Canadian Marijuana Stocks Poised to Ramp Up

Canada would be the first among the Group of Seven nations to legalize recreational cannabis as Prime Minister Justin Trudeau has promised legislation could occur as soon this spring, putting a damper on the current black markets and leveling the playing field.

The licensed producers of medicinal marijuana in Canada will face a major supply and demand shortage for recreational users since the current number of patients who are seeking cannabis is already higher than what these companies can generate, said Jason Spatafora, co-founder of Marijuanastocks.com and a Miami-based trader and investor known as @WolfofWeedST on Twitter. This lack of supply will push Canadian marijuana stocks to new highs and IPOs will "see massive runs," he said.

"The current valuations have room for growth as speculation persists with a signal from PM Trudeau to create a completely legal market, which would cause public and private licensed producers to scale up their operations in order to meet a supply versus demand shortfall, the likes of which we have never seen," Spatafora said. "It's like having 30 brewery companies in the United States go public after Prohibition ended."

The recreational market could be available for consumers as early as 2018 once regulation of the products is set, creating more value for its shareholders as revenue doubles or triples.

Canada's nascent cannabis industry has the potential for large returns as their medical market is well-regulated and institutional buying has already sparked a rally in the overall sector as shares of Canopy Growth (OTCMKTS: TWMJF TSX: WEED) rose to CAD $13 a share from CAD $4 in October and Aphria Inc (CVE:APH) rose to over CAD $6 from CAD $3.40 in October.

"The investment banks are buying huge stakes at the current levels," he said. "The legalization of medical marijuana on the federal level in Canada means licensed producers were able to to take their companies public in a meaningful way compared to the U.S. companies that still won't touch the plant directly. Canada is doing what people would wish would happen in the U.S."

Since the passage of medical marijuana in Canada in 2016, the licensed producers have run into massive shortages to keep up with demand.

"The federal approval of recreational cannabis will create a rush on expansion of cultivation operations as well as much larger investments pouring into these facilities, which has already begun," Spatafora said. "Given that the approval process can take years, licensed producers will likely trade on future earnings on revenue multiples similar to Amazon."

The Canadian cannabis market has a "lot of room to run" once the legislation is approved, said Michael Berger, founder of Technical420, a Miami-based company that conducts research on cannabis stocks and a former Raymond James energy analyst. At the United Nations meeting earlier in 2017, Health Minister Jane Philpott said Canada's Liberal Party government will introduce a law in the spring to legalize recreational cannabis.

Some Producers Will Benefit More than Others

Even though recreational cannabis should be advantageous toward all licensed producers that are approved to sell it, some companies will benefit more, he said. Many licensed producers have already started expansion of current facilities or construction of new ones to prepare for the increased demand.

"Investors should focus on companies that are well capitalized, positioned and managed," Berger said. "During the last six months, over $500 million has entered the Canadian cannabis industry through bought deals and private placements as companies focus on increasing production capacity prior to the legalization of recreational cannabis."

Opportunities to invest in private companies such as the Green Organic Dutchman have generated "great interest" from investors as the company possesses one of the largest licensed land lots in Canada as well as "one of the most attractive valuations when compared to its peers," he said.

Aphria (OTCMKTS: APHQF) is focusing on a different approach as this licensed producer recently acquired 200 acres in a separate location in Canada. This is less attractive than the acquisition by the Green Organic Dutchman since the property will need its own license from Health Canada, Berger said.

Health Canada, the federal regulatory department, said a licensed medical cannabis producer which acquires a property which is adjacent to its licensed facility does not need to receive a new license. Purchasing properties elsewhere will require the approval for a new license, which could hamper the construction process.

Also read :The Future Of Commercial Cannabis Production In Canada https://goo.gl/v6UOAO

Companies Positioned for Growth

Canada's medical cannabis market is facing a supply shortage as the number of registered patients increases by double digits each month and there are currently more than 100,000 registered patients, said Berger.

Other licensed producers which have started to increase capacity include Aurora Cannabis (OTCMKTS: ACBFF CVE:ACB) and OrganiGram Holdings (OTCMKTS: OGRMF CVE:OGI). In November, Aurora broke ground on an 800,000 square foot production facility which is expected to be completed in the second half of 2017. OrganiGram recently acquired a ten-acre property adjacent to its existing facility.

