A strong move higher could be in the offing on Golden Leaf Holdings Ltd (OTCMKTS: GLDFF) delivering stellar financial results for FY2018. Revenue growth coupled with narrowing net loss are some of the developments that continue to prop market sentiments. The company is also fresh from delivering record product sales, underlying growth.
Golden Leaf Holdings Price Analysis
The earnings report could not have come at a better time as Golden Leaf is in dire need of new catalysts after succumbing to bearish pressure in recent weeks. The stock started the year on a roll followed by a rally to the $0.14 mark. A lack of news flow saw the stock shed a significant market value.
In recent weeks, the upward momentum appears to have gathered pace as the stock has bounced off the $0.08 level, back to the $0.10 level. In response to revenues beating estimates, the stock could as well edge higher on renewed investor interest.
The immediate resistance standing in the way of the short-term momentum turning bullish is the $0.11 resistance level. A rally past the resistance level should open the door for the stock to make a run for this year highs of $0.14.
For Golden Leaf to turn bullish and emerge as a bounce-back play, from current lows, a rally past the $0.14 critical resistance level is inevitable. It is at this level that the stock came under pressure after an impressive start to the year.
Below the critical technical level, the stock remains susceptible to further drops or trading sideways given the underlying bear trend.
What Does Golden Leaf Holdings Do?
Golden Leaf is engaged in the production and distribution of cannabis oil and flower products through its subsidiaries. The company also engages in the research and development of CBD products as well as leasing of equipment to licensed producers.
Why is Golden Leaf Holdings a Bounce Back Play?
Golden Leaf is a potential bounce-back play on delivering impressive financial results that continue to prop the stock’s sentiments in the market. For the fiscal year, ended December 31, 2018, revenues increased 43% to $16.5 million compared to $11.5 million generated in FY2017.
During the year, the company also generated record product sales of $16.3 million, representing a 57% year-over-year increase. Comprehensive net loss for the year shrunk to -$4.4 million compared to -$55.9 million reported a year earlier.
Golden Leaf capped yet another impressive year by attracting investments amounting to $25 million as cash balance increased 105% to $12.3 million.
According to the Chief Executive Officer, William Kulczycki, the solid financial results affirm the important steps that the company took to accelerate business growth. Expansion of cultivation capabilities, as well as wholesale brands, position the company to generate significant value with the expansion of the Canadian cannabis market.
“Looking forward, we remain focused on growing revenue by expanding our retail footprint, product array and cultivation presence throughout the U.S. and Canada. At the same time, we are committed to growing responsibly while improving our margin growth and EBITDA,” stated Mr. Kulczycki.
Some of the milestones achieved in 2018 that position the company for a strong performance in 2019 include the garnering of licenses for expanding and solidifying the company’s strategic position in the multi-billion industry.
For starters, the Golden Leaf has secured a license for the opening of a Marijuana dispensary in Oregon. The company has also secured regulatory approval to operate an extraction facility in the state in addition to carrying out cannabis cultivation operations.
The company is also increasingly unveiling new cannabis products as it seeks to meet the needs of the diversified cannabis marketplace.
“With a differentiated brand portfolio and increased scope of operations, we are well positioned to benefit from the rapidly growing North American cannabis market,” added Mr. Kulczycki.
Golden Leaf stock price does not reflect the company’s tremendous potential especially on the posting of impressive financial results. Robust revenue growth complemented by narrowing net loss underscores underlying growth and long term prospects.
The stock appears to be a bargain at current levels, as the upward momentum continues to gather pace. The stock is likely to shoot higher on finding support above the $0.11 resistance level.
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Disclosure: We have no position in GLDFF and have not been compensated for this article.