are up to 678 followers despite not giving out a lot of alerts, a fact that we think is indicative of this successful, diligent and prudent stock picking history. If you like our picks you can follow our blog by clicking the follow button on the top of the left hand panel. You can also follow us on Twitter @StockTradePicks. We have over 3,000 followers on Twitter as well.

It's getting harder to find undervalued cannabis stocks that haven't gone on a run yet that look ready to play catch up. But when you do find one, it has a chance to really take off. Yesterday we were considering Naturally Splendid Enterprises (NSP), a stock so far removed from cannabis that it openly claims that it is a hemp stock and not cannabis related. But it went up 100% on Monday, too much of a run for something that had no news. Turns out our instinct was right. NSP jumped as high as $0.40 in the morning but cratered to $0.25 by the end of today as the company confirmed there was no pending news to justify the increase in price. Traders would have had to be quick or take losses.

In its place, we picked NeutriSci International Inc (NU). which rose 20% to $0.18 and finished the day strong, just a half penny from its day high. We also chose a gold pick, Aton Resources Inc. (AAN) which closed down 10% to $0.085. We are going to focus on NU since we really liked how it traded on Tuesday and these "cannabis peripherals" that we have picked recently like KBEV or KALY show that NU can go on a sustained and substantial run. At $0.18, NU has a tiny $18 million market cap. This compares very favorably to other players in the CBD beverage and food space. NU's background and technology is used to develop nutraceutical products, but with cannabis legalization and the increasing popularity of cannabidiol for a variety of health benefits, the company quickly pivoted so that it is planning to offer products such as this:

NU has teamed up with Nutritional High International (EAT), bringing Cannabis-Infused Nu Energy Tablets to the market:

"TORONTO, July 10, 2018 (GLOBE NEWSWIRE) -- Nutritional High International Inc. (the “Company” or “Nutritional High”) (CSE:EAT) (OTCQB:SPLIF) (FRANKFURT:2NU) is pleased to provide an update on its previously announced partnership with NeutriSci International Inc. ("NeutriSci") (TSX-V:NU) (OTCQB:NRXCF) (FRANKFURT:1N9) (see press release dated May 30th, 2018).

As of July 11th, 2018, NeutriSci and Nutritional High will commence the production process of its newly developed chewable, sublingual THC product (“Nu Energy Tablets”) for sale and distribution in the state of California. The Nu Energy Tablets will be produced at the Company’s Pasa Verde manufacturing facility, located in Sacramento, California. Delivery of the first purchase orders is on track and set to begin in Q3 of 2018. Initial distribution will begin in approximately 400 dispensaries across the state.  

The recreational use cannabis market in California is expected to exceed $5 billion in 2019.  By comparison, beer sales in California hit $5 billion in 2018, according to industry research group IBIS World.

Jim Frazier, CEO of Nutritional High commented: “We are pleased to announce this milestone in our working relationship with NeutriSci and look forward to rolling out the distribution of the product across California. As a Company, we strive to provide our customers with unique best-in-class cannabis products, and this signifies the continuance of that strategy.”

NeutriSci’s CEO, Glen Rehman stated, “We are very pleased to announce that the manufacturing of the new sublingual melts using NeutriSci’s patent pending CRYOLISATION™ technology will begin July 11, 2018.  This signifies a major step forward in gaining a strong foot-hold in the California market for both companies.  Our partnership with Nutritional High has secured distribution for our ground-breaking product in dispensaries across the state of California.  We are excited to bring our product to the California marketplace!”

EAT has a $90 million market cap in Canada - much bigger than NU's market cap, but much smaller than many other cannabis players - and is another stock that could go on a substantial run. With EAT's aggressive expansion into Nevada, we think there could be news of expanding the tablets to sell in that and other states too, leading to more positive catalysts for NU.

Something very important that can't be overlooked is that NU has signed distribution agreement with one of the largest food retailers in Canada, enabling them access to the shelves of over 1,000 supermarkets:

"Vancouver, British Columbia – January 17, 2017 – NeutriSci International Inc. (the “Company” or “NeutriSci”) (TSX-V: NU) (FRANKFURT: 1N9) the innovator and pioneer behind neuenergy®, announces its latest distribution agreement with Sobeys and Safeway Canada.

Sobeys Inc. and Safeway Canada are wholly-owned subsidiaries of Empire Company Limited (“Empire”).  Empire is one of the largest food retailers in Canada, with over 260 Sobeys and 183 Safeway supermarkets operating in Canada, with an additional 1,200 stores operating under banners such as IGA and IGA Extra, Thrifty Foods, Foodland, FreshCo, Price Chopper, Lawtons Drugs, Rachelle-Béry, Needs, Marché Bonichoix and Les Marchés Tradition."

If NU can get its CBD product eligible/legal for sales in supermarkets, the distribution agreements will already exist for fast expansion. .

New Age Beverages Corporation (NBEV) and DAVIDsTEA Inc. (DTEA) have been on fire recently as healthy beverage producers who trying to get into the CBD drink space, similar to what NU is doing with their energy tablets. In fact, DTEA is up merely on rumors of it - the stock price tanked after hours after the company denied anything out of the ordinary to its normal business activities which do not involve cannabis. Ever since Tilray (TLRY) went on its crazy run, investors have been scraping the bottom of the barrel, desperate to find anything remotely cannabis related to park money. NU has thus far been overlooked but with the increase in price from $0.12 to $0.18 and 12 million shares traded over the past two days, we don't think NU will be overlooked for much longer.

If NSP, NBEV and DTEA can go on substantial runs, doubling their stock price or more, then so can NU with its minuscule $18 million market cap.

Update: A report independent of ours authored by someone who appears to be a long-term shareholder highly familiar with NU called "The Fundamental Roadmap to $1 for NU" made a brief but informative bullish case for the stock. We suggest you read it.

Disclosure: We are long stocks listed in this write-up

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