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Sunday, November 29, 2020

Why Kush Bottles Inc (OTCMKTS:KSHB) Should be on the Radar

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With the cannabis space taking flight once again over the past 24 hours, it’s important to keep Kush Bottles Inc (OTCMKTS:KSHB) on the radar. This is a small float stock that has a strong niche as one of the most obvious pick and shovel plays in the space. Revenue growth is strong (173%), and the balance sheet tips in the right direction. And the technicals suggest a strong potential for a continued longer-term upward trend to remain in place.

In addition, the company just announced the launch of Kush Supply Co., a new subsidiary based in Toronto, Ontario, with a national sales force leveraging the robust infrastructure of Kush Bottles’ current distribution platform. According to the release, “This new subsidiary will serve licensed producers, processors, retailers and distributors throughout Canada and will be led by Gordon Woolley, Vice President, and Mark Doerr, Regional Sales Director.”

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, there’s quite a bit flowing the right direction with the KSHB story. But the recent technical action has been a bit stark – as it has been for most of the cannabis space. That said, key support has held at the $4 level. Traders will note -4% stripped out of share pricing for the listing in the past week. What’s more, the listing has registered increased average transaction volume recently, with the past month seeing 11% over what the stock has registered over the longer term.

Note, also, that the stock trades on a tiny float of less than 10 million shares.

“Canada has become a global leader in national cannabis reform with its adult-use program, and we are excited to support the significant growth happening in this market,” said Nick Kovacevich, CEO of Kush Bottles. “We believe Kush Supply Co. is well situated to capitalize on the momentum in Canada leading up to its national launch later this year. By leveraging our supply chain efficiencies, we are extremely well positioned to serve the current needs of the Canadian market, and to adapt to future needs as the regulatory structure evolves and the market expands.”

Currently trading at a market capitalization of $330.5M, KSHB has a significant war chest ($3.6M) of cash on the books, which must be weighed relative to 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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