Cashing In on the Greatest Achievement in Decades

Matthew Carr
by Matthew Carr, Emerging Trends Strategist, The Oxford Club
Marijuana_Plant

“Suppose you could make money trading harvested baby brains. Would you do it?” asked Charlie Munger, Berkshire Hathaway’s (NYSE: BRK) outspoken vice chairman. To him, bitcoin is just as bad.

Munger and Warren Buffett set the Twitterverse afire by poo-pooing bitcoin and cryptocurrency at Berkshire’s recent annual shareholder meeting.

But Munger did admit that blockchain, the computer science behind bitcoin, “is a great triumph of the human mind.”

I agree with him there.

But today I’m talking about perhaps the most controversial investment opportunity in history... an opportunity formed by the colliding worlds of cryptocurrencies and marijuana.

The two are made for each other.

And the potential upside could be enormous.

In simplest terms, blockchain is just a digital, public ledger that’s decentralized. Everyone can see it, but no one can hack it... yet.

Because all cryptocurrencies are encrypted, processing a transaction requires solving a math problem. The more transactions, the more complicated the problems become.

Voila! Those are your blocks in this ever-growing chain of records and transactions.

What the internet has done for data, blockchain will do for money.

During the dot-com collapse,  DrKoop.com, eToys.com, Flooz.com, GeoCities.com and Pets.com didn’t survive... but the internet did.

They weren’t bad ideas. They were just a little too early.

Think about it... In 2001, no one wanted to get health content from a website founded by former Surgeon General C. Everett Koop, but today everyone uses WebMD to self-diagnose.

And even though consumers thought Flooz’s online currency was stupid in 2001, there’s now a whole industry built on digital currencies.

So is there some euphoria in the cryptocurrency space? Most definitely. And not all cryptocurrencies will survive. That’s capitalism.

But just like the internet, blockchain is here to stay.

You can use it for title ownership, real estate, contracts, voting and decentralized cloud storage. Plus, if you can get everyone to agree on a standardization, you can use it in shipping.

And even in an industry like marijuana, blockchain has a home.

Just like in other industries, blockchain can enable peer-to-peer transactions as well as smart contracts.

But one of the largest opportunities is seed-to-sale tracking.

This is a requirement in the U.S. and anywhere else that allows legal marijuana sales - medicinal or recreational.

For now, seed-to-sale tracking is accomplished with radio-frequency identification (RFID) chips.

But in Colorado this year, the state Senate introduced a bill allowing the use of blockchain to track pot in the state. The idea is that law enforcement could quickly distinguish between legal medical, recreational or hemp and something from the gray or black market.

And in Canada, even fuddy-duddy “Big Blue” IBM (NYSE: IBM) has made a similar pitch for a national blockchain registry and tracking system.

As IBM stated, “Blockchain is the ideal mechanism... to capture the entire history of cannabis throughout the supply chain.”

And this is an area where several companies are currently innovating. They’re bridging the pot and crypto markets. That means there’s a lot of potential for them to grow very quickly.

Seed-to-sale is only one enticing aspect.

This week, hearings in D.C. are deciding the fate of cryptocurrencies and blockchain. So this is a very exciting moment in time for the industry. But the future is even brighter... especially as two explosive industries - marijuana and crypto - combine.

Maybe you agree with Munger and believe bitcoin is “worthless, artificial gold.”

But even he recognizes that a tremendously useful tool has been forged.

And it will start to become a part of every industry... just like the internet.

Good investing,

Matthew

Thoughts on this article? Leave a comment below.

Viva La Veeva!

Matthew has a habit of identifying opportunities before the masses get smart to them. That's why he's our Emerging Trends Strategist - and why his VIPER System is designed to target stocks that are primed to surge to new highs.

Since 2016, Matthew's recommended Veeva Systems (NYSE: VEEV) as part of his VIPER Alert Portfolio. Below is his latest update from February...

After the bell on February 27, we heard earnings from Veeva Systems (NYSE: VEEV)... and they crushed it.

Before that, I wrote that Wall Street was looking for Veeva to report a revenue increase of almost 20% to $180 million with earnings per share (EPS) of $0.21.

Our life sciences cloud solutions play continued its string of top-line beats. Veeva reported revenue jumped 23% to $184.9 million with EPS of $0.23.

Subscription services for its cloud-based products increased 26% in the quarter to $150.9 million. And subscription revenue retention was 121% for the year.

This is important because Veeva's products are for a specific industry. And it's starting to see growth pick up.

Veeva's customer base grew 21% to 625. Of those, 311 were Commercial Cloud customers and 449 were Veeva Vault customers. And in the first quarter, Veeva added a record number of customers, including two top-20 pharmaceutical companies.

So it's in a good place and is seeing business pick up speed.

For the first quarter, Veeva forecast revenue between $188 million and $189 million. Despite this narrow range, it's above what Wall Street was expecting. As is Veeva's full-year guidance of revenue between $815 million and $820 million. Not only is that above the $806.35 million analysts were looking for but the top line of the guidance nearly matches the most bullish estimates.

Our shares of Veeva surged on the beat. And we're now up more than 70% on our shares as they push back to new 52-week highs.

- Donna DiVenuto-Ball with Matthew Carr

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