"Aurora's hybrid greenhouse facility is expected to be the largest, most advanced and most automated cannabis production facility in the world," he said. "The facility will be able to produce more than 100,000 kilograms a year and it is located on 30 acres of leased land in Alberta."

Selectivity is Key

Attractive valuations and an influx of capital to capitalize on potential growth is what sets apart the various companies. 

"Some of the factors which make the Green Organic Dutchman an attractive opportunity is its strategic partnerships with renowned companies like Eaton, Ledcor and Larseen Greenhouse, its attractive valuation, its sound financial structure, its proven management team, and its best-in-class infrastructure.

"Canada's legal recreational cannabis market should be generating over $10 billion a year and will serve over three million people in 2018," Berger said.

Acknowledgement: https://goo.gl/eNwbsR

Source: https://goo.gl/Zhm6os

Is hyperconvergence the next big thing in tech?

Opinion: After Nutanix IPO, tech giants jump to offer software that manages data stored on private servers and public cloud

Nutanix Inc. co-founder and Chief Executive Dheeraj Pandey attempts to explain hyperconvergence at the company's San Jose headquarters.

Hyperconvergence may never be a household word, but in Silicon Valley, last year’s booming initial public offering of Nutanix Inc. has pushed more big tech companies to jump into the young technology in hopes that it is the next big thing.

Simply put — or as simple as the complex technology can be — hyperconvergence combines storage and computing functions in disparate systems through software on a single device, similar to the software-based virtualization movement sparked by VMware Inc. VMW, +0.89%  a decade ago. Just as VMware’s software allows a single computer to host multiple virtual machines running different operating systems, hyperconvergence makes it easier to store and manage data spread across private servers and the public cloud from a single appliance, critical for companies that use a “hybrid” approach to the cloud.

“Everyone and their brother are either thinking about a hyperconverged system or building new ones,” said Richard Fichera, a Forrester Research analyst. “It’s a hot active area right now because it has a high value to its users.”

–– ADVERTISEMENT ––

Just as VMware’s 2007 IPO and subsequent success pushed legacy enterprise-tech companies to jump into that field, last year’s Nutanix NTNX, +1.91%  IPO put the spotlight on its pioneering concept of hyperconvergence and has attracted the attention of those same companies, which want a piece of a sector expected to grow into a $6 billion industry in the next few years.

“It is an extremely exciting space,” said Stefanie Chiras, vice president of power systems at IBM Corp. IBM, -0.18%  “We are watching the space extremely closely…The growth rates are incredible.”

Gartner projects that hyperconvergence revenue will grow at a compounded annual rate of more than 60% in the next few years.

In January, Hewlett Packard Enterprise Co. HPE, +1.44%  purchased a young company in the field called SimpliVity for $650 million. Storage appliance maker NetApp Inc. NTAP, -0.61% told investors in February it is working on a next-generation hyperconvergence product based on technology from SolidFire, a company it acquired in 2015 for $870 million. Cisco Systems Inc. CSCO, -0.36%which unveiled its own hyperconverged infrastructure in March 2016, said one year later that 1,100 customers had embraced its HyperFlex offerings in their first nine months on the market.

Nutanix, though, is the poster child for this new computing trend, having coined the term “hyperconvergence.” The eight-year-old San Jose, Calif., company was one of just a handful of tech IPOs in 2016, capturing investors’ attention with stunning revenue growth rates, a large and growing customer base and its vision to become a platform company.

Read also: Nutanix’s eye-popping post-IPO pop is largest of the year

Nutanix software is simply trying to make computing mirror life, the company’s co-founder and chief executive told MarketWatch in an interview at the company’s headquarters.

“A life analogy is housing or lodging,” Nutanix CEO Dheeraj Pandey said. “When I go travel for two nights, I rent a hotel. When I go away for a month, I will rent corporate housing. But if I move for three years, I will own a home.”

With hyperconvergence, companies don’t have to choose between those types of scenarios in computing power, which can be bought through on-premises servers or rented through public-cloud offerings, he said.

“There will be all sorts of different lifespans of owning and renting [computing power]. At the end of day, we are not as wedded to the idea of renting, as we are to converging the two. We have always been about converging.”

How 4D mapping could change the way we live and work

(2:19)

Mapping-software company HERE is owned by the biggest German automotive companies - BMW, Audi and Mercedes owner Daimler. HERE CEO Edzard Overbeek spoke to MarketWatch about the evolution of maps from two to three and, eventually, four dimensions.

