Why Green Organic Dutchman Stock (TSE:TGOD) (OTCMKTS:TGODF) Is A Bounce Back Play

Green Organic Dutchman Stock (TSE:TGOD) (OTCMKTS:TGODF) is in dire need of groundbreaking catalysts if it is to bounce back after taking a significant hit over the past year. The stock is languishing near all-time lows after a roller coaster 2019. The plunge coincided with a sell-off wave gripping the overall cannabis industry.

Green Organic Dutchman Stock Catalysts and Price Analysis

Widening net loss is one of the tailwinds that continued to take a toll on Green Organic Dutchman stock sentiments. Amidst the disappointment on the earnings front, Green Organic Dutchman has continued to strengthen its prospects in the cannabis industry. For starters, the company has made its much-awaited entry into the recreational cannabis industry.

Construction of facilities to ramp up cannabis cultivation and processing has also come into play as the company seeks to secure its future and prospects in the multibillion-dollar industry. For instance, the company has already commissioned a 20,000 square foot indoor cultivation facility in Ancaster. Likewise, Green Organic Dutchman stock has strengthened its balance sheet through capital raises.

Amidst the milestones on operational efficiency, Green Organic Dutchman stock has remained subdued amidst soaring selling pressure. After plunging by more than 50% to lows of $0.52, the stock might as well have hit bottom and due for a correction as a bounce-back play.

To avert further slide, Green Organic Dutchman stock will have to rise and find support above the $0.80 mark, the immediate resistance level. A rally followed by a close above the resistance level should fuel a rally as a bounce-back play.

Failure to take out the $0.80 resistance level would leave the stock susceptible to further drops in continuation of the long-term downtrend.

About The Green Organic Dutchman

Green Organic Dutchman casts itself as a premium certified organic cannabis company engaged in the cultivation and production of cannabis and its derivatives. In Canada, the company is currently working on expanding its product portfolio with the launch of next-generation cannabis products. the company also maintains operations in Europe whereby it is currently distributing premium hemp CBD oil through HemPoland

Ancaster Facility Construction

Green Organic Dutchman has, in the recent past, ramped up operations on the construction of the cannabis production facility in Ancaster. The facility is at the center of the company, becoming a leader in the cultivation processing and distribution of premium hemp products.

Similarly, the company has closed a $42.7 million credit facility with Maynbridge Capital Inc. The credit facility consists of $27.7 million in senior secured term loans and an additional uncommitted $15 million senior secured term loan. The Green Organic Dutchman intends to use net proceeds from the credit facility to finance the completion of its processing facility in Ancaster and for general corporate purposes.

The closing of the credit facility came hot on the heels of the company closing a $27.6 million bought deal upon the issuance of 36.8 million units priced at $0.75 a unit. Proceeds from the offering are also to go towards completing the construction of the processing facility in Ancaster.

British Columbia Purchase Order

The Green Organic Dutchman is ramping up the construction of the Ancaster facility to support a big purchase order it has received from the BC Liquor Distribution Branch. With the purchase order, the company can now distribute its products to 527 retail locations across five provinces in Canada.

“We believe the province represents an enormous market opportunity for our brand. As we continue ramping up production, we remain focused on expanding our distribution channels and achieving our goal of distributing nationally in Q1 2020,” commented Brian Athaide, CEO of TGOD.

Similarly, the company has obtained a license amendment from Health Canada that opens the door for it to commence cultivation at its hybrid greenhouse in Valleyfield, Quebec. The company will now be able to cultivate cannabis in a state of the art 46,500 square feet greenhouse.

By ramping up cannabis cultivation and processing operations, the company should be able to enhance revenue growth to curtail the widening of net loss. The company generated a $20.1 million net loss in the quarter, which consequently triggered a cost-cutting drive of $3 million per quarter.

Bottom Line

While Green Organic Dutchman stock has been beaten up over the past year, the worst looks to be over for shareholders in 2020. The construction of the Ancaster cannabis facility has the potential to strengthen the company’s operations, especially on the signing of a massive purchase order with British Columbia.

The company has the financial muscle to pursue strategic initiatives as well as ramp up operations in the cannabis sector in pursuit of revenue opportunities. In our view, the stock has hit a bottom, and due for a correction higher as underlying fundamentals continue to improve.

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Disclosure: We have no position in Green Organic Dutchman stock and have not been compensated for this article.