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Signal Bay Inc (OTCMKTS:SGBY) Is Due An Upside Correction

Signal Bay Inc (OTCMKTS:SGBY) Is Due An Upside Correction
Written by
Chris Sandburg
Published on
November 17, 2016
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At the end of October, we took a look at what we believe could be one of the real winners of the recent cannabis legalization push, Signal Bay Inc (OTCMKTS:SGBY). At the time, the company had gained considerably in line with its potential across the previous quarter, but unlike in many other entities, markets seemed to be a little tentative in their acquisition of its stock.Having run up throughout late October, Signal Bay actually declined into the ballots. This changed after November 8, however, and it's since been something of a recovery stock. The company sits up close to 10% on its November 8 capitalization (which in all fairness, seems a little soft given the state of the industry right now), and we think there's plenty of run room left for Signal bay to gain strength heading into the latter half of this quarter, and beyond.A couple of fresh releases have reinforced our bias.For those who missed our previous coverage, here's where our thesis lies. It's rooted in quality control. Signal Bay's growth potential derives from one of its subsidiaries called EVIO Labs. The company has a couple of other subs, called Signal Bay Research, and Signal Bay Services, but as we outlined previously, these are bread and butter revenues generators, while EVIO is where the potential really lies.The company is set up to to develop testing laboratories, through which it can test the quality of both commercial and personal strains of marijuana. These tests involve looking for everything from pesticides, to molds, to infectious disease, and we think this sort of quality control is going to play a huge part in the recreational landscape going forward.The thing is, right now, very little is in place to standardize the quality of the cannabis that is sold. Obviously, this is the case for illegal transaction sales, but it's also true for medicinal purchase. Growers and distributors deal direct with retailers, and these retailers deal direct with patients and customers. There's testing for the pharmaceutical grade, FDA level product, of course, but when it comes to thinks like pre-rolled marijuana cigarettes for medical patient consumption, or even raw product retail, the quality control is at the discretion of the retailer and the purchase (to a large extent).Signal Bay, through EVIO, is trying to change this.Last time we looked at the company, it had three labs running in Oregon, which controlled more than 95% of the states legal cannabis quality testing. Since then, it's made a fourth acquisition in Oregon, specifically a lab in Portland called GreenHaus Analytical Labs. Additionally, and very importantly for our bull thesis, it's also picked up a lab in California. The lab is called Green Style Analytics Lab and it's located in Yuba City. Bringing this on board for EVIO includes a book of circa 1300 currently held accounts, and this is going to form the root of the strategy we discussed previously – the Spoke and Hub strategy of one central lab and a number of satellite labs located around the central location – that the company expects to roll-out nationwide as more and more states come on board with recreational legalization.Signal Bay also announced, on November 14, that it had been uplisted and approved for trading on the OTCQB Marketplace for early stage and developing U.S. and international companies, as well as appointed a fresh CFO to oversee the transition, and future expansion, of the EVIO lab expansion strategy.These are big moves for a company that is very much at the core of a booming industry, yet we’ve not seen significant, and representative, moves in its share price – as yet.We think there's some upside correcting to come, and that's why we remain bullish on Signal.We will be updating our subscribers as soon as we know more. For the latest updates on SGBY, sign up below!Disclosure: We have no position in SGBY and have not been compensated for this article.

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