CLS Holdings USA Inc (OTCMKTS: CLSH) Due To Rebound

CLS Holdings USA Inc (OTCMKTS: CLSH) has been under immense pressure, since the start of the year, depicted by a 50% plus slide. With the stock currently trading near 52-week lows, the big question remains, does it have what it takes to stage a comeback?

CLSH Catalysts And Share Price Analysis

While the plunge is a point of concern, it does not paint an accurate picture of underlying developments that signal growth in the company’s core business. For starters, CLS Holdings is fresh from delivering impressive financial results, highlighted by a 25% increase in revenues in the recent quarter.In addition, the company's wholly owned subsidiaries, Oasis Cannabis, and City Trees are fresh from setting a new record for monthly revenues of more than $1 million. The company has also embarked on an aggressive acquisition drive as it seeks to strengthen its prospects and competitive edge in the highly competitive sector.Following the acquisition of Alternative solutions mid last year, CLS Holdings has moved to acquire an 80% ownership interest in CannAssists LLC. With the acquisition, the company is poised to expand its footprint into Massachusetts, a cannabis market with immense opportunities for growth.Amidst the string of positive developments, the stock has continued to edge lower in line with the bearish trend that began in the last quarter of 2018.While trading at the $0.32 level, CLS Holdings faces strong support at the $0.30 level. A sell-off followed by a close below the support level could result in the stock edging lower in continuation of the bearish trend. Below the $0.30 level, the stock could plummet to two-year lows of $0.10. CLSH Daily ChartConversely, any rally will have to contend with resistance at the $0.45 mark. A rally followed by a close above his resistance levels should pave the way for CLS Holdings to edge higher as a bounce-back play.

About CLS Holdings

CLS Holdings is a cannabis-focused company engaged in the extraction and conversion of cannabinoids. The company extracts cannabinoids from the marijuana plant and then converts them into concentrates such as oils, waxes, and edibles. It also offers consulting services to cannabis-related businesses.

Sales Growth Momentum

Amidst the underperformance in the stock market, CLS Holdings core business has continued to grow at an impressive rate helped by the acquisitions that the company has carried in the recent past. The company reporting revenues of $2.4 million representing 25% year-over-year increase is a development that underscores underlying growth.The company’s subsidiary based in Nevada Oasis Dispensary generated $1.4 million of the total revenues. The unit delivered a gross margin of 39% up from 22%. The City Tree brand accounted for $1 million of the total revenues. CLS Holdings attributes revenue growth to an increase in sales through customer-focused initiatives.Sales at Oasis Cannabis dispensary and The City Tree brand continue to increase at an impressive rate having already set a new monthly record of more than $1 million. The Oasis Cannabis recorded sales of $560,000 in March as City Tree recorded $453,000.

“In the past 90 days, we’ve made a number of positive changes. These changes have resulted in increased revenue, increased margin, consistent growth of daily customer traffic and an organization that is currently executing at a high level,” stated COO Andrew Glashow.

Massachusetts Expansion

Revenue growth looks set to be the order of the day as CLS Holdings has agreed to acquire an 80% ownership interest in CannAssists LLC. The agreement builds on a similar deal that the company inked to acquire Good Health as it moves to expand its footprint into the Massachusetts Cannabis market.With CannAssists acquisition, CLS Holdings gains access to an 86,000 square foot facility set to produce its first harvest in the first quarter of next year. While operating at full capacity, the facility could generate revenues of more than $100 million. CLS Holdings remains confident of generating positive cash flow from the grow facility.

“The market dynamics in Massachusetts are compelling for large scale cultivation. [..]This opportunity fits into our stated objective of entering markets that are on the cusp of implementing a robust adult use market, “explained CEO Jeff Binder.

Bottom Line

CLS Holdings share price does not provide an accurate reflection of a company in a phase of robust growth. Sales growth, acquisitions as well as expansion into other markets justifies why the stock deserves a higher valuation in the market.In that regard, it would not come as a surprise on CLS Holdings rebounding as investors taking note of the company’s tremendous potential.We will be updating our subscribers as soon as we know more. For the latest updates on CLSH, sign up below!Disclosure: We have no position in CLSH and have not been compensated for this article.