OrganiGram Holdings Inc (OTCMKTS:OGRMF) has emerged as an acquisition target after rallying by more than 80%, over the past two months. A surge in trading activity has seen the stock spike to all-time highs, as it threatens to break out, supported by a string of strong fundamentals and catalysts.
Talk that the company is an acquisition target has gone a long way in eliciting strong investor interest in the stock, as analysts insist it boasts of a favorable valuation profile. The company’s strong presence on the east coast, as well as its robust product portfolio, are some of the factors that appear to be boding well with investors.
The stock is currently trading at the $4.45 level, waiting to see if the upward momentum has what it takes to push the stock above the 52-week high of $4.60. On the downside, the stock faces immediate support at the $4 a share mark, below which it could drop to the $3.30 handle seen as the next support level.
All indication, taking into consideration recent price action activity, points to the stock’s continued climb to the top. The stock has essentially bounced back from a minor week, arousing suggestion that it will continue to spike higher as part of the long-term uptrend.
What Does OrganiGram Do?
OrganiGram produces and sells medical marijuana products to individuals and physicians in Canada, through its wholly-owned subsidiaries. The company also offers marijuana plants seeds and cuttings to people and businesses looking to venture into the business.
The public listed company also operates healing centers that offer treatments for post-traumatic stress disorders, as well as chronic pain and trauma therapy.
Why is OrganiGram Climbing Higher?
Technically speaking, OrganiGram remains well positioned to take out its 52-week high thanks to a number of catalysts it has served at the back of an active news cycle. The company’s news release have been material and informative, painting a clear picture of the company’s long terms prospects and what investors should expect in the short term.
Health Canada License
Top on the list as one of the catalysts strengthening investors’ confidence in the stock is the announcement that the company has received an expanded cultivation license from Health Canada as part of its Phase 3 expansion.
The license approval paves the way for the company to move cannabis plants into new rooms on a rolling basis. OrganiGram will also be able to begin staggered harvests of the new rooms starting the first week of August
Completion of the remaining Phase 3 rooms will take the company’s production capacity to 36,000kg/year, making it one of the five largest licensed producers.
“Given our existing inventory, production volume and consistency and quality of supply, we believe we are well positioned to be a supplier of choice for many of the provincial cannabis boards and private retailers across Canada,” said CEO Greg Engel.
Eviana Health Corporation Equity Stake Purchase
Renewed investor interest in the stock also follows the announcement that OrganiGram has entered into a non-binding Term sheet, for the purchase of a 26% stake in Eviana Health Corporation. The strategic investment opens the way for OrganiGram to purchase up to 50% of Eviana’s annual CBD oil production.
The $10 million investment is set to expand the company’s footprint on the international scene.
“Our investment and concurrent offtake agreement with Eviana will provide OrganiGram with a source of low-cost, high-quality CBD for the burgeoning medical market within Europe. The proven cultivation and processing costing model that Eviana has developed will allow us to bring a range of innovative products to the global CBD marketplace,” said Mr. Engel.
In addition, OrganiGram has entered into a letter of intent whereby it proposes to make a strategic investment in Hyasynth Biological. The agreement also opens the door for the company to purchase a pre-defined quantity of a range of cannabinoids or cannabinoid-related production from Hyasynth.
Hyasynth is a leader in the field of phytocannabinoid sciences and biosynthesis. The company boasts of a patent-pending technology that makes it possible to produce phytocannabinoid using genetically engineered strains of yeast.
Cannabis Export Permit
OrganiGram is set to begin its first international shipment after receiving a permit from Health Canada. The company will be able to ship dried cannabis products to Cannatrek Medical PTY Ltd, with operations in Melbourne Australia
The new international sales channel should go a long way in strengthening the company’s revenue stream even as the company eyes similar opportunities in Europe, Germany to be specific.
OrganiGram 2018 Outlook
OrganiGram remains well positioned to serve both medical and recreational markets supported by a cannabis production capacity of 36,000 kg. Strategic investments in fast-growing cannabis plays underline the company’s commitment to pursuing growth opportunities at all costs. The company has also set its eyes on sales opportunities in Australia and Europe.
That said, 2018 is turning out to be a pivotal year for OrganiGram, which is firing on all cylinders. The stock can only continue to rise, especially on bouncing back after a minor correction.
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Disclosure: We have no position in OGRMF and have not been compensated for this article.