Canada House Wellness Group Inc (CNSX:CHV) has broken out of a six months trading range in what appears to be a change in the direction of trade. The recent spike follows a transitional year where the company completed a string of strategic investments. A build-out of the Abba Medix Production facility, improvement in clinical operations as well as stabilization of senior management are some of the developments fuelling the upward momentum.
Price Analysis
Investors are increasingly taking note of the fact that the company is positioning itself to become a leading a medical cannabinoid therapy company. Since the start of September, the stock has rallied by more than 60%, further affirming the emerging uptrend. All indication is that the stock will continue powering high, as investors take note of a string of positive developments. SARSF Daily ChartWith Price action pointing to further movements on the upside, the stock faces immediate resistance at the $0.35 mark, after a recent pullback. A breach of the resistance level should open the door for the stock to make a run for the $0.4 mark, seen as the next substantial resistance level.On the downside, Canada House Wellness faces immediate support at the $0.23 mark on any sell-offs. A breach of the critical support level could pave the way for short sellers to push the stock to the sub $0.2 handle, which happens to be the next critical support level.Considering recent price action and developments, all signs point to further movements on the upside.
Why is The Stock Rallying?
The stock has experienced an uptick in trading activity ever since the company reported fiscal year financial results. While revenues did drop by 47% to $6,207, the management insists, they made impressive strides in the year, consequently positioning the company for long-term growth.
“This was a transitional year for Canada House, with significant investments made in the build-out of our Abba Medic production facility, improvements in clinic operations and stabilization of our senior management team and board of directors, which collectively form the foundation to grow Canada House into a leading medical cannabinoid therapy Company,” said CEO Chris Churchill Smith.
During the year, the company increased its clinic capacity, which allows it to handle more than 1,000 patients a month. The company also secured a long-term lease on Abba’s LP production facility. Completion of the production facility should allow the company to produce more cannabis strains needed to furnish the growing demand.The Company has already secured a draw-down equity facility of up to $25 million with Alumina Partners LLC. The equity facility provides the company with much-needed financing to accelerate growth in the medical cannabis industry. Canada House Wellness will now be able to attend to the needs of more patients and be on the way to generate more revenues.
Rebranding Drive
In line with the new equity line, Canada House Wellness Group will rebrand its medical cannabis specialty clinics to Canada House Clinics effective October 1st, 2018. The rebranding is part of the company’s strategic plan of focusing on the medical cannabis market with a more integrated approach.The company has already won a dispensary license from the city of Edmond, which paves the way for it to strengthen its medical cannabis empire further. The license allows the company to go ahead and launch a non-medical distribution of cannabis products in the city. The company should also be able to explore new distribution channels.
“This license allows us to carefully and responsibly test this sub-segment of the market while keeping focused on the execution of our clinical strategy. Building on CHV's in-depth understanding of the medical cannabis market, the dispensary enhances CHV's insight and knowledge of the overall cannabis industry,” said Mr. Churchill-Smith.
Canada House Wellness has also engaged the services of Marigold Marketing, a top Cannabis PR Firm. The firm is tasked with the responsibility of echoing the company’s value proposition through public relation campaigns.
Bottom Line
While Canada House Wellness is still engulfed in a bearish trend, it has started showing signs of trading higher. A 60% plus rally in recent weeks, is a testament that bulls are slowly winning the war against the bears.The recent upward momentum is well supported by solid fundamentals, which should continue supporting further movements on the upside. That said, the stock looks set to continue climbing high especially on breaking out of a tight trading range.We will be updating our subscribers as soon as we know more. For the latest updates on CHV, sign up below!Disclosure: We have no position in CHV and have not been compensated for this article.
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