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Friday, January 15, 2021

Penny Stock Kush Bottles Inc (OTCMKTS:KSHB) Turns the Corner

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Kush Bottles Inc (OTCMKTS:KSHB) is a penny stock we looked at about a week ago, noting that it appeared to have found some new traction and a new tone on the tape. That has indeed been a prescient call, with shares of KSHB up significantly in the meantime. That movement was aided in part by the company’s latest earnings report, which showed a burst of topline growth as a product of recent operational diversification, with revenues up 103% on a quarterly y/y basis to about $4.7M. Management was obviously enthusiastic:

“The third quarter represents an exciting new chapter for Kush Bottles as it transitioned from a cannabis packaging provider to a dynamic, full-service sales platform with significantly increased distribution channels and more diversified product range,” commented Nick Kovacevich, co-founder and Chief Executive Officer of Kush Bottles. “We spearheaded this growth through the acquisition of CMP Wellness, a California-based distributor of vaporizers, cartridges and accessories, as well as the acquisition of the Roll-Uh-Bowl.com online distribution platform, which expanded our presence in the B2C market for the first time. This progress was reflected in record revenues in the third quarter, which were up 103% year-over-year and 59% sequentially.”

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 B2B 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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Last time we covered the stock, we reported that “shares of KSHB appear to be fighting for support right now and possibly starting to win. And this is a battle that must be appreciated by cannabis patch traders on the OTC. This stock has rewarded timely entries and exits with some huge gains in the recent past and it continues to offer that temptation, particularly as its new acquisition shows positive financial trends at work, and represents an important type of diversification for a company that had some issues with its market space targeting.”

The new report validates the thesis to some extent there.

“We are better positioned now than we’ve ever been to benefit from growth in the cannabis market regardless of geography. We see particularly strong growth opportunities in Nevada, where adult-use cannabis sales commenced in July, as well as Northern California and Massachusetts, where we recorded strong sales growth this quarter. Furthermore, we are witnessing a shift in attitudes toward cannabis on a global scale – with major economies such as Germany, Greece and Mexico moving toward legalization – and continue to monitor all potential growth areas for the Company. As a result of this quarter’s achievements, Kush Bottles has greater capacity to grow sales. We are excited to see the Company enter this new growth phase in its development,” concluded Mr. Kovacevich.

Recent action has seen 13% tacked on to share pricing for the listing in the past month, a rally that has pushed up against longer standing distributive pressure in the stock. This is emblematic of the stock. KSHB is a stock who’s past is littered with sudden rips. Furthermore, the name has seen an influx in interest of late, with the stock’s recent average trading volume running just shy of 190% beyond what we have been seeing over the larger time frame.

This is particularly important due to the tiny float size in the stock (of 9.7M shares). This type of thing is something to watch out for: with such a tight trading float, this kind of ramping interest can force a supply-shock squeeze.

Currently trading at a market capitalization of $131.4M, KSHB has a significant war chest ($2.8M) of cash on the books, which stands against virtually no total current liabilities. KSHB is pulling in trailing 12-month revenues of $10.1M. In addition, the company is seeing major top line growth, with y/y quarterly revenues growing at 103%. This is an exciting story, and we look forward to a follow-up chapter as events transpire. 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!

Disclosure: we hold no position in $KSHB, either long or short, and we have not been compensated for this article.

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