Grow Condos Inc (OTCMKTS:GRWC) Has Begun Bouncing Back

Grow Condos Inc (OTCMKTS:GRWC) stock has had a prolonged bear run since May 2017.The stock has barely recovered to its highs of $1.10 in around March. The stock has started trading above $0.10 since November 2017 and seems to be holding above $0.8 per share. The prolonged bear market seems to be over without major pullbacks in its share price and the stock is at the cusp of a major recovery. GRWC Daily ChartThe stock has been underpriced for a while and the following article highlights why the stock is now a good pick.Contrary to market sentiments on the Marijuana industry the company core business, which is Real Estate, will be vibrant when considering the trends in the global markets and home markets. But first let’s have a brief overview of the company.Background InfoGrow Condos Inc. focuses on providing industrial properties mainly gauged towards the Marijuana industry. The company buys, sells and leases the properties to prospective Marijuana growers. The company’s portfolio of services also includes an end to end consulting service to Marijuana growers. The services focus on Real Estate, equipment and finance, labor and logistics, and brand building. In a nutshell it is a one-stop-shop for anyone who wants to venture into the Marijuana industry. The has company established itself as a growth partner in the cannabis dynamic industry that is now gaining attention to many companies, including pharmaceuticals.PartnershipGRWC has also developed an advantageous strategy designed to enhance the Company’s spectrum of service offerings, bolster corporate awareness through mutually beneficial relationships and Joint Ventures, and strengthen its financial position with supplemental revenue streams. Such partnerships include GRWC's resource (which focuses on human resource management) and Can Lease LLC which is a leasing company, and even academic professionals who continue to advice on the best practices in activities revolving the cannabis industry. The partnership base will be strategic in keeping the company’s unique offering ahead of new developments and disruptions within the industry.Marijuana IndustryEven though the Marijuana industry is considered to be at its infancy there are enabling forces globally that will result in a global boom in the industry in 2018. Regulations around marijuana use (both medicinal and recreational) are predicted to loosen around the globe in 2018. The pace of legalization of marijuana is increasing across America, with major cities, like Michigan, passing laws that make the sale, possession, processing and distribution of marijuana related products easier by the day. A majority of Americans (54%) support the legalizationof marijuana, therefore more legalization across states and cities is bound to continue. The supporting legislations are key in the growing market that is bound to hit $25 billion dollars in sales by 2025.In addition, Canada has introduced regulations that will make it easier for eligible adults to buy marijuana, also inclusive is a reduction in tax that will see cannabis competing with other recreational drugs such as alcohol. The regulation is also a boost to the Canadian Cannabis sector that is expected to be worth more than $8 billion in 2020, presenting an opportunity for Growing Condos Inc. to exploit Canada’s rich market. Overall the market has scale and is growing therefore Grow Condos Inc. will gain revenues across the value chain of the cannabis industry in the near future given its strategic position in the industry.Financials.The company’s financials are showing momentum on the earnings side. The company has managed to cut losses and grow their pretax profits on average of 53% for the last 3 quarters ending March 2017. The momentous recovery and growth is underpinned by a widening acceptance of marijuana and widening legislations across America. The major expenses have been professional fees which stood at $94 236 and marketing fees at $100,236. We are yet to see improvement in this, however given the management’s competence and experience, we believe this major expense will be brought down in the coming quarters, driving the company to profitability. On the positive side the management has managed to maintain revenues at $85,968 for the nine months ending March compared to $89,650 during the same period in 2016.The profitability of Grow Condos Inc. has also been undermined by interest expense, which is the result of mortgages the company has taken to acquire major property across Oregon. This expense is short term and it still remains whether the company will acquire cheaper sources of financing in the future to improve profitability.Despite its large operating expenses, the company has managed to remain cash-flow positive, mainly from its operating activities, indicating that the business is viable and capable of returning returns to its shareholders in the near future. The company has been silent on its dividend policy, but once it reaches profitability, paying dividends will be priority to reward investors for assimilating the risks.ConclusionGRWC has been largely oversold on the premise of poor performance of cannabis stocks due an overarching political stance against cannabis, but we believe the fundamentals will carry the day together with increasing enabling legal environment within America.We will be updating our subscribers as soon as we know more. For the latest updates on GRWC, sign up below!Disclosure: We have no position in GRWC and have not been compensated for this article.