From Potash to Pot, Here's the Latest Sign of Cannabis's Profit Potential

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Earlier this month, emerging cannabis company Weekend Unlimited Inc. (TSE: POT) claimed an unusual victory. It won the right to use the coveted stock ticker "POT" to represent its shares on the Toronto Stock Exchange.

The coveted ticker was previously held by Potash Corp. of Saskatchewan, which gave up the ticker during a merger.

Since Canada legalized cannabis in October 2018, the industry has gone mainstream. And the Toronto Stock Exchange agreed, offering to hold a lottery for the newly available POT ticker.

Cannabis investors greeted the news of Weekend's new ticker with borderline hysteria, driving Weekend's stock up an astounding 150% in one trading session.

If such a drastic jump on routine news like a stock ticker change seems extreme, that's because it is.

However, it illustrates a vital point about the profitability of North America's emerging cannabis industry – and how you can cash in on the boom…

Canada's Ticker Craze Is a Sign of Things to Come for Cannabis

Weekend's quest for one the world's more recognizable stock tickers began over a year ago, when the Potash Corp. of Saskatchewan gave up the "POT" ticker and merged with Agrium Inc. to form Nutrien Ltd.

After spending months in limbo, the Toronto Stock Exchange, which owns the ticker, decided to hold a lottery in order to raffle it off to a lucky cannabis company.

In Case You Missed It: Former Speaker of the House John Boehner was once marijuana's biggest enemy… now he's advising Americans to go "ALL IN" on cannabis. To see his shocking prediction, click here…

Over 40 firms entered the lottery, and last week, Weekend Unlimited came out on top, assuming the "POT" symbol on the exchange and sending its shares through the roof.

The acquisition of a sensational ticker wasn't a first for Weekend, either.

Previously, the company had traded under the symbol "YOLO" – a reference to the popular saying "you only live once."

However, as last week's gains suggest, the acquisition of the "POT" ticker has been a boon for the company. While a ticker alteration doesn't change any of the company's financials, being instantly recognized as a marijuana stock is sure to drive investor attention.

According to one study, a "congruent ticker symbol" can help a business stand out from market competitors and serve as a helpful signpost for amateur investors who are interested in entering the cannabis market.

But regardless of Weekend's future success, last week's ticker craze is a just another sign that the cannabis industry is quickly entering the mainstream investing world.

However, we don't need to rely on ticker lottery gimmicks to cash in on the life-changing opportunities in pot stocks.

You see, pulling strong, reliable gains for North America's emerging marijuana industry isn't a matter of guessing which stocks are going to randomly jump next.

If you want to generate real profit, you have to identify cannabis companies that have the potential for real growth.

Fortunately, our expert research can do just that…

These 3 Stocks Are the Key to 2019's Greatest Profits

The 2018 midterm election was a turning point for the cannabis industry.

We expect nothing short of historic profits by the end of the year.

But not all pot stocks will hand you life-changing wins. In fact, often the companies making headlines are least likely to see the biggest gains.

These three stocks, on the other hand, are flying under the radar… for now. Each of them could see exponential stock price acceleration at any moment, and if you get in before that happens, you could turn a token stake into a lifetime of wealth.

I don't know of any other sector providing anywhere near this level of growth now.

Click here to learn more.

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Join the conversation. Click here to jump to comments…

IBM Is on a Spectacular Streak, Will It Come to a Bad End?

According to the data available in S&P Global Market Intelligence, IBM (NYSE:IBM) hasn't booked an impairment of goodwill in 29 years -- from 1989 to 2018. Big Blue has made 178 acquisitions in that time, spending at least $77 billion in the process.

Image source: IBM.

What's goodwill, you ask? In the simplest terms, it's the excess paid above fair market value to acquire an asset, usually a business. In the case of Red Hat (NYSE:RHT), IBM is paying $33.8 billion to acquire the company. Since Red Hat was trading for $20.5 billion in market cap at the time of the deal, it's a good bet that IBM will be adding at least $13 billion more in goodwill and intangible assets to its balance sheet, likely bringing the total carried to over $50 billion.

The table below shows why this matters. Since 2015, over 30% of IBM's assets have been rolled up in intangibles such as patents, customer lists, brand names, product reputation, market share, and the like.

Metric 2013 2014 2015 2016 2017

Goodwill	$31.2 billion	$30.6 billion	$32.0 billion	$36.2 billion	$36.8 billion
Other intangibles	$3.9 billion	$3.1 billion	$3.5 billion	$4.7 billion	$3.7 billion
Subtotal	$35.1 billion	$33.7 billion	$35.5 billion	$40.9 billion	$40.5 billion
Total assets	$126.2 billion	$117.3 billion	$110.5 billion	$117.5 billion	$125.4 billion
% of total assets	27.8%	28.7%	32.2%	35%	32.3%

Data source:  S&P Global Market Intelligence.

