Hemp Inc. (OTCMKTS:HEMP) has lost more than 50% in market value since the start of the year. While the sell-off has come on huge volume, we remain bullish about the stock’s prospects as highlighted in our previous review.
Hemp Inc. has the potential to be a leader in the industrial hemp business if recent developments in the company’s core business are anything to go by. The pullback thus presents a unique opportunity for investors who missed out on the initial run to buy, highly discounted shares.
In the run-up to the new year, the stock enjoyed a bull run that catapulted it to highs of $0.04 a share. Given that, the stock has since dropped to the $0.02 handle; it needs to close above the $0.03 handle, if it is to make a push for the $0.04 handle, ahead of its 52-week high of $0.06.
On the downside, the stock is currently trading at a key support level, a close below which could see it drop to its 52-week low of $0.01.
Before we make the case on why the stock is destined to trade higher from the current level, let us first look at what the company does in pursuit of growth and shareholder value.
Hemp Inc. Background Description
Hemp Inc. is a cannabis-focused company that produces products made from industrial hemp. Through its subsidiary, Industrial Hemp Manufacturing, the company produces lost circulation material and spill absorbents commonly used in the oil and gas industries.
Also, the company offers products and services to the medical and recreational marijuana industries. It also operates a website that provides entertainment and information related to the medical marijuana industry.
Hemp Inc. has caught our attention as a bounce-back play, on the announcement that the Indiana House of Representatives has passed a bill that allows farmers to grow industrial hemp. The bill authorizes the agricultural department to establish a pilot program to study the growth, cultivation, and marketing of industrial and products.
The authorization paves the way for Hemp Inc. to affirm its position in the industry when it comes to processing industrial hemp. That said the company should be able to generate significant revenues as it affirms its position as the nation’s leading processor of Industrial Hemp.
“Indiana’s unanimous vote underscores the fact that the visionary mindset of Hemp, Inc. is way ahead of the curve as each state, one after another, relentlessly legalizes industrial hemp, thus giving Hemp, Inc. a huge jump in the industry. As far as processing industrial hemp in the US goes, there’s nobody even in second place,” said CEO Bruce Perlowin.
The Indiana bill also paves the way for Hemp Inc. to build one of its Veteran Village Kins Community in the area for growing Hemp.
Purchase Order Fulfillment Milestone
A further indication that Hemp has transitioned from being a mere startup company to an operational industrial hemp powerhouse is the fact that it has full filled a massive purchase order. The company has shipped the first order of its proprietary spill absorbent family of products, Spill-Be-Gone to a company in Georgia.
The product, which is made from the kenaf plant, can be used for the cleanup of oil, diesel fuel, and hydraulic fluid. Hemp Inc. is also in the process of making shipments for its loss-circulation material Drill Wall and Kenaf Fiber
According to the Chief Executive Officer, providing solutions to industries that have a direct impact on the environment, provides a win scenario for the company. The executive expects the purchase orders to further broaden the company’s popularity in the industry as its footprint continues to grow.
“With the largest fiber decortication plant and industrial hemp mill in North America, we are committed to providing an environmentally friendly, non-toxic solution to cleaning up spills and absorbing various materials,” said David Schmitt, COO of Hemp, Inc.’s wholly owned subsidiary, Industrial Hemp Manufacturing, LLC.
Cannabis vs. Industrial Hemp
Hemp Inc. has paid a hefty price in the market, on U.S Attorney General, Jeff Sessions, rescinding the Cole memo, a move that ignited a sell-off of marijuana stocks. The fact that the attorney general stance only covers cannabis companies and not industrial Hemp firms means Hemp Inc. core business is not under any threat at the moment.
That said, investors should start taking note of the fact that the company has about 18 million pounds of kenaf inventory and another 2 million pounds yet to be harvested that cannot be affected by the federal government. Hemp Inc. Should remain a safe bet for investors looking to diversify their portfolios in the fast-growing space.
Hemp Inc. has done an impressive job to position itself as a global leader in the industrial hemp industry. Backed by one of the largest multi-purpose industrial hemp processing facility in the Western hemisphere, the company should be able to generate significant returns as it moves to process industrial hemp across the country.
Sessions tough stance on marijuana is not expected to spill over into industrial hemp which for now leaves Hemp Inc. a safe bet in the industry.
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Disclosure: We have no position in HEMP and have not been compensated for this article.