The year of shocking volatility in the cannabis sector is slowly coming to a close and with it comes a reflection by different companies on their past performance and expected goals. One company in the midst of such goal reviews is Harvest Health & Recreation Inc (OTCMKTS:HTHHF).The company began trading back in November during a period when their share price was presumed to have been trading at a premium as well as during a period of heightened volatility and decline in the cannabis sector. The above two resulted in volatile movements in the company’s share price as it rose from $5 as at 16th November to highs of $6.25 as at 26th November and thence declined drastically to lows of $3.5 as at 22nd December. The above price action is shown in the chart below: HTHHF Daily ChartThis period of consecutive decline has, however, changed over the past five days during which period the firm has experienced a turnaround. The share price has then increased from $3.5 to $4.59, a 31.1% increase, significant of a 6.22% daily increase as shown in the chart below: HTHHF Daily ChartAs a result of this turnaround, we opted to evaluate the firm with an incline towards establishing the catalysts which sparked this price increment. This piece presents a summary of our review.
History of HTHHF
Harvest Health & Recreation Inc which was founded back in 2011 and received its license back in 2012 is headquartered in Tempe, Arizona. The firm engages in the cultivation, processing and possession, use, sale and/or distribution of cannabis specific to the medical cannabis space. During this period, it has grown to venture into eight different states: Arizona, Arkansas, California, Maryland, Nevada, North Dakota, Ohio, and Pennsylvania with the propensity to grow into five more states: Florida, Illinois, Massachusetts, Michigan, and New Jersey. Currently, the firm has the largest market share in its home state.The firm has also grown and as of 16th November is listed on the Canadian Securities Exchange, ensuring its reach is felt and effecting their globalization strategy – discussed later in this piece.
Listing on the CSE
Prior to trading as Harvest Health & Recreation Inc, the firm was trading on the TSX Venture Exchange as RockBridge Resources. This was, however, changed by a reverse takeover which led to their name change.The firm’s listing has been driven by a number of value propositions to investors, key among them being its continued profit position. The company’s vertically integrated nature has also played a crucial role in seeing it grow its business case and expand across states while maintaining its brand. Thus far, it has hired over 300 full-time employees and continues to hire as they expand. The result has thus been that their managers opted to look into Canada as the first stop to their expansionary strategy, one which they have begun implementing.The move thus allows them to benefit from the continued growth within the Canadian market, a market which has been estimated to hit $6.5 billion by 2020 according to a CIBC analyst and deemed to provide players with a combined $1 billion in EBITDA. The firm thus expects to build on their already working business model to grow their reach within Canada thus maintain their growth and profit position.
Global Growth
The company has, over time, prided itself in being an efficient player.Back in October, the firm engaged in a reverse takeover of RockBridge Resources which saw them merge their synergies and list their shares. The firm later conducted a private placement – 33.3 million shares at $6.5 per share – which saw them raise an additional $218.5 million, building further onto their financial muscle. Not only have they harnessed their expertise and knowledge base in creating one of the largest cannabis players in the United States but also ensured that they made a profit in the process. Over 2017, they recorded revenues of 29 million, allowing for their profit to be cemented.Their trajectory is currently pegged on two factors: cementing their foothold across the United States and Canada as well as ensuring they boost their cultivation and grow their distributable produce. The former has been catered to through the listing on CSE as well as identification of four states within which to invest. For the latter; over the next 18 months, the firm expects to cultivate an additional 720,000 square feet of cannabis through indoor, outdoor and greenhouse ventures. By harnessing this produce, HTHHF expects to continue rolling out new products while meeting the current demand of their client base.All in all, with the firm seeking to maintain the sold value proposition as well as grow into new markets, their well-effected growth into different new markets and product lines will play a vital role in ensuring this comes to fruition. For now, with the world’s largest cannabis market still being the United States, HTHHF’s CEO, Mr. Steve White, remains committed to dominating this marketplace prior to venturing out globally. His vision for the company, however, remains to become the largest cannabis player in the globe, as stated by Mr. White who was quoted as saying:
"The world’s biggest cannabis market is the U.S. and it is ripe with opportunities. We are focused on capitalizing on a host of opportunities in the states, driving value for our shareholders and are on pace to become the largest cannabis company in the world."
Conclusion
The continued growth by HTHHF comes as no surprise given this review. With the firm remaining profitable during a period when large cannabis companies have continued to post losses as well as growth across both the United States and Canada, their trajectory seems to be towards the green zone. We are therefore bullish about the stock.We will be updating our subscribers as soon as we know more. For the latest updates on HTHHF, sign up below!Disclosure: We have no position in HTHHF and have not been compensated for this article.
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