GrowLife Stock (OTCMKTS:PHOT) Primed For Breakout And Here’s Why

GrowLife stock (OTCMKTS:PHOT) has dropped significantly and currently trades at one of its lowest price levels in more than three years. At $0.002, the stock is 96% off its 3-year peak. The decline that has brought GrowLife this low kicked off in July and gained momentum in September.

If we look at GrowLife’s investor relations site and go to the press release section, we see that GrowLife has issued several updates on its business activities and developments since July. On July 11, GrowLife announced that it secured a patent for the design of its commercial cloning unit in Canada. GrowLife stated that the patent affirms that its commercial cloning design is not only effective but innovative and proprietary. GrowLife believes its patented commercial cloning design will greatly expand its growth opportunity given the increasing demand for hemp and cannabis clones amid ongoing cannabis legalization.

On August 12, GrowLife released its financial results for the first half of 2019 in which it revealed 82% year-over-year revenue growth. On September 13, GrowLife updated on its CBD hemp clone sales strategy. GrowLife intends to start selling clones next year.

However, none of these positive updates from GrowLife helped halt the slide in its stock. GrowLife stock now looks to have bottomed out and a breakout is in the offing. A study of the charts shows purchasing GrowLife at its lows in the fall can deliver excellent returns.

About GrowLife stock

GrowLife serves the hemp and cannabis cultivation market. Its customers are commercial cultivators that it supplies with a range of products and services from cultivation equipment to nutrients as well as media services. GrowLife says its solutions help cultivators better control costs and tap into a more efficient supply chain. The company is headquartered in Kirkland, Washington.

History repeats itself

Back in 2015, a slide that began in September of that year pushed GrowLife to one of its record lows of $0.0031 by December. But in January of 2016, the stock abruptly halted the slide and made a sharp upward turn. By February 2016, the stock had climbed to $0.0641, delivering a 1,968% return in a space of just three months. The scenario repeated itself almost perfectly in the fall of 2016. A decline that kicked off in October of 2016 brought GrowLife down to one of its lowest price levels at $0.0071. But the stock wrapped up December of 2016 at $0.0215, thereby delivering a solid 203% return in a space of just two months. A similar performance played out in the fall of 2017, where the stock pulled from a low of $0.004 in October and wrapped up December at $0.328, thereby delivering a handsome 720% return in just two months.

Therefore, if the charts tell any story, GrowLife has a way of making investors who pick up the stock at its lows in the fall smile all the way to the bank in just a few months.

But beyond the historic chart trends, there are even more reasons to love GrowLife. Here are two reasons to be bullish on the stock.

• GrowLife continues robust revenue growth amid improving profitability

GrowLife released its third-quarter results on November 13. The company delivered a 141% year-over-year increase in revenue and gross profit expanded 1,256% year-over-year. In addition to growing revenue, GrowLife is exiting low performing businesses and this is allowing it to cut costs. For example, a recent exit of slow businesses has allowed the company to cut its expenses by $100,000 per month. Notably, GrowLife delivered solid results despite the third quarter typically being a slow period for the company.

“The summer quarter is usually challenging for GrowLife but demand for both GrowLife and EZ CLONE products remains strong,” commented GrowLife CEO Marco Hegyi.

• GrowLife poised to benefit from Canada’s expanded cannabis market

Canada last month moved to further expand its cannabis market with the legalization of more cannabis products for adult use. These include cannabis edibles, drinks, and smoking devices or vape pens. The sale of these newly legalized adult-use cannabis products will kick off next month. As a provider of hemp and cannabis cultivation solutions, GrowLife stands to benefit from the high demand for cannabis as a result of the expanded Canadian market. Experts expect the legalization of the new cannabis products to double Canada’s adult-use cannabis market to C$2.4 billion in 2020.

Bottom line

For investors who care to give GrowLife the benefit of doubt despite its huge plunge, buying the stock in the fall such as now could turn out to be a brilliant investment move.

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