Why Cresco Labs Inc (OTCMKTS:CRLBF) Should Be on the Radar this Week

Why Cresco Labs Inc (OTCMKTS:CRLBF) Should Be on the Radar this Week


The question for key support is underway in shares of Cresco Labs Inc (OTCMKTS:CRLBF) with the stock nearing a test of the critical $10/share level. That would be the second test of the level in the past few days, forming a possible double-bottom in the context of a strong and enduring upward trend. To make matters more interesting, the company just released its unaudited financial results for the first quarter ended March 31, 2019.

According to the release, “first quarter revenue of $21.1 million, up 313% year-over-year and 24% quarter-over-quarter, and first quarter pro forma revenue1 of $33.9 million, which includes the impact of pending acquisitions in New York, Massachusetts, Florida, and in California with Origin House.”

CRESCO LABS ORD (OTCMKTS:CRLBF) trumpets itself as a company that manufactures and sells medical cannabis products in the United States. It offers cannabis dry flower; vaporizer forms of cannabis; cannabis oil in capsule, oral and sublingual solutions; cannabis in topical; and other cannabis products.

The company also provides cannabis infused edibles, including chocolate and toffee confections, fruit-forward gummies, and hard sweet and chews. Cresco Labs Inc. sells its products under the Cresco brand.

In addition, it operators a Hope Heal Health dispensary in Fall River, Bristol County, Massachusetts.

The company was formerly known as Cresco Labs, LLC and changed its name to Cresco Labs Inc. in November 2018. Cresco Labs Inc. is headquartered in Chicago, Illinois.

According to the release, “Cresco Labs, based in Chicago, is a leading U.S. cannabis company with experienced management, access to capital and a demonstrated growth strategy. As a differentiated grower, processor and retailer of premium cannabis operating in ten states, the company focuses on entering highly regulated markets with outsized demand potential and high barriers to entry. Its impressive speed-to-market gives Cresco a distinct competitive advantage as it replicates its model to expand its national footprint. Cresco’s proven ability to execute is complemented by a cutting-edge brand strategy spearheaded by several of the brightest minds in consumer marketing in the nation. Cresco’s products are tailored to all major consumer segments: everyday cannabis, medicinally focused, connoisseur grade, and chef inspired edibles by James Beard Award-winning pastry chef Mindy Segal. Learn more about Cresco Labs at crescolabs.com.”

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As noted above, CRLBF just announced its unaudited financial results for the first quarter ended March 31, 2019.

The stock has suffered a bit of late, with shares of CRLBF taking a hit in recent action, down about -8% over the past week. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -14%. What’s more, the listing has benefitted from a jump in recent trading volume to the tune of 18% over what the stock has registered over the longer term.  

“Since the beginning of the year, we have made significant progress on the vision we have laid out for building Cresco into the most important company in the cannabis industry,” said Charles Bachtell, Co-founder and CEO of Cresco Labs. “We have continued to execute well from an operational standpoint, generate higher levels of revenue in our existing markets, and deliver strong profit margins. Through our pending acquisitions of Origin House and VidaCann, we have also put a foundation in place that we believe will enable us to capture a leading share in the North American cannabis market. We believe we have built the most strategic geographic footprint of any cannabis company in the United States, and now with the acquisition of Origin House, we will have the distribution platform to enable us to take market share in the largest and most important markets in the cannabis industry. As we continue to effectively execute on our strategic plan, we expect to create significant additional value for our shareholders.”

At this time, carrying a capital value in the market of $445M, CRLBF has a significant war chest ($151.5M) of cash on the books, which compares with about $49.5M in total current liabilities. One should also note that debt has been growing over recent quarters. CRLBF is pulling in trailing 12-month revenues of $28M. However, the company is seeing recent declines on the top-line on a sequential quarterly basis, with revenues falling at 0% as of its latest reporting period. 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 $CRLBF 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 $CRLBF, either long or short, and we have not been compensated for this article.

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