Saturday, February 22, 2014

Is GW Pharmaceuticals a buy on the pullback?

The beginning of 2014 has sparked a new Green Revolution for pot stocks with some outstanding results. For instance, an almost 2000% growth in GreenGro INC (GRHN) in just 6 trading days. (1/1/14 - 1/8/14) This has caused daytraders to flock to companies such as PHOT,CBIS, CANV, MJNA, and other penny pot stocks. But do the risks of penny stock investing outweigh the rewards? Most of these companies have peaked and are substantially down from their 52 week high (which for many was seen in either January or February of this year). For people who are wanting to get in on the “High” of marijuana  stocks but aren't comfortable with investing in penny stocks in OTC markets then I suggest checking out GW Pharmaceuticals (GWPH) because it is the only marijuana stock not traded OTC. It is traded on the NASDAQ and according to Jim Cramer, founder of “The Street” and host of CNBC’s Mad Money, "is the most legitimate marijuana stock,".
GW is a london based company whose #1 product is an oral treatment for Multiple Sclerosis (MS) called Sativex. MS affects over 1.3 million people in the world of which 400,000 are in the US. Sativex was submitted for phase III clinical trials in 2006.Phase III results for FDA approval for treating cancer pain are expected sometime this year. If this is approved for use in the US expect the stock price to soar to new highs due to the expansion for the possible new users of Sativex that GW will gain. While it isn't ready for the US markets just yet, Sativex has already been approved in 22 countries most of which are in Europe (England, France, Germany, and the other green countries on the map).

GW Pharmaceuticals has a 52 week high of $67.62 (2/11/14) and after Friday’s close is trading at $56.26 which is about 17% from its high. They released earnings for Q1 2014 and their outlook for the rest of the year. While they predicted a loss for the overall year there were signs of progress that the company can be proud of. Revenue for Sativex went up to $1.3 Million which is $.3 million more than the previous first quarter and sales of Sativex grew 36% due to an increasing German demand and a strong start in Italy.
Outside of Sativex, GW has other ongoing studies. They have an orphan durg designation for Epidiolex in Dravet syndrome as well as other drug that are still in early testing phases. This means that GW isn't a hit or miss company with its future tied to just one drug.

All of these factors is why I think that GW Pharmaceuticals will continue to grow this year and why I think it will be a safer investment than investing in a pot penny stock. GW has been around 15 years and is a leader in Cannabinoid Science. With some important FDA rulings coming out later this year, growing Sativex revenue, and GW being able to fund more of their projects without relying on the money from partners, Japanese Otsuka Pharmaceuticals I believe that this pull back is a buying opportunity.

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