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Argitek Holdings Inc (OTCMKTS:AGTK): Q1 Underperformance Presents A Buy Opportunity

Argitek Holdings Inc (OTCMKTS:AGTK): Q1 Underperformance Presents A Buy Opportunity
Written by
Jim Bloom
Published on
April 19, 2018
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Argitek Holdings Inc (OTCMKTS:AGTK) is still the future of the hemp industry, as articulated in our previous update, despite underperforming in the first quarter. After rallying by more than 200% late last year, the stock came under immense pressure, early in the year, consequently losing nearly 50% of the total gains.After finding support at the $0.01 handle, the stock has bounced back and is currently trading at the $0.02 handle. After the recent rally, the big question now is what the future holds for the stock?Since the start of the year, the larger cannabis industry has been trading in a downtrend. So it does not come as a surprise that Argitek Holdings has also been on the receiving end. However, with improving sentiments in the industry, it is becoming clear that upward momentum in the sector could soon come into play. AGTK Daily ChartArgitek Holdings has already bounced back to the $0.02 mark, seen as a psychological level from where it could make a push for its 52-week highs of $0.054. However, given the short-term bear trend, the stock also remains susceptible to further declines, especially on failing to hold on to gains above the $0.02 handle.Before we look at recent developments that are likely to have an impact in the stock’s direction of trade, let us have a brief look at what Argitek doesArgitek Holdings is an active investor and operator in the legal cannabis sector. The company provides strategic capital and functional expertise for the commercialization of its diverse portfolio of holdings. The company also distributes hemp-based nutritional products and provides solutions for electronic processing of transactions in the cannabis space.Recent DevelopmentArgitek Holdings has inched a step closer to completing the acquisition of a 15,000 sq. Ft. Cultivation and manufacturing facility under lease in San Juan, Puerto Rico. The company holds the option to purchase the leased facility within the next 6-18 months. It has also invested over $200,000 in the licensed partner 1919 Clinic.The new state of the art facility will allow the company to operate the first vertically integrated cannabis operation. The company intends to use 2,500 sq. Ft. of existing office space for doctors and attorneys to streamline the approval of thousands of patients awaiting certifications.Expansion into Puerto Rico provides a unique growth opportunity for Argitek holdings, given that most efforts to date have been focused on Colorado and California cannabis markets. The company already has a massive footprint in the two states, which justifies its push to expand into other untapped markets.

“I believe Puerto Rico has been an overlooked market and opportunity as pricing has continually plunged due to surplus in Colorado and California to often less than a $1,000 a pound. Our facility will be registered with over 500 strains, average 150 pounds every two months once fully operational, with a current marketplace of $4,000 a pound,” said CEO, Michael Friedman.

Purchase OrderExpansion of cultivation and manufacturing operations seeks to take advantage of the growing demand for the company’s products. Argitek Holdings has already received a purchase order of 10,000 MD Vape Cartridges from a licensed California based facility.Under the terms of the agreement, the company is to become the exclusive provider of cartridges and will provide filling machines for a new private labeled line to be sold with California recreational marketplace.

“Our California Premiums pre-roll brands are now being mass produced by licensed facilities and taken on by dispensaries and delivery services. Now, our proprietary MD Vape line cartridges and filling systems for CBD and THC oils are just beginning new revenue streams on our strategic development and acquisitions of brands,” said Mr. Friedman.

What next For Argitek HoldingsArgitek Holdings has embarked on an ambitious growth strategy. The company is seeking to become the first 360 degrees model in the sector with huge chunks of land and licensed building facilities for cannabis operations. The company also plans to fund licensees in various jurisdictions while cultivating consistent product and creating brands for the end user.The efforts are geared towards making the company a key player in the U.S medical cannabis market that is poised to reach $19.48 billion by 2024. Establishment of a strategic partnership with 1919 Clinic in Puerto Rico should open the door for the company to strengthen its revenue streams.The company has also established a strategic business partnership with Green Acres Pharms in pursuit of market opportunities and continued growth. The management team has also done an excellent job in adding complimentary segments for building an integrated platform of assets made up of pre-rolls, vaporizers edibles topical animal health and transdermal patches.In addition, Argitek Holdings is in the best shape financially, after paying off $750,000 in debt from multiple lenders. That said, the company remains well positioned to succeed in the cannabis sector as it continues to execute on its growth strategy.The stock’s bounce back should continue to pick pace as regulatory pressures from the Trump Admisntartion that had rattled investors start to ease off. As investors, sentiments of the greater cannabis sector improve, so is the stock expected to spike higher.Disclosure: We have no position in AGTK and have not been compensated for this article.

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