Pandey noted that when the company was founded in 2009, the cloud had not really taken off yet, but that made his company’s technology popular with companies that were just starting to move to cloud computing.

“We had to start it ‘on-prem,’” he said, referring to computing systems or data centers on a customer’s premises, instead of in the cloud. “The large enterprises want the first step toward cloud…its actually a five-year journey.”

He noted that in public cloud systems, VMware’s software, which partitions parts of a server to run different operating systems, is not even visible to the user.

“Why shouldn’t it be the same experience in private cloud?” he asked.

See also: Cloud-computing ETF hits new high amid strong industry growth

So Nutanix built an enterprise cloud operating system that Pandey says can meld two data centers, one that is owned and one that is rented.

“You can drag and drop from one to the other,” he said. “That is where the world is really headed.”

Nutanix has recently suffered its first major struggles as a public company, tumbling 30% in the past three months thanks to a disappointing forecast that may be partly attributable to rising memory prices and the end of a post-IPO lockup, but is still trading about 20% higher than its $16 IPO price, with a market cap of about $2.7 billion.

US:NTNX

$20$30$40$50$10

For the large tech companies that are not offering public cloud services like Amazon.com Inc.’s AMZN, -0.38%  Amazon Web Services and Microsoft Corp.’sMSFT, -0.08%  Azure, hyperconvergence represents an opportunity to address the so-called hybrid cloud market. While cloud computing has become popular, many experts consider a hybrid approach will prevail in the end, as companies look to keep their most important or sensitive data on servers they own and maintain.

“Hybrid cloud — that is, cloud-style systems or infrastructures that run in private data centers but interact with public clouds like AWS and Azure — has become the methodology of choice for most enterprise customers,” said Charles King, an analyst with Pund-IT, in an email.

Many large tech providers were far too late to challenge for the cloud-computing market, since building up a public cloud service is a huge infrastructure expense and Amazon got quite a head start.HPE and Cisco, for example, have both recently abandoned their public cloud efforts as they eye a hybrid approach.

Don’t miss: Dot-com bubble 2.0: The cloud buildup

Even companies that have succeeded in offering public cloud services see value in hyperconvergence. Sid Roy, group program manager for Microsoft’s Windows Server group, said many customers looking to upgrade hardware find the cost to upgrade their storage systems is daunting, and look for a different approach.

“Enterprise service providers are very conscious about cost, where storage can be up to 60% of the data center costs,” Roy said. “If you are not ready to go to the cloud but you are thinking of lowering your storage costs, hyperconverged is a good way to go. …Hyperconverged is a key part of our private cloud strategy.”

The growth rate for the hyperconvergence market is potentially huge, with a 60.5% compounded annual growth rate projected for the next several years, according to market research firm Gartner Inc.

“We would call hyperconvergence the fastest-growing segment of the integrated systems market,” said George Weiss, a Gartner analyst. “We are forecasting it to be a $6 billion market by 2020,” compared with $1.2 billion in 2016.

Read also: Oracle continues to hammer at Amazon in the cloud

As should be expected in the tech world, there are a raft of startups seeking to challenge Nutanix or potentially get gobbled up by the tech giants looking to jump into the sector. Cloudistics, an on-premises cloud infrastructure software developer founded in 2013, has raised about $16 million in venture funding; Atlantis Computing, founded in 2006, has raised $32.2 million from investors; and Pivot3, founded in 2002 by veterans of VMware and Compaq, has raised $253 million in venture funding, with its own software storage technology in a configurable, converged appliance.

With companies large and small nipping at its heels, Nutanix isn’t standing still, as it looks to eventually become a bigger platform, with networking and security next on its list to conquer.

“Hybrid becomes the new battleground,” Pandey said. “The aspiration is a platform for the whole infrastructure. There is no misconception that it will happen overnight. Think of AWS, they started in the 2006 time frame, it has taken them 10 years to get here.”

A lot could happen in the next 10 years to disrupt a profitable path for hyperconvergence, but if large enterprises do opt for hybrid-cloud systems as many expect, the hype for the technology could be justified.

Nutanix shares have lost 34% in the year so far, while the S&P 500 SPX, -0.08% has gained 5%. 

