It’s been a wild season for Wall Street. Blame the new Fed chief, blame Washington, every stock but one on the mighty Dow industrials lost ground yesterday. But Cannagrow Holdings Inc. (OTCMKTS:CGRW) kept reaching for big sky.
Big money is hunting safe havens, looking for any green light flashing bright enough to not only hold firm on days when the Dow shudders but even capture healthy upside.
The logic is as simple as it gets: when the market tide turns, traders want to be in the names that have the strength to blaze their own trail. Usually they’ve got an economic edge. You know, some amazing once-in-a-generation trend compelling enough to beckon the bulls even if the bears are running all the other charts.
Long story short, when 96% of the Dow was lurching toward the floor, CGRW surged more than 20% intraday . . . breaking up through technical resistance in the process.
I think recent NEWS is in the background here. (A legendary outlaw has agreed to lend his name to the operation, scroll down for more.)
Either way, here’s what a green light in a sea of red looks like:
I’ll say more later about the CLASSIC long-term pattern driving two months of waving “flag” consolidation in the wake of that monster 130% “flagpole.” For now, the important thing is how even on one of Wall Street’s worst days, OTCMKTS:CGRW had what it takes to rally from $1.16 as high as $1.41 by the close.
And yeah, it closed at the intraday PEAK. There wasn’t enough time in the trading day to satisfy all the bulls. Something about the CGRW story going VIRAL.
Green attracts green on Wall Street. It’s the secret behind “herd mentality” or why so much money crowds into just a handful of mature mega-tech stocks while leaving the rest of the NASDAQ in the shade.
CGRW is just about every shade of green a red-blooded trader could want. This is the company that provides professional services and other “turnkey solutions” for would-be growers and retailers in the Rocky Mountain High.
They’re based in Pueblo, a little town that blew out the walls when Colorado went recreational. That “little town” is now the heartland of an agricultural miracle ramping from ZERO on the books back in 2012 to a $1.5 BILLION industry here and now.
This is already big business with a lot of room to expand. At this point, when a pirate grow in Pueblo gets busted, there’s often $1 million in inventory on premises. Do all the math, and I think close to 200 TONS of the stuff is flowing through Colorado every year now.
So there’s the Big Picture. A company like CGRW isn’t really cued into the “macro” drift. They’re riding a much faster flight path. All of this is new build, green fields that have yet to really reveal their ultimate potential, a chart open to the blue sky.
The OTCMKTS:CGRW Story
CGRW doesn’t sell the product and doesn’t even run the grow operations. They’re one of those companies we love to talk about, selling the equivalent of mining tools to prospectors flocking to the current green gold rush. As I said, they’re a CONSULTANT. They help would-be growers set up and run their operations.
They work with compliance, marketing, all the back-office headaches that a lot of people coming to the industry (let’s face it, they’re hippies) don’t have the experience or the inclination to handle on their own.
They’ll even build the greenhouse and literally hand a would-be grower the keys! Maximum convenience . . . and CGRW naturally takes a piece of the action.
Think of it like one of those “co-working facilities” only for green buds. Lease a little space, lease a lot. The relationship expands according to the grower’s needs! But I’m not here to give you a commercial on using CGRW services. We’re here to figure out how that offering plays into the chart.
On that level, CGRW has all the moving parts it needs to open the doors WIDE and let the cash flow in. It starts with the Buffalo Ranch, 20 acres of Colorado farmland with 10,000 square feet of greenhouse already up and running. That’s 23,000 square feet in total, supporting every phase of the operation from strain development to 12-month harvest.
Remember, this is greenhouse so the plants are exposed to natural sunlight. No hot, bright lamps or huge power bills required! One estimate I’ve seen is that a square METER of greenhouse can yield 250 grams of product per crop, max 6 harvests a year. Multiply across 23,000 square feet, that’s up to 3,400 POUNDS of product coming out of Buffalo Ranch every 12 months.
Colorado pays $6-$10 per GRAM depending on quality. You can see the revenue potential right there. Naturally the state limits the number of plants each individual grower can operate, but since CGRW isn’t the grower, it’s not an issue in terms of scaling up.
Furthermore, the better the breeding on each plant, the higher the yield. As consultant, CGRW has big input on the strains, which is why they brought in Dr. John Janovec (Ph.D in Botany) as their “master grower.” He helps ensure every plant is as good as it gets.
Thanks to Janovec’s expertise, flagship tenant Category One Botanicals has ramped up production to 232 pounds a month, on a limit of 1,800 plants and in the dead of winter, no less! Not only is that 16% above the company’s own targets, it translates into an annual run rate north of $12 million.
And that’s just Phase ONE on Buffalo Ranch. The plan has FIVE phases. We’re literally in the first inning of this game, which is why CGRW still trades for pocket change instead of “mature company” prices!
Maybe you’re scared of shifting regulations. CGRW is up to speed on all the federal and state rules. They’ve even taught local compliance courses to both growers and local authorities alike to make sure everyone’s on the same page. I hear from Colorado that they’re not going to get pushed around. They love this business in Denver and the citizens have spoken: they want Rocky Mountain High.
Sure, it’s early stages and who knows what the future brings. Last 10-Q I saw, CGRW still had a little ways to go before it even takes $1 million a year from its business partners. But don’t forget, those partners shoulder most of the overhead! Gross margins here are tracking above 30% and technically the company is already positive on an EBITDA basis, even down here at these levels.
I’m not even going to speculate on what those margins turn into once this tiny little company can graduate into even minimal “efficiencies of scale.” The greenhouses were only finished back in August!
