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Top Picks 2019: EVIO (EVIO)
01/23/2019 5:00 am EST
I’m extremely bullish on cannabis, in case you couldn’t tell. This is the birth of an industry that is set to grow to epic proportions. We’re talking tens, maybe even hundreds, of billions of dollars a year, asserts Jason Williams, editor of The Wealth Advisory.
And we’ve got the opportunity to invest in the future leaders of that industry on the ground floor. So, you shouldn’t be surprised that my speculative pick for 2019 is also a cannabis stock. But don’t go thinking this is just some company that grows or sells marijuana. It’s far more important to the industry than only being a producer.
This year, many U.S. states and the entire country of Canada passed laws that require the testing of legal cannabis before it can be sold to dispensaries. All the cannabis, all the oils, all the edibles — everything has to be tested for pesticides and other various chemicals before it can make it onto store shelves.
And few companies were ready for this move. Most producers already had things like tetrahydrocannabinol (THC) and cannabidiol (CBD) levels tested so they could display it on their packages. And flowers were given visual inspections for bugs and mold. But nothing this stringent had been in place.
So, the industry was caught unprepared. And for a while, shelves were almost bare in some states as producers and the few labs that are out there rushed to get everything tested to meet the new standards.
But there was one company that saw the industry growing and knew regulations would soon get around to what was in the products being sold. So, its management set out to become the largest cannabis-testing company in the country. And it’s well on its way to accomplishing its goal.
EVIO (EVIO) is the largest publicly traded cannabis tester. And it’s battling for the top spot overall. It hasn’t seen the kind of interest that the Canadian companies have. It hasn’t even seen the kind of interest that most U.S. companies have. But that’s because the growers are the focus right now. Nobody is looking at the pick-and-shovel plays that keep the industry running. Not yet, at least.
But once investors start looking for parts of the industry that aren’t already saturated with cash, testing labs will be one of the first places they go. And EVIO is the best investment in that part of the cannabis market. Its balance sheet is a little beat-up right now because of the cost of such rapid expansion.
But management plans to use proceeds from its operational labs in the U.S. and Canada to pay down debt and expand further. This could be the year that cannabis becomes fully legal in the U.S. Established American companies will dominate the global market after that. So, getting invested now would set you up for massive profits down the road.
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