CBIS Stock Predictions For 2019 (Buy or Sell?)
According to rock-and-roll lore, Bob Dylan was the man who first gave cannabis to The Beatles.
Indeed, for investors today, a Dylan song from the 1960s comes to mind: The Times They Are a-Changin’.
Once a symbol of counter-culture rebellion, marijuana has evolved into a multi-billion-dollar industry. “Mary Jane” has moved from Woodstock to Wall Street, representing a disruptive force for a slew of industries, including pharmaceutical, tobacco and beverage companies.
As marijuana becomes increasingly legal, the recreational and medical uses of this apparent wonder herb represent a huge investment opportunity.
In particular, cannabis-based medicines present some of the most intriguing plays in the entire biotechnology sector. For conditions ranging from epilepsy to multiple sclerosis, to glaucoma, to even cancer, compounds derived from the plant are achieving remarkable results when conventional therapies can’t.
Which brings us to Cannabis Science (OTC: CBIS). This small marijuana biotech has experienced intense investor interest, with sharp swings up and down. What’s the real story behind this much-discussed “pot stock”?
In this issue of Investing Daily, you’ll learn:
- Why Cannabis Science has captured Wall Street’s imagination.
- Cannabis Science’s performance in 2017/2018.
- Should you buy Cannabis Science?
- Should you sell Cannabis Science?
- Our final forecast and outlook for Cannabis Science in 2019.
Let’s get into it!
The “Canna-Business” Behind Cannabis Science
Cannabis Science is a biotech based in Irvine, California. Incorporated in 1996, the company sports a market cap of $102 million.
The company’s goal is to obtain U.S. Food and Drug Administration (FDA) approval for cannabis-based medicines, with a focus on treating skin cancer (particularly basal and squamous cell carcinomas), HIV, and post-traumatic stress disorder (PTSD).
Cannabis Science has a research collaboration agreement with Dana-Farber Cancer Institute to develop cannabinoid-based cancer treatments, as well as with Stellenbosch University to treat chronic pain.
Cannabis Science operates two pharmacies in California, with a line of products ranging from inhalation aerosols, to drops, patches, capsules, extracts, creams, and balms.
How Has Cannabis Science Stock Performed?
CBIS shares have gained 15.94% over the past 12 months, compared to 2.66% for the S&P 500; fallen 38.17% over the past two years compared to a gain of 26.67% for the S&P 500; and gained 6.00% over the past five years compared to a gain of 49.17% for the S&P 500.
What Is Cannabis Science Stock History?
As is often the case with small-cap biotech stocks, Cannabis Science has been volatile. Shares have demonstrated a tendency to suddenly spike up or down, based on a press release or Wall Street rumor.
The stock also has moved in tandem with the volatility of the overall marijuana industry, which typically gyrates according to policy or legal developments.
How Has CBIS Performed In 2017/2018?
CBIS shares gained 75% in 2017, compared to a gain of 18.72% for the S&P 500. Year to date in 2018, CBIS has lost 68.29% versus a loss of 2.02% for the S&P 500.
Read Also: Tesla Stock Prediction
Who Are Cannabis Science’s Rivals?
The marijuana industry has a few well-capitalized stocks traded on major exchanges, but most pot companies, like Cannabis Science, are penny stocks traded Over the Counter.
These three marijuana stocks stand out as competitors to CBIS:
GW Pharmaceuticals (NSDQ: GWPH)
With a market cap of $4.3 billion, GW Pharmaceuticals is perhaps the best-known pharmaceutical company developing cannabinoid treatments. Through partnerships with Big Pharma, the company is already marketing its Epidiolex multiple sclerosis treatment in more than 20 countries.
The company has other products in the pipeline, including therapies for glaucoma and schizophrenia, and a potential treatment for a particularly aggressive form of brain cancer.
22nd Century Group (NYSE: XXII)
With a market cap of $294 million, this biotech focuses on genetic engineering and plant breeding and is developing a new strain of hemp with zero THC, the main psychoactive compound found in cannabis (the compound that produces the “high” that’s keeping marijuana illegal on a federal basis in the United States).
Apart from medical uses, a THC-free plant would have huge ramifications for the industrial hemp industry, which is all but crippled in the U.S. Hemp is one of the world’s most sustainable and practical basic materials, yet has been illegal in the U.S. since 1970.