The Outlaw Impact
Meanwhile, management has much bigger ambitions . . . again, this is only the appetizer! I’m still getting my head around the revelation that thanks to CGRW’s support, tenant Category One got one of only THREE contracts to supply plant matter for Willie Nelson’s elite “sun grown” signature brand.
Willie Nelson! WILLIE NELSON! The red-headed stranger himself, friend of the kind bud since way back. Plants grown on CGRW property have made it into Willie’s Reserve. (Get the low down HERE.)
How much will Willie want? Fans know it’s a trick question. The answer is “every ounce the market demands.” He’s already raised close to $30 million to ramp up his personal operation. It was even in stodgy old FORBES.
Getting the legendary outlaw smoker’s seal of approval is a big, big deal. This relationship is an obvious honor and win for Category One. And their success reflects well on CGRW . . . every grower who wants something similar knows who to call now!
Add it all up, I think that’s the remaining X Factor keeping that chart green on the red days. And NOW is the time to get the action on your screen. That chart looked poised for a long triangular breakout as it was. Nudging the sloping upper limit of the “flag” consolidation that started around the New Year. Eager to convert that one-time ceiling into a new floor.
If CGRW could test that ceiling on a day when Wall Street was losing its nerve, I’m eager to see what it can do when the bulls strike back! We could be riding an overside bounce (check that RSI kicking back up from the 30-point line) or something more substantial.
Either way, you bet we’ll be watching! And with the red-headed stranger on our side, there’s BUZZ to light the fire.
IMPORTANT SECURITIES DISCLAIMER:
TheOTCReporter.com is a publisher. Our parent company, Touchstone Media, has been compensated $2,500 from Sunrise Media, LLC (a non-affiliated third party) for advertising and promotional services related to CGRW. We are not registered as a securities broker/dealer or an investment advisor either with the U.S. Securities and Exchange Commission or with any state securities regulatory authority. Our Service is intended to provide opinions and analysis of stocks and markets, but is not intended to provide personalized investment advice.
DO NOT E-MAIL, CALL, WRITE TO OR OTHERWISE CONTACT THEOTCREPORTER.COM SEEKING PERSONALIZED INVESTMENT ADVICE, WHICH CANNOT BE PROVIDED.
By using our Services, you understand that the material provided by our Service is for general informational purposes only. No information on the TheOTCReporter.com as a part of our Service constitutes a recommendation that any particular investment, security, portfolio of securities, transaction or investment strategy is suitable for any specific person.
You further understand that TheOTCReporter.com and its employees, independent contractors, affiliates, outside contributors and creators of the Services may not and will not advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of investments, securities, transaction, investment strategy or other matter. Accordingly, do not attempt to contact them seeking personalized investment advice, which they cannot provide.
To the extent any of the content published as part of the Service may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. The material contained within our publications should be used solely for informational purposes.
The information provided by our Service represents only our editor’s opinions and should not be relied upon for purposes of transacting securities or other investments. This information is provided by both our staff, independent contractors, affiliates and by outside contributors. While it is based on sources believed to be reliable and are written in good faith, we cannot and do not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. All information should be independently verified. We are not responsible for errors or omissions in our publications, and any opinions expressed are subject to change without notice.
You bear responsibility for your own investment research and decisions, and should seek the advice of a qualified securities professional before making any investment. Any sale or purchase of securities or ownership interest that results from information presented by our Service will be on a negotiated basis between you and parties other than TheOTCReporter.com without any participation by or remuneration to TheOTCReporter.com You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. TheOTCReporter.com will not be liable for any loss or damage caused by your reliance on information obtained in any of our publications. You are solely responsible for your own investment decisions. Before selling or buying any stock or other investment, you should consult with a qualified broker or other financial professional to verify pricing information.
TheOTCReporter.com is an investment publisher, not an investment advisor. Our publications may contain information that is not accurate or complete. The opinions expressed in our publications may change without notice. We do not purport to tell you to buy or sell securities. We cannot be held accountable for any financial loss you incur by following the investment ideas in our publications. Use our research solely as a starting point for your investment decisions.
IMPORTANT DISCLAIMER CONCERNING FORWARD-LOOKING STATEMENTS:
Past results are not necessarily indicative of future performance. Understand that performance data is supplied by sources believed to be reliable, that the calculations therein are made using such data, and that such calculations are not guaranteed by these sources, the information providers, or any other person or entity, and may not be complete.
From time to time, we may make references in our marketing materials to prior articles, reports, commentary, analysis, newsletter issues and opinions we have published. These references may be selective, may reference only a portion of an article, portfolio, report, commentary, analysis, newsletter issue, opinion or recommendation, and may not be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.
We require our editorial staff and independent contractors to disclose their positions in individual securities that are mentioned in a publication that they author and that is featured on TheOTCReporter.com
IMPORTANT: Although we require our editorial staff and independent contractors to disclose their positions in individual securities that are mentioned in a publication that they author and that is featured on The TheOTCReporter.com, we cannot and will not guarantee that the information they disclose or fail to disclose is accurate, honest, and truthful and complete.
Furthermore, we do NOT require affiliates or outside contributors to disclose their positions in individual securities that are mentioned in an article, report, commentary, and analysis or newsletter issue. Therefore, our affiliates and outside contributors may write about investments or securities in which they or their firms have a position, and that they may trade for their own account and not disclose these positions to us.
In addition, portions of our Service may contain opinions that are different from other portions of our Service. TheOTCReporter.com’s member owners, directors, employees, contract employees, independent contractors, outside contributors, subsidiaries, affiliates, advertisers, and agents may, from time to time, have long and short positions in, or buy or sell the securities, or derivatives thereof, of companies mentioned in respective Service and may take positions inconsistent with the views expressed in the Service.