LONG 3.5k shares of $OGI @ $.73
OGI showing bullish trend change signals here at $.73 for long-term #Potstock exposure.Technical analysis:
- Bullish RSI divergence showing on Monthly & Weekly chart which suggests and upside rally soon.
- Momentum oscillators and MACD are buried and curling up from lows on all time frames chart..
- possible double bottom test here at $.70-.75 best seen on daily and hourly chart..
- Emotional retail investors are the main price action driver so a final shake out of weak hands that have accumulated over the years & grown impatient with the lack of stock appreciation seems likely. With that said, share price could see a possible $.68 washout over the next couple weeks with sector tailwinds and industry consolidation.
- Institutional investors are still waiting on the sidelines for the market to mature, however, I feel they will be late to the party on any major industry catalysts discussed below and the bottoming processing is occurring now.
Fundamental analysis:
- Low cost producer, pot stock industry Licensed Producer pioneer with the best cultivation knowledge
- Strong balance sheet with large cash position to stalk and act at the perfect time to enter Germany or US market, either through a convertible note or acquisition.
- Strong cash to debt
- strong price to book of .6 and price to sales of 1.98 which suggests undervaluation
- Management continues to learn and watch from other publicly traded companies success and failures in the US market to keep shareholders interest in mind when getting exposed to US markets
- Very compliant to Canadian and other country industry regulation. Leader in market share in Alberta and expanding into Winnipeg (gummies). Largest Hash producer in Quebec
- Currently exporting to Israel (cannadoc) & Australia, and looking to expand into US and Germany
- British American Tobacco's significant investment (BAT) suggests strong partnerships in product and industry regulation research. Big Tobacco wants to be exposed to Cannabis and chose Organigram as an entry into a very regulated market that they have to be cautious
- Canadian indoor grown cannabis is a premium brand in many countries,
- Potstock sector tailwinds look to finally be slowing down and priced in like safe banking act failing & other regulations priced in
- margins growing driving efficiencies , long term vision
- CAD likely to rally against the USD here to reduce foreign exchange impact
Catalysts:
- federal legalization in US
- reschedule of cannabis in US
- market competitor shake out that will happen over time and industry consolidation
Risks:
- Continued common stock dilution with ATM share offering and stock compensation
- Emotional Retail Investors continue to liquidate while smart money accumulates below <$1
- Nasdaq delisting however, intrinsic value suggest share price is undervalued below $1. Company mentioned they would reverse stock split if it came down to it
- US and other countries slow progress on regulation
- Industry wide tailwinds and sell offs
Although OGI has produced highly inconsistent earnings , the company should be back flirting with free cash flow. Risk reward remains favorable with a tangible book value of nearly $1.64 per share limiting downside. The future is bright with Organigram. One of the best balance sheets in the industry, a great team with great execution, both on the retail side execution sales excellence, and in cultivation and production. Organigram will expand outside of Canada offering exposure to many different markets and opportunities for share price appreciation
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