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Thursday, November 26, 2020

Is Emerald Health Therapeutics Inc (OTCMKTS:EMHTF) Pushing Toward a Breakout?

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One stock we find interesting here as a recent strong point in the cannabis patch is Emerald Health Therapeutics Inc (OTCMKTS:EMHTF). Shares of the stock popped above the 200-day average last week on increasing volume, with a potential breakout to new 2019 highs set up if EMHTF can move above the $3.15 level on a closing basis. To further flesh out the story, the company just announced that it has fulfilled its first purchase order of cannabis from Ontario Cannabis Retail Corporation, operating as the Ontario Cannabis Store.

According to the release, “Emerald’s cannabis supply is provided primarily through its 88,000 sq. ft. Verdélite indoor facility in Saint Eustache, Quebec, and through Pure Sunfarms, its 50%-owned 1.1 million sq. ft. greenhouse facility in Delta, British Columbia.”

Emerald Health Therapeutics Inc (OTCMKTS:EMHTF) trumpets itself as a licensed producer of medical marijuana under the Access to Cannabis for Medical Purposes Regulations, which allows the company to produce and sell medical marijuana and cannabis oils to clients and other licensed producers.

Individuals may become clients of the company by registering with the company through its secure online portal or via telephone after the individual has received a medical document signed by a licensed health care practitioner setting out the daily quantity of dried marijuana, in grams, that the practitioner authorized for the person.

According to company materials, “Emerald Health Therapeutics Inc (OTCMKTS:EMHTF) operates through Emerald Health Botanicals Inc., a wholly owned subsidiary and Licensed Producer under the Access to Cannabis for Medical Purposes Regulations. Botanicals is authorized to produce and sell both dried medical cannabis flower and medical cannabis oil in Canada. Botanicals currently operates an indoor facility in Victoria, BC, and is progressing on expansion plans for a 32-acre property in Metro Vancouver and a partnership with Village Farms, called Pure Sunfarms, utilizing a 25-acre existing greenhouse complex in Delta, BC. Botanicals is one of Canada’s most medically focused licensed producers, with a team highly experienced in life sciences product development and large-scale agribusiness. Its vision is to be a leading provider of cannabis products through its production capabilities, proprietary genetics, value-added products and branding, and superb customer experience. Emerald Health Therapeutics is associated with the Emerald Health group, which comprises multiple companies advancing diverse botanical, nutraceutical and pharmaceutical products that may provide wellness and medical benefits by interacting with the body’s endocannabinoid system.”

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As noted above, EMHTF just announced that it has fulfilled its first purchase order of cannabis from Ontario Cannabis Retail Corporation, operating as the Ontario Cannabis Store.

The chart shows 21% piled on for shareholders of the listing during the trailing month. In addition, the company has benefitted from a jump in recent trading volume to the tune of 23% over what the stock has registered over the longer term.

“As we scale up production in our wholly-owned, premium indoor growing facility, Verdélite, and our large-scale, state-of-the-art joint venture greenhouse operation, Pure Sunfarms, we are consistently meeting our supply commitments of Emerald-branded adult-use cannabis in British Columbia and Newfoundland Labrador, and we are now prepared to provide the same service to the Ontario Cannabis Retail Corporation and other provinces,” said Dr. Avtar Dhillon, President and Executive Chairman of Emerald. “We now have distribution access to over half of the Canadian population of adult-users of non-medical cannabis. We are advancing prospective supply agreements that we expect will ultimately give us nation-wide market exposure.”

Currently trading at a market capitalization of $425.98M, EMHTF has a significant war chest ($52.9M) of cash on the books, which stands against about $30.7M in total current liabilities. One should also note that debt has been growing over recent quarters. EMHTF is pulling in trailing 12-month revenues of $1.3M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 51.9%. We will update the story again soon as further details emerge. Sign-up for continuing coverage on shares of $EMHTF 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 $EMHTF, either long or short, and we have not been compensated for this article.

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