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Tuesday, November 24, 2020

Are We Seeing a Bear Trap Setup in KushCo Holdings Inc (OTCMKTS:KSHB)?

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One stock we have been interested in at a strong level over the past 18 months is KushCo Holdings Inc (OTCMKTS:KSHB). Now, shares of that stock have been pulling back in recent days inside of what would appear to be a bullish long-term pattern on the weekly chart. That could represent an interesting opportunity. To help further flesh out the story, the company just announced it has entered into a number of long-term supply arrangements-in-principle with regard to three large, well-known new customers.

According to the release, “The Company believes these long-term supply arrangements (with expected terms of one to three years) will not only create lasting partnerships with these new customers, but also are expected to provide the Company with an aggregate value of up to $75.0 million of new revenue over the next three years, while providing more supply chain certainty for all parties involved.”

KushCo Holdings Inc (OTCMKTS:KSHB) is the parent company to a diverse group of business units that are transformative leaders in the cannabis, CBD and other related industries. KushCo Holdings’ subsidiaries and brands provide exceptional customer service, product quality, compliance knowledge and a local presence in serving its diverse customer base.

KushCo Holdings’ brands include Kush Bottles, a dynamic sales platform that is the nation’s largest and most respected distributor of packaging, supplies, and accessories, Kush Energy, which provides ultra-pure hydrocarbon gases and solvents to the cannabis and CBD sector, Hybrid Creative, a premier creative design agency for cannabis and non-cannabis ventures, and Koleto Packaging Solutions, the research and development arm driving intellectual property development and acquisitions.

Founded in 2010, KushCo Holdings has now sold more than 1 billion units and regularly services more than 5,000 legally operated medical and adult-use dispensaries, growers, and producers across North America, South America, and Europe. KushCo Holdings subsidiaries maintain facilities in the five largest U.S. cannabis markets as well as having a local sales presence in every major U.S. cannabis market.

According to its materials, “KushCo Holdings, strives to be the industry leader for responsible and compliant products and services in the legal cannabis and CBD industry. The Company has been featured in media nationwide, including CNBC, Los Angeles Times, TheStreet.com, Entrepreneur, and business magazine Inc.  While KushCo Holdings services all facets of the cannabis and CBD industries, it has no direct involvement with the cannabis plant or any products that contain THC or CBD.”

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As noted above, KSHB just announced it has entered into a number of long-term supply arrangements-in-principle with regard to three large, well-known new customers.

Traders will note a few percent during the past month in terms of shareholder gains in the company, despite the drawdown seen in recent days. In addition, the stock has witnessed a pop in interest, as transaction volume levels have recently pushed exceeding 320% beyond its prior sustained average level.

Jason Vegotsky, Kush Supply Co.’s President commented, “We are witnessing a rapid evolution of our customer base as the large multi-state operators continue to gain scale and prepare for additional market legalization.  As the leading provider of ancillary products and services into the US and Canadian cannabis markets our customers count on us to provide security of supply so they can maximize their market opportunities.  It is therefore vital we have the products they need, readily available and in the ever-increasing quantities that they require.  These long-term supply arrangements, once implemented, will establish a working partnership such that both parties can achieve the maximum benefit in this dynamic market environment.”

Earning a current market cap value of $446.29M, KSHB has a significant war chest ($3M) of cash on the books, which is balanced by about $19.5M 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 $68.5M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 186.2%. You can bet we will update this one again as new information comes into view. 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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