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Tuesday, December 1, 2020

Is Kush Bottles Inc (OTCMKTS:KSHB) a Mystery Afoot Right Now?

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In a simple sense, just looking at metrics, Kush Bottles Inc (OTCMKTS:KSHB) occurs to us as a very promising stock: the float is tiny (under 10M shares), growth has been strong (nearly 200% y/y growth on the top-line), and some recent action on the M&A front. It may be overly critical to state that the stock has underperformed over the past 6 months given that it is sitting up over 150% over the past 52 weeks.

To further develop that story, among other recent catalysts, the company just announced it has acquired Zack Darling Creative Associates, LLC along with its wholly-owned subsidiary, The Hybrid Creative, LLC, a specialist design agency based in Santa Rosa, California. According to the release, “ZDCA is a full-spectrum digital creative agency, founded in 2009 and based in Santa Rosa, California, considered the gateway to The Emerald Triangle. It serves both traditional industry accounts as well as cannabis companies and currently works with clients across the U.S., Canada and Europe. Its services include brand strategy, design and marketing, web application development and e-commerce solutions.”

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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Traders will note 10% added to share values of the name over the past week of action. In addition, the company has registered increased average transaction volume recently, with the past month seeing 21% above its longer run average levels.

Traders should note this as important with a float in play that’s very limited — of 9.7 million shares.

Nick Kovacevich, Kush Bottles’ Chief Executive Officer, said, “As cannabis products become increasingly commoditized, more and more producers are focusing on brand development as a means of differentiating their products to ensure customer loyalty and improve their profit margins. Acquiring The Hybrid Creative complements our existing offering and we expect it will generate additional cross-selling opportunities by deepening our branding capabilities so that we can help our cannabis clients develop unique brands at the earliest stages of their development. Furthermore, ZDCA’s book of business includes a significant portion of companies involved in a vast array of business verticals that are not in the cannabis industry, providing us with stronger insight into marketing trends in other industries and further diversifying our business.”

Now commanding a market cap of $323.5M, KSHB has a significant war chest ($3.6M) of cash on the books, which compares with about $2.6M 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 $40.8M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 173.4%. As more color becomes clear on the name, we will review the situation and update our take. 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.

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