The bad side of goodwill

In the short term, paying for goodwill is easy to justify. Again, take Red Hat. Not only is the company a leading provider of open-source tools and software, it also has the leading brand name in Linux, which is one of the world's most used operating systems and essential infrastructure for today's corporate computing environments. The company also has relationships with a huge number of developers, serves large, long-term accounts, and produces close to $1 billion in excess cash flow annually. You could reasonably argue that IBM is paying a fair fee for one of the best companies in tech. I find it extremely unlikely that IBM will ever have to write down its investment in Red Hat.

If only that mattered.

Here's the problem. Public companies no longer get to amortize and retire goodwill as they once did. In fact, according to accounting standards, each year management is required to test the value of its acquired assets and determine whether fair value has dropped enough to force an "impairment," a write-off to earnings equal (roughly) to the excess fair value that's been forfeited. Each time IBM rolls up a new deal, the odds of an impairment of goodwill increases, especially on the fair value of businesses that were acquired many years ago and that may no longer be central to selling Big Blue's products and services.

So far, IBM has avoided writedowns by keeping and using the tech it's acquired. But if you read the annual report, that may be changing:

In the fourth quarter, the company performed its annual goodwill impairment analysis. The qualitative assessment illustrated evidence of a potential impairment triggering event as a result of the financial performance of the Systems reporting unit. The quantitative analysis resulted in no impairment as the reporting unit's estimated fair value exceeded the carrying amount by over 100 percent.

This same language appears in IBM's annual reports for 2013, 2014, and 2016. It's at least possible that a portion (or all) of the $1.862 billion in goodwill assigned to the systems unit as of Dec. 31, 2017 could be written down in the coming quarters or years. At the very least it's a warning sign since IBM has never suffered a writedown of goodwill and since it is stockpiling goodwill much faster than revenue.

But it's actually worse than that. According to data supplied by S&P Global Market Intelligence, since 1990, IBM's revenue is up 0.52% annualized while net profit is up 1.43% annualized, and cash flow from operations is up 2.58% annualized. Goodwill and intangibles? Up 8.41% annualized over the same period. Investors holding IBM stock throughout that 28-year period would be up 338.6%, versus 740.5% for the S&P 500. Even with all those pricey acquisitions, you'd have done better with simple indexing than you would have buying and holding IBM stock.

Where this has happened before

If you're thinking that this analysis may be a long road to nowhere, I'll admit that you could have a point. There's no sure way to tell whether IBM management is due for a goodwill writedown. And yet I think it's worthwhile spending some time under the hood in cases like these. Investors can pay a steep price when years of accumulated goodwill become an anchor too heavy to carry. Consider what's happened to General Electric (NYSE:GE). A $10 billion-plus deal for Alstom has gone horribly wrong in recent years, forcing a $23 billion markdown of goodwill late last year.

I wouldn't presume to say IBM is in a similar position, but I'm confident enough that Big Blue will shed some goodwill in the next two years that I've shorted the stock in my CAPS portfolio. So I hope you don't own IBM stock. But if you do, I hope that I'm wrong.

Better Buy: Intercept Pharmaceuticals vs. Madrigal Pharmaceuticals

Around 20 million Americans have a progressive, life-threatening liver condition called non-alcoholic steatohepatitis (NASH), and there's isn't much doctors can do about it besides recommending fewer calories and more exercise. 

Any day now, Intercept Pharmaceuticals (NASDAQ:ICPT) will share long-awaited pivotal trial results that could make its Ocaliva drug the first approved NASH treatment. The lead candidate at Madrigal Pharmaceuticals (NASDAQ:MDGL) is behind Ocaliva on the development timeline, but results so far tick all the right boxes. Let's examine the case for both stocks to decide which one is the better pick right now.

Image source: Getty Images.

The case for Intercept Pharmaceuticals

Investigators are going to present long-awaited interim results for Intercept's only drug, Ocaliva in the first quarter. It's been five long years since midstage results sent the stock rocketing higher. A surprising 45% of patients given Ocaliva for 72 weeks showed significant NASH improvements, compared with just 21% of the placebo group.

Defining NASH is still a work in progress, but it involves liver cells that retain more lipids than they should, which causes them to balloon and become too inflamed to function properly. Since the condition progresses slowly, the FDA is willing to grant accelerated approval to the first candidate that can reduce NASH symptoms or reduce the scarring caused by long-term inflammation. Ocaliva hit both marks in its midstage study, and a repeat performance could send the stock soaring again.

The FDA approved Ocaliva in 2016 for the treatment of primary biliary cholangitis (PBC), a condition in which the immune system damages the path bile takes from liver to the stomach. Bile acids that back up into liver tissue cause all sorts of problems for an estimated 130,000 Americans with PBC, and this population needed a new treatment option.

