The last time we looked at American Cannabis Company, its stock had shed more than 50% of market value on dropping to the $0.60 handle. However, we made the case on why the stock was destined to trade higher, as the company ramped up efforts to acquire new clients in a bid to grow its revenue base.Fast forward, American Cannabis Company has lived up to our analysis and in the process generated significant returns to inventors who took our advice. The stock has spiked from October lows of $0.6 a share and in the process touched record highs of $1.53 a share. AMMJ Daily ChartThe considerable rise has come on massive volume as investors continue to take note of the company’s growth prospects. While the stock has pulled back to the $1.23 handle, the correction presents a unique buying opportunity, pending a further move on the upside.On the upside, American Cannabis Company faces immediate resistance at the $1.3 handle, above which it could rise to the $1.53 handle, which is its 52-week high. Any sell-off should be limited to the $1.10 handle a critical support level, below which the stock could drop to the $0.9 handle, another key support level.Before we get into details of the catalysts behind the stock’s upward momentum, let us first understand what the company does in its pursuit of shareholder value.Business OverviewAmerican Cannabis offers consulting services to existing and people looking to venture into the legal cannabis business. The Company provides business planning ideas as well as market assessment services, needed to start and run a successful marijuana business. It also helps aspiring businesses in state licensing procurement.In addition to providing consulting services, American Marijuana develops and owns a portfolio of proprietary products. The company generates revenue by providing consulting services for starting marijuana business, manufacturing of proprietary products to serve the cannabis industry and by managing group partnerships.For the company to be able to hit its target when it comes to revenue generation, it must amass a broad client base.Renewed investor interest in the recent past is an indication that most of them believe the company is hitting the right notes when it comes to growing its client base.Growing Client BaseEarly this year, American Cannabis Company secured a contract with California City Cannabis Company. Pursuant to the agreement, the company is to acquire an equity stake in California City’s cannabis business park project, currently under development.The park will host future cannabis extraction, cultivation, and distribution businesses. It is also expected to host 16 greenhouses, able to hold up to 22,000 plants.
“We are ecstatic to be a part of this project in California City. We see tremendous potential in the scalability of this project and look forward to having a long-standing relationship with this client. Being equity participants in the project allows our company to focus on the long-term goals of our client and increase value to our shareholders,” said Terry Buffalo.
Also, the company has closed a similar contract with Cloud 9 Apothecary. Under the agreement, the company is to acquire an equity stake in Cloud 9’s upcoming project for the construction of closed-loop greenhouses. The project to be built out in Desert Springs comprises 22,000 square foot of cannabis cultivators.
“Strategic partnerships are something we believe will catapult Cloud 9 Apothecary into a statewide and national brand. These are a few of many reasons we partnered with American Cannabis Company; we are proud and confident that our partnership with ACC will be successful,” said CEO Remington Hudson.
The two consulting contracts build on an agreement that American Cannabis signed with a client in New Brunswick for the construction of a state of the art 63,000 square foot warehouse. The facility is to feature extraction technologies with the focus being on lean manufacturing.What Next Taking into considerations the company’s effort towards growing its client base, it goes without saying that it is on the right track on revenue growth. The company reported revenue growth in the first six months of last year as revenue went up by more than 100% in the second quarter. Net income from operating activities increased 226% to $123,826 from a net loss of (-$98,332) reported last year.Revenues from consulting’s services were up by 297% attributed to more consulting sales.Bottom Line American Cannabis Company revenues and earnings can only continue to grow as the company pursues clients on three key frontiers. With the company’ financial strength showing signs of improvement, the company should be able to expand and take advantage of the emerging opportunities in the legal cannabis space.Improvements in financial condition and performance metrics are expected this year as the medical and recreational cannabis market continues to expand. That said, American Cannabis remains well positioned to generate more shareholder value as it moves to expand its business domestically and internationally.We will be updating our subscribers as soon as we know more. For the latest updates on AMMJ, sign up below!Disclosure: We have no position in AMMJ and have not been compensated for this article.Image courtesy of Jurassic Blueberries via Flickr
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