Top Stocks of 2023

It’s time for our big predictions…

Posted December 19, 2022

It’s that time of year again.

No, not Christmas.

Not New Year's resolutions.

It’s time for our big predictions for 2023!

If you’ve stuck with us Outsiders, you know this year’s been a doozy.

But it’s set us investors up for bargain hunting next year.

We still believe there's never been a better time to be an investor.

It's simple... the two sectors that have explosive potential next year are the cannabis and psychedelics industries.

I’ll give you my top picks for each one below...

State of the Weed Market

First up, we’re likely to see full decriminalization if not federal legalization of marijuana in 2023.

You just need to look around to prove the point.

In November, New York approved 36 businesses and nonprofits to operate the first retail dispensaries in the state.

Here in Maryland, we got the chance to vote on decriminalizing weed in the November primaries.

This month, Missouri joined the list of states to legalize recreational cannabis.

Today, 21 states, Washington D.C., and Guam allow recreational pot.

We’ve also seen the tone shift dramatically in Washington. President Biden announced in October that he was pardoning anyone with a simple marijuana possession conviction. But he also said he wants to reclassify the drug, saying, "I am asking the Secretary of Health and Human Services and the Attorney General to initiate the administrative process to review expeditiously how marijuana is scheduled under federal law. Federal law currently classifies marijuana in Schedule I of the Controlled Substances Act, the classification meant for the most dangerous substances. This is the same schedule as for heroin and LSD, and even higher than the classification of fentanyl and methamphetamine — the drugs that are driving our overdose epidemic."

In April, the House voted to federally decriminalize marijuana. According to CNN, "The bill... will prevent federal agencies from denying federal workers security clearances for cannabis use, and will allow the [Department of Veterans Affairs] to recommend medical marijuana to veterans living with post-traumatic stress disorder, plus gains revenue by authorizing a sales tax on marijuana sales. The bill also expunges the record of people convicted of non-violent cannabis offenses..."

Common-sense laws are a good sign for the future of cannabis. It’s also encouraging to see that users are taking the drug seriously and want doctor supervision. In a recent survey by WayofLeaf, a company that helps people get their medical marijuana (MMJ) card, a whopping 71% of MMJ applicants wanted doctor supervision.

Now, a big hurdle for the weed industry as a whole, especially when you’re talking about investing in the top cannabis companies, is the lack of access companies have to banks.

According to High Times, "Under current regulations, banks are subject to penalties under federal money laundering and other laws for servicing such companies, leaving the cannabis industry to operate in a risky environment heavy in cash."

Weed advocates had hoped that the Secure and Fair Enforcement (SAFE) Banking Act would pass this year. Alas, it got left out of the recent National Defense Authorization Act (NDAA) annual spending bill. But lawmakers expect the act to be passed soon.

Another hurdle is a lack of information on how cannabis use changes for users once it's legalized. The Journal of General Internal Medicine conducted a study this year that found when recreational cannabis laws were passed, those of legal drinking age tended to mix weed and alcohol, stating that the "Implementation of recreational cannabis policies resulted in increased simultaneous use of cannabis and alcohol, supporting the complementarity hypothesis, but only among adults aged 21-plus. Efforts to minimize harms related to simultaneous cannabis/alcohol use are critical... Future studies should investigate cultural norms, perceived harm, and motives related to simultaneous use."

So federal legalization could still be far off. As Forbes reports, "The federal government is, in theory, moving toward unscheduling marijuana and thus decriminalizing its possession and use. However, the federal government moves slowly, and there is no timetable for its legalization."

But next year could be good for speculating on marijuana companies as rumors of legalization continue.

My top pick is Innovative Industrial Properties (NYSE: IIPR). It's a real estate investment trust that leases land to pot growers. And it pays the highest dividend in the industry, coming in at a whopping $1.80 a share per quarter. That'll surely come in handy in any economic season.

Psilocybin to the Rescue

The second trend that I’m really excited about is the expanding psychedelics market.

That’s because companies are cheap relative to those in the medical marijuana sector, and the evidence points to psychedelics holding more medicinal power. Not to mention they're now considered safer by researchers.

As Big Think notes,

A pattern emerges when you compare the harmfulness of different types of psychoactive drugs: Alcohol and hard drugs like heroin and cocaine rank as the most harmful, while psychedelic substances like psilocybin and LSD score as the least harmful. It’s perhaps not too surprising. After all, psychedelic substances are generally non-toxic and medically safe to consume. The drugs do not come with the same kind of overdose risks that substances like alcohol and heroin do. Still, psychedelics can have profound effects on the psyche. Bad trips are a real phenomenon. But bad trips are sometimes the result of an interplay between the drugs and the user’s environment. As explained by Dr. Matthew W. Johnson, a professor of psychiatry and behavioral sciences at Johns Hopkins, the conditions under which someone experiences psychedelics can significantly influence the trip — for better or for worse.

Johnson further explains, "There were a lot of overstatements and urban legends about the dangers of psychedelics. Things like, you know, that it was common for teenagers to stare into the sun and burn their eyes blind because they were on LSD. There's no credible evidence that ever happened."

In many of the original experiments, including MKUltra, researchers dosed people with huge amounts of LSD and kept them in a padded cell, tied them to a bed, or didn’t even tell them they were being dosed.

Recent experiments, however, have shown that psilocybin, the active psychoactive compound in magic mushrooms, is effective at treating things like PTSD as well as OCD and other anxiety disorders.

Here are the major players in the psychedelics market:

  • Bright Minds Biosciences (NASDAQ: DRUG)
  • Cybin (NYSE: CYBN)
  • GH Research (NASDAQ: GHRS)
  • Mind Medicine (NASDAQ: MNMD)
  • Silo Pharma (NASDAQ: SILO)

There's a lot of growth potential here, so there's definitely added risk with these companies.

But these two markets will surely gain momentum as talks of decriminalization and legalization continue.

Stay frosty,

Alexander Boulden
Editor, Outsider Club

After Alexander’s passion for economics and investing drew him to one of the largest financial publishers in the world, where he rubbed elbows with former Chicago Board Options Exchange floor traders, Wall Street hedge fund managers, and International Monetary Fund analysts, he decided to take up the pen and guide others through this new age of investing. Check out his editor's page here.

Want to hear more from Alexander? Sign up to receive emails directly from him ranging from market commentaries to opportunities that he has his eye on. 

P.S. Food insecurity is at all-time highs because of the Ukraine crisis. What’s more, Business Insider recently wrote that energy blackouts are coming, from Europe to LA. Forbes published a piece saying rolling blackouts could send Europe and the rest of the world into darkness. Reuters recently reported that Europe is bracing for mobile network blackouts. Europe’s already regulating hot water and turning off streetlights. It’s not looking good. To mitigate the crisis, the EU is turning to the U.S. for help. Our chief energy investor Keith Kohl says there's only one solution to the energy crisis, and it starts right here with these three U.S. energy companies.

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