Buy Low For The Bounce III And Chase the Canopy CBD News
Our buy low for the bankruptcy bounce strategy has worked quite well so far. Last Wednesday we wrote about Pernix Therapeutics Holdings, Inc. (PTX) and how it was an ideal candidate for a bounce after getting hammered since announcing Chapter 11 bankruptcy. The result was a positive one as the next day it rose 34%. We then picked Aceto Corporation (ACET) which initially dropped, but that small loss was recovered and then some when it ran nearly 200% to $0.43 on Wednesday, allowing for significant profits to be taken. We are up to 812 followers despite not giving out a lot of alerts, a fact that we think is indicative of a 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 3,700 followers on Twitter as well.
We are hoping to continue these profitable trades with third oversold stock due for a bounce. It isn't a bankruptcy bounce because it isn't going bankrupt, but it has sold off substantially on unjustified news. Reliq Health Technologies Inc's (RQHTF) (RHT.V) Canadian symbol has tanked from $0.375 to $0.235 in two days on news that it is suing several of its former employees for misconduct that resulted in Reliq having to restate all of its financials last year. This news in itself should not be causing a tank, in fact this could be seen as a positive as it is aggressively trying to separate itself from the ones responsible for the wrongdoing. The financials have already been restated and revenue has been zeroed out for last fiscal year. Reliq's Q2 ended December is due to come out on Friday, adding to the fear. But there is really nothing to fear about. The worst case scenario is already known. Zero revenue with a heavy burn rate. Once the financials are out, we believe that cooler heads will prevail and the company will return to prices seen before this week's tank.
Sequential Brands Group, Inc. (SQBG) is at the other end of the spectrum, a company that ran 40% to $1.68 on Thursday after announcing a deal with Canopy Growth (CGC) (WEED.TO) to have Martha Stewart join on as a product advisor. The news release stated:
"Canopy Growth and Sequential Brands Group Announce Collaboration on CBD Product Development
Martha Stewart to join as advisor on hemp-derived CBD products
SMITHS FALLS, ON and NEW YORK, Feb. 28, 2019 /PRNewswire/ - Canopy Growth Corporation ("Canopy Growth" or "the Company") (WEED.TO) (CGC) and Sequential Brands Group, Inc. ("Sequential") (SQBG) announced today that Martha Stewart has joined the Company in an advisory role to assist with developing and positioning a broad new line of product offerings across multiple categories.
Martha Stewart to join as advisor on hemp-derived CBD products (CNW Group/Canopy Growth Corporation)
With decades of success in publishing, broadcasting, online and merchandising, Martha Stewart has firmly cemented herself as one of the most well-respected businesswomen in the United States. Along with a deep understanding of what consumers in the United States and around the world want, Martha has been one of the most vocal advocates for animals, championing the health and wellness of pets and farm animals alike. With several clinical trials underway, Canopy Growth will be leaning on Martha's vast knowledge of consumer products while exploring the effectiveness of CBD and other cannabinoids as they relate to improving the lives of both humans and animals.
"I am delighted to establish this partnership with Canopy Growth and share with them the knowledge I have gained after years of experience in the subject of living," said Martha Stewart. "I'm especially looking forward to our first collaboration together, which will offer sensible products for people's beloved pets."
"As soon as you hear the name Martha, you know exactly who we're talking about," shared Canopy Growth Chairman and co-CEO, Bruce Linton. "Martha is one of a kind and I am so excited to be able to work alongside this icon to sharpen our CBD product offerings across categories from human to animal."
As previously reported in January 2019, Canopy Growth has developed diverse product offerings specific to hemp-derived CBD and the Company looks forward to working closely with Martha Stewart as they further develop and introduce these products to market in the future. Canopy Growth previously reported that it will invest between $100 and $150 million in a hemp industrial park in New York State with an intended purpose of being the Company's first hemp facility in the United States.
Here's to Future Growth (it's a good thing).
About Martha StewartMartha Stewart is an Emmy Award-winning television show host, entrepreneur, trusted lifestyle expert and teacher. She is also bestselling author of 94 books which have been published by Clarkson Potter, who continues to partner with the brand on new culinary titles. Millions of people rely on Martha Stewart as a source of useful "how-to" information for all aspects of everyday living - cooking, entertaining, gardening, home renovating, collecting, organizing, crafting, holidays, healthy living and pets. The Martha Stewart brand reaches approximately 100 million consumers across all media and merchandising platforms each month. Her branded products can be found in over 70 million households and have a growing retail presence in thousands of locations.
About Sequential Brands Group, Inc. Sequential Brands Group, Inc. (SQBG) owns, promotes, markets, and licenses a portfolio of consumer brands in the fashion, active, and home categories, which includes the Martha Stewart media and merchandising properties. Sequential seeks to ensure that its brands continue to thrive and grow by employing strong brand management, design and marketing teams. Sequential has licensed and intends to license its brands in a variety of consumer categories to retailers, wholesalers and distributors in the United States and around the world. For more information, please visit Sequential's website at: www.sequentialbrandsgroup.com. To inquire about licensing opportunities, please email: newbusiness@sbg-ny.com."
This is an extremely brilliant partnership that will reap substantial benefits for both companies. Though it will be much more bullish for SQBG only because it has such a small market cap of $108 million so the percentage impact on operations and stock price will be much greater. Why should this partnership be so lucrative?
Martha Stewart's name is not as wholesome as it once was prior to her legal issues, however she is still the face of the family for many moms. The BIGGEST hurdle Canopy and other weed players will face outside of government policy is mainstream acceptance of cannabis/hemp products. The old-fashioned, conservative, religious mom who makes the buying decisions for so many households across America wants nothing to do with "pot-smoking hippie" nonsense. Martha Stewart has such high profile and influence in this demographic that she can access this market to Canopy in a family friendly way. That includes hemp products today and likely CBD for medical use down the road as well as the untapped pet market opportunity.
The positive case for SQBG should be very apparent. This is a new, hot market and Canopy is global market leader. This deal brings SQBG legitimacy to a whole pile of investors flush with cash and looking for new angles in the cannabis industry for which to profit. This brilliant partnership will be lucrative to the bottom line for SQBG but more importantly from a trader looking to get in early, should make this a very hot stock for a sustained period of time.
Disclosure: We are long RHT.V, SQBG
2019 got off to a reasonable start in January for microcap stocks as the market in general was bullish for the month. There were a lot of stocks that spiked 100-500% in a matter of one or a few days. As we look towards the rest of 2019, we have to figure out what's next for microcap stocks? TradeMiner identifies seasonal trends and market cycles, the Penny Stock Prophet and Microcap Millionaires finds the next big small cap plays in various industries while Addicted to Profits makes trades from a Canadian perspective.
There are also some good books available on microcap stocks and day trading such as:
Here are some other good stock market resources. This includes technical analysis and day trading, dividend stock investing, gold and commodities, sector rotation, options trading and microcap trading strategies:
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