Ocaliva is a super-potent analog of a natural bile acid, but PBC patients with seriously impaired livers should start with just 5 mg per week. More than a few patients with severe cirrhosis died after taking the recommended dosage for healthier patients, which is 5 mg every day. A more stringent risk mitigation strategy is doing its job, and sales are climbing again.

During the first nine months of 2018, Ocaliva sales rose 36% over the previous-year period to $125 million. That will help extend the company's cash runway, but not by much. Intercept's operating expenses reached $330 million during the same period. 

At the end of September, the company had $489 million in cash after losing $221 million during the first nine months of 2018. If Intercept's long-awaited NASH results disappoint, raising any more cash will become nearly impossible. Beyond Ocaliva, the company doesn't have anything coming through its pipeline.

Image source: Getty Images.

The case for Madrigal Pharmaceuticals

This pre-commercial biotech is developing a tablet that acts on the thyroid hormone receptor beta (TRB), which seems like the right target for treating NASH. Biopsies taken during a midstage study with MGL-3196 showed that 56% of patients given the drug experienced a significant reduction of NASH symptoms after 36 weeks, compared with just 32% of the placebo group.

Madrigal's experimental treatment ticked another box by reducing fibrosis as well. If MGL-3196 can produce improvements to NASH and the fibrosis it causes in a pivotal study as well, the drug should clear the FDA's hurdles without any trouble.

Although the agency is primarily concerned with inflammation and scarring, MGL-3196 impressed investors by helping NASH patients lower liver fat content, measured with an MRI, by 37%, compared with a 9% reduction in the placebo group. Shortly after Madrigal's day in the sun, though, Viking Therapeutics (NASDAQ:VKTX) released data for its TRB agonist that showed a liver fat reduction that was much stronger, but we haven't seen any biopsy results from a Viking candidate yet.

Madrigal doesn't have a revenue stream yet, but the clinical-stage biotech is running a much smaller operation than Intercept. In fact, Madrigal licensed its only clinical-stage candidate from Roche (NASDAQOTH:RHHBY) and owes the pharma giant a single-digit royalty percentage if MGL-3196 hits pharmacy shelves. Despite a complete lack of revenue during the first nine months of 2018, Madrigal lost just $21 million during the first nine months of 2018. 

Phase 2 results for MGL-3196 hit the mark last May, but Madrigal still hasn't told investors if its phase 3 study for MGL-3196 will begin before the end of 2019. Madrigal finished September with $489 million in cash, which means it can probably afford to wait for a deep-pocketed drugmaker to make a buyout offer, or at least a partnership deal.

The better buy

If trial results on the way this quarter fall in line with earlier observations, Intercept could have a gigantic addressable patient population all to itself. The NASH market probably won't stay sewn up for long. A large underserved patient population has inspired a great deal of drug development, and right now there are dozens of potential competitors in mid- to late-stage testing.

Madrigal's $2.1 billion market cap seems like a compelling bargain for a drugmaker that wants to jump into NASH with a drug ready for late-stage testing, but we'll probably have to wait until at least one proves itself in the commercial setting. Intercept's a little more expensive than Madrigal, with a recent market cap of $3.2 billion, but Ocaliva's revenue stream now, coupled with a great chance at becoming the NASH population's first treatment option, makes it the better buy at the moment.

Here's how high medical costs could get you tax break on your 2018 return

If health-care expenses have been squeezing your household budget, it could be worth checking if they'd get you a tax break on your 2018 return.

A range of medical expenses can qualify, and as long as you itemize instead of taking the standard deduction, a portion of those costs can help lower your tax bill.

While the Tax Cuts and Jobs Act of 2017 eliminated most deductions, the one for medical expenses remains in place, along with those for charitable contributions and mortgage interest. Taxpayers also can still take a deduction for state and local taxes (a.k.a., SALT) although it is now capped at $10,000.

Amnarj2006 | Getty Images

However, there are a couple of hurdles to clear before you can grab the tax break for medical expenses.

First, as mentioned, you must itemize your deductions. And for itemizing to make financial sense, the combination of all your available deductions would need to exceed the standard deduction, which nearly doubled as of 2018. For single taxpayers, it's $12,000; head-of-household, $18,000; and married couples filing jointly, $24,000. (Taxpayers age 65 and older get an additional $1,300.)

Second, you can only deduct qualifying medical expenses that exceed 7.5 percent of your 2018 adjusted gross income (total income minus certain adjustments). For example, if your AGI was $50,000, only medical expenses that exceed $3,750 would qualify.

"So far we're seeing more single people than married couples taking the medical expense deduction," said Bryan Bibbo, an advisor with The JL Smith Group in Avon, Ohio.

For example, he said, a single taxpayer with other write-offs — mortgage interest, charitable contributions and SALT — could find that the medical expense deduction more easily pushes them over that $12,000 standard deduction. For married couples filing jointly, the $24,000 hurdle is more difficult.

