Money Morning

This Backdoor Cannabis Play Could Climb Over 100%, and It's the Perfect Time to Strike

Tue, 19 Mar 2019 09:00:32 +0000

At the National Institute for Cannabis Investors, we talk a lot about cannabis banking. That's because accessing loans and depositing money are still huge hurdles facing cannabis companies.

But the progressive financial firms that realize how much money there is to be made working with legal cannabis companies will be handsomely rewarded.

And I've found the perfect play...

Just like when we talked about Innovative Industrial Properties Inc. (NYSE: IIPR) - which is now up almost 100% since we launched the American Cannabis Summit on Oct. 23, 2018 - we wanted to add another way for you to try and capture an additional potential triple-digit return.

Of course, timing is everything, so you may have not seen when we first mentioned Innovative Industrial Properties and bought it at a higher price, or you may have simply chose not to buy its shares.

But if you missed out, that's okay. I wanted to share another play with you today that could offer a similar profit opportunity, and the timing is perfect.

I talked to my friend and banking expert, Money Morning Special Situation Strategist Tim Melvin, and he tells me that as of right now, there is only ONE publicly traded bank taking on cannabis customers - the rest are credit unions or privately held banks.

I've held off talking about this company too much before because it faced some significant challenges outside of its cannabis business. However, those challenges seem to be behind it, and we could soon see a quick jump in the stock price thanks to some positive headwinds.

So right now, I'm going to share with you hopefully another big winner to add to your growing list of cannabis investments...

Why Severn Bank Makes the Cut

The company I'm talking about is Severn Bancorp Inc. (NASDAQ: SVBI), which is headquartered in Annapolis, Md. You may have seen me mention it recently.

Again, there are a lot of reasons to get excited about this pick. But first, I want to take a look at the challenges that I mentioned earlier. That way, it will give you a better idea of the pros and cons of owning Severn Bancorp as a type of backdoor cannabis play.

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Recently, Severn Bancorp has transitioned from slow growth to faster growth after spending several years recovering from the financial crisis. Year-over-year growth in assets increased from only 2% in 2017 to 20.7% in 2018, with much of that growth in the second half of the year. Deposits showed a similar growth, from 5.3% in 2017 to 29.4% in 2018, mostly in the second half of the year once again.

Thanks to good management, the company has put that money to work profitably, increasing return on equity from 3.1% in 2017 to a more respectable 9% in 2018.

A big part of that was through controlling operating expenses. The bank's efficiency ratio (lower is better) is the lowest it has been since 2012. From an operating point of view, that makes Severn Bancorp a more desirable bank than it was just a few quarters ago.

The company also now has a full year of stable dividend payments under its belt, after suspending dividends from 2009 to 2018. It currently has a dividend yield of 1.39% - look for increases in the dividend sometime this year.

As a bank, the other ongoing challenge Severn Bancorp has faced is rising interest rates. The common thinking is that rising interest rates benefit banks, but that's a lot less true of smaller banks than larger ones, and Severn Bancorp is a small bank.

It even identified rising interest rates as a key risk to the company's growth, but there's good news. The U.S. Federal Reserve recently indicated that it would be pausing its interest rate increases until economic conditions justify another bump.

That means Severn Bancorp can continue to grow and profit without fear that rising rates will hurt the demand for the loans that are powering its growth.

The Boom in Bank Consolidation

One trend in Severn Bancorp's favor is an increase in bank consolidation. Analysts and many economists have been calling for larger banks to buy smaller ones for some time now, and it is finally beginning to happen.

In particular, regional banks want to become larger and are buying each other and smaller banks. The reason is consumer-driven. Consumers demand advanced services like mobile banking, fast mortgage turnarounds, and instant and personalized customer service. The technology behind all those services is expensive, and smaller banks have a hard time keeping up.

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Severn Bancorp is a logical consolidation candidate with only six branches, but it has a large market share in one of the richest counties in America - Anne Arundel County, Md.

Just from an acquisition offer, shareholders could receive a premium from where the Severn Bancorp stock price is trading today.

And that brings us to the cannabis business.

Severn Bancorp's Bold Cannabis Move

Cannabis has been a big part of the turnaround story at Severn Bancorp, particularly when it comes to profit growth. Cannabis-related deposits and loans were around 2% of the company's total deposits and loans as of Sept. 30, 2018. I expect that number to be around the same when the company makes its full regulatory filing for December later this month.

But cannabis companies also provided 16% of Severn Bancorp's non-interest income. Fees are very high in the cannabis industry, and this Maryland bank will continue to profit from them.

Below, you can see how the Severn Bancorp stock price has been slowly climbing thanks to the recent positive stream of news.

Looking at the chart now, I expect the company to grow at a more normal rate going forward.

I project the stock to make a run at the high seen in that chart of $9.80 per share fairly soon. From the opening price of $8.77 on March 14, that's a potential return of 11%, which doesn't include dividend payments.

Not bad for a potential quick buck, but the long-term potential is even better...

Over time, the company should bump up to near its all-time high of $21.14 per share, a level not seen since before the financial crisis. That would be a potential gain of 141%.

