In the last three instances of our coverage (here, here, and here) for Aleafia Health Inc (OTCMKTS: ALEAF), we have insisted on the potential for the company to offer investors an opportunity to buy at a discount. Although the stock seems to be steeped in a bear market, the following analysis should help one to decide what next.
Aleafia Share Price Analysis
During the opening trading sessions for 2019, ALEAF stock traded at $1.22, 28.4% higher than the lowest value established in December 17, 2018. The stock then rallied 72% and touched a high of $2.10 on February 5, 2019. Sadly, the price remains elusive since then and even chances of attaining that peak are growing minimal as the current bear market persists.
The ongoing price action is surprising if evaluated from the context of the strategy the company has put in place. Further, there is a lot of positive developments in terms of sales, revenues and expansion which should nudge the price action in the opposite direction. In one of our previous analyses, we noted that the company was approaching the completion of Phase II expansion of the processing facility in Paris, ON. This would avail an additional 50,000 kg extraction capacity.
Also, the company recently brought its Outdoor Grow facility to plan-ready after expansion. The company anticipates to the expanded facility to produce around 60,000 kg of dried flower annually. Meanwhile, the company has already submitted the final evidence package to Health Canada after which the facility will be operational. Aleafia anticipates to spend less in terms of cost of production compared to indoor growing or use of traditional greenhouse technique.
Positive investor sentiment for the stock still held down by weak financials for full year 2018
Previously, we also noted that the expansion of the Aleafia Campus Processing and extraction was in progress and on completion, the extraction capacity will jump to 50,000 kg. At the same time, the dried flower processing capacity will also be boosted to 138,000 kg on annual basis.
Also, the company is reaching into international markets with a view on leveraging the booming cannabis industry. In early May, the company partnered Acnos Pharma GmbH, a pharmaceutical wholesaler based in Germany, in a deal aimed at availing ALEAF products into the new market.
In light of such developments, one expects the stock price to reap the dividends of positive sentiment but this has not happened in ALEAF’s case. Perhaps there is a reason. While reporting the full year 2018 financial results, ALEAF noted that revenue loss in full year 2018 was wider than full year 2017. In particular, the company lost $18.5 million CAD in 2018 compared to $9.69 million CAD in 2017. Also, the company recorded a rise in revenue by a mere $15,766 CAD.
Fearing worse for 2019, investors punished the stock through a sell-off which saw the share price plunge 4.2%. Since then, the stock has never achieved the $1.34 price after the sell-off. Therefore, it suffices to say that investors are still suffering the hangover of the weak figures.
About Aleafia Health
Aleafia Health is a vertically integrated company with interests in the wellness and cannabis health sectors. Primary business is divided into Health & Wellness Clinics, Cannabis Cultivation & Products, Consumer Experience and Cannabis Education.
In its latest corporate update, ALEAF confirmed the completion of an all share transaction which culminated in the acquisition of Emblem. As such, the company is better placed to accelerate its strategy. Part of the strategy includes creation of a medical cannabis clinic complete with an education center network which will serve 60,000 patients. Also, the company will continue to differentiate its product portfolio and to scale up production capacity.
Clearly, Aleafia is not only interested in dominating the local market in Canada. In the corporate update, the company revealed efforts to expose its products in Germany through a partnership with Acnos Pharma. This latest move comes hot on the heels of a similar partnership to leverage the potential of the Austrian cannabis market.
Innovative research and improvement profile in the market
Since mid-March, ALEAF trades on the Toronto Stock Exchange. The listing on TSX will strengthen the company’s liquidity position in addition to the revenue from the international ventures. Also, the company is set to leverage the tons of data it collects from patients to publish research papers for internal strategic benefit and to expand knowledge in the industry.
What next for Aleafia Health?
From the analysis, it is apparent that ALEAF is trading at a discount and that the current bear market is a needless fixation on the poor financials for the full year 2018. There are clear strategic moves which, if the market takes note, the share price will catch a huge momentum which will propel it to new highs.