"They might have double the medical expenses, but not as much in other deductions," Bibbo said.

show chapters Retiree health costs    5:34 PM ET Mon, 22 Oct 2018 | 01:59

As for what counts toward the tax break, qualifying expenses run the gamut.

Co-pays, co-insurance, dental work, travel costs associated with health care (getting to and from the doctor's office, for example) are all fair game. So are hearing aids, crutches, wheelchairs and the like. You can check the IRS list of qualifying expenses if you're unsure whether something counts toward the deduction.

Also, if you pay for health insurance with after-tax dollars, your premiums might be able to count toward the deduction. Long-term care premiums also are deductible up to amounts that depend on your age (see chart below).

Deduction limits for long-term care premiums Age before close of taxable year 2018 maximum deduction

Under 40	$420
More than 40 but under 50	$780
More than 50 but under 60	$1,560
More than 60 but under 70	$4,160
Over 70	$5,200

Source: Internal Revenue Service

"Some states also let you deduct your long-term care premiums, so check your state laws," Bibbo said.

Be aware that any expenses paid for with funds from a flexible spending account or health savings account cannot count toward the deduction.

"Those expenses were paid for with pre-tax dollars so you can't include them," Bibbo said.

Some expenses that can't count toward your total for tax purposes are most cosmetic procedures, non-prescription medicines and general gym memberships.

And while you don't send in your receipts and records with your tax return, you'd need to be able to produce them if the IRS were to ever ask for proof.

More from Personal Finance:
Don't lose your refund — or your shirt — to these common tax scams
10 states that are the most tax-friendly for middle-income households
Why you shouldn't celebrate that big tax refund

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Does Restaurant Brands International Have a Popeye’s Problem?

For companies that own multiple restaurant chains, a common theme seems to be that it's hard to get growth humming at all of them simultaneously. For Restaurant Brands International (NYSE:QSR) -- parent company of Burger King, Tim Horton's, and Popeye's -- the fourth-quarter's problem child was the latter, its newest. Given that the company pre-announced its earnings in January, there weren't a lot of surprises in its quarterly report on Feb. 11.

But now that the up-to-date numbers are out, Market Foolery podcast host Chris Hill and senior analyst Abi Malin can address the key questions for the company: Has Popeye's weak performance signaled bigger issues; what plan does the company have in the rapidly growing delivery game; and what does it need to do to keep up with the competition.

A full transcript follows the video.

This video was recorded on Feb. 11, 2019.

Chris Hill: Let's move on to Restaurant Brands International, which is the parent company of Popeyes, Tim Hortons, and Burger King. Fourth quarter results were good. The stock isn't really popping today, but they pre-announced in January, so just in the last five, six weeks or so, this stock is up more than 20%. I'll tell you what stood out to me, you tell me what stands out to you. Once again, we've got an umbrella corporation that's got several restaurants, and one of them is lagging the others. In this case, Tim Hortons and Burger King performing, at least in this quarter, much better than Popeyes.

Abi Malin: I think that's a this-quarter issue. Popeyes for the year, sales were up 9%. That's driven by 7% restaurant growth and comp sales of about 1.6%, which I don't think is anything insignificant. But, definitely, for this quarter, Popeyes was the drag.

Hill: Do you have a sense of what the delivery strategy is for QSR -- Restaurant Brands International, I should say. The ticker is QSR. In my mind, one of the great ticker symbols. Do you have a sense of, are they approaching delivery in an integrated way? Meaning, "This is what we want across all of our restaurant brands." They're all in that fast food space. Are they doing it by essentially letting each restaurant brand decide upon themselves? You and I have talked about delivery before. Investors, if you're looking at restaurant stocks, this is a box you need to check.

Malin: I would imagine that it's more uniform across the entire system. They've mentioned they have delivery in about 3,000 restaurants for Burger King in the U.S. and about 7,000 around the world for Burger King. And Popeyes, especially, it's their push in bringing that restaurant back up to speed, maybe. They have delivery in about 1,100 Popeye's restaurants in the U.S., and that's about 50% of all of their restaurants. And that was really done 0 to 100 in just one year. It's definitely a necessary technological investment. We've seen a lot of restaurants get in this groove of how they're going to figure it out. You've seen some big partnerships between Grubhub and Yum! Brands. I think it's the question to be answered, and it's just about how you can do it most efficiently.

Hill: It would seem on the surface -- you know a lot more about the delivery industry and Grubhub in particular than I do -- like unless you feel like your restaurant can operate at a high level when it comes to delivery, that the partnership route seems like it would be an easier route to go.

Malin: Yeah, theoretically it should be like as long as there's an existing marketplace there. Part of that is also about these brands, though. Are people going to go on Grubhub's site and specifically look for Popeyes or Burger King? I think those are strong enough brands that perhaps they could, and maybe they could even be strong enough that they demand their own app, which is what you've seen a lot of the pizza industry do. They haven't really partnered, because traditionally, pizza was takeout, so you were so acclimated to looking for it by itself.

