Peter HodsonOrganigram HoldingsOGI.VDON'T BUYAug 03, 2016

This trades at low valuations – 12 times earnings. A low cost producer in New Brunswick. Yield 0%. (Analysts’ price target is $9.09)

Contender, go by the wayside, or be acquired? Be careful, takeout premium is built in. If no takeout, there could be a blow up in the stock. Stuck in no man’s land, no R&D on pharmaceutical side, no export agreements. Tough for them to compete in exports and pharmaceuticals when the market price of wholesale marijuana reaches a plateau in a year or two.

(A Top Pick March 10/17. Up 63%) He says this cannabis producer has done well, but still does not get the recognition it deserves – especially on the east coast.

(Market Call Minute.) Until proven otherwise, marijuana producers are producing an agricultural commodity and will earn low returns on investment capital. It's a business model that’s unproven, and he would steer clear.

Chart shows some pretty big swings. What is positive currently is that there is nice little upward trend, but is probably going to be in jeopardy based on the gravity affect. If it got below $2.70, he would say there is probably something wrong with the story. When you have a new industry like this, you will often get some rationalization, and in this new cycle, he expects it will happen much sooner. It’s really hard to tell which are the winners.

(Market Call Minute) They had all these issues with the recall, but it is probably one of the cheapest ones out there.

Marijuana stocks sold off a few days before the legislation was getting tabled. There is a lot of supply of stock coming on right now with a lot of companies going public. After everything they’ve gone through, he still thinks they are one of the best operators, and that the stock is worth more than the current price. Their relationship with TGS out of the US is really interesting, where they are looking at the extracts and other products. That is probably not going to come into play for the company, but certainly down the road with the next step of legalization, it will.

Marijuana stocks are tough to get a read on. They’ve all moved in a similar direction. He doesn’t know what the industry is going to look like or what the regulation is going to be like and how everything is going to play out. This is an industry in its infancy, but as a portfolio manager, it is not something he would look at. Once there is some clarification on what future legislation is going to look like, federally and provincially, then it will be a lot easier to determine which stocks are the ones to own.

He likes the prospects and just added to his holdings recently. This will be a core holding in his marijuana fund portfolio. It is the only one in the Maritimes. (Analysts’ price target is $4.10.)

This is going to be a massive growing sector. Legislation has not been tabled yet, and all these stocks have been running up on anticipation of the government’s task force reporting later this month. It is probably going to be about nothing, and doesn’t think the public is going to get access to it. You have to watch for when the legislation gets tabled, probably in 2017. Valuations have run up so much they have to be dangerous.