I hope bringing Severn Bancorp to your attention will help your cannabis portfolio in the long run, and as soon as I see other under-the-radar picks like this, you will be the first to know.

These 3 Stocks Are the Key to 2019's Greatest Profits

The 2018 midterm election was a turning point for the cannabis industry.

We expect nothing short of historic profits by the end of the year.

But not all pot stocks will hand you life-changing wins. In fact, often the companies making headlines are least likely to see the biggest gains.

These three stocks, on the other hand, are flying under the radar... for now. Each of them could see exponential stock price acceleration at any moment, and if you get in before that happens, you could turn a token stake into a lifetime of wealth.

I don't know of any other sector providing anywhere near this level of growth now.

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The Next Tech Stock to Buy Ahead of the $1.3 Trillion 5G Boom

Mon, 18 Mar 2019 19:20:36 +0000

With the new 5G technology, the likelihood of a cell phone connection saving your life is very high.

And we aren't talking about calling for emergency help, either.

With health sensors galore and seamless data transmission thanks to 5G, you could be lying in bed lost in restful sleep, never knowing that your body was in trouble.

Before you know it, you are in the back of an ambulance being rushed to the hospital.

Why?

Because your phone sensed trouble and alerted the authorities before you even knew there was an issue.

That is the potential - and coming reality - thanks to 5G.

No wonder this market is estimated to be a $1.3 trillion opportunity.

The ever-growing complexity of the world requires 5G. The productivity gains across multiple sectors will be transformative.

You will not want to miss the 5G train.

Get Ready for 5G NOW! A single company could be about to corner the entire 5G market - and you could turn every $1,000 you stake into $10,000! Go here now to find out how.

But finding the best 5G stocks isn't quite so easy.

That's where Money Morning Stock VQScore™ comes in handy.

This 5G stock to buy got one of our highest VQScore ratings, and it has everything you need to profit from the 5G explosion.

Here's everything you need to know...

A Top 5G Stock to Buy Now

Juniper Networks Inc. (NASDAQ: JNPR) is one of our top tech stocks to buy with its perfect 4.75 VQScore.

Not only is the stock a breakout candidate according to our proprietary stock-ranking system, it's also plugged into the 5G revolution.

5G solves many problems with respect to data transmission and reliability. And this requires fast, reliable networks built and provided by Juniper.

Unfortunately - or fortunately, depending on your perspective - shares of Juniper have been trending lower on worries about macroeconomic data.

After peaking near $30 per share, the stock has dropped 10%, having difficulty getting out of correction territory.

That's an opportunity, in my opinion.

In the near term, analysts are expecting Juniper to grow profits by 14% from the current year to the next, but those numbers fail to incorporate the rapid deployment and evolution of 5G.

To the extent the economy continues expanding, my bet is that Juniper will blow away current estimates.

As the stock only trades for 15 times current-year estimated earnings, there is plenty of upside here.

The big driver for a potential earnings surprise will be autonomous driving, a technology made a reality by 5G connectivity. Autonomous cars can't function without seamless connectivity.

The $5 billion in sales at Juniper currently pales in comparison to the $1.3 trillion market that 5G will unleash. And Wall Street analysts have yet to incorporate that value in terms of valuing companies poised to profit from 5G.

But there is just no stopping the 5G train.

And if you want an even better opportunity in the 5G sector, then look no further...

5G Is Coming: The Breakthrough of the Century Could Rest on This $6 Stock

CNBC reports that this opportunity is worth $12.3 trillion... and it's gearing up to make an appearance all over America.

In fact, some of these devices are showing up right in your neighborhood - and I'm willing to bet you didn't even notice.

Our Silicon Valley insider mapped out all the details in this report.

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Here's What's Shaking the Dow Jones Today

Mon, 18 Mar 2019 14:26:08 +0000

The sell-off of Boeing Co. (NYSE: BA) stock is dragging down the Dow Jones today.

Investors are pulling back as the U.S. Department of Transportation launches an investigation into the Federal Aviation Administration's approval of 737 Max 8 planes.

More below on how this, U.S.-China trade news, and updates to monetary policy are affecting the Dow.

Plus, a weed stock to watch that's already popped 300% since last year...

Here are the numbers from Friday for the Dow, S&P 500, and Nasdaq:

Index	Previous Close	Point Change	Percentage Change
Dow Jones	25,848.87	138.93	0.54%
S&P 500	2,822.48	14.00	0.50%
Nasdaq	7,688.53	57.62	0.76%

Now, here's a closer look at today's Money Morning insight, the most important market events, and stocks to watch.

The Top Stock Market Stories for Monday

The United States and China have made progress on a trade deal. According to the South China Morning Post, China's Vice Premier Liu He spoke with Trump officials by phone. Last week, multiple media outlets reported that Chinese leaders want to combine a state visit to the United States around the signing of a new trade pact between the two nations.
Finally, expect a lot of chatter today about the U.S. Federal Reserve. Tomorrow, the central bank will start its latest two-day meeting on monetary policy and interest rates. The Fed isn't expected to raise rates this week or alter its plan for tightening its balance sheet significantly. Here's what investors need to know ahead of this week's Fed Open Market Committee meeting. Investors are advised to prepare for the worst-case scenario and get out ahead of the market in case anything goes sideways.
Finally, oil prices ticked slightly higher ahead of OPEC's pending meeting on supply cuts. According to reports, Russia has agreed with OPEC's plans to reduce the cartel's oil production output in the coming weeks.

