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This iconic company could soon enter the marijuana market

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From Justin Spittler, Editor, Casey Daily Dispatch:

The Coca-Cola Company has its eyes on the legal marijuana market.

And it’s watching the space for the same reasons as Big Alcohol and Big Tobacco.

The legal marijuana market is exploding before our eyes.

In the U.S., it’s already a $6.5 billion industry. By 2026, it’s expected to be a $75 billion market.

That means the industry is set to grow more than 10-fold in less than a decade. That’s almost unheard of. In fact, we haven’t seen a consumer industry grow this rapidly since broadband internet in the early 2000s.

The soda industry, on the other hand, is in a terminal decline.

By volume, soda sales have fallen for 13 years in a row. And consumption (on a per capita basis) is at its lowest level in more than three decades.

So Coca-Cola is looking elsewhere for growth…

But the beverage giant isn’t just giving the industry a look—it’s in serious talks with Aurora Cannabis.

Aurora is one of the largest Canadian cannabis producers.

Together, the companies would develop cannabis-infused drinks. But these drinks wouldn’t get people high (aside from maybe a sugar high).

I say this because Coca-Cola doesn’t want to infuse its drinks with tetrahydrocannabinol (THC), the compound in marijuana that gets people stoned. (At least, not yet.)

Instead, it wants to infuse its drinks with CBD, or cannabidiol. CBD is another compound in marijuana. It doesn’t get people high like THC, but it does offer many health benefits.

People take it to treat everything from anxiety to insomnia to chronic pain. In fact, the benefits of CBD are so widely recognized that it has become the “next big health craze in the United States.”

And that’s exactly why Coca-Cola has its sights set on the CBD industry. A company spokesman told Bloomberg two weeks ago:

We are closely watching the growth of non-psychoactive CBD as an ingredient in functional wellness beverages around the world. The space is evolving quickly.

To be fair, Coca-Cola also told Bloomberg that “no decisions have been made at this time.”

But I wouldn’t rule out a deal closing between Coca-Cola and Aurora soon. And I’m clearly not the only investor who thinks so.

Aurora’s stock surged 17% on the day of the announcement…

This is a huge, one-day move.

And it wasn’t just Aurora… the North American Marijuana Index popped 5% higher that day, too.

And you can bet the whole sector will run even higher if Coca-Cola closes a deal with Aurora.

Still, many investors are asking themselves… “How much higher can marijuana stocks possibly run?”

That’s a fair question. After all, the average marijuana stock has more than tripled in value over the past year. The best ones are up much more than that.

Now, some of these big moves are warranted. But not all are.

Some marijuana stocks have completely lost touch with reality…

I’m looking at you, Tilray.

Tilray is another Canadian cannabis company. The stock went public on July 18. And the timing couldn’t have been better.

Just look at this chart…

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Tilray’s share price jumped from $17 to as high as $300 on September 19. That means the stock jumped 18-fold in just over two months.

As if that weren’t crazy enough, consider this…

Tilray’s market capitalization reached $25.8 billion at its peak. That’s higher than 288 companies in the S&P 500. We’re also talking about a company that did just $20.5 million in sales last year.

This is completely insane. So it wasn’t much of a surprise that Tilray’s share price lost 54% since peaking two weeks ago.

Still, Tilray’s meteoric rise and fall has led to a lot of people writing off the entire legal marijuana market as a “bubble.” But… that would be a mistake.

It’s still the early days for the legal marijuana market…

Crisis Investing chief analyst Nick Giambruno summed it up best in a private email he recently sent to Doug Casey and me:

Taken together, the medical, industrial, therapeutic, and recreational markets for cannabis will easily be bigger than alcohol and tobacco, and could very well be bigger than the soft drink industry. An enormous, new, global industry is being born.

Put another way, the industry has massive, long-term potential.

There are also several major catalysts on the horizon that could push marijuana stocks much higher. Nick explains:

There is a good reason behind the mania, in my opinion. And I’d bet the mania will get even bigger in the weeks ahead as hemp is legalized at the federal level, CBD is rescheduled, Canada goes live with total legalization (on October 17), and other big states legalize in the near future.

In short, there are plenty of reasons to still be bullish on legal marijuana.

So consider speculating on marijuana stocks if you haven’t yet…

Just be sure to use discipline. Do your homework first. Only bet money you can afford to lose. And no matter what, don’t chase high-flying stocks. Let the opportunities come to you.

I also strongly encourage you to sign up for Nick’s Crisis Investing newsletter. I say this because Nick hasn’t just been covering the marijuana space… He’s put his subscribers in a position to get rich.

In fact, four of the marijuana stocks that he’s recommended in Crisis Investing have gone up 100% or more. One is up 605%, another is up 192%, and the other two are up 115% and 110%, respectively.

Those are incredible gains. But Nick says the best is yet to come…

He explains why in his brand-new video presentation right here.

Regards,

Justin


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Retail earnings reports, China trade impact

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CNBC’s Jim Cramer on Friday said he expects more of the same in the week ahead of stock trading.

“Next week, once again, is all about trade and retail,” the “Mad Money” host said. “This is the week when most retailers report, so we will be listening closely to what they say about the trade war.”

Monday: Trade watch

The stock market will confront the same issues on Monday as the week prior. The days following will see a lot of retailers hold conference calls, and Cramer is looking to see what they have to say about tariffs on Chinese imports.

“The market will punish companies that source in China and reward companies that don’t, because that’s what [President Donald Trump] is doing,” he said.

Tuesday: Home Depot, TJX, Nordstrom

Home Depot: The home improvement retail giant reports earnings before the bell. Cramer is expecting weather to weigh on earnings again.

“There’s much too much rain this gardening season, and I bet that hurt them,” he said. “I still believe Home Depot can tell a decent story about trade, but it won’t matter if gardening season, their equivalent of Christmas, turns out to be a bit of a bust.”

