What is Motley Fool's "#1 pot stock" and is it really as good as they claim?
In this review I'll be going over what the stock is that they are teasing here, including the ticker symbol, and I'll be doing it for free... so that you don't have to buy into a subscription of their service in order to find out.
The Teaser
There are likely a bunch of different ads going around for this, but what I came across recently was titled as "Motley Fool #1 Pot Stock"...
Being an investor in the cannabis industry, this caught my attention and so I clicked on the ad, which then took me to a page titled "One Stock for the Coming Legalization Boom"...
This page basically just provided a bunch of rather vague information about this opportunity and at the end wanted me to subscribe to their Stock Advisor service... of course.
*Note: Stock Advisor is their flagship advisory service. It's a follow-along style newsletter advisory service that, in summary, provides specific investment recommendations to subscribers on an on-going basis.
But what if you want to find out what their stock pick is without buying into their service? Well, that's exactly the point of this article.
Upon looking into things further, it seems that this same pitch has been around for quite some time, and has continued to evolve. Other variations I've found include the titles: “One Stock for the Coming Marijuana Boom” and “CEO Bets $1.1 billion on 1 Legalization Stock”... but they are all teasing the same stock.
So what is it? Well, let's go over some of the clues we are given.
Some Clues
Luckily, most investment teasers, although very vague, usually provide enough hints and clues so that we are able to find out what stocks they are teasing without buying into whatever they are promoting - and this is no exception.
Some of the hints we're given include:
- "a game-changing deal just went down between the Ontario government and a powerhouse Canadian company"
- "has locked in key partnerships with behemoths like Facebook, Amazon, and now the Ontario government"
- "we’ve actually recommended this stock before"
- "This company’s future doesn’t hinge on the issue of legalization"
- "1,151% returns since our July 2016 recommendation"
- "46% sales growth in the past year alone"
And this is all we need.
Their Stock Pick Exposed
This might sound strange at first, but what they are teasing here is Shopify (NYSE: SHOP), which is an ecommerce platform used to create online stores to sell products/services online. Some large companies that sell over their platform include Red Bull, Tesla, Sephora, Nestle and many more.
All clues point here.
- Yes, the Ontario government signed a deal with Shopify to use their ecommerce platform for online cannabis sales
- Yes, Shopify is a Canadian company - based in Ottawa, Ontario
- Yes, Shopify does have a partnership with Facebook to provide software to make it easier for entrepreneurs to advertise on the platform - and they have a partnership with Amazon as well (first heard about it in 2015), allowing entrepreneurs to migrate their data from amazon to their Shopify stores seamlessly
- Yes, they've recommended this stock before - and they talk about it quite often
- The stock price has actually increased by more than 1,151% since their July 2016 recommendation - prices have been fluctuating a lot lately
[Source: Yahoo Finance]
- Yes, their adjusted gross profit was reported to have grown 46% in 2019
- And it is true that this companies future certainly does not hinge on the future of cannabis
It might seem like a strange cannabis play, but all the clues here point to this company, and people have confirmed this being their stock pick that have bought into the Stock Advisor subscription they are selling just to find out.
Shopify isn't involved in the cannabis industry directly and, as mentioned, their success certainly doesn't hinge on the future of cannabis, but it does stand to profit from the legalization boom. Not only is Shopify running government cannabis sales websites in Ontario, but they also handle the online sales for large cannabis producers such as Canapy Growth Corp, Aurora Cannabis Inc, and Hexo Corp.
A Good Investment?
Buying SHOP as a marijuana play could be a good investment, but it's hard to say how much of an impact the growth of marijuana will actually have on the stock price - and likely not all that much.
The whole "Motley Fool #1 Pot Stock" ad seems to be more of a marketing angle to bring in new subscribers rather than a matter-of-fact... because there is no way this is their "#1" pot stock - a good stock? Yes... but I just can't see this being their #1 "pot stock", because it is hardly one at all.
Other analysts, such as those at CNN Business, offer a much more mixed opinion on the 12-month stock price forecast - not quite as bullish as The Fool.
That said, the company does have strong management and big future plans for expansion, which make it a solid investment option for many.
And something else you have to consider is the cost of the stock, which is very expensive compared to their sales revenue. This is largely due to the vision the company has and its potential - they have stated publicly that developing a superior product is what's important to them, not short-term sales goals - and personally this is what I like to see.
Quick Recap
- Motley Fool is at it again teasing their "#1 pot stock"
- This teaser has been headlined as "One Stock for the Coming Legalization Boom", “One Stock for the Coming Marijuana Boom”, “CEO Bets $1.1 billion on 1 Legalization Stock”, and there are probably other variations floating around as well
- In order to find out what their "#1 pot stock" is, you first have to subscribe to their Stock Advisor service, which is an investment advisory service that provides investment recommendations regularly
- The stock they are teasing here is Shopify (SHOP)
- It can be considered a "pot stock" I supposed, but how much the marijuana boom will actually help out this stock is iffy
And there you have it. Now you don't have to buy into their subscription just to find out what they are teasing.
Let me know what you think about this whole thing in the comment section below...