Stocks to Watch Today: TLRY, FB, CZR, ERI

Tilray Inc. (NASDAQ: TLRY) leads a busy day of earnings reports as the cannabis producer helps investors wind down earnings season. Since its IPO in 2018, TLRY stock has more than tripled in price. However, shares are off 3% so far this year and have pulled back from $300 per share in September. The question most analysts are asking is whether TLRY can justify its massive evaluation at a time that the legal cannabis industry is just getting off the ground. The average Wall Street forecast for today's earnings report calls for a loss of $0.15 per share on top of $18.95 million in revenue. Here are the top cannabis stocks to buy ahead of Tilray's earnings report.

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Facebook Inc. (NASDAQ: FB) may soon experience a large exodus of leadership at the executive level. Shares of FB stock are off nearly 1% after a Needham Management analyst slashed the stock's rating to underperform with a price target of $170. The analyst said the recent departure of 11 Facebook executives could spark a greater wave of resignations. The company has faced more criticism for its customer data management practices and its live-streaming of a terrorist attack in New Zealand last week.
In deal news, shares of Caesars Entertainment Corp. (NASDAQ: CZR) rallied 5% on the news it is in merger talks with Eldorado Resorts Inc. (NASDAQ: ERI). Reuters notes that hedge fund icon Carl Icahn has been pressing executives at Caesars to make a deal and sell its assets. Icahn placed three nominees on Caesars' board of directors.
Look for other earnings reports from Del Taco Restaurants Inc. (NASDAQ: TACO), Lumber Liquidators Holdings Inc. (NYSE: LL), Overstock.com Inc. (NASDAQ: OSTK), and StoneCo Ltd. (NASDAQ: STNE).

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How to Handle a Stock for Maximum Profit Potential When the Unthinkable Happens

Mon, 18 Mar 2019 09:00:12 +0000

Folks know to look out for events like earnings, for example, or FOMC meetings, or the regular release of economic data - dates you can look ahead to and circle on a calendar.

But most investors never give a thought to those unpredictable, unthinkable events that don't show up next week in your planner, but explode across global markets in minutes or even seconds flat.

Boeing Co. (NYSE: BA) is a great example.

It's a key defense contractor, and the very definition of a "must have" stock - one that's tied into several key Unstoppable Trends: including technology; war, terrorism, and ugliness; and demographics.

Of course, the company's under extreme pressure at the moment, and existing shareholders have taken a $26.6 billion buzz cut they didn't sign up for.

One day, they buy a company based on super results, super products, or just super potential. Then... WHAM... it gets pounded.

For most investors, a situation like this is unthinkable. For investors like us who have prepared ahead of time, however, a stock like this represents a significant upside opportunity...

The "Unthinkable" Happens More Often Than Most Realize

Boeing opened a full 51.29 points lower Monday, following the crash of Ethiopian Airlines 737 Max 8 the day before - the second such crash in less than six months for a 737 Max 8 aircraft. Then, it dropped further, ultimately breaching $370 a share by Wednesday.

Thing is, moves like this aren't an isolated incident.

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In some cases, it's simply due to the perceived change in operations, supplies, or market conditions.

That was the case for Nvidia Corp. (NASDAQ: NVDA), Visa Inc. (NYSE: V), and Apple Inc. (NASDAQ: AAPL) - stocks that are all roaring back, incidentally.

Other times, as is the case with Boeing, it's far more serious - and literally deadly...

BP had the Deepwater Horizon oil spill in 2010. Exxon Mobil had the Valdez incident in 1989, which spilled 11 million gallons of crude into Prince William Sound, Alaska. In 1984, Union Carbide had the Bhopal disaster, in which 40 tons of the highly toxic chemical methyl isocyanate (MIC) killed thousands in a matter of hours.

My point is that these events happen far more often than we care to admit or even to remember.

Preparing ahead of time is not just something that sounds nice in today's day and age. You can't just assume that "nothing" will happen and trust that it won't.

Preparing ahead of time can mean the difference between huge opportunity... or huge losses.

So you - quite literally - have every incentive to prepare ahead.

My favorite tactic for doing this is also the simplest.

Here's How You Capitalize on the Unimaginable

This is where the "lowball order" comes in. Just like the name suggests, you "lowball" the market.

Here's how it works.

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Place "lowball orders" ahead of time, when things are looking good and nobody can fathom a huge price drop. You'll know you're in the right neighborhood when people tell you there's "no way" that'll happen or that the stock you want to buy will hit those levels.

Think Apple below $150... in October of last year, when it was trading at $230-plus per share.

Or Amazon.com Inc. (NASDAQ: AMZN) below $1,400... in August of last year, when it was trading at $2,050 a share.

You can lowball the market with any stock, fund, ETF, or investment that interests you.

Simply set aside what you want to spend, draw your line in the sand, and let the markets come to you.

More often than not, they will.

