The cannabis flame continues to shine over cannabis stocks especially so for Canadian cannabis stocks. The share prices of most of these companies have continued to rise drastically, reminiscent of the federal legalization of cannabis throughout the country.One such stock which has benefited greatly from this is Aleafia Health Inc (OTCMKTS:ALEAF).The past two months have seen the company’s share price has risen from lows of $.5 to highs of $3.5; a 600% rise in stock price as shown in the chart below: ALEAF Daily ChartThe past month, moreover, has seen the most significant rise with most of this growth being witnessed then. As at the beginning of September, the stock was trading just shy of $.5 with an average trading volume of a few hundred thousand shares. Over the period, the shares rose to over $3.5 with an average traded share volume just shy of 10 million; a new high for the company.However, the recent pullback has led to the share price to drop to $2.39 per share where the share price currently trades.Despite the pullback, the run experienced by the company makes it clear that ALEAF has been doing something right. This piece goes further to evaluate this premise and come up with reasonable conclusions for investors wishing to invest in them.
Background to Date: ALEAF
Before carrying out our review, however, let us have a brief review of the firm’s history and operations to put things into perspective for new readers.Aleafia Health Inc was founded back in 2007 and its headquarters placed in Concord, Ontario. It operates within the healthcare sector with an incline towards the drug manufacturers industry. Through the years, they have integrated vertically into a full-fledged cannabis company, providing medical consultation to clients and enabling them to use cannabis to treat chronic pains and disabling illnesses. Moreover, their morphosis has led them into the growth, possession and sale of cannabis products throughout Canada, allowing for revenue generation in the process. This business model has over time led the market to forecast the company’s high growth and consequently led to their share price rise.
Recent Changes and Developments
There has been a lot that has happened to ALEAF over the past one month. The company has partnered with global cannabis leaders as well as received funding for a recent deal. All the above have been pivotal to their growth path and have led to their current share price level.With this in mind, let us take a more in-depth look at the recent developments which have affected ALEAF.
The Cronos Effect
As alluded to in the beginning, ALEAF has partnered with a global leader in cannabis: Cronos Inc (NASDAQ:CRON).The former OTC stock which went ahead to list on the NASDAQ stock exchange is among the pioneers in the sector and has gone ahead to secure its place among the giants. Currently, the firm’s revenue potential has been on the rise, rising to C$3.4 million in the second quarter of 2018, up from $0.6 in the same quarter a year ago, courtesy of their aggressive marketing and internalization strategy.News on the partnership between the two firms, therefore, came to the jubilation of shareholders of ALEAF.Currently, the two firms are working together towards creating a solution to insomnia and daytime sleepiness through a cannabis-based drug. The project which is partly funded by Peace Naturals Project Inc will see both firms develop the drug and, given positive results, market it to the over 50,000 patients in ALEAF’s database.
The ETF Promotion
Driven by the company’s growth, ALEAF has recently been added to the Horizons Marijuana Life Sciences (HMMJ) exchange-traded fund.With the HMMJ being driven mainly by growth stocks such as Cronos Inc and Canopy Growth Corp all with a combined net revenue of $1.1 billion, entry into the fund speaks to a firm’s ability to grow drastically. Currently, ALEAF is expected to hit their target of 38,000 kilograms of cannabis by 2019, allowing for higher revenues in the future. As such, their entry into the fund will allow for a much higher exposure to investors as well as postulate the firm’s strength to the market as stated by the firm’s chairman Julian Fantino:
“We welcome the increased exposure to the investment community that this will bring to Aleafia.”
Financials
Earlier this week, ALEAF received a $10 million strategic investment from the Serruya Family. The family purchased the shares at $3.1 per share, allowing for a premium on the shares of the company. The total private placement is expected to be completed by 15th October, two days before the legalization of cannabis is done and will see ALEAF obtain 51% of Serruya-led One Plant.Through this investment, ALEAF is expected to venture further into the cultivation of cannabis as well as form over 20 retail locations in Ontario, furthering their marketing campaign. ALEAF is expected to form a joint venture with the strategic investors and contribute $5 million to it in the process.Eventually, it is expected that ALEAF will grow drastically in the cannabis sector and this partnership is bound to get them the market necessary to expedite for this growth.
Conclusion
ALEAF is already on the path to exponential growth. Their current partnerships have been pivotal to their current share price surge and, given the factors detailed in this piece, are expected to see the firm grow further into the future. We remain bullish about the stock.We will be updating our subscribers as soon as we know more. For the latest updates on ALEAF, sign up below!Disclosure: We have no position in ALEAF and have not been compensated for this article.
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