Sproutly Canada Inc (OTCMKTS: SRUTF) Is A Strong Buy

Sproutly Canada Inc (OTCMKTS: SRUTF) is pulling lower after an excellent start to the second quarter that saw it rally by more than 100%. The stock has since pulled back and now looks set to trade sideways, in a range, having bounced off a fundamental support level.

Price Analysis

A rally to all-time highs came on the company confirming a strategic partnership with Ogilvy Canada as part of an effort of developing strong brands. In the recent past, the company has also inked a strategic partnership with Moosehead Breweries, resulting in the formation of a joint venture to launch cannabis-infused beverages.

Sproutly has also achieved significant progress on its bid to deliver a safe and consistent whole plant experience for cannabis, on securing processing license from Health Canada. The stock pulling lower in response to recent developments could as well indicate minor correction pending continuation of the emerging uptrend.

The $0.50 mark is the immediate support level supporting Sproutly uptrend that began in March. Above the critical technical level, the stock remains well supported for further upside action as a bounce-back play. Conversely, a breach of the support level would leave the stock susceptible to further drops, probably back to the $0.36 level, seen as the next support level.

A close below the $0.36 support level would bring to an end the bullish momentum consequently exposing Sproutly to further drops, probably back to 52-week lows. However, as it stands Sproutly is likely to edge higher after the recent correction.

What Does Sproutly Canada Do?

Sproutly Canada is a cannabis-focused company seeking to become a leading supplier to the cannabis beverage and edibles market. With its Toronto-based facility, the company cultivates pharmaceutical grade cannabis. It is also engaged in the distribution of cannabis products having secured license authorization from Health Canada.

Strategic Partnerships

Shares of Sproutly have pulled lower after a meteoric rise as of the end of the first quarter. The pullback could as well be because of investors taking profits after the recent spike high. The company moving to strengthen its cannabis product line is a development that continues to prop the stock’s market sentiments.

The formation of a joint venture in partnership with Moosehead Breweries opens the door for Sproutly to strengthen its cannabis product line, with the launch of a new line of cannabis-infused beverages. The two are joining forces to develop, produce and market non-alcoholic cannabis-infused beverages using naturally produced water-soluble cannabinoids.

“Moosehead is a truly iconic brand, and we are very excited to partner with a company that possesses such deep-rooted Canadian heritage and over 152 years of history in the beer industry. Partnering with a company of this caliber is a strong validation of APP Technology and Infuz20,” commented Keith Dolo, Chief Executive Officer and Director of Sproutly.

In addition to the Moosehead partnership, Sproutly has hired Ogilvy Canada as its integrated brand development firm. The award-winning creative agency is tasked with the responsibility of delivering excellent creative and impactful communications strategies to promote the launch of Sproutly brands in Canada.

Sproutly Canada is in the process of building a robust brand and partnership strategy ahead of the legalization of edibles and beverages in October.

“With award-winning creativity and a deep understanding of our consumers, Ogilvy will be a valuable partner in helping Sproutly to launch into the beverage and edibles market with a brand and strategy that uniquely delivers the rapid onset benefits of our APP proprietary technology,” said Melise Panetta, Vice President, Marketing and Sales, for Sproutly.

The company is leveraging the Aqueous Phytorecovery Process technology to come up with new products, as it is capable of producing naturally water-soluble cannabinoids. Sproutly has also secured a Health Canada license that allows it to move forward with the production of cannabis oil and other related products.

The processing license also marks an important milestone on the company’s bid to commercialize cannabis beverages and other edible products.

What Next For Sproutly Canada

While Sproutly Canada has pulled lower from this year highs, underlying fundamentals are as solid as ever and set to support further upside action. The stock is likely to resume its upside action after the recent correction lower.

The pullback presents an exciting entry position given the company’s tremendous potential in the multi-billion-dollar industry.

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