Medical Marijuana Inc (OTCMKTS: MJNA) is surging, having become apparent it is in a phase of robust growth. The stock has continued to generate significant returns to subscribers who took time to read our previous update that affirmed why the stock is a comeback play.
Medical Marijuana Price Action Analysis
The trigger fuelling a spike in share price and market activity is an impressive earnings report that underscores operational efficiency as well as underlying growth. The Company has also strengthened its product line much to the excitement of shareholders, consequently strengthening market sentiments.
Medical Marijuana delivering a 92% increase in revenues for Q1 explains why the stock has taken a flight after coming under immense bearish pressure over the past year. A 40% plus rally since the start of May could as well signal a change in the direction of trade.
With the stock currently trading above the $0.06 support level, further gains are likely ahead of the $0.10 mark, the next substantial resistance level. Given the underperformance of the past year, Medical Marijuana will have to rally and find support above the $0.10 mark to turn bullish.
Failure to take out the $0.10 resistance level could result in the stock trading sideways given the underlying long-term bear trend. However, in our view, Medical Marijuana remains supported for further upside action as underlying fundamentals have turned bullish.
About Medical Marijuana
Medical Marijuana casts itself as an investment holding company focused on opportunities in the medical marijuana and industrial hemp markets. The Company boasts of a diverse range of products based on Cannabinoids products to seed as well as other isolated high-value extracts.
Revenue Growth And Net Income Generation
Shares of Medical Marijuana are flying on the delivery of an earnings report that underlines growth in the core business. Robust revenue growth is the latest catalyst fuelling the stock’s price action activity after the underperformance of the past year.
For the first three months of the year, Medical Marijuana generated total sales amounting to $20.2 million, representing a 92% year-over-year increase. Revenue growth was as a result of significant growth in sales revenue from the Kannaway subsidiary that registered a 130% increase in sales from the previous quarter.
Cost of goods sold in the quarter decreased as a percentage of sales decreased from 31% to 22%, causing gross profit margins to increase by 13% to 78%. The company generated a net ordinary income of $1.5 million, marking an important milestone in the push for positive cash flow.
“The first quarter of 2019 proved to be the largest sales revenue quarter in the history of our Company. We are pleased to see this level of growth our company has experienced as the world continues to open up to the benefits of hemp-derived CBD,” explained CEO Stuart Titus.
Widening Product Line
Medical Marijuana has already started reaping the rewards of a robust and diversified product line. The company has continued to expand its product line through strategic investments in its wholly-owned subsidiaries.
For starters, its Dixie Botanicals subsidiary is fresh from launching a new Natural orange flavored CBD Tincture. The THC free tincture is ideal for consumers on the go because of its compact size. Its other Subsidiary Kannaway is also fresh from unveiling a new CBD Coffee and Tea pot-infused with 10mg of hemp-derived cannabidiol CBD per pod.
The revamped product line positions the company to make a push for market share in the CBD market poised to hit $16 billion by 2025.
In addition to expanding the product line, Medical Marijuana also continues to strengthen its Intellectual Property portfolio. Its investment company AXIM Biotechnologies is fresh from filling a provisional patent application for a patent on a chewing gum composition comprising of cannabinoids.
“AXIM is best known for its patent on chewing gum containing cannabinoids and our flagship CBD chewing gum product, CanChew. With this patent application and AXIM’s current cannabis chewing gum products currently in development, we plan to bring a variety of treatment options to the market,” said AXIM CEO John W. Huemoeller II.
Medical Marijuana bounce back from all-time lows should continue to gather pace in line with the bullish momentum in the overall cannabis sector. Improving underlying fundamentals should also continue to fuel upside action after a steep pullback over the past year.
In our view, revenue growth, as well as a strengthened product line, are some of the catalysts that should continue to fuel Medical Marijuana higher throughout 2019 and beyond.
We will be updating our subscribers as soon as we know more. For the latest updates on MJNA, sign up below!
Disclosure: We have no position in MJNA and have not been compensated for this article.