On August 13, 2014 Jeff, a Talk Radio AM640 listener, asked for a review of the stocks he had bought in an effort to save for retirement and not be a burden to his children when he reached the promised land.
On August 13, 2014 I investigated the case for GW Pharmaceuticals plc (GWPH NASDAQ) and on August 15, 2014 provided an analysis of Rubicon Minerals Corp (RMX TSX). The next stock in his portfolio is Tweed Marijuana Inc. (TWD TSXV).
TWD through its wholly owned subsidiaries Tweed Inc. and Prime 1 Construction Services Corp. (Park Lane Farms) are licensed producers of medical marijuana in Canada. The company raised $15 million in a bought deal in May of 2014 and then in June acquired Prime 1 Construction Services Corp. In the last quarterly report the company had no revenue but that may be about to change. In a July press release TWD announced that it was about to make a number of its strains available for purchase, to registered users, through its online shop.
What you need to know as is that there doesn’t appear to be much in the way of barriers to entry in the sector. There could come a day when a new larger producer with a high demand strain competes aggressively for the market.
An inspection of the charts will provide added texture to the study.
The six month chart illustrates the explosive move as shares in TWD came to market. The 52-week high for the shares was recorded at $5.10 at the height of the excitement. The stock has pulled back and volume has thinned out since the open of trading in April. The RSI signalled that the shares were overbought for a a short period after trading began. After decades of prohibition it should come as no surprise that there would be some level of pent up demand. The main question is will TWD survive and thrive as the sector expands?
The three-month chart calls our attention to the resistance that has formed along the 50-day moving average and the volatile trading pattern for TWD. At this time there are few indications of the direction we might anticipate.
TWD has to be classified as a high risk speculative investment. It has a market capitalization of $103.85 million which makes it a small player vulnerable to competition from a more substantial organization.
Make it a profitable day and happy capitalism!