Charlotte’s Web Holdings Inc (OTCMKTS: CWBHF) continues to live up to expectations as a top pick in the cannabis sector. Just as was the case in our previous update, the stock continues to climb the ladder in what is turning out to be a break out year for the stock.
CWBHF Catalysts And Share Price Analysis
While a ‘buy’ rating from analysts was the main catalyst behind the upswing, the stock’s sentiments have yet again inched higher, on the company delivering impressive financial results. The financial results have once again underscored the fact that the company is on course for a record-breaking year.
The fact that Charlotte Web Holdings is among a cluster of few profitable cannabis companies underscores why the stock is exploding in the market. The company confirming a 74% increase in revenue for FY2018 also explains why investors are increasingly betting on the company’s long-term prospects.
The stock is currently trading in a steep uptrend after a solid start to the year. An 80% plus rally since the start of the year also provides a glimpse of what investors can expect as underlying fundamentals continue to improve.
With bulls in control, pullbacks should emerge as exciting entry positions. Immediate support on pullbacks is seen at the $17 a share level, above which the stock looks set to continue powering high. Bulls must also contend with $21 mark, which happens to be the next resistance level.
A violation of the resistance level should open the door for the stock to continue climbing the ladder. Conversely, a breach of the $17 a share support level could open the door for short sellers to come in and push the stock lower, probably back to the $13 a share mark.
What Does Charlotte Web Holdings Do?
Charlotte Web Holdings is a hemp-focused company that develops and distributes cannabidiol wellness products across the United States. It boasts of a diverse product line made up of topical products, capsules as well as tinctures.
Why is Charlotte Web Holdings Exploding?
Shares of Charlotte Web Holdings are exploding on the confirmation that the company registered a 74% increase in revenues in FY2018 that came in at $69.5 million. Conversely, gross profit increased 75% to $52.3 million. Revenues in Q4 surged 71% to $21.5 million as gross profit increased 63% to $16.3 million.
Q4 net income stood at $3.2 million compared to $2.4 million reported a year earlier.
The company is already projecting yet another record-breaking year on revenue growth. The passing of the 2018 Farm bill according to CEO Hess Moallem has the potential to accelerate revenue growth.
“We believe this important legislation will have a positive impact on consumer access to hemp-derived CBD products and for our valuable farming communities throughout the country,” said Mr. Moallem.
In 2018, the company benefited from record harvest that came in at 675,000 pounds, ideal for meeting future demand. The company reporting more than 10 times growth in harvested hemp underscores it is slowly becoming an industry leader.
Charlotte Web Holdings joins an exclusive club of a few companies that are capable of supplying large volumes of high-quality hemp extract in its supply chain.
“As the category and brand leader, our goal is to increase our market share, and with this bountiful harvest, we are able to satisfy our customer demands for 2019 and beyond. This incredible harvest ensures we can continue to produce our high-quality human nutrition products without being subject to constantly fluctuating market prices as is common with third-party sourced raw material,” Moallem in a statement.
Analysts remaining bullish about Charlotte’s Web Holdings also explains why it is flying high in the market. Cormark Securities analysts have already initiated coverage of the stock with a strong buy. Other analysts also polled by Thompson Reuters reiterated a buy rating with a consensus price target of $28.
Charlotte’s Web is likely to continue climbing the cannabis ladder given the increased cannabis production capacity as well as revenue growth. Improving operational efficiency should continue to strengthen investor confidence in the stock, ideal for fuelling the upside action.
For investors eyeing opportunities in the cannabis sector, Charlotte’s Web Holdings is an ideal pick as it is among a few names that are profitable in the multi-billion-dollar industry. The stock should continue powering higher as 2019 continues to roll.
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Disclosure: We have no position in CWBHF and have not been compensated for this article.