NightFood Hldg Inc. (OTCMKTS:NGTF) is the latest high flying cannabis stock to catch our attention. The stock is riding high all for a good reason after a stellar performance on the earnings front depicted by double-digit revenue growth.
Given the company’s efforts in increasing online conversion rates, we believe the stock’s impressive run is all but starting. After being in consolidation for the better part of last year, NightFood Holdings has risen by more than 300% this year, according to the chart below, and is showing no signs of slowing down.
The stock has since pulled back after touching record highs of $0.68 a share this month. A pullback to the $0.58 handle presents a unique buying opportunity for investors looking to generate significant returns as the company dashes growth opportunities in the cannabis space.
Before we look at why NightFood Holdings is likely to continue touching higher highs, let us look at what it does in pursuit of shareholders value.
NightFood Holdings Business Overview
NightFood Holdings bills itself as a snack development and distribution company. The company through its subsidiaries develops and provides nutrition bars for supermarkets, grocery stores, and nutrition stores.
In the recent past, the company has expanded its footprint in pursuit of growth opportunities in the high flying cannabis sector. Late last year the company engaged the services of Jeffrey Robinson, managing director of Marijuana Accelerator to assist in the development and distribution of a new line of CBD infused snacks.
It is the latest push that appears to have triggered renewed investor interest in the company’s long-term growth prospects.
NightFood Holdings is flying after announcing revenues for the quarter ended December 31, 2018, more than doubled. Product sales in the quarter totaled $75,004 before refunds of about 3.8% and promotional expenses of 29.6%.
The company attributes the increase to its promotional activities on Facebook and TV that continue to drive Amazon sales.
“We’ve had a very productive holiday season, and are looking forward to sharing updates with the investment community when we’re able. We’re very excited about the opportunities we’ve identified, and the strides we’ve taken in the fast-growing CBD and marijuana edibles space,” said CEO Sean Folkson.
NightFood Holdings has moved to affirm its growth prospects in the cannabis space with the unveiling of a new line of CBD infused edibles. As part of the effort, the company in partnership with Marijuana Accelerator have formed, a new joint venture dubbed MJ Munchies that is to be based in Nevada.
The joint venture was formed with the sole aim of differentiating NightFood core business from CBD and marijuana-related brands, as the company continues to diversify its streams of revenue. Through the joint venture, the company is exploring the possibility of introducing snacks with Cannabidiol for promoting better sleep.
“With the amazing growth we’re experiencing with the NightFood line, our timing for connecting with Jeff could not have been better. Marijuana Accelerator is the definition of smart money in this space, and we’re extremely enthusiastic about the various cannabis-related projects we’ll be tackling together,” said Mr. Folkson
Entry into the cannabis business is a smart move given the opportunities for growth up for grabs. Legal in 50 states, Cannabidiol is being investigated as a chemical compound for promoting sleep, reduce pain and inflammation among other significant benefits. The CBD market is projected to grow to $2.1 billion by 2020.
Having reached significant sales milestones over the last four months, NightFood Holdings believes it is the right time to explore sales opportunities on CBD. The company has already developed a robust direct-to-consumer online sales model that should help it reach a broader market when it comes to sales.
The company is also in discussions regarding potential acquisitions targets for a CBD product line as it looks to be on the front seat as health benefits of CBD products become mainstream.
Night time nutrition s poised to become a key trend with significant in the consumer snack space over the next several years, which further attests to the company’s growth metrics.
“Our focus remains clearly on the nighttime snack market. We expect the NightFood brand to remain our cornerstone, and project the mainstream night-time snack market to be larger and more strategically valuable than the rapidly growing CBD market. With edibles rapidly gaining momentum and market share, the inclusion of CBD cannot be ignored,” said Mr. Folkson
The company creates manufactures and distributes snacks that help consumers satisfy their nighttime cravings in a better healthier and friendlier way.
It goes without saying that NightFood Holdings looks a little bit expensive at the current trading levels. However, if recent developments are anything to go by, then the company remains well positioned for more gains given the expansion being experienced in the legal cannabis business.
The company’s diversified product portfolio is one of the reasons that makes it a perfect fit for investors looking to gain exposure in two industries with exciting opportunities for growth. We believe any pullback from current trading levels would act as a buying opportunity pending further movement on the upside.
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Disclosure: We have no position in NGTF and have not been compensated for this article. We have been previously been compensated a fee of ten thousand usd by a non affiliated third party, Mantle Media, LLC for a 2 day awareness program regarding NGTF.