As the cannabis space continues to inflect back into a major new bull market context, one stock that stands out as a possible emerging growth story in the California market is Cannabis Strategic Ventures (OTCMKTS:NUGS). While many stocks in the cannabis space appear to be turning around after 18-24 months of bearish technical action, the biggest gains for new money flowing into this group will be earned by finding the emerging growth stories. We would point to NUGS as a prime example.
As a case in point, the company just announced that it has seen record total monthly cannabis sales and record sequential monthly cannabis sales growth so far in the month of April, with total gross cannabis sales for April running at an annualized pace of more than $6 million, up more than 400% over average monthly sales seen in calendar Q1. This stands in contrast to something like Harvest Health & Recreation Inc (OTCMKTS:HRVSF), which has been pushing higher because of divesting its core assets to relieve a financial burden. NUGS, by contrast, has been ripping on core expansion.
Cannabis Strategic Ventures (OTCMKTS:NUGS) is an interesting story because it would appear that the company has the ability to increase capacity at a time when it is seeing elevating market share as its distribution relationships multiply.
“This data should help to better contextualize our prior announcement detailing our expansion in total cannabis production capacity,” commented Simon Yu, CEO of Cannabis Strategic Ventures. “Demand is through the roof. We don’t see this as a consequence of the stay-at-home policy. This is about improving market positioning in a strong structural growth boom. We are establishing a wider and wider footprint in terms of distribution partners, and the overall market is continuing to experience powerful growth in demand at the end market level.”
We would also note that the company recently announced that it is moving toward the launch of branded products. That would increase its margins on each unit of capacity. All of that adds up to 3 different sources of improving value for its shareholders: more production, more demand, and bigger margins. It’s basically a perfect storm of execution in a positive context.
According to company materials, “Cannabis Strategic Ventures Inc. (OTC: NUGS) is one of the largest publicly traded marijuana cultivators in the United States. The Company is Los Angeles-based and incubates, develops and partners with category leaders within the cannabis and ancillary sectors. The Firm’s NUGS brand experience provides operational and financial strategic partnerships and a range of essential services to emerging and existing Cannabis consumer brands.”
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As noted above, NUGS just announced that it has seen record total monthly cannabis sales and record sequential monthly cannabis sales growth so far in the month of April, with total gross cannabis sales for April running at an annualized pace of more than $6 million, up more than 400% over average monthly sales seen in calendar Q1.
Traders will note 52% added to share values of the stock over the past month of action. What’s more, the company has registered increased average transaction volume recently, with the past month seeing topping 160% above the average volume levels in play in this stock over the longer term. HRVSF is moving as well, as noted above, but for very different reasons. We don’t mean to pick on Harvest. It simply represents an instructive contrasting example.
According to the company’s most recent release, “Management notes that the Company finalizes sales on a midweek basis and has started to consistently run out of inventory each week. However, as announced in its release dated April 23, 2020, the Company has recently expanded total cannabis production capacity at NUGS Farm by 88% to 150%, which means it may be producing approximately twice as much cannabis product over the next 45 to 60 days as it has produced so far this year.”
Currently trading at a market capitalization of $26M, NUGS has a chunk ($222K) of cash on the books, and is pulling in trailing 12-month revenues of $2.9M. In addition, the company is seeing recent top-line growth, with sequential quarterly revenues growing at 91.4%. That could accelerate further based on what we are hearing from this company in its recent communications. We will update the story again soon as developments transpire. Sign-up for continuing coverage on shares of $NUGS 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 $NUGS, either long or short, and we have not been compensated for this article.