A third consecutive quarter of EBITDA-positive quarterly results underlines why 48North Cannabis Corp (OTCMKTS: NCNNF) deserves a higher valuation. The stock has been on an impressive run, since the start of the year, despite coming under pressure in recent weeks.
NCNNF catalysts and price analysis
In addition to delivering impressive financial results, the Company has continued to strengthen its long-term prospects, having embarked on an aggressive expansion drive. The Company is in the process of opening one of the world’s largest licensed outdoor cannabis operations a development that continues to excite investors
By enhancing the cannabis production capacity, the Company seeks to cater to the growing demand for cannabis products in the market. The Company is also fresh from signing supply agreements key among them being with AGLC.
The closing of a bought deal for gross proceeds of as much as $28.75 million leaves the firm well financed to oversee strategic initiatives key among them being the expansion drive.
Price action activity is yet to reflect the underlining developments that affirm 48North Cannabis long-term prospects. However, after a steep pullback from record highs of $1.2, the stock has once again started showing signs of making a run for 52-week highs.
Standing in the way of further upside action is the $1 resistance level. A rally followed by a close above the resistance level should open the door for the stock to power high. In our view 48North, Cannabis is an ideal bounce-back playback to 52-week highs.
What does 48North Cannabis do?
48North Cannabis is a vertically integrated cannabis company with operations in the health and wellness market. The Company is engaged in the cultivation and extraction of cannabis. In addition, it also creates authentic brands for next-generation cannabis products.
48North Cannabis is an ideal bounce-back play after a steep correction from record highs on underlining fundamentals turning bullish. The Company reporting stellar financial results for the first three months of the year is a development that continues to prop the stock’s sentiments among investors.
The first three months of the year marked a third consecutive quarter of EBITDA that came in at $78,000 up 570% sequentially. EBITDA for the nine months ended March 31, 2019, totaled $696,000 as revenues surged to $4.3 million.
“48North successfully achieved all of the milestones it targeted in Q3 and is therefore well on its way accomplishing its goal of delivering next-generation products for fall 2019. This included receiving its outdoor cultivation license from Health Canada for its Good Farm,” said Alison Gordon, co-CEO of 48North.
Revamped CBD production
During the quarter, the Company secured a cultivation license from Health Canada for its 3.7 million square feet organic farm in Brant County, Ontario. The farm, once fully operational, will become the largest ever-licensed cannabis operations in the world, allowing the Company to harvest in excess of 45,000 kg of derived cannabis.
With the revamped cultivation capacity, 48North remains well positioned to become a global leader in the production of low cost, high-quality cannabis products. The license approval could not have come at a better time as the Company is fresh from signing a string of supply agreements that need servicing.
A historic supply agreement with SQDC will see the Company become an exclusive distributor of cannabis in Quebec, in the excess if 1,200 kg of dried cannabis. In addition, the Company has inked an agreement to supply Alberta Gaming Liquor & Cannabis up to two, 460 kg of dried cannabis. It has also signed an agreement to supply Humble + Fume 6,000kg of dried marijuana and trim.
Separately the Company has closed a $28.75 million bought deal that provides the much-needed financial muscle for servicing the supply agreements by enhancing cannabis cultivation.
“48North will use the proceeds of the Offering to execute on its business plan, namely developing its proposed 100-acre outdoor cultivation site in Brant County, and the distribution of next-generation cannabis products to consumers for retail sales in Canada come October 2019 “, said Alison Gordon, co-CEO of 48North.
48North is on its way to becoming one of the largest cannabis producers, a milestone that will allow it to enjoy economies of scale. Revenue growth, as well as the signing of supply agreements, underscores the fact that the Company’s growth strategy is working. That said the Company is on its way to posting impressive numbers in 2018 on revenue and EBITDA generation.
The stock should continue to edge higher as underlying fundamentals improve.