22nd Century Group also is creating genetically engineered tobacco plants with 97% less nicotine than conventional strains, as well as a strain high in nicotine that allows for the lowest tar-to-nicotine ratio in the cigarette industry.
The low-nicotine variety has proven effective in helping smokers kick the habit and is gaining the support of tobacco scientists worldwide.
INSYS Therapeutics (NSDQ: INSY)
INSYS has been racing GW Pharmaceuticals when it comes to pediatric epilepsy treatments. But this biotech (market cap: $564 million) also has other products in its pipeline that could boost its shares exponentially when they receive approval.
The company is developing cannabis-derived drugs for easing opioid dependence and moderate-to-severe pain. But it has already received approval for Dronabinol, an orally delivered solution that eases nausea and vomiting associated with chemotherapy and AIDS, as well as eating disorders.
Read Also: Our Nvidia 2019 Stock Prediction
Will CBIS Go Up In 2019 (Should You Buy)?
Cannabis Science certainly enjoys several powerful tailwinds. First, let’s examine the political revolution that has fueled the rise of canna-business.
On October 17, 2018, Canada became the second country, after Uruguay, to legalize possession and use of recreational cannabis for all adults. Medical marijuana has been legal in Canada since 2001.
Canada has left it to the provinces and municipalities to determine parameters, such as where cannabis can be bought and consumed.
Analysts expect demand for marijuana to surge in Canada, creating an acute shortage. Scarcity of weed should be manna for marijuana investors.
Canada’s approach toward marijuana differs from that of its southern neighbor.
In the U.S., marijuana remains illegal on the federal level. However, individual states can adopt their own legal standards for marijuana thanks to Congress, which prohibits drug enforcement agents from pursuing marijuana growers and users in states where pot is legal.
In the U.S., 30 states and the District of Columbia have legalized marijuana to some degree. See the following chart, current as of March 2018, compiled with data from Governing magazine:
According to Ameri Research, the global legal marijuana market generated spending of $14.3 billion in 2016 and is forecast to grow at a compound annual growth rate of 21.1% between 2017 and 2024, culminating in 2024 revenue of $63.5 billion.
Arcview Market Research estimates that the recreational marijuana market will account for nearly 70% of that global spending by 2024, with medicinal treatments taking up the rest.
Cannabis Science is doing its best to exploit these trends.
Nevada regulators in July 2018 approved a new 40-acre industrial hemp research and development project in the state for a biotech consortium including Cannabis Science.
The main R&D focus will be on cancer, PTSD, chronic pain, arthritis, Parkinson’s disease, epilepsy, autism and HIV/AIDS.
In October 2018, Cannabis Science won a U.S. patent for compositions of cannabinol for treatment of various neurobehavioral disorders, sleep deprivation, anxiety disorders, and PTSD disorders.
And yet, does Cannabis Science really have what it takes to reward investors over the long haul?
Will CBIS Go Down In 2019 (Should You Sell)?
Without a doubt, there’s money to be made in the medical marijuana industry. But you should steer clear of thinly capitalized marijuana penny stocks that lack significant products in the marketplace.
Investors are jumping aboard the marijuana bandwagon with a lemming-like fervor that’s reminiscent of previous market frenzies — Dutch Tulip Mania and the Dot.Com bubble come to mind.
This video highlights the current dangers of marijuana investing:
Driven by hype and increasingly populated by indebted and poorly managed microcaps, the marijuana industry is poised for a brutal shakeout. The survivors will be those with solid balance sheets, FDA-approved products, and partnerships with giant drug firms.
Regrettably, Cannabis Science has many of the characteristics of a dangerous marijuana stock that you should avoid.
With cash on hand of only $30,000 and total debt of $2.73 million, the company’s balance sheet isn’t pretty.
The 12-month trailing price/sale ratio is a staggering 14,772.72, a nosebleed valuation even though the company continues to lose money and demonstrates no revenue growth.
And despite its breathless press releases, the company has no major products in the marketplace.
Overall CBIS Forecast And Prediction For 2019
The verdict for CBIS? Not favorable.
Cannabis Science has performed poorly in 2018 and there’s no reason to expect this risky penny stock to turn around its fortunes in 2019.
In fact, despite the huge opportunities in the marijuana industry at large, you should consider Cannabis Science a toxic stock to avoid. As with any investment, tune out the hype and focus on the fundamentals. CBIS is fundamentally flawed and probably has further to fall.
John Persinos is the managing editor of Investing Daily.