I think it's interesting, especially in this middle segment. Maybe Popeyes is fast food, maybe it's a little bit higher, but probably more fast food. It's definitely a consumer behavior shift, and I think companies are just struggling to catch up.

Histogenics Corp (HSGX) Expected to Post Earnings of -$0.06 Per Share

Analysts expect Histogenics Corp (NASDAQ:HSGX) to report ($0.06) earnings per share for the current fiscal quarter, according to Zacks. Zero analysts have provided estimates for Histogenics’ earnings. Histogenics reported earnings per share of ($0.26) in the same quarter last year, which would suggest a positive year-over-year growth rate of 76.9%. The business is scheduled to report its next earnings report on Thursday, March 21st.

On average, analysts expect that Histogenics will report full year earnings of ($0.24) per share for the current fiscal year. For the next fiscal year, analysts expect that the company will report earnings of ($0.03) per share. Zacks Investment Research’s earnings per share calculations are an average based on a survey of sell-side research analysts that that provide coverage for Histogenics.

Get Histogenics alerts:

Several equities analysts have recently commented on HSGX shares. Zacks Investment Research raised Histogenics from a “hold” rating to a “buy” rating and set a $0.25 target price on the stock in a research report on Tuesday, January 15th. HC Wainwright set a $1.00 target price on Histogenics and gave the stock a “buy” rating in a research note on Friday, November 9th. Finally, ValuEngine upgraded Histogenics from a “sell” rating to a “hold” rating in a research note on Wednesday, January 2nd. Three analysts have rated the stock with a hold rating and three have assigned a buy rating to the company’s stock. Histogenics presently has a consensus rating of “Buy” and a consensus target price of $2.44.

In other Histogenics news, major shareholder Randal J. Kirk sold 998,204 shares of the stock in a transaction dated Tuesday, January 15th. The stock was sold at an average price of $0.16, for a total transaction of $159,712.64. The sale was disclosed in a filing with the Securities & Exchange Commission, which can be accessed through this hyperlink. Also, major shareholder Randal J. Kirk sold 251,800 shares of the stock in a transaction dated Friday, January 11th. The stock was sold at an average price of $0.17, for a total value of $42,806.00. The disclosure for this sale can be found here. Corporate insiders own 19.70% of the company’s stock.

Several institutional investors and hedge funds have recently modified their holdings of the company. Geode Capital Management LLC acquired a new stake in shares of Histogenics in the 4th quarter valued at about $25,000. Virtu Financial LLC bought a new position in Histogenics in the 3rd quarter valued at about $117,000. Renaissance Technologies LLC lifted its position in Histogenics by 6.1% in the 2nd quarter. Renaissance Technologies LLC now owns 384,329 shares of the biotechnology company’s stock valued at $961,000 after acquiring an additional 22,133 shares in the last quarter. Finally, BlackRock Inc. lifted its position in Histogenics by 72.0% in the 2nd quarter. BlackRock Inc. now owns 54,753 shares of the biotechnology company’s stock valued at $137,000 after acquiring an additional 22,927 shares in the last quarter. Institutional investors own 17.04% of the company’s stock.

NASDAQ HSGX remained flat at $$0.13 during trading on Wednesday. The company’s stock had a trading volume of 6,144,066 shares, compared to its average volume of 12,962,290. The firm has a market capitalization of $8.13 million, a P/E ratio of -0.14 and a beta of 3.71. Histogenics has a 1 year low of $0.08 and a 1 year high of $3.35.

About Histogenics

Histogenics Corp. engages in the development, marketing, and commercialization of musculoskeletal medicine. Its regenerative medicine platform combines expertise in cell processing, scaffolding, tissue engineering, bioadhesives, and growth factors to provide solutions that can be utilized individually and in concert to treat musculoskeletal-related conditions.

Recommended Story: Stock Symbols, CUSIP and Other Stock Identifiers

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Square Inc (SQ) President, CEO & Chairman Jack Dorsey Sold $7.4 million of Shares

President, CEO & Chairman of Square Inc (NYSE:SQ) Jack Dorsey sold 103,035 shares of SQ on 02/06/2019 at an average price of $71.83 a share. The total sale was $7.4 million.

Square Inc is a software company offering solutions ranging from payments and point-of-sale services to financial and marketing services. It offers a free software app with its hardware to turn mobile devices into powerful POS solutions in minutes. Square Inc has a market cap of $30.39 billion; its shares were traded at around $73.49 with and P/S ratio of 10.29. Square Inc had annual average EBITDA growth of 21.10% over the past five years.

