Agraflora Organics International Inc (OTCMKTS: PUFXF) is yet again an exciting cannabis pick after generating significant value for our subscribers. After rallying by more than 80% from our previous update, the stock has pulled lower, presenting yet another opportunity to buy the stock at a discount.
PUFXF Catalysts And Price Analysis
The pullback, in our view, makes AgraFlora Organics an exciting fundamental investment given the underlying fundamentals that look set to fuel further spikes on the upside. The acquisition of Organic Flower assets made up of domestic and downstream product formulation affirms the Company’s ability to generate long-term shareholder value.
The Company has also secured a landmark cannabis, supply agreement that will see it supply up to 100 million grams of premium cannabis flower over the next five years. Divestiture of Greece operations has also come into play in the recent past as AgraFlora Organics seeks to focus on the North American market given the maturity of the market and the vast opportunities for growth.
While the stock has pulled lower in view of the flurry of positive developments, it now looks set to embark on another leg higher after hitting a key support level. The $0.30 mark is the crucial support level above which the stock remains supported for further issued action.
As it stands, AgraFlora Organics is likely to make a run for the $0.60 mark, as was the case in the first quarter of the year. A rally followed by a close above the $0.60 resistance level should reaffirm the stock’s break out credentials.
Conversely, failure to stabilize above the $0.30 support level could trigger further sell-offs that could result in the stock plunging back to the $0.20 support level. A breach of the $0.20 support level could see the stock turning bearish and resuming its long-term bear run.
What Does AgraFlora Organics International Inc Do?
AgraFlora Organics bills itself as a growth-oriented and diversified Company focused on the cannabis business. The Company owns and operates indoor cultivation operations in Canada. The Company also leverages strategic relationships to develop best in class cannabis products and brands.
Agraflora Organics International Inc Acquisition Impact
AgraFlora Organics is a potential bounce-back play on easing short selling pressure after a minor correction. After pulling lower following a meteoric rise in the first quarter, the stock has very reason to register another leg higher, given the solid underlying fundamentals.
The strengthening of the Company’s core business, as well as long-term prospects with the acquisition of kept assets belonging to Organic Flowers is the latest catalyst likely to fuel the stock’s upside action. With the acquisition, the Company is poised to gain access to a 20% interest in the Delta Greenhouse complex as well as an array of domestic downstream/product formulation operations
According to the Chief Executive Officer, Brandon Boddy, the Delta Greenhouse acquisition is a major coup that should strengthen the Company’s ability to generate long-term shareholder value.
“The reunification of the 2.2 million square foot Delta Greenhouse Complex will create the critical mass needed in today’s evolving landscape for Canadian cannabis producers. The combined entity will be equipped with world-class upstream cultivation assets and diverse downstream capabilities that will act as a beachhead into the 700 million person European marketplace,” said Mr. Boddy.
With the acquisition, AgraFlora is poised to play host to the World’s second largest cannabis cultivation operation under glass. It should also solidify the Company’s first-mover trajectory.
Cannabis Supply Agreement
The acquisition could not have come at a better time as AgraFlora is fresh from signing a cannabis supply agreement with International Cannabis Corp. Under the terms of the agreement, the Company is to supply up to 100 million grams of premium cannabis over the next five years.
With the supply agreement, AgraFlora is to leverage its 2.2 million square feet of grow space under glass to service the supply agreement.
“AgraFlora and its JV partner are equipped with over 30 years of cultivation expertise, instilling us with on-going confidence to consistently deliver a safe supply of medicine for our high-value patient populations,” stated David Spilt, Chief Executive Officer of International Cannabis.
AgraFlora is an attractive fundamental investment after a recent pullback from 2019 highs. The pullback provides an opportunity to buy the stock at a discount, as it remains well positioned to power higher thanks to solid underlying fundamentals.
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Disclosure: We have no position in PUFXF and have not been compensated for this article.