And guess what?

Your profit potential is just that much larger when it happens. Other investors will be licking their wounds, wondering how they're going to cover the losses while you're going to be focused almost entirely on the upside profit potential.

At the end of the day, most investors make a critical mistake, and ironically, it's got nothing to do with which stocks they pick.

What price you pay is far more important.

"Buy low, sell high" is an investing maxim for a reason, which is why you want to do it every chance you get.

Speaking of chances...

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There Are 105 Million Reasons to Buy This Mid-Cap Internet Stock

Fri, 15 Mar 2019 20:54:10 +0000

When it comes to making money from the Internet's growth, you've been bombarded with information about the American "FANG" stocks like Amazon.com Inc. (NASDAQ: AMZN) and Alphabet Inc. (NASDAQ: AAPL).

More recently, you've been saturated with stories about the Chinese "BAIT" stocks like Alibaba Group Holding Ltd. (NYSE: BABA) and Tencent Holdings Ltd. (OTCMKTS: TCEHY).

Now, those are all great Internet stocks, and we're not going to tell you otherwise.

But it's hard to get an inside edge when it comes to companies as big and well-covered as those are.

That's where today's stock comes in...

Today, we have a mid-cap company that dominates Internet infrastructure in a country you probably don't hear about very often. This country is probably bigger than you think, with a population of 105 million. And it's probably growing faster than you'd guess, at 6.7% annual GDP growth.

According to Statista, this country's Internet user base is expected to grow from 69.6 million to 93.7 million by 2023. That's 35% growth in just four years...

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This pick is sure to get the lion's share of that growth. It already has 60 million subscribers to its home and individual phone and Internet services and is the most recognizable communications company in the country.

And because Wall Street isn't paying attention, it's now available at a substantial discount. That's why it was just given a top score by our Money Morning Stock VQScore™ system.

If you grab it quickly, you can get it for less than 60% of its fair value.

After 90 Years Keeping a Nation's Inhabitants Connected, This Company Still Finds New Profit Opportunities

We're talking about the Philippines, and the company is PLDT Inc. (NYSE: PHI).

Establishing and maintaining communications in the Philippines is both 1) critical for public safety and 2) very, very difficult.

That's because it's an archipelago of more than 7,500 islands, and every year, it endures a rainy season filled with tropical cyclones, about five of which will typically be destructive typhoons.

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PLDT was incorporated in 1928 to address that problem and establish reliable cross-village telephone service in the worst conditions. By 1933, it had established the first international long-distance service in the country's history.

After the Japanese invasion during World War II destroyed the country's communications infrastructure, PLDT rebuilt it with astonishing speed. By 1953, the subscriber base had surpassed pre-war levels.

Now that the islands were moving past the American colonial period, the company made the transition to native ownership in 1967. And beginning in the 1980s and 1990s, it set its sights on wireless communication and the Internet.

Today, the PLDT "Smart" services for homes and individuals have 60 million subscribers. Net service revenue in that segment was up 7.1% in 2018, even outpacing the country's rapid GDP growth.

Home service revenue in particular is growing at a 10% annual pace. But that's nothing compared to its enterprise services - those for multi-faceted organizations rather than simple personal use.

Revenue for enterprise data and broadband rose 37% in 2018, to an equivalent of $1.7 billion. Enterprise wireless revenue was up 24%.

Enterprise services now account for 60% of the company's revenue, so rapid growth in this segment is going to be key for the company's overall success in the coming years.

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But because it's based in a county that's not on many investors' radars, this stock is easy to underestimate. Even a little bit of bad news can lead to overreaction, which is exactly what's happened in this case.

That gives you a great opportunity to pick it up at a discount.

Now Is the Time to Buy PHI

Shares of PHI (that's the ticker, not to be confused with the company name) are down 26% over the last 12 months. Some of that loss was understandable, due to some disappointing 2017 financial results and a recent earnings miss.

But since the company's performance bounced back in 2018 - net income rose 35% - investors are starting to clue in to how much value they left on the table. The stock has closed higher in all but two trading days in March so far.

In addition to the impressive net income figure in 2018, PLDT's free cash flow jumped 155%, putting the company in a great position to keep expanding its offerings and bringing the latest technology to the rapidly growing Philippines.

PHI's price/earnings-to-growth ratio for the last 12 months comes in at 12.98, just 56.6% of the industry average.

That suggests a 77% rise for the stock to reach its fair value.

And if you buy your shares at today's price, you'll lock in a nice 3.92% dividend yield on top of it.

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Here's Why the Price of Gold Will Keep Going Up in 2019

Fri, 15 Mar 2019 17:44:11 +0000

Bulls can stop worrying about the price of gold falling anytime soon.

I've been telling you for a while that a pullback was not only normal, but healthy. Now that the data is in, I'm going to show you why.

Gold prices just notched a huge gain over a short six-month period, blasting 14% higher between August and mid-February.

That's big. And if the gold price had continued to power any higher, its correction could have been worse.

So chalk it up to normal bull action of three steps forward and one step back as gold continues to climb its golden staircase.

Although the price of gold has dropped by about $60 from its recent peak, we may have already seen the worst.

