December 23, 2018 Watchlist

Hot Stock No. 1 – Tilray Inc. (TLRY)

The Canadian marijuana grower just announced a global partnership with Sandoz AG, a division of Novartis to develop and distribute medical marijuana around the globe.

That’s certainly great news for Tilray Inc.  With Novartis’ major global presence, TLRY can compete more effectively in international markets, including Australia, Germany and the United Kingdom. It also gives TLRY considerable credibility in the global cannabis industry.

With the potential to enter into more markets, Tilray CEO Brendan Kennedy sees the opportunity as one that will inspire a great deal of confidence.  “It just made sense for us to reach an agreement with a company like Sandoz, which is known for its focus on patients, its reliable supply chain, a well-established sales force and a global distribution network,” Tilray Chief Executive Officer Brendan Kennedy said, as quoted by Bloomberg. “If a product comes into a pharmacy with the Sandoz logo co-branded on it, or if a pharmaceutical sales rep is talking to a physician about a product that’s branded as Tilray and Sandoz, it lends credibility to that product.”

According to analysts at Cowen, the partnership should help boost the top and bottom lines for TLRY moving forward.

Hot Stock No. 2 – Bank of America (BAC)

After an incredible pullback with the broader markets, the stock has become technically oversold at bottom of trend.  Not only does it sit at its lower Bollinger Band (2,20), it’s over-extended on RSI, MACD and Williams’ %R, as well.  We believe it’s setting up for a near-term reversal higher and could refill its gap around $28 shortly.

While we’re looking at potential slowing economic growth, and a flattening yield curve, we have to consider this stock hasn’t looked this fundamentally cheap in years.  It’s P/E of 8.6 for example is unreasonably low at this point.  BAC also carries a low PEG ratio of 0.46, which we believe it unsustainable.  We believe the reward is greater than the risk here.

Hot Stock No. 3 – Johnson & Johnson (JNJ)

This stock is not yet a buy.  It’s more for the radar screen.  According to Johnson & Johnson, the Reuters article that took the stock down is “one-sided and inflammatory.”

“Johnson & Johnson’s baby powder is safe and asbestos-free. Studies of more than 100,000 men and women show that talc does not cause cancer or asbestos-related disease. Thousands of independent tests by regulators and the world’s leading labs prove our baby powder has never contained asbestos. J&J attorneys provided Reuters with hundreds of documents and directly responded to dozens of questions in order to correct misinformation and falsehoods.”

As the storm clouds clear, and as the true facts of the story become more apparent, shares of Johnson & Johnson could very well become a “blood in the streets” opportunity.

Also, insiders are buying. According to the Dow Jones, “three directors bought half a million dollars of shares on the open market, the first such insider purchases in more than two years.”  Anne Mulcahy paid $100,050 for 748 shares, or $133.76 each, according to a form she filed with the Securities and Exchange Commission. Charles Prince paid $268,731 for 2,000 shares, or $134.37 each. William Perez paid $133,910 for 1,000 shares, or $133.91 each. 

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