Four of the companies known for the alcohol drinks are Diageo, Constellation Brands, Molson Coors, and Heineken. While they focus on alcohol right now, natural resources expert Matt Badiali says that they are also getting involved in another recreational substance which is cannabis. These companies, which are collectively worth $200 billion, will spur huge investment and growth opportunities in the nascent cannabis industry.
The sale of beer and pop has been on a multiyear decline, Matt Badiali reports. In fact, pop sales fell to a 30-year low in 2018. Heineken reported that their beer sales also declined this year. What these four brewers are hoping for is that by spiking beer and wine with cannabis their sales will go up in volume. The first of these companies to make their move was Constellation Brands which invested $4 billion in Canopy Growth Corporation, a medical cannabis firm. Since they did this on August 15th the shares of Canopy Growth have shot up by 83 percent.
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— Matt Badiali (@MattBadialiGuru) September 22, 2018
Some cannabis companies are highly overvalued, though. An example of this is Tilray Inc. They had sales of $9.7 million for the second quarter of 2018 and they lost $12.8 million. The big problem, though, is that this company is valued at $5.7 billion on the stock market. It looks like investors expect this company to also be invested in by one of the big alcohol brands but that may or may not happen.
Matt Badiali says that the price to earnings ratio for Tilray Inc. is 1,230 times what it will earn in 2018. Most stocks trade more like around 15 times. He says that investors are expecting massive growth for Tilray Inc. but that is not realistically going to happen.
Matt Badiali works for Banyan Hill Publishing. He performs research in natural resources and which ones have good investment opportunities. In addition to cannabis, he also covers commodities such as oil, timber, gold, platinum, and energy. His educational background includes a master degree in geology and he has been writing about natural resources investing since 2004.