Acknowledgement:https://goo.gl/eNwbsR

By Therese Poletti

Source:https://goo.gl/4BFhSz

The Week Ahead: All Eyes on Technology's Momentum

The Washington 'swamp' keeps getting murkier, but tech stocks are cutting through the gloom. Here's what to look for in coming days.

 

The Trump administration's looming health reform fiasco, draconian budget blueprint, and foreign affairs missteps are roiling the markets, but one sector appears to have seized sustainable momentum: technology.

Here's a look at the forces driving tech higher and the profitable opportunities emerging among tech companies of all sizes, regardless of the market's excessive valuations and myriad political risks.

The stock market closed on Friday with a gain of 0.2% for the week, although it didn't top its record high from the start of March. The clear outperformer was the tech-heavy Nasdaq, which closed +0.7%, rising near its early-March high to hover near another record close. The Nasdaq is now up 9.6% year to date, versus the S&P 500's (SPY) YTD gain of 6.2%.

One sector that hasn't fared well over the past week is health care. The Republican alternative to Obamacare, inevitably dubbed "Trumpcare," is a toxic stew of half-measures that no one finds palatable.

The consensus in both parties is that the Obamacare replacement bill is dead on arrival, as an increasing number of GOP senators indicate they will vote "no." The political stalemate over health care has dampened enthusiasm for health stocks, with the benchmark Health Care Select Sector SPDR Fund (XLV) falling 1.08% over the past five days.

Trump also has unnerved global investors by alienating America's key allies of Britain and Germany.

The president continues to infuriate the Brits by repeating groundless claims that Britain's intelligence services spied on him at the behest of Obama. Meanwhile, at a White House meeting on Friday, Trump's anti-EU stance was on full display as he treated German Chancellor Angela Merkel with insulting disdain to the point where he refused to shake her hand.

In case anyone has forgotten, Britain is America's most important strategic partner and Germany is the largest economy in Europe.

But through it all, technology paints a rosy investment picture. One tailwind is Trump's promise to make it easier for tech firms to repatriate cash hoards that are parked overseas. Tech companies are likely to use this cash to fund merger and acquisition activity, to fuel organic growth and innovation.

In a sign of the heightened M&A to come, Intel (INTC) announced on Monday that it was making a big bet on self-driving vehicles by acquiring Mobileye (MBLY) for $15.30 billion in cash, paying a 34% premium to Mobileye's share price from the previous session. Mobileye is a small Israeli company that creates vision systems for cars and trucks.

In the week ahead, keep an eye on Silicon Valley giants with deep pockets. They increasingly need to find new avenues of growth by gobbling up smaller, entrepreneurial firms in such hot areas as autonomous cars, the Internet of Things, and the cloud.

Indeed, largely driven by cloud growth, Oracle (ORCL) on Wednesday delivered an earnings beat that sent shares rocketing higher. The tech giant's third-quarter 2017 earnings per share of 63 cents and revenue of $9.27 billion handily exceeded the consensus estimate of 57 cents and $9.24 billion, respectively.

Another positive for technology is the expected increase this year in IT spending, as cash-rich corporations make deferred upgrades. According to research firm Gartner, worldwide IT spending is projected to total $3.5 trillion in 2017, a year-over-year increase of 2.7%. Historically, IT spending is positively correlated with stock performance. One fast-growing segment is cyber security, as hacking incidents continue to mount.

The key takeaway: ignore the dreariness of today's politics and focus on the fundamentals. And right now, several trends strongly favor technology.

Notable tech company earnings on the calendar in the week ahead: Accenture (ACN) and Upland Software (UPLD) (Thursday). Economic reports: Existing Home Sales (Wednesday); Jobless Claims, New Home Sales, and Bloomberg Consumer Comfort Index (Thursday); Durable Goods Orders and Baker-Hughes (BHI) rig count (Friday).

If you walked by this guy on the street, you would not think "millionaire"

You would probably probably think "accountant" or "average cubicle guy." Actually, he was a lawyer until he unlocked this secret that made him $5 million. How does he do it? We'll warn you... it's about as exciting as a ham sandwich. But it's turning regular readers into six-figure income machines. Click here now for all the details.

By John Persinos

Source:https://www.thestreet.com/story/14050220/1/the-week-ahead-all-eyes-on-technology-s-momentum.html