In the meantime, investors are better off remaining patient.
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Disclosure: We have no position in ALEAF and have not been compensated for this article.
Terra Tech Corp (OTCMKTS: TRTC) A Bounce Back Play As Net Loss Narrows And Gross Margins Expand
Terra Tech Corp (OTCMKTS: TRTC) has retraced lower ever since it clocked 2019 highs at the end of the first quarter. The stock has crumbled under soaring bearish pressure. Amidst the steep pullback, the stock is a potential bounce-back play as it is currently trading at the lower end of a tight trading range.
Terra Tech Price Analysis
A plunge to the lower end of the $0.63 to $1 trading range leaves the stock in a precarious position. A plunge lower could elicit further selling pressure while a bounce back could result in the stock making run for this year highs.
In our view, the stock could bounce back on investors reacting to a string of positive developments that affirm the Company’s prospects. For starters, Terra Tech is fresh from launching a legal cannabis delivery services as it continues to pursue growth opportunities in California.
The Company is also fresh from delivering impressive financial results that indicate gross margin expansion as net loss from operations continues to narrow. The sale of Blum Desert is another development poised to strengthen the company’s financial position.
Terra Tech commencing cannabis sales to the adult use market should continue to excite investor’s, ideal for fuelling an upswing in the stock’s price action activity. With the stock appearing to have hit the floor after the recent pullback, a correction higher could be in the offing at the lower end of the trading range.
Namaste Technologies Inc (OTCMKTS: NXTTF) A Bounce Back Play On Robust Revenue
Namaste Technologies Inc (OTCMKTS: NXTTF) has had to contend with wild price swings, as investors reacted to delays in the filling of audited financial results and ousting of Sean Dollinger as the CEO. That could soon change, as the Company has come through and filled results that affirm robust revenue growth.
Namaste Technologies Price Analysis
However, concerns over widening net loss could hurt the stock’s sentiments in the market, at a time when it is in dire need of, groundbreaking catalysts to avert further slides. While the stock has bottomed out, it remains engulfed in a long-term bear trend.
The descending trend line could attract short selling pressure on the filling of negative news that arouse concerns about the Company’s long-term prospects. A spike to the $0.65 level essentially means the stock is at a critical resistance level.
Failure to rally and find support above the resistance level could elicit some form of selling that could see the stock trading sideways. Immediate support on any pullbacks from current highs is seen at the $0.40 mark.
A sell-off followed by a close below the $0.40 mark could result in Namaste Technologies resuming its downtrend, as has been the case for the better part of the past year. Conversely, a rally followed by a close above the $0.66 mark should pave the way for the stock to make a run for the $1.20 mark, seen as the next…
Cannex Capital Holdings Inc. (OTCMKTS: CNXXF) A Long-Term Play Despite Price Slump
A strategic merger with 4Front coming on the heels of Pure Ratios holding acquisition affirms why Cannex Capital Holdings Inc (OTCMKTS: CNXXF) prospects can only get better despite the recent price slump. The transformational events expand the Company’s operations into six U.S states signaling push for market value in the burgeoning cannabis sector.
Cannex Price Analysis
While Cannex has taken a significant hit in the market, it is still up for the year after an excellent start that saw it rally by more than 200%. The stock has since pulled lower in what appears to be a correction phase.
The ongoing pullback has since exposed the stock to a crucial support at the $1 a share level. A breach of the support level would leave the stock susceptible to further drops probably back to the $0.80 mark, a critical technical level.
For the stock to resume its uptrend, it first needs to rise and stabilize above the $1.20 mark, the immediate resistance level. The stock rallying and finding support above the $1.2 mark would open the door for bulls to fuel a rally back to 52-week highs.
Cannex is a diversified company that leases real estate properties and sells supplies to cannabis cultivators. The Company also offers financial services as well as branding and IP services to licensed cannabis operators. It is also focused on premium indoor cultivation extraction and branding of edible…