Cannabis stocks are the pursuit of most investors across both the United States and Canada as the product continues to offer some of the highest returns in the economy. Throughout this period, Canadian as well as multi-state operating cannabis players’ stocks have offered investors with the best options to make capital gains. As such, new entrants into the industry have been a number. In line with their predecessors, these entrants have continued to benefit from the flame cannabis has continued to shine on their performance. In the financial markets, most of the cannabis stocks rose merely due to the continued growth in the entire industry.
However, with time, scrutiny into the operations of these firms led to them working harder to ensure their investors understood their value proposition. As such, the firms had to put in considerable effort into different parts of the value chain so as to boost their investment bid. This formed the backdrop to the specialization of firms in different sections of the cannabis value chain. Over time, most firms have come to understand the entire value chain and are thus benefiting from better financial performance thus higher valuations.
PUF Ventures Inc (OTCMKTS:PUFXF) seems to be trying to emulate its predecessors by ensuring its ventures into all the sections of the value chain. In doing so, the firm seeks to ensure it can present investors with higher returns and associated capital gains.
However, thus far the firm has not been performing as well as it expected. During the past year, the share price had taken a nosedive, falling from highs of over $1.5 in January to trading just shy of $.25 by mid-August. However, the share price bounced back in mid-September – driven by the expected legalization of cannabis in Canada – to trade at above $1 again but this was again followed by a commensurate decline.
The above price action is shown in the chart below:
However, the recent few days have shown the firm turning back to the green zone after the share began rallying upwards. During the past two days, the share soared from $.57 to $.7 where it currently trades, a near 23% price increment shown in the chart below:
Due to these shifts in the share price, we opted to take a look at the company and evaluate what they have been doing that has driven the volatility and whether this will have a long-term effect on their affairs.
History of PUFXF
Incorporated in 2004 and headquartered in Vancouver, Canada, PUF Ventures Inc operates within the cannabis industry. The firm has undergone significant morphosis as it changed its name – from Chlormet Technologies, Inc – and business operations back in 2015. This drift lay the way for their venture into the cannabis sector, an investment which seems to have and continues to pay off significantly in their favour.
A number of issues have arisen pertaining PUF Ventures Inc. Most of these have been driven mainly by the changes in the industry, especially within Canada. That said, the firm seems to be in a favorable position especially with the changes in the legal environment in Canada thus is expected to continue operating within the country and profitably.
The Receipt of Licenses
With the continued increase in demand for marijuana and its products within Canada courtesy of the federal legalization of recreational use of marijuana, more and more companies are receiving the license to produce marijuana. Health Canada through the issuance of ACMPR approval supports the approval of bodies with the right to cultivate the marijuana within the country.
Currently, one of the most recent recipients of this license is PUF Ventures Inc through its subsidiary AAA Heidelberg Inc. Through this, PUFXF received a green light to begin cultivation in one of their facilities in London, Ontario. The firm expects to capitalize on this opportunity to begin producing their own product as they work towards boosting their product line. Moreover, this provides them with the first step towards ensuring that they can tap into the entire cannabis product line as well as take advance their bid to expand going forward.
In the words of their President and CEO, Derek Ivany:
“Receiving a cultivation license from Health Canada is a significant achievement which positions PUF to become a leading cannabis supplier to legal medical and recreational markets… As we embark on this exciting next phase of growth, we are eager to expand our reach in both domestic and international cannabis markets.”
The Fund Raise
While this happened, they further closed the initial $12.5 million of the $40 million they expect to raise. In doing so, it is expected that the funds will boost their production capacity especially now that they have received the go-ahead to continue with the production in their London facility. This also creates the opportunity for them to foster a working rapport with their financiers through ensuring that they receive the expected returns, thus creating the opportunity to raise more funds.
With the continued run the firm is experiencing especially with regards to licenses, PUFXF should leverage on their good fortunes and grow their business. Moreover, their increased financial muscle plays a critical role in ensuring that they achieve their goals sooner and with greater returns. This being the case, we remain bullish about the stock.
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Disclosure: We have no position in PUFXF and have not been compensated for this article.