You May Want to Keep a Close Eye on Hexo Corp (OTCMKTS:HYYDF)...

You May Want to Keep a Close Eye on Hexo Corp (OTCMKTS:HYYDF) Right Now

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The cannabis space has been in correction mode, with what became perhaps the most explosive branch of the sector – the cannabis-infused beverages space – correcting violently as well, led by its most prominent exemplar, Hexo Corp (OTCMKTS:HYYDF). That said, the stock remains above its major support levels, and we are heading into a key week that will likely define the near-term pattern.

To help further flesh out the story, the company just announced the closing of the acquisition of its interest in a large facility in Belleville, Ontario. The release noted that 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 center 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. According to the release, the company will host an event in late November to give the residents of Belleville and the surrounding areas the opportunity to come learn about HEXO’s history and vision from Chief Brand Officer and co-founder, Adam Miron. HEXO will also use the event as an opportunity to provide information about the types of jobs that will be available at the facility and the projected timelines for the Belleville location.

Traders will note the listing has registered increased average transaction volume recently, with the past month seeing 75% 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.”

Currently trading at a market capitalization of $929.32M, HYYDF has a significant war chest ($244.8M) of cash on the books, which stands against 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%. 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 $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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