Very soon ... Marijuana is going to be legalized so .....

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abstacey

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Very soon ... Marijuana is going to be legalized so .....

posted on Jul 22, 2010 08:25PM

Thursday, July 22, 2010

To unsubscribe -

I've had many debates with my wife (a substance abuse counselor) on the dangers, or lack thereof, associated with chronic marijuana use - and at this point we've agreed to disagree. I'm of the mind that what you do in your home is your own business, so long as it does not impede my freedoms in any way. Smoking pot is surely bad for you, but so is watching TV, eating red meat and smoking cigars, but I see no reason to throw people in jail for those actions either.

God forbid someone gets it into their mind to outlaw knocking back a few Sierra Nevada Pale Ales or I'll become a criminal too.

http://listapp1.bfpnewsletters.com/track?type=click&mailingid=549700&messageid=312200&databaseid=38800&serial=1211230010&emailid=abstacey@i-zoom.net&userid=7230&extra=&&&2002&&&http://www.time.com/time/health/article/0,8599,1821697,00.html">Time Magazine article, 54% of Americans have tried marijuana. Ironically enough, that's the exact percentage of Americans that vote - so there's clearly some cross over.

I'm not suggesting that you should employ your green thumbs to actually grow the stuff - but I do think we can expect certain sectors, and a few specific companies, to benefit from decriminalization.

So let's drop in, tune in, and turn on our thinking caps to figure out what those companies might be.

I foresee two types of marijuana cultivation starting to happen.

1) Large scale marijuana and hemp farms

2) Home grown operations.

Special opportunity, article continues below.

Turn BP's Gulf Spill into Long Term Profits

When the Deepwater Horizon oil rig caught fire and sank in 5,000 feet of water in the Gulf of Mexico, it started a chain reaction that will mean strong long-term gains for forward-thinking investors.

Almost immediately, President Obama placed a moratorium on deepwater drilling. And even though that's been temporarily reversed, it still doesn't fix our energy problem. After all, if we don't drill, there won't be accidents right? And if we do drill, all of our energy problems will be solved, right?

Unfortunately, neither is that simple.

Even without the BP spill, the EIA cut 300,000 barrels of oil per day from future projections for Gulf production. That means 300,000 more that we'll have to important from other countries, and some of them aren't exactly friendly toward us.

There's a homegrown energy solution that we can use right now and investors are lining up to get in on it. In fact, they're buying at fire sale prices...at least for now. Industry and governments are already converting to this fuel source and the pace is quickening every year. That's why we bought into this as part of Ian Wyatt's $100k Portfolio service. We know a good thing when we see it, and we love to buy on sale.

.

Large scale farming operations always need two things: fertilizer and tractors. I'll avoid recommending the two leading tractor companies Deere (NYSE: DE) and Caterpillar (NYSE: CAT) just because Caterpillar recently announced positive earnings and both companies' stocks just jumped. I do like these companies, just not at current valuations.

The small operations need fertilizer, but they also need smaller-scale equipment.

*****The world's largest fertilizer company is Mosaic Co. (NYSE: MOS). I like this company because they have a track record of solid profits, they have very little debt, and buying them today isn't just a bet that Americans will keep using marijuana. It's a bet that the world will continue eating more food as well.

It's a great time to buy this company. It's selling near 52 week lows, and fertilizer is still one of those sectors that is largely unloved by the broad market. When mom and pop start seeing their grocery bills go higher, and junior starts buying sacks of nitrogen for his closet grow operation, Mosaic will be pocketing the profits.

I love this company under $45 (the 50 day moving average), but I think it's safe to nibble under $54 (the 200 day moving average). Buying blue chips under their moving averages is a simple and safe strategy to make sure you're getting a relatively inexpensive entry point.

*****I've been perusing

You can get just about everything you'd need with one trip to one of my favorite brick-and-mortar stores: Radio Shack (NYSE: RSH).

Radio Shack is one of those companies that will always be around - and it does nothing but book solid profits, quarter after quarter. While many other types of retailers have struggled to compete with online vendors, Radio Shack will continue to survive because most of us don't, can't or won't wait for a 5-7 day delivery period when we need a specialized light bulb or remote control or replacement battery. This company is boring but it's reliable. And pretty soon Radio Shack will be filled with neophyte homegrowers who aren't worried about getting busted anymore.

Right now Radio Shack is selling for around $20 a share - exactly what it was selling for in 1997. It has an attractive PE that's below 12 right now. It's only a $2.5 billion company, but it has over 4,000 retail locations in the United States. The company was founded in 1899, and it pays a modest dividend of 1.2%. I like this company under $20 a share.

If you believe that pot growers both big and small will come out of the woodwork in the coming months and years, these two companies are a great way to profit from the trend.