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Sunday, October 25, 2020

Kush Bottles Inc (OTCMKTS:KSHB) Plans Aggressive Expansion Centered on California Boom

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Kush Bottles Inc (OTCMKTS:KSHB) is a penny player tangentially involved in the MMJ space as an equipment supplier for business and retail end markets. The stock has generally acted a bit waterlogged over recent months, and we have flirted with the concept that new, high-profile investment in the space may act to crimp margins for companies in the container space.

That said, KSHB is showing signs of growth, and just announced that, “on July 1, 2017, it will move its corporate headquarters and California fulfillment center to a larger, more centrally located facility in Garden Grove, CA. The new building features greater warehouse space to allow for increased inventory, as well as additional floor space to support new services for the company’s growing customer base.” Shares of the stock have responded, powering about 30% on the back of the announcement.

Kush Bottles Inc (OTCMKTS:KSHB) provides packaging products and solutions to producers, processors, and retailers operating in the regulated medical and recreational cannabis industry.

KSHB sells primarily into the b2b market, which includes legally operating medical and adult-use dispensaries, growers, and MIP producers (Marijuana Infused Products) in states with marijuana programs.

It offers pop top bottles; child resistant exit, paper exit, and foil barrier bags; tubes; and polystyrene, polypropylene, or silicone containers to urban farmers, greenhouse growers, and medical and recreational cannabis dispensaries.

According to the company’s press messaging, “Founded in 2010, Kush Bottles has sold more than 100 million bottles and regularly services thousands of customers across the United States and Canada. The company primarily services the business-to-business market, which includes legally operated medical and adult-use dispensaries, growers and marijuana-infused product manufacturers. Kush Bottles aims to be the gold standard for responsible branding and packaging in the cannabis industry.”

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Overall, the chart shows 18% added to share values of the company over the past week of action, a bounce that has taken root amid largely bearish action over the larger time frame. However, KSHB has evidenced sudden upward volatility on many prior occasions. Furthermore, the name has seen interest climb, with an increase in recent trading volume of about 17% over the long-run average.

It pays to take note of this fact due to the extremely small float size in the stock (of 16.7M shares). One is wise to respect the dynamic this may create — a mechanically driven price squeeze can result from this type of mix of small float and ramping attention from traders.

The company’s press release points to a recent report from the World Bank that states that California just surpassed the nation of France to become the world’s sixth largest economy, only outpaced by the US (as a whole), China, Japan, Germany, and the UK. According to an article in Business Insider, the size of the cannabis market in California could reach $4.27 billion in 2018, and could grow to $6.45 billion by 2020. In other words, California is the place to get roots in the ground for accessories and product lines tethered to the cannabis boom.

“Kush Bottles thrives in regulated cannabis markets, where strict rules require the use of certified, child resistant packaging,” said Nick Kovacevich, CEO of Kush Bottles, Inc. “We are excited about the passage of Measure M, which will allow newly established and existing medical marijuana facilities to legally operate in Los Angeles under new rules to create a safe and well-regulated market.”

“Our client base is growing at a rapid pace and we are continuing to invest in our infrastructure to meet burgeoning demand,” said Ben Wu, President and COO of Kush Bottles, Inc. “Moving to a larger facility will enable us to further diversify our product and service offerings and to strengthen our position as the gold standard for the cannabis industry.”

Currently trading at a market capitalization of $103.4M, KSHB has a store ($2M) of cash on the books, which stands against virtually no total current liabilities. KSHB is pulling in trailing 12-month revenues of $9M. In addition, the company is seeing major top line growth, with y/y quarterly revenues growing at 43.7%. This may be a very interesting story and we will look forward to updating it again soon. For continuing coverage on shares of $KSHB stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!

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