Kush Bottles Inc (OTCMKTS:KSHB): A Buy Opportunity on Solid Fundamentals

A steep pullback might as well have presented the best buy opportunity as Kush Bottles Inc (OTCMKTS:KSHB) continues to show signs of bottoming out. The stock is due for a turnaround, after a recent bear run, given that underlying fundamentals have continued to tick higher from our previous update.Kush Bottles Price ActionKush Bottles has done an excellent job in serving a string of catalysts that look set to strengthen investor confidence in the stock. The stock is currently trading at the $4.09 level, near a critical support level at $3.70 mark. To avert a further slide, the stock needs to rise and stabilize above the $4.40 mark, which is a strong resistance level. KSHB Daily ChartAbove the $4.40 mark, the stock should be on its way to the $5 a share mark. A sell-off followed by a close below the $3.70 mark, on the other hand, could accelerate the emerging bear trend, which could see the stock plummeting to the $3 a share handle.While falling share price is a big point of concern, all indication is that the stock is ready to bottom out if recent developments are anything to go by.But before we look at the factors likely to steer the stock up the charts, lets first understand what Kush Bottles does in pursuit of growth and shareholder value.About Kush BottlesKush bottles cast itself as a dynamic sales platform focused on providing unique products as well as services for the cannabis industry. Since inception in 2010, the company has sold more than 1 billion units and serviced more than 5,000 legal medical and adult use dispensaries as well as cannabis growers and producers in North America.The company’s main goal is to become the gold standard when it comes to products and services in the cannabis industry.Why Kush Bottles Is Destined to Bottom OutKush Bottles share price underperformance has nothing to do with operational inefficiencies. The company appears to be firing on all cylinders when it comes to execution of its business strategy. A stellar third quarter financial report is one of the bright spots that paints a clear picture as to why the stock is due for a bounce back after recent sell-off.For the three months ended May 31, 2018, Kush Bottles says it generated a 173% increase in revenue that came in at $12.9 million. The increase was mostly driven by organic growth, across all the major markets and product lines. However, the company appears to have spent a good chunk of the money in growing the business empire as its net loss more than tripled to (-$2.16) million.According to the Chief Executive Officer, Nick Kovacevich the wider than expected net loss should not be a big point of concern given that most of the funds are being used to lay the foundation for strong organic growth.

“The introduction of a number of innovative new proprietary products, as well as increased investment in research and development, further strengthen the sustainability and defensibility of the Company,” said Mr. Kovacevich.

Canada ExpansionIn a bid to expand and diversify the current revenue stream, Kush Bottle has unveiled a new subsidiary, tasked with the responsibility of pursuing sales opportunities in Canada. Based in Toronto Ontario, Kush Supply Co is to service licensed producers as well as processors, retailers, and distributors in the North American nation.Canada has emerged as a global leader in cannabis reforms having recently legalized recreational use. The legislation paves the way for further expansion of the target market that various companies intend to pursue. By unveiling a new subsidiary, Kush Bottles plans to capitalize on the momentum by leveraging supply chain efficiencies.New Energy Division LaunchKush Bottles has also moved to diversify its product line as it looks to target all the niche markets in the cannabis sector. Kush Energy is the company’s new division that will specialize in supplying the industry with high quality tested solvents and hydrocarbons essential for the extraction and production of oils edibles and waxes.The new division is set to pursue growth opportunities in the burgeoning concentrates markets, which account for nearly half of all the sales in the cannabis industry. The company intends to operate eight hazmat compliant facilities with the focus being on the Californian market.

“This is yet another example of our successful strategy of purchasing complementary businesses, integrating them into the Kush Bottles platform, and then driving significant organic growth,” said Mr. Kovacevich.

What Next For Kush BottlesA lot has changed from our previous update of Kush Bottles, more so on the business execution front. While the company has shown it has what it takes to be a key player in the legal cannabis space given the 173% revenue increase, the stock has continued to underperform.Taking into consideration the operational efficiencies highlighted above, it could be a matter of time before the stock bottoms out from current lows. The falling share price might as well have presented the best buy opportunity.We will be updating our subscribers as soon as we know more. For the latest updates on KSHB, sign up below!Disclosure: We have no position in KSHB and have not been compensated for this article.