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Emerald Health Therapeutics Inc (OTCMKTS:EMHTF) Is An Exciting Cannabis Play

Emerald Health Therapeutics Inc (OTCMKTS:EMHTF) Is An Exciting Cannabis Play
Written by
Jim Bloom
Published on
September 20, 2018
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Is Emerald Health Therapeutics Inc (OTCMKTS:EMHTF) a buy? That’s the big question, as the stock continues to bottom out after a steep pull back from record highs of $7.77 a share. After plunging to the $2.1 mark, the stock has bounced back with the upward momentum showing signs of ticking higher.

Emerald Health Therapeutics Price Action

Pullbacks have so far acted as opportunities from where bulls have continued to push the stock higher. With bulls appearing to have regained control from short sellers, the stock look set to continue powering high especially after a 60% plus rally over the past one month.Investors’ confidence in Emerald stock has ticked higher in recent weeks, having become clear that the company’s capacity expansion is on track. The signing of supply deals is another development that continues to strengthen the stock’s sentiments in the market. Inventory levels ticking higher and the company showing signs of pursuing acquisitions to accelerate growth are other positive developments. EMHTF Daily ChartThe stock is currently trading in a steep uptrend and closing in on a critical resistance level at the $4.80 mark. A rally followed by a close above the resistance level should reaffirm the emerging uptrend from where bulls could push the stock higher. On the downside, the stock faces immediate support at the $2.90 level. A sell-off followed by a close below the support level could see the stock plunging to the $2 a share level.Taking into consideration a string of positive developments in the recent past, it is becoming increasingly clear that the stock will continue climbing higher.

About Emerald Health

Emerald is a licensed producer and seller of dried cannabis as well as cannabis oil for medicinal purposes. Headquartered in Victoria Canada, the company owns a 50% stake in Pure Sunfarms which is engaged in Commercial cannabis production. It also owns Agro-Biotech a licensed Cannabis Producer.

Increasing Cannabis Production Capacity

A recent spike in Emerald Health Therapeutics share price comes on growing investor confidence about the company’s long-term prospects. For starters, the company is gaining traction on the cultivation of cannabis, through its wholly-owned subsidiary Agro Biotech. It has also increased its licensed cannabis production area at Pure Sunfarms to about 420,000 square feet.The company is on track to achieve 1.1 million square feet of growing capacity. The milestone should allow the company to enjoy economies of scale.

Supply Agreements

In addition to increasing production capacity, Emerald Health Therapeutics is also increasingly looking for buyers for cannabis harvests and products. The company has already signed a string of supply agreements, further strengthening its sales channel. With the Adult use market set to go online next month, the company is set to be one of the chief suppliers of Ontario Cannabis Retail Corporation.

“We’re proud to partner with the OCS to provide adults in Ontario with the opportunity to discover our products. We look forward to helping Ontario expand its supply and diversity of products to meet anticipated demand and consumer preferences,” said CEO Chris Wagner.

Signing deal with OCS is a milestone achievement as the company will now be able to address the needs of more than 14 million people.Newfoundland Labrador Liquor Corporation has also selected the company to be one of its suppliers for cannabis products. The company is planning to venture into the adult use market and sees Emerald Health Therapeutics as a perfect partner for addressing the needs of the entire province.

Acquisitions Push

In a bid to accelerate growth and take out a bigger piece of the multi-billion cannabis business, Emerald Health Therapeutics is eyeing acquisitions as well as partnerships. In the recent quarter, the company completed the acquisition of Agro Biotech for CA$90 Million. The acquisition should see the company’s capacity to increase by 10,000 kilograms a year going forward.The company has also inked a strategic partnership with Factors R&D Technology. With the partnership, the company gains access to valuable expertise in Good Manufacturing Practice for softgel production and packaging.

What Nest For Emerald Heath Therapeutics

Emerald Health Therapeutics looks set to continue powering high as investors take note of a string of positive developments that affirm its long-term prospects. The company remains well capitalized, at over CA$70 million, to pursue growth opportunities.The signing of supply agreements is another development that affirms the company’s prospects as they are poised to complement the company’s growing production capacity. That said the stock looks like an exciting pick for investors looking to gain exposure in the cannabis sector given, as it has a lot of room to run on the upside.We will be updating our subscribers as soon as we know more. For the latest updates on EMHTF, sign up below!Disclosure: We have no position in EMHTF and have not been compensated for this article.

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