Kush Bottles Inc (OTCMKTS:KSHB): A Good Reversal Play

Kush Bottles Inc (OTCMKTS:KSHB) is due for a reversal, on improving market sentiments and fundamentals. After spiking to record highs of $8.51 early in the year, the stock came tumbling to the $4.20 level.Expansion drive complemented by improving results are some of the factors that affirm talk the stock is due for a bounce back. Just like in our previous update, we remain upbeat about Kush Bottle.A pullback from record highs, in our view, presents a unique buying opportunity for a stock with genuine potential. Given that the stock is currently trading at the $5.57 handle, it needs to close above the $6 a share handle to affirm its long-term uptrend, ahead of potential rise to 52-week highs of $8.51. KSHB Daily ChartOn the downside, sell-offs should be limited to the $4.20 handle a key support level, below which the stock could drop to the $3 a share mark.Before we look at some of the factors that have strengthened our bullish thesis on the stock, let us look at what the company does, in pursuit of growth and shareholder value.Kush Bottle is engaged in the business of marketing and selling packaging products and solutions in the United States. Some of its lead products include pop top bottle, foil barrier bags and silicon lined polystyrene containers to urban farmers.The company has sold more than 100 million units and is now in the process of servicing the medical and adult use marijuana sector. It is currently targeting the more than 5,000 legally operated medical and adult use dispensaries, growers and producers across North America.Growing Business Portfolio Kush Bottle is due for a bounce back because its core business continues to elicit strong demand. Emerging cannabis players are starting to take note of the company’s distribution channels, presenting an avenue for the company to generate significant revenues.Cannabis startup, FunkSac, LLC, has selected the company to be its exclusive distributor, for its line of FunkGuard products. Under the terms of the agreement, Kush Bottle is to distribute the products to existing customer base as well as through its national platform.

“We are pleased to be selected as Funk Sac’s exclusive distribution partner and look forward to offering our customer base with an even greater range of brand able packaging and compliance solutions,” said CEO Nicholas Kovacevich.

In addition, Kush Bottle has hired a regional sales Director, Kyle Heverly, to oversee the company’s expansion drive, in the rapidly growing East Coast cannabis market. Mr. Heverly joins the company with vast experience in sales and marketing management experience.The director is to oversee the building of distribution channels and customer relationships as Kush Bottle moves to strengthen its footprint on the East Coast medical and adult use marijuana market. The leading provider of packaging and branding solutions is also in the process of setting up a new distribution facility in the Boston area as it looks to streamline its growth prospects.

"The East Coast is the next exciting frontier in the American cannabis market, and until now, it has been a largely untapped market for us. With Kyle expanding our sales presence and the building out of our new distribution facility, we are well positioned to become a vital partner for cannabis businesses on the East Coast,” said Nicholas Kovacevich, Chairman, and CEO of Kush Bottles.

The expansion drive is part of an effort that seeks to position the company in the ever-expanding legal cannabis market. The global legal cannabis market which was valued at $14.3 billion in 2016 is set for robust growth and could be worth $63.5 billion by 2024.$6 Million Equity InvestmentKush Bottles has already entered into a strategic partnership with Merida Capital Partners. Pursuant to the agreement, the company has received $6 million in equity investment to accelerate its long-term growth strategy.The company plans to use the funds to expand its product portfolio and build new distribution channels, to strengthen its revenue generation stream. Kush Bottle also plans to penetrate new legalized cannabis markets.Kush Bottles 2018 OutlookKush Bottle is an exciting pick in the legal cannabis industry, given the market niche it is targeting. As other companies focus on growing, manufacturing, and production of marijuana products, the company has set its eyes on providing packaging and brandings solutions for cannabis products.The company’s business model, is not capital intensive, which means it stands to enjoy better margins with the expansion of the cannabis market. A $6 million investment provides the much-needed capital for pursuing untapped markets in pursuit of more revenues.It goes without saying that Kush Bottles is a sure bet, after a pullback from record highs. The stock remains well positioned to spike higher given the strong fundamentals supporting the emerging uptrend.Disclosure: We have no position in KSHB and have not been compensated for this article.