The Fed's renewed dovish stance has lower real rates back as a driving factor for higher 2019 gold prices.

And consider too that, seasonally, gold tends to bottom around mid-March then climb through until end of May.

Gold has already printed a solid bounce back to $1,310 in just the last few days, strongly suggesting its correction has run its course.

With all this in mind, there are big things ahead for the price of gold in 2019...

Why the Gold Price Is Bouncing Back

Over the past three weeks, gold has come to terms with its strong gains between August and February, with the metal's price peaking on Feb. 20 at $1,346.

From the August low of $1,175, that produced a striking gain of $171, or 14.6%.

Since that February peak, gold has dropped back by about $60 to $1,286, giving up a total of 4.5%.

This correction in the gold price has been an almost perfect negative correlation with the U.S. Dollar Index (DXY), with about a five-day delay.

Looking at the action in the dollar, we can see that the DXY bottomed a few days after gold's February peak, and may have peaked just after gold's recent low.

But even as gold has corrected, its recent price action suggests that correction may have already hit a low.

The most recent CFTC Commitments of Traders report for the week ending March 5 shows that the net long position in gold futures dropped some 62%.

And despite such sudden, strong selling pressure, gold has held up well.

So far, gold's March 7 low has held above its Jan. 24 low, providing for a bullish higher low pattern.

It's still a bit early, but I believe we've seen the bottom of this gold correction.

What's more, if you consider the seasonal patterns of gold's behavior, we could be in a sweet spot right now.

Looking at gold's bull years since 2001, it typically bottoms in mid-March, then starts on a spring rally through until the end of May. In the chart below, you see the "high lows" circled immediately before a rally begins. This pattern should continue into 2019.

I think this potential rally has the ability to push gold above its February high near $1,340 by then. If gold can close above that level, then its previous high of $1,350 (last April) will lie within close reach.

Stronger Indicators for the Price of Gold in April

As I've said in previous updates, the dollar's direction is anything but clear at this point.

The DXY remains above its 50-day moving average, and both the relative strength index and moving average convergence divergence have been trending higher since early January.

As I've noted before, this doesn't seem to have gotten in gold's way, as gold prices have continued to rally in the face of a stronger dollar. That has been a bullish omen for gold in the past.

With the gold price back above its 50-day moving average, it's possible that $1,300 will now become a new support level.

If indeed the gold correction is over, it will have been relatively short, barely lasting three weeks.

Looking at gold stocks, we can see that even as gold was languishing around $1,285 between March 4 and March 7, they were attempting to push higher.

The VanEck Vectors Gold Miners ETF (NYSEArca: GDX) was trying to break higher each of those days, except for March 6, suggesting at the time that we could be witnessing a near-term bottom in gold, and that its next move would be higher.

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As it turns out, when we look at the gold stocks to gold ratio, it tells us that gold stocks held up better than gold through the correction and bounced back faster. In fact, gold stocks rose three times as much as gold since the metal started rallying late last week.

This kind of outperformance by gold equities may be foreshadowing more strength both in gold and gold stocks over the next few months.

So gold's taken a well-deserved break after rallying almost nonstop between August and February, and its technical price action is encouraging.

But on a fundamental basis, there are positive signs that gold is set to continue climbing higher this year. Here's how high the gold price is set to rise in 2019 - and a selection of the best investments for you to capitalize on it...

The Best Gold Funds for Your Money

2018 was exceptional for institutional gold buying. Central banks bought more gold by volume last year than in any year since 1967.

That makes it the most in over 50 years. Thanks to increased economic and geopolitical concerns, central banks turned to gold in a big way to diversify their reserves and seek safety and liquidity.

This, along with the fact that gold may have ended a long-term consolidation it started in mid-2016, may help explain why the safe haven dramatically outperformed most other major asset classes last year. The central bank has also been buying up significantly more gold each year since the 2008 financial crisis, as depicted in the chart below.

Below is one of my favorite gold charts for 2018 from the World Gold Council. You can see gold did better than not only most major stocks and global treasuries - it rose substantially in the face of a stronger U.S. dollar.

Of course, my January gold recommendations have pulled back with the sector.

The DB Gold Double Long Exchange Traded Notes (NYSEArca: DGP) are down about 16%, but as gold's bull comes roaring back, this ETF will soar. Stay long DGP and/or buy on weakness.

The VanEck Vectors Junior Gold Miners ETF (NYSEArca: GDXJ) has dialed back along with gold's consolidation/correction, and yet it's still up a respectable 7.5% since mid-January. Continue to buy on weakness.

Despite the correction gold endured starting in mid-February, it remains solidly above its 200-day moving average.

And gold priced in over 70 different national currencies, including most major ones, is either at or near all-time highs.

So, by all accounts, gold continues in a long-term uptrend, and its recent correction could well be history.

I think the precious metal is headed toward $1,350 over the next few months and remains on a solid path toward $1,400 later this year.

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Bank 100% Gains on This Industry's Slowdown

Fri, 15 Mar 2019 15:36:11 +0000

We've uncovered a trend in stocks the rest of Wall Street is overlooking, and it could double your money if you play it right. We'll show you exactly how with today's trading strategy.

