Is it Time to Take a Fresh Look at Hexo Corp (OTCMKTS:HYYDF)?

Is it Time to Take a Fresh Look at Hexo Corp (OTCMKTS:HYYDF)?

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One of the most explosive areas of the cannabis space during the run from July through September was in the beverage infusion segment, and Hexo Corp (OTCMKTS:HYYDF) was clearly one of the leaders of that pack. Since then, we have seen a sharp pullback in the whole space, with the beverage plays included. But now, it may be time to stock playing for a bounce, with HYYDF as a key opportunity.

To add fuel to that potential fire, the company just announced the closing of the acquisition of its interest in a large facility in Belleville, Ontario. According to the release, “This is the first facility that the Company has established outside of Quebec, further delivering on its national expansion strategy and allowing HEXO to create a centre of excellence for the development of advanced cannabis products.”

Hexo Corp (OTCMKTS:HYYDF) trumpets itself as a company that, together with its subsidiaries, produces and distributes medical marijuana products. The company is headquartered in Gatineau, Canada, and, as noted above, just changed its corporate name from “The Hydropothecary Corporation” to “HEXO Corp.” effective August 29, 2018.

HEXO creates and distributes innovative, easy-to-use and easy-to-understand products to serve the Canadian cannabis market. One of the country’s lowest-cost producers, HEXO is rapidly increasing its production capacity in the lead up to the adult-use cannabis market.

The Company currently operates with over 310,000 sq. ft. of production capacity with construction on another 1,000,000 sq. ft. expansion set to be complete by year-end. HEXO will serve the adult-use market under the HEXO brand, while continuing to serve its medical cannabis clients through the well-known Hydropothecary brand.

According to company materials, “HEXO Corp. creates and distributes innovative, easy-to-use and easy-to-understand products to serve the Canadian cannabis market. One of the country’s lowest-cost producers, HEXO is rapidly increasing its production capacity in the lead up to the adult-use cannabis market. The Company currently operates with over 310,000 sq. ft. of production capacity with construction on another 1,000,000 sq. ft. expansion set to be complete by year-end. HEXO will serve the adult-use market under the HEXO brand, while continuing to serve its medical cannabis clients through the well-known Hydropothecary brand.“

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As noted above, HYYDF just announced the closing of the acquisition of its interest in a large facility in Belleville, Ontario.

Traders will note 8% during the past week in terms of shareholder gains in the listing, but that move comes in the context of a larger bearish trend. Furthermore, the company has seen interest climb, with an increase in recent trading volume of exceeding 140% above the average volume levels in play in this stock over the longer term.

“Closing the transaction and acquiring our interest in this facility is integral to carrying out our hub and spoke business strategy,” said Sebastien St-Louis, HEXO’s CEO and co-founder. “The space can be scaled up based on our future needs and provides HEXO with the infrastructure it needs to continue partnering with Fortune 500 companies and to create category-winning cosmetics, edibles, vapes and more.”

At this time, carrying a capital value in the market of $921.07M, HYYDF has a significant war chest ($244.8M) of cash on the books, which must be weighed relative to about $12.1M in total current liabilities. One should also note that debt has been growing over recent quarters. HYYDF is pulling in trailing 12-month revenues of $4.9M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 63.7%. We will update the story again as soon as developments transpire. Sign-up for continuing coverage on shares of $HYYDF 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 $HYYDF, either long or short, and we have not been compensated for this article.

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