CEO Recent Trades:

President, CEO & Chairman, 10% Owner Jack Dorsey sold 103,035 shares of SQ stock on 02/06/2019 at the average price of $71.83. The price of the stock has increased by 2.31% since.President, CEO & Chairman, 10% Owner Jack Dorsey sold 103,035 shares of SQ stock on 01/30/2019 at the average price of $70.33. The price of the stock has increased by 4.49% since.President, CEO & Chairman, 10% Owner Jack Dorsey sold 103,035 shares of SQ stock on 01/23/2019 at the average price of $69.87. The price of the stock has increased by 5.18% since.President, CEO & Chairman, 10% Owner Jack Dorsey sold 103,035 shares of SQ stock on 01/16/2019 at the average price of $66. The price of the stock has increased by 11.35% since.

Directors and Officers Recent Trades:

Capital Lead Jacqueline D Reses sold 15,000 shares of SQ stock on 02/01/2019 at the average price of $70.85. The price of the stock has increased by 3.73% since.

For the complete insider trading history of SQ, click here

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Account sharing costs Netflix, Amazon millions a…

It seems innocent enough.

You "borrow" your parents' login for Netflix, Hulu or Amazon Prime so you don't have to pay for your own. And, on an individual level, subscription sharing is a pretty minor crime.

On an aggregate basis, however, it's a massive problem that's costing the three leading streaming services hundreds of millions of dollars.

While it's not the top streaming offering, Hulu is the service where people are most likely to share an account, with 19.2 percent doing so, according to a survey from CordCutting.com, a blog dedicated to covering cord-cutting, streaming and free over-the-air options. Stephen Lovely, a Fool.com freelancer, is the editor of Cordcutting.com.

Time to binge: Streaming video is only going to grow in 2019

Cord cutting: Even with price hikes from Netflix and Hulu, streaming still cheaper than cable

Looking to trim budget? How to cancel Netflix, Hulu and other streaming services

Hulu is followed by Amazon Prime, where 16.5 percent of those surveyed said they used a shared account. Netflix brought up the rear at 15 percent, which suggests that perceived value is a factor. Since Netflix has a larger offering with many more hit original series, consumers may be more willing to pay for it. With the other two, more people might want to watch only a show or two, so borrowing seems like a reasonable option.

This survey, however, comes before consumers feel the impact of Netflix raising prices. The company increased its lowest-level low-resolution single-stream plan to $9 a month from $8, while its core HD, two-stream plan will cost $13 instead of $11. And that could make more people willing to consider breaking the rules by sharing an account.

Of course, some of the people mooching accounts from relatives and friends would simply go without if they could not share an account without paying for it. Still, it's fair to assume that some percentage of these consumers would pay if they were put into a situation where they had to.

.oembed-asset-photo-image { width: 100%; } What can the streamers do?

Netflix, Hulu and Amazon Prime are leaving a lot of potential money on the table by not implementing ways to cut down on sharing. The problem is that doing so isn't easy, and it could come with customer service backlash. In general, all three services allow the account to be shared by members of the household.

That does not mean it can only be used at home or by people under the same roof at the same time. On a two-stream Netflix account, for example, you may be watching in a hotel room while your spouse watches at home. That's a legal use, but it could look like fraud, and enforcing the rules could result in major customer frustration.

In addition, some lighter-use Hulu and Netflix subscribers might justify not dropping the service because another friend or family member uses their account. If either company started making efforts to stop sharing, it's possible that some of these subscribers could drop out. (Amazon Prime would face less impact, as most members sign up to get free two-day shipping, and the video service is an add-on.)

Streaming services should want consumers to pay if they're watching, but enforcing rules about account sharing could have unintended consequences.

That's why all three of these companies will tread lightly and will probably continue to ignore some account sharing even when they know it's probably occurring. It's also possible that one of the three comes up with a family plan allowing parents and siblings to pay more to share one account (an option some wireless phone providers have pushed in the past).

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Daniel B. Kline has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and Netflix. The Motley Fool has a disclosure policy.

The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.

Critical Quarterly Updates Ahead for Aurora Cannabis and Canopy Growth -- Here's What You Can Ex

Two of the biggest marijuana companies in the world have what are arguably their most critical quarterly updates ever coming up next week. Aurora Cannabis (NYSE:ACB) announces its fiscal 2019 second-quarter results after the market closes on Monday. Canopy Growth (NYSE:CGC) will update investors on its fiscal 2019 third-quarter results after the market closes on Thursday.

These quarterly updates are so critical because they'll be the first to include results from the early days of the launch of the Canadian recreational marijuana market. Here are four things you can expect when Aurora and Canopy report their results.

Image source: Getty Images.

1. Record-high revenue

You can bet the ranch that both Aurora Cannabis and Canopy Growth will report record-high revenue in the upcoming quarterly updates. Actually, we already have a ballpark number of what to expect from Aurora since the company gave a sneak peek of its Q2 results several weeks ago. Aurora's guidance called for revenue between 50 million and 55 million in Canadian dollars, by far its highest sales ever.

