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Alcanna Inc (OTCMKTS:LQSIF) Approaching Crucial Breakout

Alcanna Inc (OTCMKTS:LQSIF) Approaching Crucial Breakout
Written by
Jim Bloom
Published on
March 27, 2019
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Alcanna Inc (OTCMKTS:LQSIF) reporting the best quarter of same-store sales growth could as well justify a higher valuation of the stock, after a period of consolidation. Better than expected financial results for FY2018 is likely to fuel an upward momentum, that has been gaining pace in recent months.

LQSIF Share Price Analysis

The stock is trying to bounce back after succumbing to short selling pressure in 2018. A 60% plunge in 2018, all but triggered concerns about Alcanna’s long-term prospects. However, the stock has started the year on a roll depicted by a 20% plus bounce from the all-time lows.The bounce back has come on the broader cannabis sector turning bullish. However, the company delivering impressive financial results now looks set to fuel the next rally from one-year lows.In addition, the company has closed a series of transactions that pave the way for it to form and vend stores into the Canadian Liquor Retailers Alliance Limited Partnership.After a minor correction, the stock has once again started pulling up in what appears to be a continuation of the emerging uptrend. The $4.20 is a critical technical level that bulls will have to breach if the stock is to continue powering high. Below the critical resistance level, the stock remains susceptible to further drops. LQSIF Daily ChartA violation of the $4.20 resistance level should open the door for the stock to make a run for the $6 a share handle. Conversely, a breach of the $3.90 support level on sell-offs could open the door for short sellers to push the stock lower.

About Alcanna

Alcanna casts itself as a retailer of highly regulated controlled substances. It is one of the top three largest retailers of Alcohol in North America with over 200 locations in Alberta, British Columbia, and Alaska. The company has also expanded its footprint into the cannabis sector through a strategic partnership with Aurora Cannabis.

Sales Growth Boost

Alcanna price action activity has received a significant boost in recent weeks on the company reporting a 7.4% same-store sales growth in Canada and same-store sales growth of 6% in the U.S. The growth marked the best quarter in six years, as the company continues to enjoy robust growth in various facets of the business.

“The Board and management set out in 2018 to change Alcanna from a declining business anchored in the past to a dynamic growth-oriented company. Our objectives were – and continue to be – to recapture lost market share, expand and re-invent our preferred label program, enter the discount segment of the Alberta liquor retail industry, launch an entirely new cannabis retail business,” said CEO James Burns.

The company has since set sights on the cannabis sector through its Nova Cannabis brand, established in October of last year. The fact that Aurora Cannabis has already acquired a 25% stake in the company, for $138 million, all but underscores the company’s prospects in the cannabis sector.Aurora cannabis is one of the biggest players in the burgeoning sector whose connections and partnership will go a long way in accelerating Alcanna push for market share in the cannabis business.In addition to pursuing opportunities for growth around cannabis, Alcanna has also moved to affirm its position as the largest liquor retailer in Canada. The company has since formed the Canadian Liquor Retailers alliance in partnership with Ace Liquor.Alcanna generated liquor sales of $650,965 for the full year ended December 31, 2018, up from $637,681 reported the previous year. The company also recorded revenues of $7,966 from cannabis sales for the few months it was in operation.Buoyed by the performance, the Chief Executive Officer expects the company to enjoy robust growth in 2019, which should lead to positive cash flow growth.

Alcanna is on track to turn our strong balance sheet into a strong generator of cash flow in the medium to long term. These fourth-quarter results indicate clearly that the metrics most important to understanding our strategy and the objectives essential to our future growth have all been met or exceeded,” said Mr. Burns.

Bottom Line

Alcanna has set sights on the cannabis sector through its strategic partnership with Aurora Cannabis. Having already generated a significant amount of cannabis revenues, despite being in business for a short period underscores the company’s prospects in the highly lucrative industry.After bottoming out from one-year lows, the stock is likely to continue climbing the ladder given the massive opportunity Alcanna has given its size and scale.We will be updating our subscribers as soon as we know more. For the latest updates on LQSIF, sign up below!Disclosure: We have no position in LQSIF and have not been compensated for this article.

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