CBDD is a penny stock that has been quiet for the past year. Volume has been low and there were no price spikes. Trading action was range-bound until now.
The reason for the recent price spike was blowout Q3 numbers. Now, we know that many are unhappy that the stock closed near the lows of the day. However, the fundamentals are strong. In this article, we lay out the bull case for CBDD and why it can be a major winner for investors over the next coming months.
First up, here’s a little background info for those not familiar with CBDD. CBD of Denver, Inc. is a full-line CBD and Hemp oil company selling Black Pearl CBD hemp products and the owner of CBD Social Network.
CBDD Q3 Results
In Q3, CBDD reported that gross revenues increased nearly 10-fold over the second quarter to $5,963,820.00 with gross profits of $484,666.00. Rockflowr GmbH generated the bulk of that revenue and is still growing. Rockflowr has been able to source hemp flower from the United States in large quantities and its distribution has grown to more than 7 countries in Europe.
CBDD offers a superior CBD product that is full-spectrum without depending on THC to activate the benefits of cannabidiol. Black Pearl CBD has 0% THC but is not an Isolate where the THC is stripped from the product rendering it ineffective. CBBD uses a proprietary technique adding terpenes as the activation ingredient, resulting in a product that is the finest in the industry.
CBDD has agreed to a working relationship with a Denver based company to supply up to two tons of hemp per month to CBDD’s Rockflowr subsidiary.
Sourcing product from the United States gives Rockflowr a steady supply of high-grade hemp flower. They have been expanding at a rapid pace and opening a supply chain from Denver is allowing them to broaden their sales base in Switzerland and throughout Europe.
CBDD Bulk Sale
Driving Q3 results has been a deal that CBDD signed over the summer. On June 30, Rockflowr GmbH entered into an agreement for 24 months with a Swiss company for the sale of bulk CBD flower.
The first purchase by the customer was signed on July 7, for 500 kgs (more than half a ton) of Hybrid Indoor CBD Flower. This one sale amounted to 341,500 CHF or approximately $363,000 USD in revenue. They agreed to purchase an additional 1,000 kgs per week for an initial 3-month trial period. Total revenue per week could exceed 680,000 CHF or 2,728,000 CHF per month.
CBD Welt 24
CBD Welt 24, GmbH is also expanding its production/distribution of pollen and is currently looking to purchase a larger pollen extraction machine. Selling pollen has become a very profitable segment of their business. CBD Welt 24 is not only selling raw pollen but also pressing the pollen into blocks, similar to Hashish, only without the THC. CBD Welt 24 is still on track to harvest every month and is seeking to expand its operations.
Biomass can be purchased for as little as 30,000 CHF a ton. CBDD can convert one ton of Biomass into 200 – 250kg of Pollen. Pollen is then sold for up to 450CHF a kilo. Once the pollen is extracted the leftover biomass is converted into CBD oil. CBDD already sells pollen to customers in Germany.
CBD Welt 24, GmbH, has leased a new indoor grow facility in Zurich. The facility has 40 1000-watt lights and has room to support approximately 1,200 plants. The company expects the first harvest sometime this month.
Black Pearl CBD Website
CBDD has 2 new products for their Black Pearl CBD website. The first product is a CBN/CBG gel cap which will be sold in 30 count bottles. Reports show that CBN and CBG can help with sleep and relaxation. The second product is a CBD pain stick containing 3.8% full-spectrum CBD.
CBDD Market Opportunity
CBD stocks have been hurt by two things this year – the FDA and COVID-19. FDA scrutiny of CBD stripped food products from the menu in 2019. However, the FDA appears on a path to legal clarity via a bill such as HR 8179 or a change in FDA enforcement policies. The CBD industry expects actionable guidance by the FDA in 2021 and a vaccine or treatment for COVID-19 should exist by this timeline.
Overall, cannabis and CBD stocks have underperformed the market over the past year. Recently, market sentiment has started to shift towards the bulls. A big part of the enthusiasm surrounds the upcoming Biden/Harris administration. Vice President-elect Kamala Harris said on the debate stage that the Biden/Harris administration is in favor of cannabis legalization on the federal level.
CBDD Bottom Line
Currently trading with a market cap of just $8 million, CBDD is extremely undervalued at current prices. The company just reported a 1000% increase in quarterly revenues to almost $6 million in just three months. These are incredible numbers for a company that is trading under a penny. When you look at the numbers CBDD is reporting that the company is focused on using equity to acquire profitable Swiss assets at attractive valuations, we don’t think shares will remain this cheap for much longer. CBDD is a play to own, not trade.
As always, good luck to all (except the shorts)!
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Disclosure: We have no position in OTCMKTS:CBDD or any of the securities mentioned. We wrote this article ourselves and it expresses our own opinions. We are not receiving compensation for it. We have no business relationship with any company whose stock is mentioned in this article. Insider Financial is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This article is not a solicitation or recommendation to buy, sell, or hold securities. This article is meant for informational and educational purposes only and does not provide investment advice.