Golden Leaf Holdings Ltd (CNSX:GLH) has bottomed out from all-time lows after posting impressive second quarter financial results and announcing plans to expand in California with the acquisition of a retail license. The developments have strengthened the stock’s sentiments in the market, triggering an uptrend that is slowly gaining momentum.
Golden Leaf Holdings Price Action
A 40% spike is already fuelling suggestion of market correction, as the stock continues to show signs of trading higher supported by solid fundamentals. The stock is currently flirting with a critical support level above the $0.20 mark.
Bulls appear to have short-term control, after the recent spike, waiting to see if they have what it takes to push the stock higher. Golden Leaf Holdings needs to stabilize above the $0.20 mark to affirm talk that a bear trend that had pushed it to all-time lows has finally lost momentum.
Above the $0.20 mark, the stock looks set to make a push for the $0.25 mark, seen as the next substantial resistance level. A breach of the $0.20 mark, on the other hand, could see the stock plunging to the $0.17 mark, seen as the next support level. Below the $0.17 mark, the stock remains susceptible for further declines, on the continuation of the long-term bear trend.
However, we do believe the stock remains well positioned to climb higher, taking into consideration recent developments that continue to strengthen the upwards momentum.
What Does Golden Leaf Holdings Do?
Golden Leaf Holdings is a Canadian public company engaged in the cultivation, production and the sale of recognized brands in the cannabis space. The company has operations in multiple operations including Canada as well as Nevada, California, and Oregon.
The company distributes its branded products through Chalice Farm’s retail dispensaries as well as through third-party dispensaries that act as sales Channels.
Why is Golden Leaf Holdings Climbing High?
Investor confidence in Golden Leaf Holdings has inched a notch higher in recent weeks on the company announcing record revenues for the quarter ended June 30, 2017. Revenue came in at $3.7 million compared to $2.1 million reported last year. The company attributes the increase to the acquisition of the Chalice Farms retail operations.
In addition to double-digit revenue growth, the company opened new Chalice Farms Dispensary in Happy Valley Oregon as it continues to pursue new streams of revenue. The company also signed a letter of intent for the acquisition of two large cultivation facilities as part of its expansion drive.
Introduction of several cannabis concentrates in Nevada further strengthened the company’s product line. Golden Leaf Holdings also received license approval from the City of Portland and state of Oregon for a new extraction facility.
Second quarter developments underline critical milestones in the company’s push to increase its cultivation, wholesale and retail capabilities. With Canada adult use market set to come online in October, the company remains well positioned to generate significant value on targeting a wider target market.
“Combining these efforts, our goal is to be cash-flow positive by the second half of 2019. Our work to build strong brands in key markets is central to the expansion of Golden Leaf, built on vertical integration where it is economically and operationally rational,” said Mr. William Simpson, Chief Executive Officer.
Golden Leaf Holdings has already appointed Jeff Yapp as its new Chief Marketing Officer, tasked with the responsibility of setting up the company’s global retail and franchising strategy. With more than three decades of experience, Mr. Yapp is also to oversee the company’s wholesale revenue, marketing, and public relations initiatives.
In addition, the Canadian cannabis company signed a definitive agreement for the acquisition of combined, cultivation production and retail license in Northern California. Dubbed as ‘Sweet 16’, it is one of the only licenses issued by the city of San Jose, which allows companies to operate in a vertically integrated fashion.
“Adding production and retail licenses complements our entry into California in a meaningful way. The approval of this single, multi-faceted license is expected to position us for this market swiftly,” said Mr. Simpson.
What Next For Golden Leaf Holdings
Golden Leaf shares have taken a flight, in recent trading sessions, on huge traded volume an indication of strengthening investor confidence in the company’s long-term prospects. A 76% year-over-year growth in revenue is a testament that the company’s expansion strategy is working as it continues to pursue new revenue streams.
In our view, the stock has a lot of room to run on the upside especially after the deep pullback. Given the solid fundamentals, now may be the best time to be an early bird in a stock headed to the moon as a bounce-back play.
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Disclosure: We have no position in GLF and have not been compensated for this article.