The economy might be slowing down from its peak, and there's no better evidence for it than in the transportation sector.

Last week's release of the February jobs report disappointed in a big way. With a mere 20,000 increase in total nonfarm payrolls, it was much lower than the consensus expectation for 181,000 new jobs. After a long string of jobs successes, this report made investors nervous that economic growth was truly slowing down.

However, for those who paid attention, one critical sector was already slowing down and foreshadowed recent numbers. Friday's report simply proved that it wasn't just a fluke.

The transportation sector is a favorite Wall Street bellwether for the economy - and the stock market by extension. It's also been one of the weakest sectors in the stock market this year.

The forecasting ability of transportation stocks, such as air freight, rails, tankers, and trucking, is no secret. After all, chartists have been following "Dow theory," named after The Wall Street Journal co-founder Charles Dow, for decades. They look for moves in the Dow Jones Industrial Average to be echoed in the Dow Transports. The theory holds that if the companies that make things and the companies that deliver those things are both doing well, then the economy should be doing well, too.

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Unfortunately for the bulls, the late 2018 market sell-off created a Dow theory sell signal that is still in effect today. What that means is the primary direction of the stock market is to the downside, and the rally we've seen since December is just a bounce. It's been a great bounce, but the transport sector suggests it will soon be over.

The good news is that we can still make plenty of money in this type of market. All it requires is creating a bearish strategy, and Money Morning Quantitative Specialist Chris Johnson has one.

His strategy could bag you a 100% gainer by going against this transportation titan while the rest of Wall Street overlooks it...

Double Your Money from the Transportation Slowdown

Just as a bullish strategy often relies on buying the strongest stocks in the strongest sectors, a bearish strategy relies on just the opposite.

That's why we're targeting the transportation sector. As we pointed out, it's been a laggard in the Dow index this year, and its fortunes worsened after the lackluster jobs report.

And to find a prime target in the sector, Johnson turned to his "Best in Breed" screener. His research pinpointed American Airlines Group Inc. (NASDAQ: AAL) as a dud set to drop the most as the economy slows down.

One way to make money off this stock's fall is to simply short it. But the risk here is too high, and we have a smarter play. Shorting a stock exposes an investor to potentially unlimited losses, should the stock move higher.

Rather, we can use stock options to accomplish the same result - but with much lower risk. Buying options risks only the small amount of money invested but has the potential to double your money or more in a short period of time.

American Airlines closed Thursday at $32.13 per share, and Johnson has a price target of $29 for the near term. Given the price and time frame, the AAL April 18, 2019 $32 put (AAL|20190418|32.00C) presents a great opportunity to profit as the stock falls. At $1.25 per option, these puts offer the opportunity to double your money over the next few weeks, as this laggard leads the transportation sector lower. This isn't even factoring in the Boeing Co. (NYSE: BA) scandal that's grounded all 737 Max aircraft. American Airlines owns 24 of them.

This put option contract, which gives the holder the right (but not obligation) to sell 100 shares of AAL stock at $32 per share will cost $125 per 100-share contract, before commissions. If shares of AAL fall to Johnson's target price of $29 before its April 18 expiration, the options price will be $3. This is the difference between the strike price ($32) and stock price ($29).

With the current options price $1.25, that is more than a double. And that's not a bad payday for a month's trade.

But you don't have to stop there. Chris Johnson is leveraging his quantitative research into even more lucrative trades...

Chris Johnson's New Trading System Unveiled

The stock market recently experienced its worst October since 2008.

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In fact, Chris has a new trade opportunity coming out tonight.

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Millions of Investors Needlessly Lose Billions of Dollars Because of This

Fri, 15 Mar 2019 09:00:24 +0000

There's a lot of discussion at the moment about which way the markets are going to go from here.

Some of it is good, of course, but frankly, a lot of it is bad.

Thing is, most of what you hear is noise - make that badly informed noise. Big shock there...

Right now, mainstream analysts are finally coming around to topics and thoughts we've had on our plate for months - like for example, the possibility of short-term market turbulence but higher prices ahead... That's the latest from Wells Fargo's Christopher Harvey, who's a noted bear, and seconded by Merrill Lynch's Stephen Suttmeier - both as reported by CNBC.

Meanwhile, Bloomberg is reporting that JPMorgan analyst Stephen Tusa now considers the $6 target he's got on General Electric Co. (NYSE: GE) to be "generous." Apple Inc.'s (NASDAQ: AAPL) pivot, meanwhile, is beginning to draw attention for the reasons we laid out more than a year ago, when I first told you about why services could double that stock's value. Tesla Inc. (NASDAQ: TSLA) is in trouble again...

You get the idea.

Anyway, the reason I'm bringing all this up is not to take a victory lap - as often as we get to do that together, we can skip it just this once.

Rather, since we're ahead of the curve, as usual, I thought I'd take the opportunity to run through some of the basics that ensure we keep banking more profits more often than the crowd, in this market or any other...

The "Big Four" Profit-Robbing Pitfalls

There are lots of tactics we use to get the superior returns we enjoy month in, month out - position sizing, limit orders, lowball orders, buying the dips, and one of my personal favorites, the "free trade."