TJX: The T.J. Maxx parent delivers its quarterly results to shareholders in the morning.

Nordstrom: The luxury department chain has an earnings call at the end of trading. The stock is down more than 20% this year and more than 27% in the past 12 months.

“At these levels, it pays you a 4% yield. I think it may be too cheap to ignore,” Cramer said.

Wednesday: Lowe’s, Target

Lowe’s: Lowe’s, the main rival to Home Depot, presents its quarterly earnings before the market opens. CEO Marvin Ellison is guiding the home rehab chain through a turnaround.

“Wall Street loves Ellison, though,” Cramer said. “If Lowe’s gets hit, either before or after the quarter, I’d be a buyer of the stock.”

Target: Target comes out with its latest results before trading begins. The stock is about $20 per share off its September high and has a 3.6% yield.

“I know it’s battling both Walmart and Amazon, which might be too much competition for any one company, ” Cramer said. “But I think CEO Brian Cornell’s doing a terrific job. You know what, I like the stock here.”

Thursday: Best Buy, Splunk

Best Buy: The tech gadget store reports earnings in the morning. The stock is up 30% this year, and Cramer is warning not to take a chance on it at current levels.

“I’m betting they’re going to have to talk about tariffs on the whole darned conference call,” he said.

Splunk: The software analytics company, one of Cramer’s “Cloud King” stocks, presents its financial report after the market closes. Cramer expects Splunk to put up a good conference call out of CEO Doug Merritt. He said Merritt continues to deliver on promises.

“I like it a lot. … [It’s got] no China exposure — I say buy,” he said.

Friday: Foot Locker

Foot Locker: The shoe retailer will lay out its quarterly report for investors before stocks start trading. With a presence in shopping centers across the country, Foot Locker carries Nike, Adidas, Under Armour and a range of other sports apparel brands in its stores.

“The stock’s been held back by trade war worries,” Cramer said. “I bet it will prove to be immune, or at least more immune than most people think.”

WATCH: Cramer breaks down the week ahead in earnings

Disclosure: Cramer’s charitable trust owns shares of Amazon.com and Home Depot.

Questions for Cramer?
Call Cramer: 1-800-743-CNBC

Want to take a deep dive into Cramer’s world? Hit him up!
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Questions, comments, suggestions for the “Mad Money” website? madcap@cnbc.com



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Charts suggest markets could soon get a deep correction

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CNBC’s Jim Cramer said Thursday that his colleague is warning that danger could be on the horizon for the stock market.

The “Mad Money” host took a look at chart analysis as interpreted by technician Carolyn Borogen, Cramer’s coworker at RealMoney.com who also runs FibonnacciQueen.com, to understand what could come of this volatile market.

The major U.S. averages were taken for a ride this week as investors attempted to gauge whether the United States would raise existing tariffs on imports from China on Friday. Because of this uncertainty, the best way to get an empirical reading of the market is through studying chart action, Cramer said.

The high-to-high cycles, as explained by Boroden, in the weekly chart of the S&P 500 is cause for concern, the host said.

Highs on the index have ranged between 31 weeks and 36 weeks, and the most recent peak was recorded last Friday, he said. Prior to that, the last major high was set in September, which preceded the stock sell-off in October.

Markets tend to repeat themselves, and because stocks sold off this week after a big run, Boroden thinks there could be cause for concern.

“In fact, she’s looked at a series of previous high-to-high cycles, and what she’s noticed is that there’s a whole confluence of them coming due this month,” Cramer said. “That’s why she’s throwing up a caution flag, because Boroden thinks we might finally get a deep downside correction — even deeper than what we’ve already experienced during hell week.”

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These 6 stocks could make or break the S&P 500’s run

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Call them the Supersized Six.

Microsoft, Amazon, Apple, Alphabet, Facebook and Berkshire Hathaway — six of the most highly valued companies in the S&P 500 — don’t just boast the index’s biggest market caps.

In fact, those six companies are worth about as much as the bottom 290 companies in the S&P combined. Taken together, their market caps total $4.2 trillion, while the bottom 290 S&P companies are worth roughly $4.3 trillion.

It’s fairly common knowledge that the top 50 S&P stocks are worth more than the bottom 450, and it’s not unusual that the market is frequently this “top-heavy,” says Carter Worth, chief market technician at Cornerstone Macro.

But the concentration in these six names is noteworthy, and it could mean trouble for the market, Worth said Tuesday on CNBC’s “Fast Money.”

Considering the influence they have over the S&P’s direction, it makes you wonder: “Is it an index, or is it a few big names that drive everything?” Worth said. “That’s what makes beating the index so hard.”

He called attention to this chart tracking the six-stock basket against its 150-day moving average, as well as the number of times it has traded above or below that average.

“Literally, every single time we have gotten this far above the 150-day moving average, we have peaked. It is right at that level yet again,” Worth said, pointing to the uptick in the bottom panel’s trend line. “So, as this goes, so goes the market. I think you’ve got a crowding that’s not so good. Just to put it in real context, think of those six names relative to the S&P. It’s all so dependent on these big names.”

Moreover, while the market’s “heavy hitters” have made up 15% of the S&P’s total market cap, on average, since at least the 1990s, that percentage is also ticking up, Worth noted.

“We’re starting to get back to a level that is typically indicative of when markets peak. That’s ’07, so forth and so on,” he said. “None of this is particularly healthy.”

By market cap, Microsoft is worth about $963 billion, Amazon is worth $949 billion, Apple is worth $969 billion, Facebook is worth $540 billion, and Berkshire Hathaway is worth $515 billion.

The broader market mounted a recovery Wednesday, with the S&P lifting off its Tuesday lows early in the session.



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