After a major pullback from record highs, CANNAGROW HOLDINGS INC (OTCMKTS:CGRW) is starting to show signs of bouncing back on waning short selling pressure. A string of positive news in recent weeks has brought buyers back to the fold, a development that could see the stock rising from this year’s lows.Price ActionJudging by the recent price action, it may be time to pay close watch on the stock as the market reacts positively to an array of positive news. Trading volumes have picked up an indication that investors are starting to take note of an emerging bullish trend.The stock needs to close above the $1.60 mark, seen as a key resistance level above which the uptrend could resume. A close below the $1.20, mark on the other end, could open floodgates, which could see the stock edging lower to the $1 a share handle. CGRW Daily ChartWe remain bullish about the stock’s long-term prospects especially after a recent pullback from record highs. In our view, the pullback is a minor correction, from which the stock could bounce back to its 52-week highs of $2.50 a share.Before we carry out a detailed analysis of the factors likely to affect the stock price swings going forward, let us look at what CannaGrow Holdings actually does.CannaGrow Holdings is a cannabis-focused company that provides licensed growers turnkey growing facilities in the state of Colorado. The company targets clients both in the medical and recreational cannabis business, as it continues to explore ways of growing its footprint in the industry.Willie Nelson Brand Partnership Renewed investors interest in the stock, after a recent sell-off, has to do with the selection of the company’s licensed grower, by the Willie Nelson brand Willie Reserve, as an independent Organic farmer.Being one of the three Farmers selected for Willie’s sun-grown line affirms the quality of Cannabis that Category One Botanical produces. The selection marks an important milestone as CannaGrow Holdings continues to explore ways of enhancing its growth prospects in the industry.
“As growers, we have heard time after time that we should switch our methods to a more industrial, hydroponic approach based largely on the injection of synthetic fertilizers. However, we have followed our long-term vision of organic soil-based methods – doing it our way – which we believe is the right way for the future of the Cannabis Industry,” said Dr. John P. Hanover, COO, and Facility Manager.
Revenue GrowthA partnership with Willie Nelson Brand can only strengthen the company’s sales channel after exceeding sales targets last year. CannaGrow through its Licensed Grower Category, One Botanicals LLC, surpassed production and monthly sales targets by two hundred pounds in November and December last year.Surpassing production and sales target has set the stage for what could be a remarkable year for the company as it moves to generate revenues and shareholder value from its operations. The company has already opened talks with the Colorado Marijuana Enforcement Division as it seeks to double its live plant limit from 1,800 plants to 3,600 plants.Increased plant count should allow the company to s strengthen its production capacity which should lead to more monthly sales.Cultivation Facility ExpansionCannaGrow is currently expanding its Colorado Buffalo Ranch Cultivation Facility as part of a Five Master Plan. With the first 2 phases already complete, the final three phases should expand the company’s production capabilities.The facility will also allow the company to start generating revenues from licensed growers subleasing the turnkey facilities.
“We have developed a talented Grow Team that has a combined experience of 100 years plus in growing the Cannabis plant. The Team has been able to implement a rigorous perpetual production and harvest schedule during this calendar year 2017 with increasing yields of product that meets quality standards set by the Industry in Colorado,” said Mr. Janovec.
CannaGrow Holdings 2018 OutlookCannaGrow Holdings market cap has more than doubled over the past one year as its share price continues to rise. 2018 is not expected to be any difference, especially with the legalization of recreational use of marijuana in more states.Cannabis target market is expected to increase, which should lead to an increase in licensed growers looking for turnkey solutions to expand their growing and production capacities. CannaGrow Holdings remains well positioned to meet the demand and in the process generate a significant amount of revenues expected to lead to more shareholder in future.While the recent steep decline from record high is a point of concern, in our view it should be viewed as a buying opportunity especially by investors looking to diversify their portfolio into the cannabis space.CannaGrow remains well positioned to continue powering up the charts as it transitions into a revenue-generating entity. Strengthening investor confidence should result in a buying spree of the stock, which should drive the stock even higher from current levels.Disclosure: We have no position in CGRW and have not been compensated for this article.
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