Tech stocks have had a busy 2017 so far. We've seen the acquisition of groundbreaking companies in healthcare and autos, while the online revolution is seeping into every nook and cranny of our lives here and around the world. There's also been major news in marijuana legalization, which is living up to the hype as a frontier sector.
Of course this is all huge for investors, with juicy profit opportunities popping up with each new development.
We're going to look at four major areas for tech investing: legal marijuana, healthcare, the online revolution in Asia, and the cars of the future. For each one, we'll tell you what Money Morning Director of Tech and Venture Capital Research Michael Robinson sees on the horizon. Then we'll pick a favorite stock to buy to profit from each trend.
For marijuana, we'll look at how legalization is progressing in Canada and the United States. In healthcare and pharmaceuticals, we'll cover some groundbreaking developments in immunotherapy to treat cancer. Next, we'll see how online interaction is taking over Asia. And finally we'll go over the enormous profit potential in the fast-growing trend of autonomous vehicles.
We'll also give you our favorite picks in each subsector - including a company that could become the Apple of legal weed and a biotech that's leading the way through the next revolution in cancer treatment. First up is why Michael Robinson has been looking to Canada for some of the biggest winners in marijuana legalization...
Only one nation - Uruguay - has made marijuana completely legal. That is, not decriminalized or de facto tolerated, but fully legal as a consumer product for adults.
If all goes according to Canadian Prime Minister Justin Trudeau's plan, however, there will soon be two.
In April 2017, Trudeau introduced legislation to legalize and regulate marijuana. He has been a vocal supporter of legalization since his campaign, arguing that it is the best way to keep it out of the hands of children.
Trudeau and Canada's Liberal government are eyeing 2018 for implementation of the new law. Provinces will have some discretion to limit who can buy pot and where. Some illegal dispensaries may be shut down.
Some marijuana advocates are frustrated by the delay and also by some of the restrictions in the legislation.
But Michael Robinson says not to worry. Legal weed is coming to Canada, and soon. The government wants it, and Canadians want it.
BREAKING: New Legislation Could Turn Tiny Pot Stocks into Millions. Click Here...
According to an NRG Research Group poll released in March, 51% of Canadians support marijuana legalization, compared to 33% who are opposed. Only 14% were unsure. The opposition is simply not strong enough to stop it.
That's good news for investors looking to profit from marijuana legalization. Legal weed sales in North America hit $6.7 billion in 2016, and according to Arcview Market Research will climb to $22.6 billion by 2021. Thanks to new laws in Canada, California, and Massachusetts, spending for recreational use in particular is expected to rise from $1.8 billion to $14.9 billion in that time frame.
"Nothing here shatters the lucrative reality that double-, triple-, or even quadruple-digit gains are on the way for the five stocks I included my latest report," Michael says. Investors can prepare for a major expansion in the legal weed industry as Canada prepares to put an end to prohibition.
Believe it or not, support for marijuana legalization is even stronger in the United States than in Canada. A Gallup poll last year reported that 60% of Americans support legalization. That's up from just 12% in 1969. The times they are a-changing.
It's unlikely that the federal ban on marijuana will be lifted in the next few years. But more and more states are hopping on the legalization bandwagon, and the feds have generally been hands-off.
That state of affairs should continue, as the spending bill passed by Congress in late April extended the Rohrabacher-Blumenauer amendment, which prohibits the Justice Department from using funds to interfere with state medical marijuana laws. That hamstrings Attorney General Jeff Sessions, who has previously talked tough on enforcing federal marijuana laws.
Currently, 88% of marijuana spending in the United States is illicit. As states work to implement new laws, the legal cannabis industry will be taking more and more profits out of the hands of criminal organizations.
Coming up, we'll highlight one of our favorite pot stocks to buy today. For now, let's turn to healthcare.
There's a new cancer treatment on the way. Immuno-oncology, or "IO," harnesses the human immune system's natural tendencies to eradicate cancer from the body. Immunotherapy drugs can either direct the immune system to target tumor-associated antigens (TAAs) or enhance existing tumor-fighting responses.
Several IO drugs have already been approved by the FDA to treat melanoma and lung cancer. And so far the treatment has been a resounding success.
