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Cara: A Cannabis Play for the Future of Pharmaceuticals

06/20/2019 8:56 am EST


Hilary Kramer

Editor, GameChangers

I’m passionate about the way cannabis and hemp deregulation are creating a new generation of entrepreneurial millionaires, explains Hilary Kramer, growth stock expert and editor of Turbo Trader.

This is where the literal “green shoots” of a future economy are sprouting. And a lot of money is chasing the buzz, driving valuations to bubble levels. It is going to take a whole lot of growth and more than a little time to justify some of these stock prices.

Our new thematic orientation gives us the time. All we need are the right stocks. I’d like to start by finding a sweet spot between the massive (but crowded) Canadian producers and the tiny (and thinly traded) start-ups that trade for pennies a share.

We’ll probably see some of the Big Weed farmers on our list sooner or later, but for now, the charts don’t provide a lot of urgency and the multiples don’t provide immediate confidence. And the penny pot stocks will reward a more diversified venture capital-style approach that we’ll be better able to exploit once we get rolling.

On the other hand, Cara Therapeutics (CARA) has the right combination of pure deregulation upside and market heft to begin to build a cannabis portfolio for us. The company doesn’t grow the plant and at nearly $800 million in market capitalization, it isn’t a penny player either.

The story here is science. After generations in legal limbo, cannabis finally has a chance to participate in the modern pharmaceutical industry. CARA has found an entire class of molecules that affect the brain the same way as the raw plant, but in a controlled and reliable dosing environment.

In other words, this is a cannabis pill that theoretically can solve urgent medical challenges like non-opioid pain relief, inflammatory diseases like fibromyalgia and other high-impact targets. All CARA needs to create a blockbuster is a little time and good luck in the clinic.

I’m happy to give it some time, but CARA has every indication of becoming a $30 stock in the next year, well before its cannabis-linked programs even reach the FDA for review. The chart looks strong enough to test $22 in the near term, which would give us our first 10 percent on this trade and serve as my initial target.

We might be here a little longer than normal, but under the right conditions CARA could even give us a 50 percent return without any of the headaches that come with trading options or other momentum-driven strategies.

Buy CARA below $20. Take your time and feel free to accumulate on the dips. After all, this is all about relaxing and letting the market (and the regulatory map) do all the work.

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