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WWhether investors realize it or not, they are going through a historic period for the stock market. During the first quarter of 2020, the wide range S&P 500 had its fastest dive by at least 30% of its history (it took about a month). This was followed by the strongest rebound on record as the S&P 500 took less than 17 months to double from its pandemic low on March 23, 2020.
During the coronavirus crash, I deployed almost all of my available capital and bought or added to over a dozen shares. But since the S&P 500 bottomed out, my cash balance has grown.
This month I found a few opportunities to put some of that money to work. Here are three stocks I added, first bought, or bet against, in November.
Image source: Getty Images.
Added to: Jushi Holdings
The first business that made me see green in November is the marijuana stockpile Jushi Holdings (OTC: JUSHF). I first bought Jushi in August, increased my stake again in September, and made my biggest share purchase to date in early November.
To clarify the air, I’m not at all worried that Congress hasn’t been able to pass reforms to the banking or legalization of cannabis at the federal level. Most US multi-state operators (MSOs) are built in such a way that state-level legalizations offer more than enough growth potential to become extremely profitable. With 36 states having legalized weed to some extent, there are plenty of opportunities for pot stocks to thrive in the United States.
As for Jushi, there are three things I particularly like about the business. First, the focus is on limited license markets. A limited license market caps the total number of licenses issued by dispensary regulators, and often to a single company. In Jushi’s case, it targets three main markets: Pennsylvania, Illinois and Virginia. The first two are traditional limited license states, while Virginia grants licenses based on jurisdiction. The point is, Jushi is protected from bigger competitors with deeper pockets by this targeted licensing. This will allow the company to successfully grow its brand and gain a strong customer base in these potential $ 1 billion markets (Illinois has already reached $ 1 billion in pot sales in 2020).
Second, Jushi’s insiders and executives are in the game. Of the first $ 250 million in capital raised by the company, about $ 45 million came from insiders and executives. Typically, when the interests of insiders align with those of shareholders, good things happen.
And third, Jushi appears to be an absolute steal from his peers. With 26 operating dispensaries and a total of 39 retail licenses in its back pocket, including pending acquisitions, Jushi offers one of the fastest growing potentials in the cannabis industry. Sales are expected to grow from nearly $ 81 million in 2020 to $ 467 million by 2023, according to Wall Street estimates. In addition, the company is expected to reach profitability next year. That’s a good deal for a company with a market cap of just $ 757 million last weekend.
Image source: Getty Images.
First purchased: Columbia Care
Just days before making my third purchase from Jushi Holdings, I made my first purchase of US MSO cannabis Columbia Care (OTC: CCHWF). That’s right, guys … it’s been kind of a stock month.
While Jushi offers me the opportunity to purchase a relatively small MSO building from the ground up, Columbia Care gives me the opportunity to take advantage of growth from a larger base. According to the company, it operates 130 facilities, including 99 dispensaries. Keep in mind that these numbers include installations under development. The approximately 100 retail outlets will make Columbia Care one of the largest marijuana retailers in the country.
One of Columbia Care’s main growth drivers is the company’s penchant for acquisitions. On the same day that I made my initial purchase, Columbia Care announced that it had completed its buyout of Medicine Man. The $ 42 million deal strengthens the company’s presence in Colorado, which is the second largest cannabis sales market in the United States. Additionally, Columbia Care closed a $ 240 million buyout of Green Leaf Medical in mid-June. This agreement gave the company a significant presence in the mid-Atlantic region.
On the one hand, a cumbersome acquisition strategy exposes Columbia Care to higher upfront costs, integration delays, and potential regulatory pitfalls – the latter issue having been a problem this year. On the other hand, this strategy is rapidly expanding the reach of the business and is expected to start paying dividends in 2022. Wall Street expects the company’s annual sales to increase from $ 180 million in 2020 to around $ 1.1 billion by 2023.
Likewise, Columbia Care focuses on a number of high value and / or limited license markets. While it’s always a good idea to have a presence in California and Colorado, the nation’s # 1 and 2 weed markets, Columbia Care also generates a cargo of revenue from Massachusetts, Ohio, and the United States. Pennsylvania, which limits the way licenses are distributed. outside.
With a market cap of less than $ 1.1 billion, I think Wall Street grossly underestimates Columbia Care’s growth-by-acquisition strategy.
Two all-electric Rivian R1Ts. Image source: Rivian Automotive.
Sold calls: Rivian Automotive
The third decision I made while sitting on a record amount of money was to sell $ 230 calls in December 2021 to an electric vehicle (EV) maker Rivien Automobile (NASDAQ: RIVN).
Since not everyone follows or trades options, here’s the bottom line: If Rivian’s stock price ends below $ 230.00 at market close on December 17, 2021 , I will receive the full premium on each contract I sell, less the nominal commission fee for trading options contracts with my online brokerage. If it exceeds $ 230 plus the premium I paid by contract, I will lose money. In theory, my potential for loss is limitless. In other words, it’s not a bet for the faint of heart. But all things considered, this is a very small bet within my portfolio (33rd highest position out of 35 holdings).
Rivian is skyrocketing for a simple reason: Everything about electric vehicles is hot, hot, hot! Most of the world’s economic powers are committed to taking action to reduce their carbon footprint. The most logical way to do this is to switch to electric vehicles and other alternative energy transportation vehicles. Rivian’s EV adventure trucks and its corporate fleet provide a niche where they could experience resounding success in the long run.
The company also landed a load of cash with its initial public offering (IPO). The company raised $ 12 billion with its IPO two weeks ago, giving it more than enough firepower to expand production capacity, hire and innovate.
However – and this is the key “however” – it should be remembered that Rivian has no 12 month income and is valued at $ 113 billion. For more than a quarter of a century, investors have overestimated the adoption of advanced technologies. In my opinion, the chance of Rivian performing a parabolic boost in production capacity without hitting any issues is pretty much nonexistent.
While you can never say never in the EV space, I just can’t see Rivian worth $ 197 billion per day of options expiration in less than a month with nothing in sales lagging behind.
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Sean Williams owns stock in Columbia Care and Jushi Holdings and has the following options: $ 230 short-term calls in December 2021 on Rivian Automotive, Inc. The Motley Fool owns stock and recommends Jushi Holdings. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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