OrganiGram Holdings Inc (OTCMKTS:OGRMF) has once again made it clear it is a solid buy as a long-term investment play. The company is fresh from announcing a 287% increase in revenues, underscoring its operational efficiency and growth metrics.
Organigram Price Analysis
The company is riding high on adult-use pot legalization a development that has continued to strengthen its revenue streams. Revenues topping estimates comes just days after the company inked a strategic partnership with an industrial hemp research company.
Organigram Holdings has also moved to strengthen its product line to address the ever-growing market demand. Plans are already underway to launch a new line of cannabis edibles in partnership with Smartest Kitchen.
If the stellar earnings report is anything to go by, then Organigram Holdings joins a list of high profile companies that are hitting their stride in the cannabis space. Renewed investor interest in the stock does not come as a surprise but on fundamentals inching higher.
After a steep pull back from record highs, the stock has once again started to bounce back in continuation of the long-term uptrend. A rally past the $5 a share level has opened the door for the stock to make a run for its 52-week highs of $6.68.
Conversely, any pullback after the recent spike would experience strong support at the $4.50 level. A sell-off followed by a close below the critical support level could leave the stock vulnerable to plunging to the $3 a share level.
A closer look at price action activity and recent developments it is clear that Organigram Holdings is destined to continue edging higher.
About Organigram Holdings
Organigram Holdings produces and sells dried cannabis and cannabis oil through its subsidiaries. The company also offers wholesale shipping for cannabis plant cuttings as well as dried foils and pre-rolls to wholesalers and retailers across Canada.
Growing Revenues And Margins
Organigram Holdings remains the talk of the cannabis sector on reporting a 287% increase in revenue that came in at $14.4 million. Net income in the quarter surged to $29.5 million or $0.195 a share, from a net loss of -$1.2 million reported a year earlier. Gross margin in the quarter nearly doubled to 71% compared to 25% a year ago.
The stellar financial result has helped strengthen the stock’s sentiments in the market depicted by an increase in trading volume in the market. According to the Chief Executive Officer, Greg Engel, Organigram Holdings remains well positioned to enjoy robust revenue growth in 2019
“The first quarter of 2019 is just the start of what we expect to be a year of tremendous growth. We have always believed the Moncton Campus would be a competitive advantage for us being able to produce high-quality indoor-grown product at a low cash cost of cultivation. Our first quarter results confirmed that as we reported an adjusted gross margin of 71%,” said Mr. Engel.
The company’s 2019 outlook points to continued growth helped by growing demand for cannabis products in the adult use market. The company expects recreational revenue to dominate the company’s revenue base. Inventory levels have already surged to $91.4 million from $45 million as the company continues to ramp up packaging extraction and stamping capabilities.
In a bid to accelerate revenue growth Organigram is planning to become the official supplier of cannabis in the province of Quebec. The company is also strengthening its sales infrastructure having deployed a high-quality sales team made up of sales representative and sale management
Organigram is also working round the clock to expand its production capacity as it looks to introduce a range of derivative products. The company has also entered into an agreement with 1812 Hemp, a hemp research company to support research and development on the genetic improvement of hemp. Under the terms of the agreement, the company is to gain access to a secure supply of hemp flower.
“We are proud to work with other industry-leading companies and researchers to continue to explore the potential of hemp and cannabis plants and the efficiency with which we can deliver CBD to our customers,” said Mr. Engel.
Organigram has once again underscored its growth metrics on posting earnings and revenue growth. The company is in a phase of robust growth supported by a business model that continues to benefit from the expansion of the Canadian cannabis market.
The stock looks set to continue edging higher helped by solid fundamentals that affirm long-term prospects.
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Disclosure: We have no position in OGRMF and have not been compensated for this article.
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