Top Picks 2020: Turning Point Brands (TPB)

01/08/2020 5:00 am EST


Timothy Lutts

Publisher, Cabot Heritage Corporation

Turning Point Brands (TPB) — our top speculative pick for the coming year — is a way to invest in the 2020 rebound of the most battered market sector of 2019 — marijuana stocks, notes Timothy Lutts, editor of Cabot Marijuana Investor.

Obviously, this is a very aggressive and high-risk sector; many institutions won’t even touch marijuana stocks because of continuing Federal illegality — and most investors won’t touch them because volatility is high, and liquidity is low.

But with the sector off nearly 50% from its 2019 high, there’s great potential for a rebound, and Turning Point is a relatively lower-risk way to play it.

This well-managed company, headquartered in Kentucky, has a stable, profitable business in smokeless tobacco (snuff and chewing tobacco) that supports a dividend of 0.7%.

But in recent years Turning Point has been diversifying into the marijuana business, first by marketing vaping supplies and then by peddling CBD, activities which are totally legal across the U.S.

In 2019, the vaping crisis (mainly attributable to black market THC devices) hit the stock hard, but it rebounded strongly in late October and since then it’s been building a base that looks like a great entry point as we wait for a resumption of the stock’s uptrend.

(Editor's note: Tim Lutts' Top Pick for 2019 was Innovative Industrial Properties (IIPR) — a REIT with some 2.9 million square feet of properties that that it leases to cannabis companies. The stock rose 73% last year. The advisor says, "If you want relatively low risk exposure to the cannabis industry, consider this one.")

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