On the flip side, however, there are some costly, all-too-easy-to-make mistakes that we need to guard against to really maximize our profits.

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Here we go...

Mistake No. 1: Reading the Headlines... and Ignoring Results

This is a biggie because businesses that produce results are almost always the better bet when it comes to the profits you deserve. Our recommended portfolios are filled with companies producing gobs of cash and/or developing huge (and growing) piles of profit potential. Examples include Raytheon Co. (NYSE: RTN), Amazon.com Inc. (NASDAQ: AMZN), and Becton Dickinson & Co. (NYSE: BDX). All of these have earned coveted "free trade" status, with respective gains of 378.6%, 121.5%, and 283.5% and counting. What a "free trade" means, simply, is playing with the "house's money"; we've recovered all our principal and put the profits to work making even more profits, continuing to rack up monster gains for subscribers who are following along.

Invest in the "best," but avoid the "rest" - meaning companies like GE - which, by the way - reminds me of Eastman Kodak Co. (NYSE: KODK), Sears Holdings Corp. (OTC: SHLDQ), Fitbit Inc. (NYSE: FIT), and dozens of other onetime darlings that have cost investors billions.

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Mistake No. 2: Assuming the Markets Will Remain the Same

Many investors mistakenly assume that the world's financial markets will remain the same tomorrow as they did yesterday. That's naïve because, when it comes to your money - when it comes to just about everything, really - the only constant is change. That's why we talk about money being a forward-looking "investment," not an "expense."

Mistake No. 3: Setting It and Forgetting It

"Buy and hold" is a marketing lie cooked up by Wall Street to keep you in the game and to get their meat hooks into your money. "Buy and manage," which, as you'll see in a second, isn't that difficult, is the real key to profits in today's markets.

Mistake No. 4: Making It Too Complicated

Contrary to what most investors believe, investing doesn't have to be difficult, and you don't have to be constantly tied to the financial markets to succeed. Markets are complicated, but making money in them requires a simple framework like the 50-40-10 Model I pioneered in the Money Map Report and a solid grasp of one of the Six Unstoppable Trends we talk about so frequently in my free Total Wealth research service - every one of which, I might add, is backed by trillions of dollars in spending that will happen practically no matter what.

At the end of the day, huge profits come from doing very simple things very well - like finding and buying the world's best companies - and avoiding mistakes that clobber your portfolio.

Staying in tune with 'em will keep you and your money moving in the right direction no matter what the headlines are, no matter what scary news stories you hear, no matter which way the markets are going, and no matter what mistakes OTHER investors are making.

Life-changing wealth is within your reach!

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The 2 Best Biotech Stocks to Buy Now

Thu, 14 Mar 2019 20:36:26 +0000

Biotech companies are known for their potential to break out when a new drug comes to market, and today we're giving you two of the best biotech stocks to buy now.

Now that the bull market is over a decade old and valuations are near all-time highs, investors need more than an index fund to net a solid return. And buying the top biotech stocks offers the sort of upside that's so hard to find right now.

In order to find the best biotech stocks, we've turned to the Money Morning Stock VQScore™.

The VQScore system is our proprietary stock-ranking algorithm that helps us separate the wheat from the chaff. The VQScore finds only the 1,500 most profitable companies trading on the major American exchanges and then ranks them based on their growth potential.

Today, we've screened the biotech industry in the VQScore system to uncover our top biotech stocks to buy right now.

Best Biotech Stocks to Buy Now, No. 2

Biogen Inc. (NASDAQ: BIIB) is a Massachusetts-based company that focuses on discovering, developing, manufacturing, and delivering therapies for neurodegenerative and neurological diseases worldwide.

The company offers four major drugs for the treatment of multiple sclerosis (MS). It also has drugs for the treatment of plaque psoriasis, spinal muscular atrophy, non-Hodgkin's lymphoma, rheumatoid arthritis, chronic lymphocytic leukemia (CLL), and pemphigus vulgaris.

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Biogen is also involved in the development of drugs to treat dementia and Alzheimer's disease, Parkinson's disease, chronic pain, and other neuromuscular disorders.

Company execs had promised to diversify its pipeline and make good this with a new acquisition. On March 4, Biogen announced that it would buy Nightstar Therapeutics Plc., a gene therapy developer, in a deal worth $877 million.

This new deal gives the company access to more later-stage assets. Specifically, Nightstar makes a gene therapy for choroideremia, an inherited and rare eye disease that can lead to blindness. It also has several gene therapies in its pipeline that are focused on treating rare eye disorders.

The company has beat earnings estimates over the past four consecutive quarters and is expected to make $28.67 per share this year. This represents 10% growth over the $26.24 EPS in 2018.

While some Wall Street analysts predict an earnings recession in 2019, this isn't a prediction for Biogen.

Growth is expected in both sales and revenue this year.

If history repeats itself and earnings bypass expectations, Biogen shares could soar past their 52-week high of $350 per share. Right now, you can pick up shares for about $319.

Currently, investors can get this stock for just 11 times expected earnings this year, which is exceptionally cheap. Plus, the company has committed to a $3.5 billion stock buyback, which is nearly 5% of its market cap.