Lung cancer patients treated with Merck's Keytruda, for example, have shown a 31% improvement in survival rate compared to those treated with chemotherapy alone. Thanks in part to Keytruda, former President Jimmy Carter announced in 2015 that he was cancer free after melanoma had spread to his liver and his brain.
Keytruda, like the other major IO drugs on the market, is what's called a checkpoint inhibitor. The T cells in your body are responsible for finding cancerous cells and attacking them. But once an attack is launched, the body releases "checkpoint" molecules to distinguish healthy cells from cancerous ones. One of cancer's most devious tricks is to masquerade as healthy cells and thus get marked for protection. Checkpoint inhibitors like Keytruda stunt this response and therefore aid the body in fighting off malignant cells.
Today there are more than 1,000 IO drugs in the trial stage. Michael says it will change cancer treatment "the way the atomic bomb changed the face of warfare."
Immunotherapy treatments generated over $6 billion in 2016, up from $2.5 billion in 2015. With a slew of new drugs on the way, sales projections vary. But no matter what research firm you trust, sales are set to explode. Projections range from $34 billion in 2024 to a stunning $119 billion by 2021.
No wonder IO partnering deals have been racking up at a record-breaking pace in the past few years. In 2015 and 2016, 18 different buyers made 31 development-stage IO deals averaging over $150 million in up-front cash. The blockbuster deals have continued to add up in 2017, too, with blockbuster acquisitions by Bristol-Myers Squibb and Servier leading the way.
For those looking to get in on the ground floor of the IO revolution, below we'll single out a company that is leading the way to the next generation of cancer treatment.
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The online revolution has found its way into the lives of just about everybody in the industrialized world. But the best news for investors is that there's still room for growth.
We can't talk about growth without talking about Asia, and particularly China and India.
China, which as Michael points out grew at 6.9% annual rate in the first quarter, has about 563 million smartphone users. That number is expected to reach nearly 740 million by 2021.
Research firm eMarketer reports that in 2017, the average Chinese adult is expected to spend one hour and 38 minutes a day on their smartphone. That's probably why it projects mobile ad spending to make up 60% of all media ad expenditures within four years.
Right behind China, India's online population is approaching 465 million people. The population as a whole is on pace to overtake China in 2023, according to the UN. India also boasts the world's fastest-growing large economy, recently leap-frogging the likes of Italy, Brazil, and Canada.
That makes it an ideal market for investing-with one major caveat. India's political instability and culture of crime and corruption mean that its investment landscape can be riddled with mines.
That's why Michael says the best move to take advantage of India's growth may be in international heavy hitters such as Alphabet Inc. (Nasdaq: GOOGL), Microsoft Corp. (Nasdaq: MSFT), Qualcomm Inc. (Nasdaq: QCOM), and Facebook Inc. (Nasdaq: FB). All of these companies have made major investments in India and stand to gain from its booming growth.
But perhaps none of them have put as much investment in India as Amazon.com Inc. (Nasdaq: AMZN). As of last September, Amazon had tripled the number of sellers on its India site in the past year, for a total of 120,000. The number of products sold on its India site is now over 80 million.
Michael says that riding India's digital wave could lead to triple-digit gains for Amazon by 2020.
We do have one other pick that is a more direct investment in China and India's tech growth. We'll go over that in our stock picks below. For now, let's turn to the cars of future.
Driverless cars will soon be a reality, Elon Musk assures us. But there are a few intermediate steps on the way.
Enter advanced driver assistance systems (ADAS). These systems can be employed to spot trouble (like drifting out of a lane or following too closely) and identify traffic signs and signals. Then they can either alert the driver or take control of the vehicle to avoid any oncoming danger. ADAS systems are even being designed to monitor blind spots and park vehicles automatically.
This is going to be a major component of autonomous vehicles when they arrive. But in the meantime, it can be used to dramatically enhance safety on the road. An ADAS system can be installed as an add-on feature in new cars or as an aftermarket enhancement.
Both the United States and the European Union have mandated that new cars have ADAS systems for emergency braking and forward-collision warning by 2020. That's probably why a study by Juniper Research projects ADAS revenue to jump from about $8 billion to $35 billion in 2020, and a whopping $144 billion by 2025.
