As we watch the pot stocks rip higher over recent weeks, Emblem Corp (OTCMKTS:EMMBF) has started to follow suit as a laggard play on the theme. This is not one of the best-known plays in the space, but shares have recently broken above the 200-day simple moving average on rising volume, so it’s definitely worth a look.
Helping to fuel the action, the company just announced that it has entered into a five-year wholesale supply agreement with Aphria Inc. (OTC:APHQF). According to the release, “The Agreement will see Emblem purchase up to an aggregate of 175,000 kg equivalents of cannabis products from Aphria over a five-year term, with the opportunity for five-year renewals. Pursuant to the Agreement, Emblem will pay to Aphria an initial deposit comprised of a cash payment of $12,755,625 and the issuance of 6,952,169 common shares of Emblem.”
Emblem Corp (OTCMKTS:EMMBF) frames itself as a company that produces, distributes, and sells medical cannabis and cannabis derivatives in Canada.
The company also operates medical cannabis education centers to provide education services for making informed decisions about medical cannabis treatment options to physicians and patients. In addition, it provides various accessories. Emblem Corp. has a strategic partnership with GreenSpace Brands to develop and commercialize cannabidiol infused health and beauty products.
The company is headquartered in Toronto, Canada.
According to company materials, “Emblem, through its wholly-owned subsidiary Emblem Cannabis Corporation, is a fully integrated licensed producer and distributor of medical cannabis and cannabis derivatives in Canada under the ACMPR. Emblem’s state-of-the-art indoor cannabis facility and research and development laboratory is located in Paris, Ontario. Led by an experienced management team of healthcare executives, accomplished marketing professionals, and cannabis experts, Emblem is focused on driving shareholder value through product innovation, brand relevance, and access to patient and consumer channels. Emblem is also the parent company of GrowWise Health Limited, one of Canada’s leading cannabis education services. Emblem trades under the ticker symbol EMC on the TSX Venture Exchange.“
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As noted above, the company just put out word that it has signed a supply agreement with Aphria. According to the release, “Emblem has entered into a five-year supply agreement with Aphria pursuant to which Aphria will supply Emblem with up to an aggregate of 175,000 kg equivalents of high quality dried cannabis flower and crude cannabis oil at preferred wholesale pricing. Initial product deliveries to Emblem are expected to commence in May 2019, with a total of 25,000 kg equivalent deliverable for the balance of the first year of product deliveries.”
In all, we’ve witnessed 73% tacked on to share pricing for the stock in the past month, but this action is running counter to the larger trend in the name. What’s more, the listing has witnessed a pop in interest, as transaction volume levels have recently pushed 150% over what the stock has registered over the longer term.
“Emblem’s supply agreement with Aphria marks a critical point in our evolution. It allows Emblem to remain focused on strengthening our core competencies of product innovation, brand building and securing distribution,” said Nick Dean, CEO, Emblem Corp. “Aphria’s support solidifies Emblem’s dedication to become a leading producer of cannabis-derived products in the health and wellness space.”
Earning a current market cap value of $183.86M, EMMBF has a significant war chest ($83.8M) of cash on the books, which stands against about $6.1M in total current liabilities. One should also note that debt has been growing over recent quarters. EMMBF is pulling in trailing 12-month revenues of $3.1M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 41.4%. 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 $EMMBF 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 $EMMBF, either long or short, and we have not been compensated for this article.