Analysts predict shares of Biogen could soar 43% higher to $455 in the next 12 months.

But our top biotech stock to buy right now could soar even higher.

Best Biotech Stocks to Buy Now, No. 1

Gilead Sciences Inc. (NASDAQ: GILD) is our top pick among biotech stocks right now.

This California-based drug manufacturer specializes in filling unmet medical needs in the international market. It was founded in 1987 and has products that treat HIV, liver diseases, lymphoma, hypertension, and influenza.

GILD share prices have dropped 16% from their peak in 2018, which has little to do with earnings missteps. In fact, the company posted close to the same earnings results in 2019 as it did the prior year.

The stock has suffered because of the failure of a late-stage trial in one of its liver disease drugs. Investors had hoped that this drug would fuel future earnings and were disappointed with the trial outcome.

This isn't uncommon in the biotech sector. Not all drugs are winners, but the bigger picture is what's more important.

Shares of GILD are getting a high VQScore now because of their unparalleled value.

You see, Gilead is now trading at lower than 10 times last year's earnings. Revenue is going to continue to grow in the coming year, even if profits remain flat.

These results will translate into a healthy dividend yield for investors, which right now sits at just below 4%.

When you view the total picture, shares of Gilead are a bargain when compared to the market multiple.

While investors wait for shares of GILD to appreciate, they also have the benefit of a yield that is close to double the current Treasury rates.

Shares of GILD currently trade just over $65 per share, but Wall Street analysts predict shares could soar to $95, a nearly 50% increase. When you factor in the dividend and share price growth potential, this stock has it all.

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Marijuana Stocks Just Got a Massive Buy Signal from a Legendary Investor

Thu, 14 Mar 2019 18:48:32 +0000

Marijuana stocks just received one of the biggest "buy signals" yet, and it came from one of the most unlikely sources.

During the financial crisis of 2008 to 2009, an investor named Danny Moses and his associates made a huge amount of money shorting the subprime market for mortgages in the United States.

What does that have to do with marijuana stocks?

Money Morning Director of Cannabis Investing Research Greg Miller points out that those types of contrarian moves can be visionary calls that take insight and courage.

Insight and courage are always in short supply.

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Moses was recently on a CNBC program called "Fast Money" discussing marijuana stocks.

But he wasn't talking about shorting them. In fact, he is very long on weed stocks.

Cannabis is one of the sectors we at Money Morning like the most. And so does Danny Moses.

In fact, Moses believes investors can make more money in weed stocks than they did by predicting the housing bubble accurately.

For our model marijuana stock portfolios, this is good news. Let's take a look closer at what he has to say.

Why Danny Moses Is So Bullish on Marijuana Stocks

Danny Moses might be most famous for "The Big Short" and the financial crisis, but he knows about far more than real estate and housing prices.

He started his financial career in the early 1990s working for MBIA Inc. (NYSE: MBI), analyzing municipal bonds. Then, he worked as an institutional broker for several Wall Street firms, such as Oppenheimer.

Next, he worked for Frontpoint Partners as a trader, and that was the era of "The Big Short."

Right now, Moses is on the investment committee of Merida Capital Partners. This company is a private equity fund focusing on the marijuana industry and the factors that will drive its fundamental growth.

Plus, he recently started his own company, Moses Ventures, to focus on marijuana investments of different asset classes.

So why is this financial expert targeting cannabis?

The Big Long: Marijuana Stocks

Why is Moses bullish - to say the least - on the weed sector? Three major environments are poised to benefit marijuana stocks: politics (more legalization), economic factors (demand, products), and wellness (the use of marijuana and hemp in medical and wellness products).

Now, remember, weed is still illegal on the federal level, even though more and more states have legalized it. Because banks are regulated by federal agencies, banks have historically been very reluctant to do business with marijuana companies. Banks avoid risk, and from their perspective, anything that is only quasi-legal - or fully illegal, as far as U.S. law goes - is to be avoided.

As a result, marijuana companies have found it difficult to get loans to expand their businesses. Banks are where the loans are.

Moses sees it this way: before the housing bubble burst 10-plus years ago, the market was not regulated enough and had too much leverage (i.e., too much debt for its value). But the marijuana stocks market currently has the opposite problem: It's regulated too much and can't get enough debt (loans) for the amount of value it has.

And when banking services move to serve the marijuana industry, as will be likely, the market is poised to be explosive.

So the play to target is the inflow of debt capacity into the cannabis sector. It would make capital expansion costs drop.

So stay tuned to see the large companies get ready to lend to the marijuana industry. It will be where the money is.

These 3 Stocks Are the Key to 2019's Greatest Profits

The 2018 midterm election was a turning point for the cannabis industry.

We expect nothing short of historic profits by the end of the year.

But not all pot stocks will hand you life-changing wins. In fact, often the companies making headlines are least likely to see the biggest gains.

These three stocks, on the other hand, are flying under the radar... for now. Each of them could see exponential stock price acceleration at any moment, and if you get in before that happens, you could turn a token stake into a lifetime of wealth.

I don't know of any other sector providing anywhere near this level of growth now.

Click here to learn more.

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