Hexo Corp (NYSE:HEXO) Joins the New Green Bounce

Hexo Corp (NYSE:HEXO) Joins the New Green Bounce


Shares of Hexo Corp (NYSE:HEXO) could be worthy of “radar” status right now as the cannabis space starts to heat back up following recent legislative action in DC. To help add some color to the story, the company just provided additional information about licensing at its facility in Niagara, Ontario.

According to the release, “In November 2018, prior to HEXO Corp’s acquisition of Newstrike Brands Ltd., the UP Cannabis cultivation facility in Niagara was licenced by Health Canada and production from that facility began shortly after. Block B – the space in question – was included in the licence application. In October 2018, Health Canada requested additional information for the application, pertaining specifically to the building where Block B is housed. When the licence was received, the team was under the impression that Block B was included in the licence. In February 2019, Health Canada conducted an inspection of the facility, which included Block B and no observations were made about cultivation in this space. This further reinforced the assumption that it was indeed a licensed growing space.”

Hexo Corp (NYSE:HEXO) trumpets itself as an award-winning consumer packaged goods cannabis company that creates and distributes innovative products to serve the global cannabis market.

Through its hub and spoke business strategy, HEXO Corp is partnering with Fortune 500 companies, bringing its brand value, cannabinoid isolation technology, licensed infrastructure and regulatory expertise to established companies, leveraging their distribution networks and capacity. As one of the largest licensed cannabis companies in Canada, HEXO Corp operates facilities in Ontario and Quebec.

The Company is also expanding internationally and has a foothold in Greece to establish a Eurozone processing, production and distribution center.

The Company serves the Canadian adult-use markets under its HEXO Cannabis, Up Cannabis and Original Stash brands, and the medical market under HEXO medical cannabis.

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, HEXO just provided additional information about licensing at its facility in Niagara, Ontario.

The chart shows 20% tacked on to share pricing for the company in the past week. Furthermore, the listing has benefitted from a jump in recent trading volume to the tune of just shy of 150% over the long run average.

“HEXO is keenly focused on producing high-quality products that Canadians can trust,” said HEXO CEO and co-founder Sebastien St-Louis. “Upon discovering that cannabis was being grown in an inadequately licensed area of the Niagara facility we immediately ceased all activities and notified Health Canada. While we are disappointed with what we uncovered, we assume responsibility for any issues with UP products prior to the acquisition.”

Currently trading at a market capitalization of $553M, HEXO has a significant war chest ($161.9M) of cash on the books, which compares with about $52.7M in total current liabilities. One should also note that debt has been growing over recent quarters. HEXO is pulling in trailing 12-month revenues of $47.5M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 993.4%. 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 $HEXO 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 $HEXO, either long or short, and we have not been compensated for this article.

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