Canopy Growth didn't provide guidance for its fiscal third quarter. However, it seems reasonable to expect that the company's sales will increase by around 70% over its Q2 revenue -- perhaps in the ballpark of CA$40 million. And that could be a lowball estimate since Canopy's Q2 sales were lower than in Q1 partially due to issues in the German medical marijuana market. 

2. No sign of profits -- yet

Aurora Cannabis reported a huge profit last quarter. Canopy Growth posted its biggest loss ever during the same period. Those numbers were deceiving, though. Aurora benefited from a big one-time investment gain while Canopy had huge stock-based compensation expenses. The reality is that both marijuana growers continue to lose money. And that won't change when they report their quarterly updates next week.

However, you can expect both Aurora and Canopy will make progress toward sustained profitability. Aurora thinks that it will be on track to deliver positive EBITDA by the second quarter of the calendar year 2019 (the company's fiscal Q4). Canopy CEO Bruce Linton said in his company's last quarterly conference call that gross margin should begin improving in its fiscal Q3.

3. Updates on capacity

Although Aurora and Canopy will no doubt announce tremendous year-over-year revenue growth, sales will still be much lower than they should be down the road because of limited supply. Both companies, though, are cranking up their production capacity. Expect to hear important updates on what's happening on that front.

Aurora was at an annualized production run rate of 70,000 kilograms in November but has plans to increase its capacity to 150,000 kilograms in the near future. Canopy Growth's BC Tweed and Vert Mirabel facilities were only partially licensed in the company's fiscal Q2. Both companies should report good news on boosting capacity. 

4. Plans for the rest of 2019

Even more important than their performance in the latest quarter will be Aurora's and Canopy's discussion of plans for the rest of 2019. Each company has made moves to prepare for the anticipated opening of the Canadian market for cannabis beverages, edibles, and concentrates, as well as expanding internationally.

It will be especially interesting to hear more about the two companies' plans for the U.S. hemp market. Canopy Growth recently announced that it will build a large-scale hemp production facility in New York state. Aurora hasn't provided many details yet on its plans for the U.S. hemp market, although Chief Corporate Officer Cam Battley said in November that the company "love[d] the opportunity" created by the legalization of hemp in the U.S. 

What won't matter

There's one thing that really won't matter regardless of what Aurora Cannabis and Canopy Growth report next week: How close their results are to analysts' estimates. You might wonder why that should be the case since most stocks move higher or lower after their quarterly updates based on whether or not they met analysts' expectations.

It's a different story for the Canadian marijuana stocks, though. Analysts simply don't have a good feel yet for how to accurately project revenue and earnings with the rapidly changing dynamics of the Canadian recreational marijuana market and global medical marijuana markets. 

When Aurora provided its guidance in January for the upcoming fiscal Q2 results, the company's top end of the projected revenue range was well below the consensus analyst estimate. Aurora's share price climbed anyway.

More important, though, performance against quarterly estimates simply isn't important for long-term investors. And with Aurora Cannabis and Canopy Growth, a long-term perspective is what every investor should have.

Stock market trades near intraday peak as tech rallies ahead of Alphabet earnings

U.S. stocks extended gains Monday, with the Nasdaq doing much of the heavy lifting ahead of Alphabet Inc.'s earnings release, as investors looked ahead to another round of quarterly results and developments in U.S.-China trade talks.

What are major indexes doing?

The Dow Jones Industrial Average DJIA, +0.70%  rose 104 points, 0.4%, to 25,166, while the S&P 500 index SPX, +0.68%  gained 12 points, or 0.5%, to 2,718. The Nasdaq Composite Index added 72 points, or 1%, to 7,336. A close at or above 7,431.50 for the Nasdaq would mark its exit from bear-market territory.

What's driving the market?

Investors will wade through more corporate earnings this week, with 97 members of the S&P 500 on tap along with one Dow component, Walt Disney Co. DIS, +0.46% reporting Tuesday. Results from Google-parent Alphabet GOOG, +1.94% GOOGL, +2.11%  are due for release after Monday's closing bell.

Read: Disney and Alphabet highlight another big week of earnings

More broadly, stocks continue to benefit from a dovish Federal Reserve after the central bank last week signaled rate increases were on hold until further notice.

Read: Surprised by Fed's dovish tilt, economists cut forecasts of future interest-rate hikes

Check out: Does Fed's dovish turn signal further gains for stocks? Bond investors have doubts

U.S.-China trade talks will remain in focus as a March 1 deadline to avoid an increase on tariffs on Chinese imports looms. Upbeat comments by U.S. and Chinese officials have been credited with supporting stocks, but analysts said markets remain sensitive to headlines, with scrutiny likely to intensify as the deadline nears.

On the data front, U.S. factory orders fell by 0.6% in November, faster than the 0.2% drop expected by economists polled by MarketWatch.

