Cronos Group Inc (OTCMKTS:PRMCF) Outperforms on International Diversification

Cronos Group Inc (OTCMKTS:PRMCF) Outperforms on International Diversification


Cronos Group Inc (OTCMKTS:PRMCF) continues to consolidate following a sharp bounce in shares in early February action. The stock has largely outpaced the cannabis space in that time after briefly sliding below its 50-day simple moving average. That said, this has been a clear positive momentum story for most of the past year in the sector and continues to sit more than 200% above its levels of last fall. The strength of the story continues to be about the company’s international exposure.

Highlighting this theme, the company just announced the launch of Cronos Australia Pty Ltd. and the grant of medicinal cannabis cultivation and research licenses. “The launch of Cronos Australia as our newest international hub marks an important milestone for the Company. Cronos is focused on providing pharmaceutical grade medicine to patients in need, and we are excited that our Australian team shares this vision and commitment,” says Mike Gorenstein, CEO of Cronos Group.

Cronos Group Inc (OTCMKTS:PRMCF) trumpets itself as a principal investment firm operating in the Canadian cannabis space.

The firm seeks to invest in companies either licensed or actively seeking a license, to produce medical marijuana pursuant to Canada’s Marihuana for Medical Purposes Regulations. The firm typically invests in companies based in Canada.

The firm is primarily an equity investor, may also advance debt as appropriate. It seeks to make minority investments with appropriate governance and shareholder rights. The firm seeks board representation consistent with the size of the investment but does not need control. Cronos Group was incorporated in January, 2013 and is based in Toronto, Canada.

According to company materials, “Cronos Group is a geographically diversified and vertically integrated cannabis company that operates two wholly-owned Licensed Producers (“LPs”) regulated within Health Canada’s Access to Cannabis for Medical Purposes Regulations (the “ACMPR”) and holds a portfolio of minority investments in other Licensed Producers. The Company’s flagship LPs, Peace Naturals Project Inc. (Ontario) and Original BC Ltd. (British Columbia), are collectively situated on over 125 acres of agricultural, licensed land. Cronos Group is focused on building an international iconic brand portfolio, providing patients with personalized care and creating value for our shareholders.”

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As noted above, PRMCF has been a clear outperformer on the strength of its international exposure and diversification. The company’s recent release builds on this theme with the launch of Cronos Australia Pty Ltd. and the grant of medicinal cannabis cultivation and research licenses. We have continuously hammered home this idea in our analysis: geographic diversification is legislative hedging. If laws changer in the US, all the money will flow to those with ex-US cannabis market exposure.

“We are extremely pleased to announce that Cronos Australia has secured both a medicinal cannabis license and a cannabis research license, paving the way for us to research, cultivate, and produce premium cannabinoid-based products for Australian patients,” says Mr. Cocks.

“Cronos Australia will continue to leverage the Group’s intellectual property to ensure that we deliver the highest quality medicinal cannabis products to the Australasia region,” says Mr. Righetti.

Traders will note 16% tacked on to share pricing for the company in the past week, a rally that has pushed up against longer standing distributive pressure in the stock. However, PRMCF has evidenced sudden upward volatility on many prior occasions. In addition, the company has benefitted from a jump in recent trading volume to the tune of approaching 260% beyond what we have been seeing over the larger time frame.

At this time, carrying a capital value in the market of $1084.7M, PRMCF has a significant war chest ($16.5M) of cash on the books, which stands against about $869K in total current liabilities. PRMCF is pulling in trailing 12-month revenues of $5.3M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 1840.4%. This is an exciting story, and we look forward to a follow-up chapter as events transpire. Sign-up for continuing coverage on shares of $PRMCF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

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

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