If you've been following Michael for a while, you know that he's been following this technology for some time. He recommended Mobileye NV (Nasdaq: MBLY), one of the leaders in ADAS, in March 2015. Those who jumped on that opportunity have enjoyed a gain of 44%. That's partially thanks to Intel Corp. (Nasdaq: INTC), which snatched up Mobileye for $15.3 billion this past March. This is part of a growing shift in the auto industry from Detroit to Silicon Valley.
Another winner, picked in December 2015, is Harman International Industries Inc. Harman grew out of the legendary Harman Kardon electronics company and has been carving out a stake in the next-generation automotive industry since 2015. The Connecticut-based company was acquired by Samsung last November, giving investors a 28% gain in one day.
Now Michael sees another winner in the connected car game. This company manufactures components that work with ADAS, among other automotive systems. It is on the forefront of the autonomous vehicle revolution, as evidenced by its recent partnership with BMW and Mobileye.
Michael calls it the "best pick in the connected and driverless vehicle space right now." He anticipated 30% gains over the next couple years back in March. It's already up 6% since then, so you don't want to miss out on any more profits.
Now let's check out the picks...
Top Tech Stocks, Marijuana Legalization: One of our favorite picks in the legal marijuana industry right now is Cannabis Sativa Inc. (OTCMKTS: CBDS). This Nevada-based company sells a range of products, from balms to mints and especially edibles. It even has its own patented strain of pot. In 2015, CBDS opened its first branded dispensary in Oregon. Under the name "Hi Brands," the company models its retail locations after Apple's. "The Hi brand aims to help consumers find reliable, trustworthy products in the fast growing but highly fragmented cannabis industry," said former CEO Gary Johnson (yes, that Gary Johnson). In an industry that still lacks a household name, Cannabis Sativa is well-positioned to become one of marijuana's most recognizable brands.
Top Tech Stocks, Healthcare: With the oncoming immunotherapy revolution, Incyte Corp. (Nasdaq: INCY) is leading the way. Incyte's bone marrow cancer drug Jakafi has hit $800 million a year in revenue and is well on its way to $1 billion. The company's portfolio also includes treatments for graft-versus-host disease, leukemia, and melanoma, and it recently made a major investment to develop small-molecule anticancer IO drugs. Its loaded pipeline makes it a prime target for acquisition. But even short of that, investors should be able to ride this wagon to the new frontier of cancer medicine.
Michael adds that you may want to consider a "Cowboy Split" with Incyte, taking advantage of any volatility in its upward path. Here's where you can find more info on that technique.
Top Tech Stocks, Asia's Online Revolution: To capitalize on the growing online presence in Asia, Michael recommends the Emerging Markets Internet & E-Commerce ETF (NYSE Arca: EMQQ). This ETF is heavily weighted toward China, including such tech pioneers as Take Weibo, Baidu, and Alibaba - the Facebook, Google, and Amazon of China, respectively. Alibaba, like Amazon, has been aggressively increasing its presence in India, recently becoming the largest shareholder in India's leading mobile payment platform. EMQQ also holds shares in Indian companies such as Info Edge and Makemytrip, as well as companies in South Korea, Argentina, and Russia.
To Tech Stocks, Driverless Cars: Finally, a big player in developing the car of the future is Delphi Automotive Plc. (Nasdaq: DLPH). Once a subsidiary of General Motors Co. (NYSE: GM), Delphi is already one of the biggest suppliers of tech components and systems for the auto industry, and has beat earnings estimates in each of the last four quarters. Now the company has shifted a quarter of its R&D team to focus on ADAS integration. To top it off, it was announced in May that Delphi will be providing components for BMW's automated driving platform. Clearly this company is ready to move into the next generation of auto manufacturing. Investors would do well to jump on board.
Marijuana Investing: What You Need to Know... The legal marijuana market is going ballistic. Last year, sales skyrocketed to $6.7 billion... and several analysts estimate sales could eventually reach $150 to $200 billion each and every year. Even better, right now marijuana stocks are on fire, with peak gains quadrupling in value. And these are mostly small companies trading for under $10. Click here to find out how you can be the next "Marijuana Millionaire"...
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