Kush Bottles Inc (OTCMKTS:KSHB) has started to show renewed life on the chart, breaking out higher on a surging volume to close out this past week, and moving above its 50-day simple moving average. While some of the strength may be attributed to reports of a shift in federal government policy regarding marijuana and cannabis-related issues, one should not lose sight of this company’s unique set of catalysts in play at present.
To wit: the company just announced it has entered into a merger agreement to acquire Summit Innovations, LLC, a leading distributor of hydrocarbons to the legal cannabis industry based in Denver, Colorado. According to the release, “hydrocarbon gases are used to turn cannabis plants into oils, and this acquisition marks Kush Bottles’ entry into a new business vertical supplying gas to cannabis extractors. The transaction is expected to close by May 1, 2018, subject to confirmatory due diligence and certain closing conditions, including (among others) approval of the transaction by the equity holders of Summit Innovations.”
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, “Kush Bottles, Inc. (OTCQB: KSHB) is a dynamic sales platform that provides unique products and services for both businesses and consumers in the cannabis industry. Founded in 2010 as a packaging and supplies company for dispensaries and growers, Kush Bottles has sold more than 100 million units and now regularly services more than 5,000 legally operated medical and adult-use dispensaries, growers, and producers across North America, South America, and Europe. The Company has facilities in the three largest U.S. cannabis markets and a local sales presence in every major U.S. cannabis market.”
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As noted above, the technical action in the stock has been strong in recent days. Shares broke above a key moving average on Friday and momentum has potentially been reasserted to the upside. While part of this may be due to president Trump’s acknowledgment of states’ rights on marijuana laws, the company has also been moving to expand operations, deploying cash, and engaging in the M&A scene.
Nicholas Kovacevich, CEO and Chairman of Kush Bottles, commented, “Summit Innovations supplies hydrocarbon gases specific to various cannabis extraction processes. Integrating this broad gas portfolio into our large distribution platform will further diversify our business by offering another unique product line that is highly complementary to Kush Bottles’ existing product inventory. This transaction, once closed, will simplify the supply chain for future and existing customers of Kush Bottles and Summit Innovations, allowing customers to fulfill all their concentrate refining and packaging needs more efficiently from just one source. This acquisition agreement aligns with Kush Bottles’ company strategy, to both grow organically and through acquisitions, further demonstrating our commitment to achieving long-term growth and diversifying our business within the cannabis space.”
Recent action has seen 7% tacked on to share pricing for the listing in the past week. Moreover, the company has seen interest climb, with an increase in recent trading volume of 10% above its longer-run average levels. This should not be overlooked due to the tiny float size in the stock (of 9.7 million shares).
Earning a current market cap value of $300.9M, KSHB has a significant war chest ($5.5M) of cash on the books, which compares with about $1.9M in total current liabilities. One should also note that debt has been growing over recent quarters. KSHB is pulling in trailing 12-month revenues of $25.2M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 257.9%. This may be a very interesting story and we will look forward to updating it again soon. Sign-up for continuing coverage on shares of $KSHB 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 $KSHB, either long or short, and we have not been compensated for this article.