At 7:30 p.m. Cleveland Fed President Loretta Mester, a nonvoting member of the Fed's interest-rate setting committee, will speak.

What are analysts saying?

"We're seeing a bit of consolidation of the recent gains," Alec Young, managing director of global markets research at FTSE Russell told MarketWatch. "The market has been impressively resilient, and I think traders are now fixated on China trade and don't want to make big bets until they get more clarity," he said.

With the S&P 500 trading at 16 times projected 2019 earnings, "stocks are no bargain right now, and for it to go higher we need some assurance that headwinds from China will be less than expected," he said.

"While there were good signs of the meeting between US and China last week, nothing concrete has been announced leaving the market vulnerable to antitrade statements," said Alfonso Esparza, senior market analyst at Oanda, in a note.

Which stocks are in focus?

Shares of pizza chain Papa John's International Inc. PZZA, +9.04%  surged 8.6% after a $200 million investment by Starboard Value LP. Starboard Chief Executive Jeffrey Smith will also become chairman of the chain,according to people familiar with the matter.

Tesla Inc.'s stock TSLA, +0.21% rose 0.8% after the electric auto manufacturer announced it would acquire Maxwell Technologies Inc. MXW, +42.65% in a deal that would value the energy-solutions provider at $217.9 million.

Clorox Co. CLX, +5.73% shares rallied 5.6% after the consumer products company announced fiscal second-quarter earnings that surpassed Wall Street expectations.

Shares of Johnson Outdoors Inc. JOUT, -4.40% slid 3.5% after the seller of outdoor recreation equipment swung to a fiscal fourth-quarter loss, on a surprise decline in sales.

Sysco Corp. SYY, +4.81% climbed 4% after the food-products company announced fiscal second-quarter earnings that surpassed analysts predictions.

Shares of Ultimate Software Group Inc. ULTI, +19.68%  soared 20% after it agreed to be bought by an investor group led by Hellman & Friedman in an all-cash deal valued at about $11 billion.

What are other markets doing?

Asian equities put in a mixed performance, with markets in several countries, including China and Korea, closed for Lunar New Year celebrations. Japan's Nikkei 225 index NIK, +0.46% ended 0.5% higher.

European equities edged lower with the Stoxx 600 Europe index SXXP, +0.06%  trading flat.

Read: Why the stock market might not cheer a weaker U.S. dollar after all

Oil futures CLH9, -0.98% retreated, and gold GCG9, -0.33% settled lower. The ICE U.S. Dollar Index DXY, +0.25% which tracks the U.S. unit against a basket of six major rivals, edged up.

—William Watts contributed to this article

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Comment Related Topics U.S. Stocks Markets NY Stock Exchange NASDAQ Quote References DJIA +175.48 +0.70% SPX +18.34 +0.68% DIS +0.51 +0.46% GOOG +21.60 +1.94% GOOGL +23.63 +2.11% PZZA +3.48 +9.04% TSLA +0.67 +0.21% MXW +1.19 +42.65% CLX +8.59 +5.73% JOUT -2.74 -4.40% SYY +3.06 +4.81% ULTI +54.69 +19.68% NIK +95.38 +0.46% SXXP +0.21 +0.06% CLH9 -0.54 -0.98% GCG9 -4.30 -0.33% DXY +0.24 +0.25% Show all references MarketWatch Partner Center Most Popular Trump reportedly reserves most of his schedule for 'executive time' Patriots win the Super Bowl, so the stock market is doomed. (Or not) This bank will give you $750 just to open a checking account — but here's the catch Do you have enough retirement savings to last 23 years? Too Many Houseplants? No Way! Community Guidelines • FAQs BACK TO TOP MarketWatch Site Index Topics Help Feedback Newsroom Roster Media Archive Premium Products Mobile Company Company Info Code of Conduct Corrections Advertising Media Kit Advertise Locally Reprints & Licensing Your Ad Choices   Dow Jones Network WSJ.com Barron's Online BigCharts Virtual Stock Exchange Financial News London WSJ.com Small Business realtor.com Mansion Global

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Buy Godrej Agrovet, target Rs 810: Chhitij Jain

Chhitij Jain

Godrej Agrovet has launched new products in crop protection segment with capital expenditure of Rs 275 crore in the current fiscal to boost its chicken meat processing, oil palm and agro-chemicals businesses.

Additionally, the company is setting up a palm oil processing facility to increase its production capacity with 60 tonnes per hour. Moreover, an increase in import duty on palm oil, making imports expensive and domestic production competitive, will benefit the company substantially.

Dairy margins are expected to stabilise owing to expansion towards the value-added products, though volatility in milk prices can play a spoilsport. The target for the next 2-3 years is estimated at Rs 810.

Disclaimer: The author is Head- Equities at Rudra Shares & Stock Brokers. The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. First Published on Oct 13, 2018 11:59 am