Continuing the analysis of companies focused on exploiting opportunities as the legalization of marijuana moves through various jurisdictions in the Untied States and across Canada I will examine the particulars related to OrganiGram Holdings Inc. (OGI TSXV).
The company is a licensed producer of organic medical marijuana and is certified by Ecocert Canada ensuring that its operations comply with international organic standards. OGI has its operations in Moncton, New Brunswick OGI and offers fully bilingual branding and services. The company boasts low operating costs and wages. Current capacity is 2,000 kilograms per year and it is expected to reach 3,500 kg/year by November of this year.
The potential output of the company’s existing property could reach 19,000 kg/year. Sales growth has been impressive reaching $1.425 million in Q2 of fiscal year 2016 from only $67,971 in Q2 2015. OGI has a market capitalization of $83.58 million and average daily volume over the last three months of 345,324 shares and should in that context be viewed as a speculative investment.
A probe of the charts will help identify how best to proceed with this stock.
The three-year chart illustrates the sustained advance the stock has enjoyed since October of 2015 when it caught a lift off its 52-week low of $0.20 and ran to its 52-week high of $1.42. The MACD and the RSI both generated buy signals as OGI came off the lows. The move higher was quite robust but was over in a quick burst of buying that ran out of gas in the first days of November.
The six-month chart highlights the buy signals generated by the momentum indicators in April as OGI moved off the $0.70 range and ran to resistance near $1.40. Once again the advance was short but profitable. In July buys signals saw the stock move off $1.00 towards another retest of resistance near $1.40.
What is evident from the analysis is that OGI is a trading stock that offers profits to those who can identify the entry and exit points. This is a speculative investment and demands constant surveillance.
I am going to move on from this deep dive into the marijuana sector and take a look at Fortis Inc. (FTS TSX) for Jerry.
Make it a profitable day and happy capitalism!