Cannex Capital Holdings Inc (CNSX:CNNX) is a breakout stock headed into the year-end, after a long period of consolidation. The stock has been on an impressive run in recent weeks, on the announcement of a $32 million investment by Gotham Green Partners.
Cannex Capital Holdings Price Analysis
The stock’s sentiments have also received a boost on the announcement of a strategic investment into Soma Group. The multi-state operator has also reiterated its commitment to pursuing opportunities in the legal U.S medical and recreational cannabis states of California and Nevada.
Investors have already started taking note of the underlying fundamentals that attest to the company’s long-term growth prospects. After plunging from highs of $1.80 to $0.60, the stock has bounced back in what appears to be bulls regaining control.
The stock has already breached a critical resistance level at the $1 a share level and now appears to be on its way to the $1.20 handle. The emerging uptrend faces immediate resistance at the $1.25 handle. A breach of the critical resistance level should open the door for the bulls to push the stock back to its 52-week highs.
On the downside, the stock faces immediate support at the $1 a share level, a breach of the critical support level could give short sellers a reason to push the stock to the $0.75 level, seen as the next substantial support level prior to the $0.60 mark.
In our view, Cannex Capital remains well positioned to continue powering high heading into year-end. Recent developments support further movements on the upside given the strengthening investors’ confidence in the company.
What Does Cannex Capital Holdings Do?
Cannex Capital Holdings casts itself as a diversified cannabis company that leases real estate properties and sells supplies to cannabis cultivators and processors. The company is also involved in the provision of turnkey real estate. It also provides cannabis growing-related consulting services.
$32 Million Cash Injection
A recent spike in share price comes on the confirmation of a $32 million investment in Cannex Capital by Gotham Green Partners. The investment should go a long way in accelerating growth as well as support Multi-State expansion initiatives.
For starters, the company is planning to scale its businesses in additional key states. Gotham Green Partners is seen as the right partner to help support the drive given its robust network of contacts as well as an excellent pipeline of opportunities.
“With this infusion of capital, we look forward to working with the management team to source additional strategic opportunities and to accelerate the Company’s growth,” said Jason Adler, Managing Member of GGP.
The new capital injection should go a long way in strengthening Cannex Cash balance that is already cash flow positive. It should also help in the funding of normal operating expenses as well as sustaining Cape from operating cash flow.
Cannex intends to use part of the financing to enhance its processing and distribution network. The company is also eyeing retail acquisition to strengthen its empire further and expand wings into additional U.S states. The company is also eyeing brand-building initiatives with both existing and new brands, which also includes cross-licensing.
Soma Group Investment
In addition, Cannex has completed a strategic investment in Soma Group and consequently acquired a 10% stake in the company for $750,000. Soma comes into the deal with an innovative Science-based Cannabinoid R&D and production platform. The acquisition paves the way for the company to expand into New Zealand’s cannabis market.
“The cannabis market is evolving rapidly, and while Cannex has a primary focus on the North American adult use cannabis market, we are excited to be involved with Soma and look forward to supporting their growth and development,” said Cannex Chairman, Roman Tkachenko.
What Next For Cannex Capital Holdings
Cannex Capital Holdings has powered out of a fierce sell-off wave after coming under immense pressure since the start of the year. If recent price action activity is anything to go by, then the stock looks set to finish the year on a high.
High turnover in traded shares in recent weeks attests to growing investor confidence about the company’s long-term prospects. Cannex Capital Holdings looks set to continue its solid performance in the market as investors continue to react to improving underlying fundamentals.
For investors looking to gain some exposure in the cannabis sector, then Cannex Capital Holdings looks like an ideal play as it continues to bounce back after a steep pullback.
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Disclosure: We have no position in CNSX:CNNX and have not been compensated for this article.