CGrowth Capital Inc (OTCMKTS:CGRA) Hedges Its Bets

CGrowth Capital Inc (OTCMKTS:CGRA) continues to test the lower end of the trading range it has been in since April of 2016 in which the support level of $.0090 is being tested for the fifth time (which incidentally is very near where the stock is currently trading at $.0083). On May 25^th the stock looked like it was going to break through the support level making an intraday low of $.0009, and then shooting right back up to close at .0080. The intraday low took the stock back to the price level of early March 2016 when CGRA began its move to the upside.

As usual, judging from the price chart alone gives a mixed bag of signals. The chart indicates that the stock has been “flirting” with the current support level for almost three months now. This may worry some investors already in the stock, and definitely make some short-term traders a bit hesitant at tempting fate for a fifth time. However, a closer analysis of the Company’s current business activities and fundamentals may help to paint a different picture.We’ll start with a little background on the Company for those not familiar with it. CGrowth Capital Inc. is an alternative asset management company for businesses and assets focused on all aspects of mining, minerals, exploration, and commercial real estate. CGrowth Capital’s services and solutions are designed to assist land owners with monetizing undervalued assets by bringing commodities such as gold, silver, oil and gas, and dolomite to market. CGrowth Capital focuses on acquiring land assets, while also providing partners and affiliates with management services, capital, contract management and logistical services necessary for the successful execution of operations. Through wholly owned subsidiaries, the company has begun to strategically leverage real estate assets for maximum value within newly developing industries, including the cannabis industry, currently underway in Washington State.First, on the oil drilling front at the West Salt Creek field in Wyoming, drilling has been completed to 90% of the planned depth on current wells. The company took a pause to verify the depth and well bore path to the drilling target prior to bringing on the final contractor to complete the well, which is currently scheduled for end of June. Data to date indicates that drilling operations are on schedule for a successful drill. Operations in the field have since renewed in full at the West Salt Creek field and the Company is looking forward to a productive summer!On the cannabis side of the Company, CGrowth Capital’s subsidiary Wildfire Cannabis Company, a Chewelah, Washington based cannabis cultivator and producer of cannabis oils and other products, is in the top 30% of cannabis producers and processors in the State of Washington. Its revenues have been steadily increasing, reporting $275,700 for the first quarter of 2017. Their top product sale in Mar 2017 was "365 Rec Reserve (Super Jack)" which they sold to 365 Recreational Cannabis for $7.50/unit. Their average retail price was $14.60 (pre-tax), a markup of 1.9x. Wildfire Cannabis Company is on a growth trajectory, and is just getting started.Current market capitalization for CGrowth Capital Inc. is holding steady at $3.25 million, on 391.41 million shares outstanding as of May 26, 2017. Another notable factor that should be considered is the fact that CGrowth Capital Inc. is diversified in a way that creates somewhat of a “hedge” with respect to each of the two sectors it is involved in (oil and cannabis). Currently, the Trump administration is putting a slight damper on the cannabis industry with mixed signals regarding federal government enforcement of cannabis laws. This is causing investors to be a bit skittish on the cannabis sector.However, on the “other side of that coin,” the Trump administration is moving “full speed ahead” on increasing domestic oil production. CGrowth Capital Inc has both sides of the proverbial “coin” covered. While the Trump administration may talk tough, or pander to their base, about enforcing federal cannabis laws, the results of actually acting on the tough talk would only have downside political implications for the Republican party. Safe to say that there will be no federal enforcement of cannabis laws any time soon.With all the aforementioned in mind, the inevitable question stands: Is the stock currently exhibiting a discounted buying opportunity for all those investors that wish they would have bought the stock in early March of last year? Or is this a sign that the Company is about to “self-destruct”? If the stock was in the $50 to $100 price range, then the down side risk would warrant a “skittish” outlook. But at $.0083, the downside risk is minimal, and the potential for both the cannabis and oil sectors to take off is very real. We will be updating our subscribers as soon as we know more. For the latest updates on CGRA, sign up below!Disclosure: We have no position in CGRA and have not been compensated for this article.